Germany's Economic Mannschaft Prevails

The German soccer team, the Mannschaft, four times a World Cup winner, has built its reputation not so much on theatrics, but on two less flamboyant qualities: team spirit (Mannschaftsgeist), and endurance. It so happens that these selfsame qualities helped the German government prevail in the standoff with the government of Greece, led by hard-left Prime Minister Alexis Tsipras, over the bailout program under which Greece is committed to implement austerity measures and structural reforms in return for a €240 billion ($273 billion) bailout. Germany has contributed €80 billion itself to the bailout.
Showing true team spirit, German leaderships assigned roles to Chancellor Angela Merkel and Finance Minister Wolfgang Schaeuble. While the latter adopted a tough line, Merkel's conciliatory tone countered accusations that Germany was being a spoilsport.
The German government also took took pains to play collectively. Berlin worked with other eurozone partners to stress the importance that each of them attached to Greece's compliance with the provisions of the rescue program. The team comprised a wide array of eurozone members, ranging from financially healthy Finland and the Netherlands, to debt-burdened countries such as Portugal, Spain, and Ireland, to tiny Lithuania and Slovakia.
By acting in concert with these partners, Germany thwarted the Greek government's attempts to scapegoat and isolate Berlin. As a matter of fact, it was Greece, rather than Germany, that found itself short on allies.
The Greek government carries a share of the responsibility for that. Had it narrowed its requests to a loosening of restrictions on government spending, Athens would likely have rallied the support of debt-stricken countries - and more important, of France - that have warned against the anti-growth effects of fiscal austerity.
Yet instead of narrowing Greece's demands, Tsipras launched an all-out war against the bailout agreement and expected the equivalent of an unconditional surrender from Greece's official creditors.
Indeed, in line with electoral promises, Tsipras demanded his country's official creditors write down a chunk of Greece's sovereign debt and give back the yields derived from their holdings of Greek government bonds. He further decided unilaterally to reverse public spending cuts and to roll back the structural, pro-market reforms (privatizations, labor-market liberalization and wage restraint) stipulated in the rescue package.
He went even further, declaring the bailout program dead and refusing to deal with the so-called troika, namely the three institutions that supervise the implementation of the program (the European Commission, the European Central Bank and the International Monetary Fund).
To make Greece's official creditors abide by its terms, the Greek government took to theatrical posturing, promising Greece's own version of Cold War-era mutually assured destruction. Tsipras and his finance minister, Yanis Varoufakis, sent a message to Greece's creditors: If you don't accept our conditions, Greece might go bankrupt, which would provoke a Continent-wide financial crisis and put in jeopardy the very existence of the euro.
In other words: Play on our terms, or we will all sink together.
The problem is, the Greek government had no way to intimidate its official creditors. The worst-case scenario, namely a Greek default followed by Greece's departure from the euro, has ceased to be perceived by Greece's partners as a catastrophe - the eurozone has put in place institutional firewalls to cope with that eventuality.
A recent note prepared by Standard & Poor's indicates that Grexit would have little impact on the sovereign ratings of other debt-ridden eurozone countries.
As a matter of fact, Greece's partners worry more about the political contagion of an eventual Tsipras success against creditors than they do about the financial repercussions of a Greek default or of a Grexit. Indeed, to yield to Tsipras' demands would bolster the electoral chances of Syriza-like populist political parties across Europe - this is something that eurozone members are keen to prevent.
Endurance was the other key feature of Merkel's strategy.
Every day that elapsed without an agreement between Greece and its partners entailed an outflow of several hundreds of millions of euros from Greek banks - €20 billion have left the country since December.
Add to this the fact that tax collection has fallen dramatically (20 percent below official projections in January after a fall of 14 percent in December), with arrears rising by €1.1 billion per month, and it becomes clear that the Greek government was in a desperate need of a deal with its official creditors so it could obtain fresh funding. Germany and its allies only had to wait for the Greek government to wave the white flag.
Capitulation finally took place on Feb. 20, when Tsipras and his finance minister backtracked on practically all the contentious points.
The debt write-down was shelved. The Greek government conceded to requesting a four-month extension of the rescue package. The troika will continue to exercise its functions, but under a different name. It will henceforth be called "the three institutions." And the policy reforms the Greek government intends to introduce or change will have to be agreed to by these institutions.
Adding insult to injury, the eurozone bailout fund will take back €10.9 billion that had been earmarked for the funding of Greek banks facing financial difficulties. The bailout fund will now directly administer that money.
The Greek government would be well advised to do some intensive training in negotiating techniques, and most of all in political lucidity, in preparation for the next match. That contest is scheduled for April, at which time a detailed list of austerity measures, including budget cuts, will be examined by the institutions before these decide whether to grant Greece access to the €7.2 billion of the rescue package that remain to be disbursed.

(AP Photo)

Israel's Military Politicians

Military politicians have played a major role in Israeli politics, defense policy, and foreign policy since the mid-1950s.

These figures - former generals elected to the Knesset and then serving in Cabinet-level roles - have negotiated all of Israel's peace agreements with its Arab neighbors. From June 1967, when Israel finally had something that it could trade with the Arabs for peace, until the collapse of the Oslo process in February 2001, six military politicians had a major influence on Israeli defense and territorial policy: Moshe Dayan, Yigal Allon, Yitzhak Rabin, Ezer Weizman, Ariel Sharon, and Ehud Barak. The first three played major roles from 1967 to 1977 - the last decade of that era's Labor Party rule. Dayan and Weizman played major roles in the first Begin government (1977-80), and Rabin and Barak were leading contributors in the Labor governments of the 1990s. Sharon was a key actor in the second Begin government (1981-83) and in the first Netanyahu government.

If we examine the attitudes of these six toward Palestinian statehood in the first instance, and then to peace agreements with neighboring Arab states, we can gauge the relative difficulty today of pursuing various avenues for regional peace - and whether the Syrian or Palestinian track, specifically, might be seen as more viable.

Allon, Dayan, Weizman, and Sharon all opposed a Palestinian state. Weizman favored a policy of genuine liberal autonomy for the Palestinians that would have stopped short of independence. It's fair to speculate about whether Dayan would have changed his views on the Palestine Liberation Organization, as Rabin did, had he lived for another decade. But he did not, and we have little proof that he would have. Rabin's change of mind in the early 1990s led to his approval of the famous Oslo deal that Shimon Peres and Yossi Beilin were negotiating in secret. Rabin never publicly supported the creation of a Palestinian state - though close associates report that he was privately reconciled to Palestinian statehood. Sharon opposed Palestinian statehood until he became prime minister, and even then he only supported a state that would have covered some 42 percent of the territory of the West Bank - an idea that was completely unacceptable to any PLO leader. Barak agreed to a Palestinian state covering about 95 percent of the West Bank, but then spent the last decade of his political career claiming that he had shown Yasir Arafat was completely inadequate as a peace partner for Israel.

In short, only two of the six key Israeli military politicians were anywhere near reaching a viable deal with the Palestinians. When Rabin was in power, both Sharon and Weizman opposed the Oslo process. President Weizman called on Rabin to halt the peace process, and Sharon inveighed against Oslo and argued with Rabin privately to end Israel's involvement.

On the other hand, all six of these statesmen supported deals with Israel's Arab neighbors under the right conditions. Dayan negotiated separation-of-forces agreements with Egypt and Syria in 1974, as well as the Egyptian-Israeli peace treaty in 1979. He publicly opposed the Sinai II agreement with Egypt in 1975, possibly because he was not the negotiator.

Allon supported the separation-of-forces agreements as part of the Israeli negotiating team and helped negotiate the Sinai II agreement. He also invented the plan for a peace agreement with Jordan based on a partition of the West Bank - a plan that in fact bears his name, but that Jordan always found unacceptable. In 1979 he opposed the Egyptian-Israeli peace treaty after visiting Egypt and speaking to members of the Egyptian intelligentsia who opposed the peace. He also preferred negotiating with Jordan in 1974 to negotiating with Egypt a second time.

Rabin negotiated the Sinai II agreement with Egypt in 1975; voted in support of the peace treaty with Egypt in 1979 in the Knesset; and negotiated a peace treaty with Jordan in 1994. He agreed to a full Israeli withdrawal from Golan in the event that Syria came up with acceptable peace terms. Sharon opposed the separation-of-forces agreements and Sinai II, but supported the Egyptian peace treaty in 1979 as part of the government. He later opposed Netanyahu's negotiating a peace treaty with Syrian President Hafez al-Assad in 1998. Weizman supported Dayan in negotiating a peace treaty with Egypt in 1977-79, as minister of defense under Begin. As a Labor minister in the late 1980s and early 1990s, he supported making peace with Syria. Barak nearly negotiated a peace agreement with Syria in 2000, but public opposition caused him to hesitate. He offered slightly less than a full return of Golan to Assad, who was dying and worried about his son's accession.

Given this record, is it any wonder that the Clinton administration favored the Syrian track over the Palestinian track in the 1990s? The Syrian track lacks the complex issues of the Palestinian track: Issues such as the partition of Jerusalem and control of the Temple Mount; the "right of return" for Palestinian refugees; and politically sensitive settlements. The West Bank is also of much greater strategic value to Israel than the Golan Heights. While the West Bank borders Israel's capital and would bisect the country, Golan only commands the settlements in its shadow in the eastern Galilee.

Since 2001, former chiefs of staff have turned to Likud rather than Labor. Likud opposes giving up the West Bank for reasons tied to its core ideology. The best chance for peace is that a former general raised in a Labor home joins the Likud for opportunistic political reasons and then after gaining a major position and following in the party defects with his followers as Sharon did in 2005. As for the Syrian track, it is on hold until the Syrian civil war has run its course and a new government is consolidated. That could take a decade or more.

Thomas G. Mitchell is the author of Israel/Palestine and the Politics of a Two-State Solution (McFarland, 2013) and Israel's Security Men (McFarland, 2015)

Paleoconservatives Are Wrong About Putin

The American Conservative prides itself on paleoconservatism, an ideology which quite rightly rejects the neoconservative worldview of Donald Rumsfeld and Paul Wolfowitz and the military adventurism of the George W. Bush administration. Unfortunately, the publication gets a lot of other things wrong.

