Russia Economic Planners Cite South Africa, Chile

(AP photo)

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 peticii.parlament.gov.ru 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

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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)

The Ideal Laboratory for a Neo-Soviet Project

What is national identity? What forces and events compel the development of new models of political thought that drive populations to accept new norms and altered realities? Arguably, the dissolution of Soviet Union in 1991 was more than just "the greatest geopolitical catastrophe of the 20th century," as Russian President Vladimir Putin describes it. Moscow saw millions of people suddenly lose the concept of national unity and a shared national purpose. Russia after 1991 dropped the social, cultural, and political norms that the Soviet Union carried across many decades.

So the Russian government, and many in the country's consolidating political elite, sought to develop and nurture a concept that would once again bring a shared sense of purpose and unity to bind the vastness of Russia - and to all of the former Soviet space. If United States has democracy, Muslim states have Islam, and leading Asian states have deep historical and cultural roots to sustain their national narratives, what, if anything, can bring together Russia and her numerous neighbors?

In November, Russian daily Gazeta.ru published an opinion piece by geopolitical commentator Vadim Dubnov, titled Novorossiya from Luhansk to Tiraspol. In it, the author seeks to explain what drove the numerous separatist conflicts that shook the Soviet Union, and then many of the independent nations born in its wake, starting in the late 1980s. Dubnov's says that the problems in eastern Ukraine, and the current frozen separatist conflicts in Moldova, Georgia, and Azerbaijan, stem from the policies of Soviet and post-1991 Moscow.

"The separatism of the 1990s began in the late-Soviet 1980s. Formally, there was no pure "separatism," since there were no independent states at that time. (Separatist) wars began as former Soviet states declared sovereignty, but they were born of developments that began before the collapse of the Soviet power. In other words, when Georgia, Moldova and Azerbaijan gained their independence, they also purchased existing territorial problems."

In explaining the current crisis in Ukraine, and the two separatist "republics" that have emerged - Luhansk and Donetsk - Dubnov juxtaposes the hostilities there with a conflict that erupted in then-Soviet Moldova, specifically in the Pridenstrovie, or Transdniestria, region. Armed clashes between Pridnestrovie separatists and Moldovan security forces erupted as early as November 1990. The conflict erupted into full-blown war in March 1992, until a cease-fire was reached that July. At that time, Russian military forces and pro-Russian informal military formations fought on the side of Transdniestria, echoing today's conflict in eastern Ukraine. The result was a separatist victory, and Russia's patronage to the separatist capital, Tiraspol, continues to this day.

As in the Luhansk and Donetsk regions, these separatists were mostly ethnic Russians concerned that their rights and privileges would be put to risk, considering newly independent Moldova's pro-Western course. Transdniestria remains an independent, unrecognized republic sandwiched between Moldova to its west and western Ukraine to its east, with Russia the only country of consequence to lend any support. Given its strategic location, there is now concern that Moscow may reactivate this frozen conflict, seeking to extend its influence over ethnic Russians residing there and to create problems for Moldova and Ukraine - countries whose military forces and economic potential are already stretched to the limit.

Dubnov continues:

"This project, code-named "Pridnestrovie," had one clear goal: to make it difficult for the (Soviet) republics to escape from the USSR. Other goals were not set, because the life of the project was limited to the lifespan of the Soviet superpower ... After the Soviet demise, Russia inherited the management of these separatist projects, which it tried to use to pressure its neighbors. In addition, each of the potential new, unrecognized countries - Abkhazia and South Ossetia in Georgia, Nagorno Karabakh in Azerbaijan and Transdinstria in Moldova -  would be given a chance at independence if their interests matched up with the interests of the Kremlin."

According to Dubnov, the roots of today's conflict in Ukraine trace back to the separatist wars of the 1990s and Moscow's attempts to influence them in its favor. Officially a closed Soviet project, this mandate for interference in fact survives as Russian policy. However, geopolitical developments in the 1990s did not allow Moscow to fully realize its goals: "Separatists did not become levers of pressure on Georgia or Moldova, since these states learned to live rather well without the separatist regions."