One of the magazine's writers, Daniel Larison, authors a blog whose raison d'etre appears to be less about proposing solutions to complex foreign policy problems than about characterizing the statements of others as "nonsensical," "dishonest," "pitiful," "absurd," "comed[ic]," "ignoran[t]", "reckless," "desperate," "cheap," and (my personal favorite) "muddle-headed."

Last year, I drew ire from Mr. Larison due to an article I wrote about how to deal with the Russian annexation of Crimea. True to form, Mr. Larison wrote, "Alex Berezow's approach to foreign policy might be summed up as 'doing stupid things because Russia won't like them,'" but he proposed no solution of his own.

His criticism was in response to my proposal of five non-mutually exclusive options for the West: (1) Economic sanctions and asset freezes; (2) Diplomatic isolation; (3) Fast-tracking Ukraine to NATO and EU membership; (4) Deploying NATO troops to western Ukraine; and (5) Surrounding Kaliningrad (a Russian exclave buried within the European Union) with NATO troops.

Mr. Larison took particular exception to options 3, 4, and 5. He wrote: 

If one wanted to come up with quick ways to escalate and widen the conflict, these would be a good start... [I]t is still remarkable that anyone can look at the crisis in Ukraine and ask, "How can we possibly militarize the situation more and get many more countries involved in a war?" This is the sort of mentality that would take a regional crisis and potentially turn it into a major war if enough Western governments were insane enough to share it.

Despite the fact that Western governments did not share my "insane" opinion, Vladimir Putin turned the regional crisis into a war, anyway. Russia has been sending weapons and soldiers into Ukraine. Russian-armed rebels murdered 298 innocent civilians on Malaysia Airlines Flight 17. The death toll in eastern Ukraine has likely surpassed 5,000. In the face of little to no provocation whatsoever, Mr. Putin conducted military drills in Kaliningrad. Recently, British airplanes intercepted Russian bombers off the coast of England. Furthermore, Mr. Putin has flagrantly violated and even mocked the recent ceasefire agreement. And according to The Economist, to boost support at home and abroad, Russia's extensive propaganda network, which includes the English language channel RT, "churn[s] out lies and conspiracy theories."

In short, Mr. Putin never had any intention of seeking peace. Irrespective of the West's response -- which did include some nontrivial sanctions and the ejection of Russia from the G8 -- Mr. Putin appears to have planned for an invasion of Ukraine and a ratcheting up of tensions with Europe. Thus, what Mr. Larison and other paleoconservatives fail to appreciate is the fact that Mr. Putin is perfectly capable of escalating conflicts all by himself.

Surely, Mr. Larison, who is also opposed to economic sanctions partially on the grounds that they may exacerbate tensions, would claim that these recent events constitute proof that sanctions do not work. That may be true for the moment, but Mr. Putin cannot flout basic economics forever. The Russian economy is supposed to contract by 3 to 5 percentage points this year due to, as the International Energy Agency claims, a "perfect storm of collapsing prices, international sanctions and currency depreciation." Sanctions, combined with good luck, appear to be working. And more may be coming.

The most damaging economic sanction likely would be banning Russia from using SWIFT. This would, essentially, shut Russia out of the international banking system.

Incidentally, damaging Russia's economy is the best reason to send arms to Ukraine. Few observers are disillusioned enough to believe that Ukraine would defeat Russia in a war. But, arming Ukraine could greatly increase the cost for Mr. Putin. As wallets shrink and soldiers return in body bags, Russians may start to think twice about their support for him.

Yet, Mr. Larison believes arming Ukraine is futile. (How Mr. Larison can believe that sanctions are simultaneously futile and escalatory is perhaps left as a paradoxical thought experiment for the reader.)

Finally, Mr. Larison claimed that "NATO and EU membership are farther away for Ukraine than ever."

That is only partially correct. Ukraine is unlikely to join NATO anytime soon, but the prospect of EU membership appears enhanced. According to the German Marshall Fund, a majority of Europeans want Ukraine to join the EU. Amazingly, two-thirds also want stronger sanctions against Russia, even if it provokes a confrontation.

It is unclear to me what Mr. Larison believes is a proper response to Russian aggression. All retaliatory measures carry a risk of escalation. However, few people want to live in a world where Russia is allowed to misbehave with impunity. Still, if it is true that my foreign policy can be summarized as "doing stupid things because Russia won't like them," then it is equally true that Mr. Larison's foreign policy can be summarized as "sticking one's head in the sand and hoping that Putin goes away." Alas, Mr. Putin will not.

(AP photo)

The Daily Lives of Russians, as Seen on the Silver Screen

Today American audiences will be treated to the Oscars Awards. Among the nominations for a best foreign language film is the Russian motion picture "Leviathan," a hard-hitting, bleak and depressing film about one man's futile struggle against corrupt city government. Russian authorities, and many in Russian society, have condemned the film as an unfair and biased representation of the country. In fact, it has been decried as "anti-Russian propaganda" at a time when Moscow is engaged in a struggle of ideas with the West over the conflict in Ukraine. Indeed, "Leviathan" could carry the day at the Oscars as a political statement against Moscow. If that happens, it wont be the first time a Russian film has caught the world's attention.

Sincere portrayals

"Leviathan" strikes a chord across Russia for its honest portrayal of a corrupt mayor who is willing to steamroll a regular citizen to get his way. The protagonist in the film has very little ammunition to fight such tactics, no matter how much he wishes to stay within the limits of Russian law. This happens regularly across Russia, as the laws and principles governing private property and individual freedom have remained in flux, and are pitted against the Russian state's growing role in practically every aspect of life. In other words, the film showed Russia as it is, rather than Russia as it wishes to be seen.

In 1981, the Oscar for best foreign-language film went to a Soviet motion picture, "Moskva Slezam Ne Verit" (Moscow Does Not Believe in Tears). Its release in the USSR caused a sensation across the country, and it is still enjoyed by millions to this day. The film centered on the life of Katerina, a single mother trying to make it in Moscow, and on two of her friends, Antonina and Lyudmilla. At once an unattainable fantasy of what could be achieved in the country through hard work, and a very realistic portrayal of attitudes that regular people had toward their difficult lives, the movie is famous to this day for its incredibly poignant one-liners and quotes. While the film ultimately strives toward a happy end for its protagonists, Katerina's, Antonina's and Lydmilla's struggles captivated audiences.

Katerina, abandoned by her boyfriend while in college and pregnant, strives to have an honest career and raise a daughter on her own, achieving a high-level post and a comfortable lifestyle. She is the embodiment of the motion picture's title - regardless of the difficulties life throws in one's way, success is achieved through hard work and dedication. Antonina and Lyudmilla are two sides of the same coin, showing at once how a Soviet woman should be and what she may actually be in real life. Reserved Antonina follows the proper stages in a young Soviet woman's life- dating a nice man, meeting his parents, getting married right out of university, raising kids, working at her job, taking care of her in-laws, and keeping up their modest dacha (summer home). "How boring," quips Lyudmilla about her friend in what would become one of the most quoted lines in the country. "First, they save money to buy a TV, then for a washing machine, and then to purchase a fridge. Everything is already predetermined for 20 years ahead, like a state planning agency. No room for anything else." In one line, she had described the entire lifespan of major achievements and financial freedoms allowed to regular Soviet people by the state. Meanwhile, Lyudmilla is on the hunt for a wealthy and well-connected husband that could provide the fairy-tale life she so desperately wants. Turning down offer after offer, she relentlessly pursues the elusive goal of material wealth in a city that, in her own words, is a "lottery - you can have everything in Moscow at once."

When Katerina and Antonina try to give Lyudmilla advice, she fires back another famous one-liner still quoted today: "Don't teach me how to live  - instead, help me financially." While the film tries to be kind to Lyudmilla's needs, her pursuits result in only short-lived success, as her husband, a famous hockey player, quickly succumbs to alcoholism, leaving her once again single and in need of a companion in her late 30s - an age that Soviet society considered "way over the hill." When her co-worker notices how Lyudmilla fawns over a military general, she tells the heroine that "in order to be a general's wife, you must first marry a lieutenant." Lyudmilla never gives up: "I am an optimist - I was recently told that I should meet people at a cemetery that is frequented by widowed men."

The film spanned many such "winged" quotes, quickly fired off by film actors and picked up by Soviet audiences eager to comment on their lives without risking trouble with the authorities: "Singlehood is when birthrates are falling, while alcoholism is rising." Katerina herself is treated to a very honest compliment by her would-be husband Gosha: "You listen and listen and then suddenly ask a question, directly to the point. This is a male characteristic - some men even appreciate such a quality in women." "Sometimes you hear a stupid thing - turns out, it was somebody's point of view." "What if I say something off-hand," asks Katerina when Lyudmilla is preparing a meet-and-greet with young men. "So say it," quickly responds Lyudmilla, "but say it confidently. Its called a point of view." When Lyudmilla's alcoholic ex-husband begs her for money, she fires back that her "money press is broken." In the film, real-life, heart-wrenching situations were mixed with such humor to show that life's challenges can indeed be overcome - but at a cost. "You must make a good man, not get one that is already that way" hears Lyudmilla from her friends. "Look at your big stomach," fires back Lyudmilla at Antonina's would-be husband Nikolai. "It's not a stomach - its a knot of nerves," he responds.

The film is still very popular among Russian speakers across the world - despite being made almost 4 decades ago, the problems, issues, and concerns encountered by the female protagonists have not changed much across Russia. At once a comedy and a love story, it's a far cry from the heavy and depressing tone of the "Leviathan" - perhaps because this year's Oscar entry shows reality as it is today, when man and state are locked in an unequal struggle that cannot be joked away.

Varoufakis Needs to Talk Politics

(AP photo)

As an experienced economist, Greek Finance Minister Yanis Varoufakis argues economic logic in his meetings with eurogroup counterparts. What's sorely lacking is political logic. Needed is a compromise that he and his counterparts can all explain to their voters back home. Varoufakis thinks he has framed his arguments with inescapable logic, but all his counterparts see is a bag lady with a big mouth. And they're tired of it.

Twice now Varoufakis has met with his counterparts in the eurozone, most of whom represent countries that have lent Greece large sums of money to pay off loans to banks, pension funds, and other investors.

Those loans came with dire conditions that sent Greek consumer spending plunging. The loans, essentially a string of bailout programs, replaced the loans to the private sector that Greece found it was no longer able to repay after it turned out that previous governments had been cooking the books, inflating Greece's gross domestic product and income. Now Greece is on the hook mainly with eurozone nations and with institutions like the International Monetary Fund.

Varoufakis has toured eurozone capitals and met with creditor nations twice in the eurogroup meetings that bring together the eurozone's finance ministers. During these meetings, Varoufakis publicly and vociferously reminds all who will listen of the democratic mandate Greek voters overwhelmingly gave him and Prime Minister Alexis Tsipras to end the vicious cycle of bailouts, repayments, and conditions.

Things came to a head last Monday evening when Varoufakis irked his counterparts by having his diplomats publicly leak a draft proposal by the eurogroup - a proposal Varoufakis refused to sign. This was irksome, but in line with Varoufakis' political stance, which from day one has outright irritated Eurozone pols.

Judging by his public comments, it appears that Varoufakis does not understand that his is not the only elected government in the eurozone. That whereas Greek voters want Varoufakis to abrogate the current debt agreements, his counterparts represent the majorities across Europe that want Greece to pay back every last eurocent - with interest. German Finance Minister Wolfgang Schaeuble has for years been promising just that to his voters, as have his colleagues from other countries.

Despite this,Varoufakis has assumed a "take it or leave it" approach. He seems to lack the basic understanding that when you publicly take up an extreme position in a political arena, you force your counterparts into their own extreme opposition. A public retreat from such a position then becomes very difficult to pull off without some form of face-saving measure - especially when the other side would in fact be perfectly happy to ‘leave it'.

The spectacle brought on by Varoufakis shows why politicians like to discuss sensitive matters in closed rooms, outside of the public view, where compromises can be hatched without fear of voter outrage.

So this is the situation Varoufakis has created with his no-holds-barred bluster: Each side is dug in deep. Whatever armistice proposal Varoufakis dreams up, it will have to be something that saves face, for himself and his government, but also for his colleagues in the other eurozone capitals. The question is whether Varoufakis cares to understand this.

The West Should Be Ready for Iran's Collapse

Uncontrolled decadence, secret police, torture, executions, and an agenda opposed by the people of Iran: Those factors are what brought down Shah Mohammed Reza Pahlavi in February of 1979. More than 36 years later, those conditions remain familiar to Iranians throughout the country and abroad, as the current regime has proven itself to be even more barbaric. Further, the country's economy lies in shambles as the regime relentlessly pursues a fundamentalist Islamic agenda.

That radical agenda extends the Iranian threat far beyond its own people to neighbors in the region and, ultimately, to the West. Its involvement in Syria and Iraq, with military personnel on the ground, and its assistance to groups such as Hezbollah and, most recently, the Houthi group in Yemen, provide ample evidence of the escalation of Iranian ambitions. 

Regretfully, Western powers have enabled the regime's expansion through their tolerance of leaders such as former Prime Minister Nouri al-Maliki in Iraq and through the sweet talk they direct at Iranian President Hassan Rouhani. Iraq and Syria have descended into chaos. Moderating influences in those countries are under siege or have completely vanished. In Yemen, the recent Houthi offensive has pushed the country's Western-backed leader to resign, leaving chaos to descend on the country. This inaction has emboldened the Iranian regime and strengthened radical groups such as al Qaeda and the Islamic State.

Though we're losing the battle at the moment, with a little resolve we could win the war on religious fundamentalism and usher in a new age of real democratic change to the region. Iran's unprecedented regional involvement is worrying, but it is also a sign of vulnerability. Just as the Nazis lashed out in a last-ditch effort during the infamous Battle of the Bulge, the Iranian regime is betting everything on its expanding regional influence.

Speaking at the recent funeral of a top Islamic Revolutionary Guards Force commander killed in Iraq, the Secretary of Iran's Supreme National Security Council, Ali Shamkhani, revealed the regime's desperation. In an uncharacteristically candid turn, Shamkhani told the crowd: "To avoid having our blood shed in Tehran, we must sacrifice our blood in Iraq and defend it." Simply put, Iran's influence abroad keeps it afloat at home.

Feeling the effects of sanctions and free-falling oil prices, the regime has taken a major gamble: It has increased the budget of the Revolutionary Guard by 50 percent, which is a multibillion-dollar investment. The fragility of the regime's grip on power is thus made clear, in word and in deed. Meanwhile, internal feuding among the regime's various factions worsens its position, making that fragility all the more evident. 

In adapting policy to meet the increasing threats from Iran and the increasingly obvious vulnerability of the ruling religious establishment, the West should be seeking to develop proper relationships with those identifiable moderate influences who courageously pursue freedom and democracy. Mayram Rajavi, the president of one of those rare moderate groups, the National Council of Resistance of Iran (NCRI), has consistently offered a voice of moderate and informed opinion. Yet the West stubbornly cuddles up to Rouhani while treating NCRI with something akin to disdain.

Rajavi suggests that we cannot make progress simply by playing one radical grouping off against the other while at the same time eschewing those who bring hope to the silent majority. According to Rajavi, only a policy that targets members of the Islamic State and al Qaeda while also confronting Syrian President Bashar al Assad and countering Iranian influence in Iraq will allow moderates to flourish. Those two camps of extremists feed off each other. A forceful policy that combats all radicals will help moderates thrive and gain political momentum.

Rajavi has consistently pointed out that terrorist criminality perpetrated by Iranian proxies in Iraq, Syria, and more recently in Yemen, is meant as much as anything to defend that fanatical regime's very existence at home. One should not make any mistake. The Nazis perpetrated their greatest crimes in the final phase of the war - at the very moment when they were most vulnerable and on the verge of defeat.

Tehran is vulnerable to the dissatisfaction and anger of its own people. When the Mullahs' regime implodes, the West should be prepared to embrace and support those who must first of all inherit the chaos. How can it hope to do that while it still courts Rouhani? Continuing the policy of appeasement and submitting to the status quo will only embolden a desperate clerical regime to commit further acts of terror and bring the war to the West. 

Why, one must ponder, is the West so bereft of dignity and diplomacy that we continue to give a cold shoulder to those who are struggling for freedom? Surely there must be a better way to confront the Iranian regime and foster the circumstances that would expedite an essential Iranian revolution - a revolution that could overcome the barbarity that now pervades the Middle East.

Lord Maginnis of Drumglass is an independent member of the UK House of Lords and prominent member of the British Parliamentary Committee for Iran Freedom (BPCIF),

The Transatlantic Alliance in Transition

(AP photo)

The Munich Security Conference's theme for 2015 was the question "Collapsing Order, Reluctant Guardians." Giving color to that theme was the main topic of discussion: Ukraine. A few days after the conference ended, on Feb. 12, negotiations on the conflict in Ukraine conflict culminated with what the media have termed the Second Minsk Agreement, an uncertain cease-fire, and an equally uncertain hope for peace.

Despite the immediacy of events in Ukraine, the most important topic discussed at the conference by far was the status of the Transatlantic alliance.

Germany's readiness to lead Europe was the opening topic. In her speech, German Defense minister Ursula von Der Leyen sought to give an answer. She emphasized that Germany views leadership as being built around a partnership of equals. Germany is seen as the European Union's de-facto leader. Yet conference speakers noted that if the Franco-German partnership acts on behalf of Europe and, in the words of European Parliament President Martin Schultz, is "backed by the Poles and the Italians," the bloc can most effectively forge a common view on foreign affairs. This stresses the core problem that the European Union has today: the increasing lack of unity on foreign policy, and even on common policies regarding the Union's future. As Schultz was saying, "the EU is powerful when united and the problem is that the EU is more divided than united".

Changes in the European power ecology

The Franco-German duo has evolved over time. While Germany rose to become the economic powerhouse of Europe, France now faces growing socio-economic problems. Charles De Gaulle's vision of European integration as a project meant to give France a platform to project its power worldwide has shifted. The creation of the eurozone seems to have contributed to France's lack of competitiveness and its growing trade imbalances, and it is Germany that benefits most from the free trade zone. Meanwhile, the economic crisis has led to social problems that along with troubling demographics and rising immigration have spurred a rise in nationalistic feelings throughout the Continent. In the aftermath of January's terrorist attacks in Paris, talk has picked up about a potential renewal of border controls. 

Amid this confluence of events, protectionist measures could soon be seen viable in European nations. Not only would this have negative effects for the European free trade area, but it could also undermine the stability of the global system as we understand it. And so we might enter a period of greater insecurity - both in economics and in defense.
The world economy is networked and interconnected. Technological progress is only one of the catalysts of globalization. The drive to ease trade relations among countries, and to integrate trade flows while diminishing barriers, is another. It was trade liberalization, especially between the United States and Europe, that won the Cold War, showing the advantages of the democratic, market economy-based system against the fenced-in Communist system. Schultz said during the Munich Security Conference that Transatlantic cooperation is not as strong as it was in the past, yet is more necessary now than ever. Schultz cited the common values shared by the two parties and outlined the world actors that compete against and are enemies to those values. Negotiations for the Transatlantic Trade and Investment Partnership peppered the speeches of European leaders, all of whom characterized the TTIP as necessary to ensure long-term stability and security in Europe.

But taking into account the European Union's current problems, the TTIP is regarded as as more of a challenge than an opportunity. As concluded in a recent academic paper: The "TTIP will shape the EU integration process itself, constituting an opportunity for accelerating the process of policy consolidation, delegating more competences at the EC level". The pact seems designed to create the basis for stability and future growth - keeping the European Union whole as a party at the negotiating table.
U.S. Vice President Joe Biden mentioned the importance of Europe to U.S. security in the very first lines of his speech. Addressing European leaders in the room, Biden said that "Europe is the cornerstone of U.S. engagement around the world. You're America's partners, not of just last resort, but of first resort when challenges arise in Europe and other parts of the world." Biden then also referred to the TTIP, pointing out that "it's not just economic benefits that will flow from such an agreement, but the geopolitical benefits that flow from a 21st century set of rules". 

Biden explained that the TTIP is an economic analogue to NATO: a boost to the global trading system that would reinforce the Transatlantic community just as the military alliance reinforces the norms of global security.

Considering the interconnectedness of the 21st Century world, and reflecting on the oft-discussed topic of hybrid warfare, I realized that beyond enhancing the Transatlantic free trade zone, the TTIP is an element of the West's defense strategy. Economics is one angle of the geopolitical triangle - politics and military are the others. The gap between civil technology products and military products has shrunk in recent years, with cyber attacks serving as tangible proof of the increasing threats that our current defense system faces. Establishing norms for trading and investment between the two most important commercial blocks allows coherence and compatibility between systems that are fighting the same adversaries.
The crises Europe faces - from socio-economic distress to the conflict in Ukraine - have exposed the shortcomings of the European Union in particular, and of the Transatlantic and international system in general. The developments in world affairs in recent months resemble a process of "creative destruction" of the global order. In the marketplace, companies win when they go through such processes and transform crises into opportunities to move ahead of their competitors. It is said that alliances also become stronger through such challenges. It remains to be seen whether international organizations such as the European Union and NATO - and their constituent countries - can face this test of "creative destruction" and emerge stronger in the geopolitical marketplace.

Desperate Voters Will Take Their Own Measures

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European parties like Syriza in Greece and Podemos in Spain that have tended to carry the extremist label are now riding high. These parties ride over the waves of discontent and weariness born of crisis and seem to channel the unrealistic dreams of their electorates. But while their plans sometimes seem outrageous, they had better succeed - should they disappoint, a worse alternative awaits.

The European political landscape is changing. While European intellectuals love to make jokes at the expense of the more clownish elements of the U.S. Republican Party, its European counterpart is poised to continue its own ascent into power.

The list is long and daunting.

In France, Marine le Pen, strongly anti-EU, anti-immigration and a vocal supporter of Vladimir Putin, is outpolling every other known candidate in presidential polls. France elects a new president in 2017. In the United Kingdom, Nigel Farage's anti-EU and anti-immigration UKIP could play kingmaker in the next government coalition after Britain votes in May of this year.

In Sweden, the Sweden Democrats -- for a long time considered to be neo-Nazis -- have become so popular that moderate right-wing parties decided at the last moment to rally around their arch-enemies, the Social Democrats, to prevent a snap election which would surely have seen the Sweden Democrats make strong gains.

In Germany the anti-EU, anti-immigrant Alternative für Deutschland party has aligned itself with what can best be described as Germany's own version of the Tea Party, the popular Pegida movement. In Hungary, the Fidesz party thrives in government while its leader praises Vladimir Putin and welcomes the end of free democracy. In the Netherlands, Geert Wilders' anti-Muslim, anti-immigrant and anti-EU Freedom Party has taken the lead in national polls and is expected to perform well during elections in March.

In Spain the new, left-wing Podemos party seems destined to win national elections slated for September and of course, Syriza in Greece just swooped into government on a bold platform of change.

But that platform turns out to be frail. Greek Finance Minister Yanis Varoufakis and Prime Minister Alexis Tsipras found closed doors in every corridor during their recent European tour aimed at cutting Greece's outstanding debts. This led Varoufakis to warn of the rise of Golden Dawn, a popular neo-Nazi party that has Swastika-like symbols in its flags. Golden Dawn activists like to beat up immigrants; their main plan is to rid Greece of foreigners.

"They are not neo-Nazis, they are Nazis," Varoufakis warned during a press conference in the Finance Ministry in Berlin, formerly the headquarters of Hermann Göring, one of the leaders of Adolf Hitler's Reich. Unimpressed, the German Finance minister yawned and cleaned his glasses.

Varoufakis' warning may be written off as hyperbole spewed by a proud man who knows he has lost. But judging by the above list of parties poised to take power, perhaps it is time for the centrist parties now in power to admit that the medicine they have been offering ever since the Credit Crisis of 2008 apparently isn't working.

Syriza and Podemos meanwhile had better make sure that their potion works, too. Because if Europe's history should teach us all one thing, it is that desperate voters will vote for desperate measures.

Alexis Tsipras Takes the Stage as Greece's Hamlet

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A study of the history of philosophy teaches us that a critical difference between the Judeo-Christian narrative and the thinkers of Ancient Greece relates to the perception of time. In the Judeo-Christian tradition, time has a direction, it moves toward an end - be that the arrival of the Messiah, or the Day of Reckoning. A secularized version of that approach gave rise to Karl Marx's contention that Communism is the end of history. For Ancient Greek philosophers, time elapses differently: It evolves in cycles. Like the sun, which rises every day after the night, life is a perpetual beginning.  For Plato, even souls return - they reincarnate.
This view of time as a cycle appears to be at work in the new, hard-left government of Greece. It, too, operates in cycles.
The administration devoted its first week to unnerving Greece's official lenders, namely those represented in the so-called troika: the European Commission, the European Central Bank, and the International Monetary Fund.
In consonance with the electoral promises made by his hard-left party, Syriza, new Prime Minister Alexis Tsipras announced he would reverse spending cuts, roll back privatizations, raise the minimum wage to pre-crisis levels, and dismantle labor-market reforms. These announcements would essentially take back what Greece had committed to do in exchange for the €240 billion ($271 billion) rescue package granted by the troika.
Add to this the fact that Tsipras called for an amputation of Greece's sovereign debt, and you have a cocktail of policy initiatives made to unnerve the country's creditors.
Given the latter's negative reaction, Tsipras and his finance minister, Yanis Varoufakis, changed tack during their second week in power. They used less confrontational language toward creditors and paid separate visits to several European capitals to round up support for a partial cancellation of Greece's sovereign debt and an overhaul of the bailout program that the preceding government reached with the troika.
The charm offensive didn't live up to expectations. True, the government backtracked somewhat on debt cancellation; but its new proposals fell short of what creditors could accept.
Tsipras' dim new stance led the ECB to announce that, given the refusal of Greek authorities to continue to implement the policy measures agreed upon in return for the bailout, the ECB could no longer accept Greek government bonds as collateral for its lending to Greek banks. The specter of Greece leaving the eurozone (Grexit) has increased considerably as a result of the ECB's move.
Once back in Athens, Tsipras and his finance minister could have taken some time to digest the lessons of their unsuccessful trip to European capitals and to prepare a negotiable package of propositions to present at the meeting of eurozone finance ministers on Feb. 11.
Luckily, there is room for a new deal between the Greek government and its creditors. Several eurozone officials have hinted at the possibility of lengthening maturities and reducing interest payments, but only in return for the implementation of structural reforms. A proposal of this nature has reportedly been on the table since November 2012.
Yet the Greek government didn't use its third week to elaborate on the modalities of a mutually acceptable agreement. Quite the contrary: It returned to the aggressive rhetoric of its first week.
In a speech to parliament on Feb. 8, Tsipras again lambasted his country's creditors; further reversed structural reforms and government-spending restraint; and rejected an extension of the bailout agreement. That extension is the creditors' precondition for negotiating a new agreement.
In case these moves were not enough to jeopardize the chances of an agreement, Tsipras took care to announce that he would seek World War II reparations from Germany.
Had Tsipras wished to derail a breakthrough, he wouldn't have delivered a different speech. Small wonder that the Feb. 11 meeting ended in deadlock.
The problem is, vituperating against creditors and scapegoating Germany will hardly improve Greece's standing. Opposition to Tsipras' intransigent position comes not only from Germany and other official creditors, but also, and perhaps mainly, from the governments of debt-ridden countries on Europe's periphery.

Those governments have in fact nothing to gain from helping Tsipras revamp Greece's rescue program as he sees fit. That would give the anti-austerity parties of their countries the opportunity to accuse the present authorities of not being as bold and successful as Syriza.
Tsipras would be well advised not to think that EU members are ready to pay any price for preventing Grexit. A Greek departure might even serve their interests: It would prove to Europe's electorates that voting for populist, anti-austerity parties carries risks and costs.
The eurozone today is better positioned to cope with Grexit than it was in 2008, or in 2009-2010 when the Greek crisis began. Today, a default by Greece would not shake the stability of the European banking system: European as well as American banks have considerably reduced their exposure to that country.
As for Greece's official creditors, they would surely have to write off what Greece owes them. But they stand to lose still more if they keep funding the Greek government without Tsipras' commitment to implement the supply-side reforms that would enable the country to eventually be solvent again.
Should Greece default and leave the eurozone, it will have a hard time getting the financing it needs. Government bonds will fall further, into junk credit category, and the interest rates applied to those bonds will rise to smothering levels. Not an inspiring scenario, to say the least.
Tsipras' empathy with Russian President Vladimir Putin would be of little comfort. Indeed, with a Russian economy in recession, and with Russia's foreign-exchange reserves dwindling by the day, any assistance that Putin provides to Greece would be cosmetic, ephemeral, or both.
Tsipras' seesaw is understandable. For the Greek prime minister faces an existential dilemma, similar to that faced by Hamlet: whether it is better to remain the hard-left maverick who won an election but threatens to take his country down the road to perdition, or to put aside unachievable electoral promises and become the seasoned statesman who will set Greece on the path to growth and prosperity.
For the sake of Greece and the eurozone, it is to be hoped that Tsipras will make his decision during an even-numbered week of his cycles of prevarications.

Russia Rolls Out Some New Military Hardware

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Russia's drive to modernize its military is in full swing, and the country appears ready to equip its armed forces with the latest and most modern mechanized platforms. The first batch of Armata battle platforms - vehicles specifically geared to face modern military challenges - is expected to arrive this month. The new tank will make an appearance in the May 9 military parade that marks the 70th anniversary of victory in World War II, which in Russia is dubbed the Great Patriotic War.

As reported by the daily Komsomolskaya Pravda, Russia's military was long overdue to replace its workhorse T-72 main battle tank, which was developed in the 1970s. Numerous upgrades of this tank could not make up for its shortfalls as a truly modern machine - especially after the 1991 Gulf War, when the American M1 Abrams tank became the military standard by which all other tanks are judged. KP reports that a radically new platform had been expected to replace the T-72 - a tank developed under the code "Object 195" and outfitted with a powerful 152-mm cannon housed in an unmanned turret. That design incorporated a low tank profile, with a three-man crew placed in an armored capsule housed within the tank chassis. Several captured images may have revealed the prototype, but the Russian government offered no official comment. The prototype passed initial tests, but the Russian military-industrial complex could not handle mass production. Right now it looks like "Object 195" will be replaced by the "Armata" heavy weapons platform.

The Armata presents a different approach to weapons manufacturing and fielding - it will form the basis for a whole range of military tracked vehicles such as tanks, infantry fighting vehicles, heavy armored vehicles, tank support combat vehicles, and armored recovery vehicle chassis for self-propelled guns, among others. The Armata, if all goes as planned, is Russia's answer to a similar American program called Future Combat Systems that the Pentagon cancelled in 2009. As envisioned by Russian designers, the Armata will prioritize firepower, mobility and protection - in that order.

The Armata battle tank will also feature an unmanned turret, but with a smaller 125-mm cannon capable of firing conventional ammunition as well as guided missiles and of hitting targets located 5-7 kilometers (3.1 - 4.3 miles) away. The new platform is to become the universal machine of the Russian ground forces, combining a full tactical missile system and an air defense system with a complex of military reconnaissance and target designations. It is also expected to feature a new onboard electronic system capable of managing, diagnosing, and adjusting all functioning elements in the tank.

KP further notes that the Russian Defense Ministry is making big plans for the overall modernization of its military vehicles. By 2020, it expects its land forces will receive more than 11,000 new and upgraded armored vehicles, such as T-72B3 modernized tanks, BMP-3 infantry fighting vehicles, and modernized BMP-2 and BTR-82A fighting vehicles. At least for now, President Vladimir Putin's promise to modernize the Russian military appears to be bearing fruit.


Draghi to Euro Politicians: I Won't Do Your Dirty Work Anymore

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By effectively cutting off Greek banks from easy money, Mario Draghi is forcing eurozone leaders to take responsibility and make some hard choices. It was about time.

"We know what we need to do. We just don't know how to get re-elected after we've done it." So once said Jean-Claude Juncker, currently the chairman of the European Commission. He astutely described the thin line politicians always walk between bold promises and unpalatable decisions.

Sometimes, politicians have to take unpopular yet necessary decisions that run counter to the promises they made to their electorates. As a result, their popularity drops, but problems do get solved - or so one hopes.

Sometimes, politicians stick to their promises even though they know that doing so could make matters worse. Re-election is then deemed more important.

And sometimes the opportunity presents itself to dump the choice on someone else's lap.

Enter Mario Draghi and his European Central Bank.

Politicians in many European capitals heaved a sigh of relief when Draghi announced that he would do "whatever it takes" to safeguard the euro. That took some heat out of the discussion about whether to continue austerity policies or start spending.

Now, however, it seems Draghi has decided he has stepped in enough to save the eurozone's political leaders. On Thursday, while Greek Finance minister Yanis Varoufakis was in the midst of a European goodwill tour to raise support for his plans to save Greece, Draghi pulled the plug on the ECB's credit facility to the country.

For several years, Greek banks have been able to sell certain bonds to the ECB, no matter what the bonds' credit rating, and receive money in return. Athens was cut out of that program on Thursday, immediately putting Greece into an even more difficult position.

Commentators and pundits opine that Draghi is playing politics; that he is putting Varoufakis under direct pressure. Yet Draghi has done no such thing. On the contrary, he has put responsibility back where it belongs: with the leaders of eurozone nations and the international institutions to whom Greece is so deeply indebted.

Now the pressure is on the elected politicians, especially those of northern Europe. These leaders must decide whether they will cut Greek debt - a highly unpopular move, as they promised their voters that Greece would pay back every last cent lent to them - or effectively push Greece into default. That wouldn't solve anything, but would allow the decision-makers to look tough in the eyes of their electorate.

The ball is in the politicians' court, and they need to pick it up quickly. 


A Tally of What Cuba Owes the World

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Since Castro brought it up...

Cuban leader Raul Castro has presented to U.S. President Barack Obama a set of conditions to re-establish diplomatic relations. Among those conditions, Castro demands compensation for the damages caused to Cuba by the U.S. commercial embargo.

How much are the damages? According to the punctilious economists in the Cuban government, the figure is exactly $116.86 billion. I have no idea how they arrived at such a considerable, but for the purposes of this column, we will accept it as accurate.

This leads us to an inevitable question: How much have the incompetence and the interference of the Cuban revolution cost the world? After all, Cuba's claim carries an implicit acknowledgment that there exist rights of property and lost profits, and that punitive damages should be levied against those who violate those rights or harm innocent victims.

Let me jot some hurried notes.

First, of course, come the ill-treated Cubans. In 1959, Cuba had a population of 6.5 million. In addition to 1.8 million dwellings, there were 38,384 factories, 65,872 businesses, and 150,958 agricultural establishments. All were seized by the government without real compensation, provoking the sudden impoverishment of Cuban society.

What does that plunder amount to? The state probably owes the Cuban people 30 times what Raul Castro demands from Obama today. Cuba went from being one of the most developed countries in Latin America to one of the least.

United States: The Americans very conservatively assessed the value of properties confiscated on the island at $7 billion assessment. That bill doesn't include (among other forgotten items) the enormous cost of integrating 2 million Cuban refugees in the United States - 20 percent of the island's population - or the damages caused by the thousands of criminals deliberately removed from Cuban jails and sent to the United States during the Mariel exodus in 1980.

Nor does it take into account the U.S. copyrights on books, music, movies, television, medicine, computer programs, and objects of every kind copied or utilized limitlessly by the Cubans. Were the cost of these violations tallied, the resulting figure would be astronomical.

Spain: "Society 1898" was established in Madrid to protect the interests of Spaniards who were hard hit on the island - they owned much of the retail trade in Cuba. The Society says that the 3,000 Spanish families it has managed to locate are owed about $8 billion in today's U.S. currency. 

The Soviet Union: According to Russian economist Irina Zorina, Soviet subsidies to Cuba, without even counting massive weapons donations, exceeded $100 billion. In the summer of 2014, Russian President Vladimir Putin forgave Cuba 90 percent of an irrecoverable debt of $35 billion that Cuba acknowledged to the Paris Club it had received from Russia. The remaining 10 percent, which Russia won't get back either, would hypothetically be invested in the island.

Venezuela: Economist Carmelo Mesa-Lago estimates the value of Venezuelan subsidies to Cuba at some $13 billion a year. Ernesto Hernandez-Cata, another luminary, puts it at $7 billion. Either way, such enormous outlays are among the many reasons for Venezuela's socioeconomic meltdown.

Argentina: The original $2.4 billion debt contracted in the 1970s remains unpaid and today exceeds $11 billion.

Japan: Cuba owed the Japanese $1.4 billion. Tokyo forgave 80 percent of this debt and postponed payments on the remaining 20 percent for 20 years. Naturally, they canceled all the Cubans' lines of credit.

Mexico: Like it did Japan, Cuba owed Mexico ($487 million). And as Tokyo did, the Mexican government forgave $341 million and postponed payment on the remainder for 10 years.

Now let us approach the topic of Cuban political interference. This topic elicits more questions than answers, because as far as I know, nobody has put a firm estimate on the costs of Cuban meddling in the internal affairs of other countries.

What was the cost to Venezuela of the landing of Cuban guerrillas in the 1960s, and the Castro brothers' support to Venezuelan guerrillas and terrorists for more than a decade? What is the cost of the harebrained political advisory that has plunged Venezuela into ruin?

What was the cost to Bolivia of the attempt by Che Guevara and Cuban gunmen to overthrow that country's government?

What was the cost to Chile of the radicalization of the government of Salvador Allende, motivated mostly by the presence in that country of Cuba's special troops and by Havana's suicidal advice?

What was the cost to Central America - in human lives and economic resources - of Cuba's creation of and support for guerrillas in El Salvador, Guatemala and Nicaragua? (Nicaragua still has not regained the indices of economic development that it had in 1979, the year of the Sandinista victory.)

What was the cost to Colombia of Cuba's links to the ELN, Jaime Bateman's M-19, and the FARC?

How much did the Argentines spend fighting the People's Guerrilla Army, organized by Cuba and led by Jorge Ricardo Masetti, as proved by journalist/historian Juan Bautista Yofre in his book "It Was Cuba"? Or the mindless attack on the La Tablada barracks, with Cuban weapons, during the administration of Raul Alfonsin?

Why go on? The small island of Cuba, led by a madman who thought he was Napoleon Bonaparte, has been a catastrophe - not only for the Cubans but also for half the world. A catastrophe that has cost everyone a huge amount of money.

Carlos Alberto Montaner is a journalist and writer. His latest book is the novel "A Time for Scoundrels."

Russian Intel Lapse Sends Mother of 7 to Jail

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Russia is embroiled in a spy scandal, and it all started with a simple phone call by a concerned citizen. Svetlana Davydova, a resident of the city of Viazma, was arrested by the Federal Security Bureau (FSB) on charges of treason. The reason was her call to the Ukrainian Embassy in Moscow. According to official documents, she noticed that military base №48886, located next to her home, was housing the 82nd Brigade of the Main Intelligence Directorate (Russia's military intelligence bureau, known as GRU). Many military experts and observers reckon that the so-called green men - soldiers in military fatigues without any official insignia who are seen in Crimea and eastern Ukraine - are members of forward-based Russian military intelligence units.

If the official allegations prove to be true, they would reveal a pretty significant failure in Russia's vaunted military intelligence. Svetlana's husband, Anatoly, told reporters that his wife took a shuttle bus to the city and saw one of the base employees riding it. The passenger's role was not difficult to discern, as apparently he spoke loudly on his cell phone, mentioning specifically that he and his colleagues were being sent to Moscow in small groups, wearing civilian clothes. From there, it appears, they were to be sent on a "business trip." Svetlana concluded that these units are actually sent to Donetsk, where pro-Russian forces are battling the Ukrainian military. Svetlana told her husband what she heard. "Svetlana called the (Ukrainian) embassy, she said she has key information that could prevent possible bloodshed", Anatoly said.

On Jan. 21, agents from the FSB raided Davydova's home and detained her. She is a mother of seven children, the youngest of whom was born two months prior to her arrest. She was brought to Moscow, where a military court ordered that Davydova be held in custody until March 19.

"Svetlana is opposed to this war, but I would not say that we are active participants in anti-war rallies and the opposition," Anatoly told reporters. "She was even a member of the Communist Party, but then left it to raise children. I do not understand how the FSB found out everything."

Svetlana now faces charges of treason. Her attorney believes that the state has grounds for such an accusation. "In general, I can't say that this all came out of the blue - there is specific information, there are facts, there are reasons. In an official investigation by the experts in the field, state secrets will determine everything." He mentioned that Davydova is feeling fine and maintains her sense of humor.

The Russian daily Komsomolskaya Pravda, which reported the incident, cited an anonymous FSB operative who said the accused could receive a 12 to 20-year prison sentence and a fine of up to 500,000 rubles. Ominously, the unidentified source said that citizens should not underestimate state counterintelligence agencies and should understand the difference between curiosity and betrayal. "It is important to note that if you accidentally divulged state secrets, but then reported the breach to state agencies and therefore helped prevent further damage to the state, then you bear no criminal responsibility," the source added.

It is unclear how the Main Intelligence Directorate, or GRU, will deal with the rank-and-file member who supposedly divulged state secrets on a bus, nor whether Svetlana will be made an example to the Russian masses.

Russia Economic Planners Cite South Africa, Chile

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When the going gets tough, the tough get going - that's the current attitude of the Russian economic planners charged with steering their country though hard times.

First Vice Prime Minister Igor Shuvalov outlined his country's economic trajectory for 2015 at the Davos Economic Forum. He concluded that while Russia's economic situation today is more complicated than it was during the 2008 global economic crisis, many Russians have not been affected at the same level.

"We need to prepare for lots of unemployed people in the current job market, and they will need help adapting to new conditions," Shuvalov said. "The government should prepare to cope with these shocks, although not everyone will suffer the same way ... Every household, down to every homemaker, must learn to live under new conditions. We have an entire year for that."

Shuvalov noted that his government has engineered an anti-crisis program meant to guide the country through new challenges - a program outlined this week by Prime Minister Dmitry Medvedev. The program emphasizes the importance of creating a safety net for the most vulnerable parts of the Russian population - the young, the sick, and the elderly. The initiative seeks to protects pension payments, freeze prices for certain medications, and build low-cost housing. Medvedev also earmarked official funds to address a potential spike in unemployment benefits, and more assistance will be directed to Russian companies working in foreign markets. Additionally, Medvedev made clear that starting this February, each Russian federal region must adopt its own economic anti-crisis programs.

At Davos, Shuvalov stated that such reforms must be undertaken quickly "in order to show investors that Russia can work even with a weak ruble ... I think that sooner or later, investors will start seeing real benefits and return-on-investment in Russia."

He remained defiant on the sanctions against Russia, insisting that they will not impede economic activity and development: "We already have the experience of South Africa (which faced global sanctions against apartheid in the 1980s). Likewise, Chile had to develop during a difficult political and economic climate (during the reign of Augusto Pinochet). Can a modern economic system develop in difficult political conditions? The answer is yes."

President Vladimir Putin referred to Russian resilience:

"This is not the first situation of this kind, we went though something similar back in 2008-2009. And then, too, the crisis was initiated outside of Russia. It began with the collapse of the mortgage system in the United States, and then the crisis reached other countries before getting to us. Presently, like before, one of the main reasons for the current economic situation is the situation in external markets, such as raw materials, which also reflects on Russia. If we talk about the so-called 'sanctions effect,' then let me remind you that during the 2008 crisis, there weren't too many candidates wishing to provide loans to Russian financial institutions. We solved these problems solely on our own, based on our development institutions and existing reserves. In this sense, little has changed since that time."

Russia endured that global crisis thanks to a variety of factors, not the least of which was the country's isolation from the global economy, relative to its counterparts in Asia and the West.

Moscow is taking other, small measures to address potential dissatisfaction among its citizens. One such measure is allowing people to propose legislation via the Internet. Starting in mid-February, anyone can log onto and submit proposals for new laws. Once a petition gathers a critical number of electronic signatures - anywhere from 10,000 to 25,000 - the proposal will be sent to the Duma's lower chamber for review. It may not be much - surely a long cry from Estonia's e-government - but at the very least it may help give Russians the feeling that they have a small stake in the way their country is governed.

Let's not Lose Our Heads over Greece and Germany's Game of Chicken

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Andy Langenkamp is a global policy analyst for ECR Research.

Alexis Tsipras wasted no time following his election as Greece's prime minister. His Syriza party quickly formed a coalition with the right-wing anti-bailout Independent Greeks, who with their 13 elected lawmakers gave the governing majority a total of 162 members of parliament. In a victory speech, Tsipras told supporters that the Troika (the European Commission, the European Central Bank and the International Monetary Fund) will be a thing of the past.

To deliver on that promise would be no small feat, but voters clearly want Tsipras to try. Some observers now fear that a Syriza win could eventually spell the end of Greece's participation in the monetary union, though Syriza's tone on eurozone membership has moderated of late. Most experts, however, assume that Syriza's bark will turn out to be worse than its bite. To the surprise of many, in recent years Greek voters have become more enamored of the euro - almost three-quarters want Greece to stay in the eurozone.

Meanwhile in Germany, some voices have called for Greece to quit the euro if it is so keen to cut short reforms instead of cutting spending. This is probably a ploy used by Chancellor Angela Merkel to gain an advantage ahead of the negotiations over a potential new aid package for Greece. The trade-off could be debt repayment extensions - the so-called extent and pretend method - in exchange for real reforms on job markets, pensions, bureaucracy, etcetera.

In other words, events could take a turn for the better. After all, Germany and Greece both stand to benefit more from compromise than from a collapse of the eurozone. (Seventy-to-eighty percent of the Greek national debt, which runs to over €300 billion, is owned by the Troika, in which the Germans have the largest share.)

A game of chicken

The Greeks will now have to haggle with the Troika in order to receive the remainder of the country's aid package. Simultaneously, Greek banks will be hoping for more cash injections by the ECB. If no agreement is reached by Feb. 28 (a deadline that has already been extended by two months), Greece will have no title to the outstanding €7 billion tranche, and the ECB will tighten requirements on Greek collateral. This could plunge the country into a fresh crisis.

So we can expect a game of chicken. The Greeks and Germans will drive straight toward each other, but both parties will probably alter their course, and they will probably do so at the last moment. Yet we cannot rule out full-on collision. If so, inflated egos will have played a part.

Let's look first at what drives the German/Troika side to stay on a collision course: The German economy is doing quite well, with very low unemployment rates. Further, countries such as Spain, Ireland, and Portugal are in a much better state than they were a few years ago. The financial sector is more robust; the eurozone's foundations have been reinforced by a partial banking union, and its member states have all signed a Fiscal Compact. Germany, backed by other eurozone countries, could therefore convince itself that the fallout of a Grexit can be absorbed. Said belief could encourage a rigid approach.

In turn, this could stir up ill will among the Greeks, who may believe that they are better suited to negotiate than they were in 2010 and 2012. Greece has a primary surplus and a small current accounts surplus, and it has achieved a modicum of economic growth. Greek banks have become far less reliant on emergency funds from the ECB and Greece's own central bank. Athens might feel justified in taking a tougher stance in negotiations as a result. National pride could also play a part. While numerous studies show that it makes more economic sense for Greece to stay in the eurozone, rationality is not guaranteed to win out. 

Still, I think a Grexit is unlikely. I find it more probable that Greece will reach an understanding with its reform-loving creditors - despite the political risks for a fragile government - and the markets so far agree. Yields on Greek 10-year bonds stand at around 9 percent - in March 2012 they almost hit 50 percent. Furthermore, long-term interest rates in other vulnerable countries such as Portugal and Spain have not risen. Neither are stock markets panicking. In other words, investors are not yet worried that a new crisis in Greece would spread elsewhere. Right now, the ECB's announcement of quantitative easing overshadows whatever worries the markets have about the outcome of the Greek vote.

It Looks Like Moscow Has a Friend in Athens

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The new government in Athens is sending some worrying signals, and they're not all about money. Events this past week beg the question: Has Vladimir Putin made a new friend in a NATO and EU member state? Is Alexis Tsipras, freshly minted as Greece's prime minister, cozying up to Moscow to create leverage in his battle for debt relief?

Though the Syriza-Independent Greeks coalition is new and untested, there are already signs the answer may be yes. One clear indication was when Tsipras chose to meet Russia's ambassador to Greece - it was the prime minister's very first meeting with a foreign envoy. The ambassador personally delivered Russian President Vladimir Putin's congratulatory message to Tsipras on Monday, mere hours after the prime minister was sworn in.

The second sign came the following day, when Tsipras abruptly announced that Greece would not support new EU sanctions against Russia. New sanctions are on the table because Russia and its proxies in Eastern Ukraine have renewed their offensive in the Donbas. 

On Wednesday Tsipras escalated his rhetoric on the theme: Greek media reported that Tsipras is ready to veto a decision on tougher sanctions. Moscow reportedly responded by proposing that Greece could be exempted from Russia's retaliatory embargo of EU products. Today, the European Union's foreign ministers are meeting to hash out a formal proposal on new sanctions. Member state leaders will vote on the proposal in one week, and a veto by a member government would leave the European Union's Russia policy in tatters.

Meanwhile, on Tuesday evening, a photo surfaced showing the incoming Greek foreign minister standing next to Aleksandr Dugin, a neo-fascist Russian ideologue who is said to have Putin's ear. 

All this creates a worrying situation for the European Union and the United States. Putin has for months worked to shatter the unified front that German Chancellor Angela Merkel, French President Francois Hollande, U.S. President Barack Obama, and European Council President Donald Tusk have put up against the increasingly jingoistic Moscow. The main worry until now has been that some EU member states would not be as hard-nosed toward Russia as, say, Poland and the Baltic states are. But Merkel, Hollande, Obama, and British Prime Minister David Cameron have carried a firm consensus.

Meanwhile, Tsipras is gearing up for a tough fight in Europe. He has made far-reaching promises to his voters, but as stated in these pages, Tsipras does not have the leverage he needs to force his creditors to cut Greek debt. His ultimate threat -- to leave the Eurozone -- would leave other EU leaders unmoved. The other EU capitals are stonewalling Greece, fully aware that they have the greater arsenal in any negotiation.

So Tsipras is looking for a weapon of his own. Another big country with deep pockets willing step in and refinance Greece's existing loans on the cheap? That could be the weapon Athens seeks. If that country is Russia, the celebratory vodka will flow in Moscow, and the unity of Europe and NATO will fall further into disarray. Merkel will have to tread carefully.

Now Is a Great Time to Go to Europe

My wife and I travel to Europe about every eight months. (Photographs? I thought you'd never ask!) In order to minimize costs, we closely monitor exchange rates, preferring to book trips when the rate is favorable.

Currently, 1 U.S. dollar purchases 0.89 euros. The exchange rate hasn't been this good for American travelers since September 2003. (See chart.)

It's raining euros, hallelujah! (Credit: European Central Bank)

The good news (for Americans travelers and European exporters, but not necessarily anybody else) is that the euro is expected to keep falling. In fact, The Economist predicts that the U.S. dollar may reach parity with the euro sometime this year. That hasn't happened since November 2002.

Why is the euro falling? Mostly, it is due to self-inflicted political and economic turmoil in the European Union. As I wrote in The National Interest at the beginning of the year, three big elections may determine the fate of the European Union.

The first, in Greece, just happened. A victory by the radical left, anti-austerity party Syriza -- by far, the worst possible outcome -- has occurred. The second election will be in the United Kingdom in May. If David Cameron is re-elected, he has promised to hold an "in-or-out" referendum on the European Union by 2017. Currently, Brits want out. Third, Poland will vote for a new parliament in October, and a mildly euroskeptic party may win. Another writer noted that Spain and Portugal are also scheduled to hold elections, and neither country is fond of austerity. And, of course, the Russian invasion of eastern Ukraine hasn't helped things, either.

Such turbulence has taken its toll on the euro. But a cheap euro isn't the only thing in a traveler's favor.

Rock-bottom oil prices have meant lower jet fuel prices, which fell by 50% in 2014. Though that hasn't translated into cheaper airfare, it does mean that airlines can invest in new planes and services, according to CNN. Transatlantic flights are very long, and small comforts can make the ride more tolerable.

Bottom line: If you have been planning a trip to Europe, 2015 is definitely the year to go. If you haven't been planning a trip to Europe... well, maybe you should plan a trip to Europe.

(AP photo; Chart: European Central Bank)

The 5 Worst Mistakes in Obama's Cuba Policy

(AP photo)

The new era in U.S.-Cuba engagement quietly got underway on Jan. 21, when Roberta Jacobson, U.S. assistant secretary of state for Western Hemisphere affairs, visited Cuba. Unfortunately the diplomat, always very concerned with human rights issues, arrived on the island in a position of weakness - Jacobson's boss, U.S. President Barack Obama, had already frittered away most of the United States' negotiating leverage. Mrs. Jacobson and her colleagues will be saddled with at least five grave mistakes Obama has made as part of his new Cuban policy.

The old policy was working

Obama's first mistake was to assume that he was ending a policy that had not worked.

That's not true. The aim to liquidate Cuba's Communist regime fell into irrelevance in 1964, when Lyndon Johnson ended all subversive operations against Castro and activated a strategy of "containment" somewhat similar to the one used against the Soviet Union. Johnson's strategy centered around three basic elements: propaganda, restricted economic relations, and political isolation.

Those were Cold War measures, taken against a country that has never stopped combating the United States. Washington in the decades since never seriously tried to eliminate Castroism. In the first half of the 1990s, with the Soviet Union gone and the Castro regime lacking allies, putting an end to the Cuban dictatorship would have been easy - but Bill Clinton was not interested in eradicating the neighboring regime.

He could have done it, with the support or indifference of the Russia of Boris Yeltsin and foreign minister Andrei Kozyrev, when Castro unleashed the "raft exodus" of 1994. He could have done it in 1996, when Castro downed the Brothers to the Rescue planes and authorized the murder of several American citizens over international waters. But Clinton didn't even consider Cuba an enemy country - he limited himself to signing the Helms-Burton Act into law.

To Clinton, Cuba seemed a historic anachronism - a political Jurassic Park - but he had no interest in driving its government into extinction. At the time, the idea prevailed that Cuba was a decrepit tyranny that would collapse with time.

Perhaps Obama believes he was canceling Cold War measures against a country that had moved beyond the era. But how then to explain why, in July 2013, authorities in Panama halted a ship loaded clandestinely n Cuba with 250 tons of war materiel? How to reclassify as "a normal country" a nation described as terrorist, an ally of the worst Islamic tyrannies - the ayatollahs' Iran and Ghadafi's Libya - a regime that plots with Venezuela, Bolivia, Ecuador, and Nicaragua to articulate a major anti-U.S. campaign not unlike those seen in the worst days of the Cold War? Don't dozens of U.S. criminals, political and common, continue to live in Cuba, protected by the authorities?

Cuba was not a former enemy. It has kept its anti-American virulence intact.

No strategic vision

The second mistake was to cancel that policy of containment without offering a strategic vision to define the policy that replaces it, and the objectives being sought.

It is obvious that what should interest the United States is that on an island so close to its borders, and in a land that has caused the United States so many mishaps, there should be a democratic, peaceful, and politically stable government, so that no further migratory spasms occur - 20 percent of the Cuban population is on U.S. soil. Costa Rica is a good model for the tranquil nation that I describe.

Of benefit to all, especially to Cubans, would be for Cuba to have a prosperous, developed, and friendly society with which other nations can engage in mutually satisfactory commercial transactions. But the foolish "theory of dependency," characterized and summarized in the book The Open Veins of Latin America, lacks any sense. To the United States, a rich and tranquil Cuba is preferable to a roiling and impoverished Cuba.

Are the objectives of democracy and stability achieved by empowering a military dynasty notorious for collectivism, single-party rule, and the absence of human rights? Is it possible to promote a rich society ignoring that Raul Castro and his military staff have divided the nation's productive apparatus among themselves like mob bosses?

Isn't it obvious that, lacking institutions of law that are able to absorb changes and exercise authority in an orderly, peaceful, and democratic manner, Cuba will experience new confrontations and conflicts in the not-too-distant future?

Obama thinks that he has solved a problem by amending relations with Raul Castro. Wrong: What he has done is to postpone that problem. In the near future, other crises will come up, and the United States will now be dragged into them. It has been so since the 19th Century. That's what happens when wounds do not fully heal.

Undermining Cuba's democrats

The third mistake is the damage that Obama has done to the democratic opposition. Perhaps this is the gravest error of all. For decades, the message sent by more credible dissidents to the dictatorship was very clear: "Let us sit down to talk and, among Cubans, let us find a democratic solution. The problem is between us, not between Washington and Havana."

To that approach (which, with different shadings, was that of Gustavo Arcos, the Cuban Democratic Platform, and Oswaldo Paya), the regime has responded with repression and with accusations that such overtures are part of a CIA ploy. But that outcome - as in Eastern Europe, as in Pinochet's Chile, as in 1990 Nicaragua - would have been best for everyone, including the United States, and it was the obvious path to follow for anyone who might inherit the Castro brothers' power.

To achieve this scenario, Washington needed to remain firm and refer the dictatorship to its own opposition whenever, directly or indirectly, the possibility of reconciliation was insinuated. The problem was among Cubans and the solution should have been found among Cubans. Bill Clinton and George W. Bush, the two U.S. presidents of the post-Soviet era, both understood this notion, which Obama irresponsibly invalidated, denying the opposition any chance to be an important actor in shaping the island's future.

Why engage in democratic reforms, Castro's heirs will say, if we have been accepted as we are? Didn't Roberta Jacobson say, on behalf of the U.S. government, that Washington held no hopes that the Castros would permit freedoms? On Dec. 30, 2014, exactly 13 days after the reconciliation was announced, Cuban political police detained several dozen intellectuals and artists who attempted to carry out a performance on Revolution Square. What room is left for Washington to induce respect for human rights if Washington has made most of the concessions unilaterally?

This was expressed clearly by a high-ranking intelligence officer, Jesus Arboleya, a Cuban diplomat and an expert in Cuba's relations with the United States and Canada, in an interview with El Nuevo Dia of Puerto Rico, also on Dec. 30. The newspaper asked Arboleya if he feared Obama's new policy.
"If in the past, when they had all the power to impose their values, [that policy] didn't work, why should it work beginning now?" was his answer.

The dictatorship is euphoric. It feels that it has carte blanche to crush the democrats without paying any price. Lacking all sensitivity, Obama has contributed to weakening the opposition.

A moral failure

The fourth mistake is a moral mistake. Beginning with the Jimmy Carter administration, the United States gradually generated a democratic doctrine for Latin America. The region was deemed exceptional for the purpose of defending democracy and freedom.

Either for strategic reasons or out of realpolitik, the United States could not order China to behave democratically. But in the same way that Latin America could be declared a region free of nuclear weapons, it was possible to declare that Latin America ought to be free of dictatorships and human rights abuses.

That spirit culminated with the Inter-American Democratic Charter, signed by all hemispheric nations in Lima on Sept.11, 2001, the same day that the Islamist attacks on New York City and Washington, D.C., took place. That document described the features and behaviors of the nations fit to participate in the Organization of American States. Cuba met none of those requirements. It was a despicable dictatorship, a carbon copy of the Soviet-Stalinist model.

Somehow, the text of that charter, on which U.S. diplomats ardously labored, put an end to the shameful succession of permanent deals signed between Washington and the worst Latin American dictatorships throughout the 20th Century: Trujillo, Stroessner, Somoza, Batista, and a long, long et cetera. No longer valid was the cynical dictum: "He may be a son of a bitch, but he's OUR son of a bitch."

After the reconciliation between Obama and Raul Castro, the United States is back to its old habits. At home, its president delivers a great speech about freedom, yet negates its very text with its diplomatic behavior. True, that's what many Latin American countries desired, but it remains a pity that, in inter-American relations, there is no space for moral considerations. The United States has needlessly sacrificed its position as an ethical leader and has returned to the worst moral relativism. A great pity.

Going against the legal grain

Obama's fifth mistake is of a legal nature. The United States is a republic directed by the delegates of society, selected through democratic elections. Among them, the president is the principal representative of the popular will, but not the only one. There is a legislative entity that shares many functions with the White House, and there is a Constitution, interpreted by the judiciary power, by which everyone must abide. As we all know, the essence of the republic is the division of power, to avoid a dictatorship and to force the leadership to find formulas for consensus.

It is possible that the surveys will reflect that a majority in U.S. society circumstantially support a reconciliation with the Cuban dictatorship - as in 1939 a majority supported a neutral stance toward the Nazis - but that has only relative importance. The United States is a republic, observant of the law, and a representative democracy. That's what matters, and it has little to do with surveys or with the decisions made by an assembly of citizens.

Well, then; it's very likely that Obama will spend a substantial portion of the two years remaining in his term explaining to the House and Senate why he deceived the public and the other powers of the state by telling them, even up to the eve of his joint announcement with Raul Castro on Dec. 17, 2014, that he would make no unilateral concessions until the Cuban dictatorship took steps toward freedom and opening. It was not a silent diplomatic maneuver. It was deceitful.

In the two chambers of Congress there are five Cuban-American representatives and three Cuban-American senators, Republicans and Democrats, who have enormous expertise on the subject. Shouldn't the president have briefed them on his Cuban policy and sought their opinions and advice? Is there no civic cordiality in the White House? Didn't Democratic Senator Bob Menendez, chairman of the Senate Committee on Foreign Relations, deserve that consideration?

It is true that foreign policy is a presidential prerogative, but legislators have a clear role to play, and they all feel that the president tricked them. In fact, some legislators believe that the president broke the law, and they will try to prove that contention.

What Obama thinks will be part of his legacy - full and cordial relations with a military dictatorship - might turn into a nightmare. For now, it is a terrible mistake, one that none of the 10 presidents who preceded him ever made. There must have been a reason they didn't.

Go East, Young Russian

Russia appears to be exploring ways to reverse the population figures in its Far East and to give people the opportunity to once again become small-scale land-owners.

One of the most common ways nations have sought to create wealth is by encouraging movements of people to gain access to available land, which they exploit for farming and industrial activities. The United States is one of the best examples: When colonists began to lay claim to the continental wilderness, they created vast amounts of wealth. For many decades, as American populations moved westward, the promise of land ownership, and the freedom to work it as each individual saw fit, attracted a great many people to the United States. This continued until modern urbanization and high-tech economies started to reverse this trend, to the point where a country's wealth is now measured by the number of its cities the and the populations dwelling in them.

Failed Soviet experiments

Russia certainly does not lack for available land. Throughout the 20th century, the Soviet state undertook several massive experiments with far-reaching consequences. After taking control following the 1917 Revolution, the Soviet regime broke the power of peasants across the country, in order to seize all land and get rid of any real or perceived economic inequalities - as well as to completely monopolize power in the hands of urbanized Communist elites. The results were tragic. Millions of peasants were killed, starved to death, and removed from land that they had worked for generations. This period saw the wholesale destruction of the peasantry and its skill for agriculture. The Soviets replaced private property with state-sanctioned and controlled collective farms, where the remaining peasants lost their freedom of action, forced instead to take orders from the central government. Private land ownership was nearly abrogated. These policies bequeathed an inefficient and underperforming system that could barely feed the expanding Soviet population.

In the late 1960s and early 1970s, the Soviet government tried to coax its young, well-educated, and urbanized population to settle in the Far East and in southern Siberia. Soviet leaders wanted a hedge against the growing power of Communist China, since vast territories devoid of people were seen as a strategic weakness. Further, extracting these lands' vast mineral wealth required a viable workforce, which could be created by Russians relocating to the Far East from the western parts of the country. Despite all its efforts, including offers of higher salaries and benefits for those willing to "Go East," the Soviet Union could not achieve the critical population and industrial mass needed to fully realize its Far Eastern potential. More than anything, the harsh southern Siberian climate impeded the large population transfers that the Soviet government needed. Those who did end up there felt trapped by the bleak economic realities of working for a few state enterprises that were heavily subsidized by Moscow.

Finally, when the Soviet Union broke apart in 1991, the Far Eastern regions experienced massive out-migration to the western parts of Russia, as people sought better economic opportunities and higher standards of living. With the population plunging to just around 7 million people across vast distances - stretching from Vladivostok on the Pacific Ocean coast to Lake Baikal in the west - local politicians, as well as Moscow-based nationalists, sounded alarm that the area was ripe for the taking by stealthy Chinese immigration. The end result, it was feared, would be that the Russian Far East would become a de facto part of China.

If at first you don't succeed...

Russia is apparently gearing up for another try. Yuri Trutnev, the Russian president's representative for the Far East, proposed to Vladimir Putin the following plan:

"We want to offer for your consideration a measure that would help strengthen the influx of people to the Far East, since people are the main driver of economies and we wont be able to develop our local economy otherwise. The state today owns 614 million hectares (1.2 billion acres) of land. We want to create a mechanism that would allow for allocation of one hectare (two acres) of land to each inhabitant of the Far East, and to every person who would like to come to the Far East, for use in agriculture, or to create a forestry or hunting business."

Putin expressed openness to such a plan once the major details are worked out - details such as not allocating land plots near big cities in order to avoid misuse or corruption, and ensuring that land will be actively utilized and not left unattended. Trutnev explained that under the terms of the proposal, the state would put parcels out for use for five years, after which the land can become the private property of the individual working it. The state would reclaim any plot that goes unused for a prolonged period of time. Putin agreed with the general idea, citing land reforms by Imperial Prime Minister Stolypin, who encouraged migration and land use in Siberia prior to World War I. Putin:

"Today's economy and other realities are very different, so this plan needs a thorough review before it is implemented."

Trutnev responded that in order to prevent abuses, there will be prohibitions on selling such land to foreigners and foreign entities.

While ambitious in scope, such a plan by itself won't attract enough people to the Far East in the absence of larger economic drivers and benefits, such as participation in international trade. Therefore, representative Trutnev brought Putin up to speed on several plans to create free economic trade zones at the Port of Vladivostok and on the Big Ussurisky Island.

"We showed this plan to the Chinese", said Trutnev, "and they offered their own advice on how further develop this territory. We are also working on developing the Russkiy Island into a scientific and educational hub."

Convincing people to move to the Far East will be difficult now that Russia's economic decline has hit the wallets and savings of ordinary citizens. Still, the adventurous may be pushed to seek out fortunes in this region, providing that the government actually delivers on its promise of oversight and economic development.

(AP photo)

Draghi Opens the Money Tap

The European Central Bank has opened the money spigot, but it is unlikely to keep the European economy afloat. ECB intervention will not help alleviate what is probably the Continent's most pressing problem: lack of consumer spending and domestic demand. What Europe needs is U.S.-style direct stimulus.

From 2009-2011 Barack Obama dished out $787 billion of federal money to the U.S. economy. This was while the first round of quantitative easing by the U.S. Federal Reserve was already underway.

With interest rates already low, Ben Bernanke's bond purchases pushed credit rates even lower, making corporate borrowing cheap and depressing rates for consumer credit. This is basically the effect Mario Draghi aims to achieve. Not only does he want to shore up European banks' balance sheets to ease borrowing, he wants to revive the entire system of credit and loans, as happened in the United States.

But can the effort succeed without that other important element, the stimulus spending? While Draghi finally pulls out the ECB bazooka to restart borrowing with a bang, he is looking over his other shoulder to see what his European partners are doing.

The answer is, well, nothing, really. And that's worrying. Recently, European Commission President Jean-Claude Juncker brought forth the first-ever pan-European stimulus package, supposedly worth 300 billion euros. This was no bazooka, but Juncker's weapon of choice at first glance appeared to be a pretty decent grenade launcher. On closer inspection, it has turned out to be a well-worn BB gun.

Indeed, the European Commission is not going to spend anywhere near 300 billion euros in hard coin. The actual funds in fact amount to just 21 billion euros - money the Commission scraped together from its own budgets and reserves. The paltry sum is meant to act as a credit guarantor of sorts. With that small amount, and relying on a basket of loopholes and fantastical assumptions, Juncker hopes to entice banks and investors to shell out their own money -- or perhaps Draghi's?

Either way, there is a huge difference between American resolve and European hesitance. Obama's stimulus put money into peoples' pockets, while the Fed showed no qualms about restructuring American banking. Hundreds of smaller, regional banks went bankrupt, merged out of necessity or were bought by their larger peers.

Meanwhile, U.S. consumers deleveraged; American household debt shows a steep decline since 2008. There is no doubt that rock-bottom rates (which allow for much cheaper refinancing) and stimulus spending aided that process. Household debt is holding back consumer spending in many crisis-hit countries, and economic insecurity makes people want to save their money despite low interest rates.

European governments are unwilling to do what is necessary: quicken the pace of deleveraging and boost consumer spending. Politically speaking it is too risky. The Germans, Dutch, Finns, and Austrians do not want their governments to spend a dime on other countries. The ECB is politically independent; it makes its own decisions. So if quantitative easing fails, it will be on Draghi's head.

(AP photo)