Now, according to Dubnov, everything has turned upside down: In Crimea, pro-Russian fervor was already widespread, but in Donetsk and Luhansk, it was necessary to develop a new line of political thought in order to create in the regions' pro-Russia citizens a desire to "Save the Soviet Union." And while it was never clear why the Russians should rejoice in Transdiniestria's separation from Moldova, or that of Abkhazia from Georgia, everything has come together in Ukraine - the ideal laboratory for a neo-Soviet project.

Dubnov writes that Kiev offered two ideal conditions for the experiment:

"Everything that happened in the Ukraine was inspired by the West, and the only language that can describe what happened is the language of the Great Patriotic War (WWII)."

Moscow has openly stated that the Ukrainian government and its armed forces are inspired after the anti-communist and anti-Soviet guerrilla formations that officially sided with invading Nazi Germany against Moscow. "The battle for Ukraine is a continuation of the Soviet military doctrine, considered defensive at that time, and whose legacy was supposed to have been the establishment of sovereignty doomed to failure in places like Abkhazia and Transdnistria."

This, Dubnov concludes, avenges the Soviet past, and Moscow is willing to carry the effort to its fullest extent:

"Current events in Ukraine... thrillingly avenge everything that was thought impossible ... Unrecognized Tiraspol is preparing for a referendum and Russia is hinting that it can officially recognize the breakaway state. And then there will be a Novorossiya -  from Lugansk to Tiraspol - like Crimea, ours, regardless of whether there is global recognition and irrespective of the opinions of people in Luhanks and Donetsk. it will exist to counter existing enemies, foreign and domestic. It will cut off Ukraine from the sea ... It's not just revenge - its a national idea. One does not refuse such a chance."

Merkel to Tsipras: Go Ahead, Greece, Jump!

Faced with a popular Greek opposition party, Syriza, which demands that Europe either reduce Greece's debts or watch Greece walk out of the eurozone, German Chancellor Angela Merkel has not blinked. By declaring that the rest of Europe can get by without Greece, Germany has neutralized the bargaining position Syriza hoped for.

It was a nice try, but Greece's creditors - in the main, the governments of northern European Union countries, the IMF and the World Bank - are unfazed by Greek threats.

Syriza's threats are somewhat akin to those of a suicide jumper standing on a ledge, threatening to jump unless he is paid. In this case, had he threatened to jump three years ago, he would have taken many financial backers with him.

There are still creditors tied to Greece now, but they have changed. Greece's creditors are governments and international organizations, and not banks and pension funds, nor companies whose downfall would immediately affect millions of citizens in predominantly northern European countries - the more powerful of the lot, and the ones holding the EU purse strings.

Because no, all that aid was never about altruism. The money that went to Greece in the past years did not end up in the pockets of Yannis the Athenian sausage seller or Adonia the Cretan consumer. The rescue operation was a huge bailout - but in the form of quick money that was used to pay off Greek debts to German, French, and Dutch financial institutions. Not Yannis and Adiona, but traders and investors like Rodney in London, Charles in Paris, Pieter in Amsterdam and Gerhardt in Frankfurt were saved. And with them their economies, and with their economies, the political futures of the parties in power at the time.

For a time, Greece had to be kept talking on the ledge while Merkel and her firemen brought the assets of their national champions to safety. At the beginning of the crisis, a Greek default would have seen banks and pension funds in the tank, resulting in renewed panic on financial markets still reeling from the credit crisis. Now the risk of contagion - with banks in Italy, Spain, and Ireland crashing like dominoes stones as investors flee - has largely subsided.

Instead, Greece now owes billions of euros to EU countries, the IMF, and the World Bank, among others. Unlike banks, these creditors do not easily default. The hit they would take would be one they could bear. Meanwhile, a default and an exit from the European Union wouldn't help Greece at all.

Let's entertain for a moment the notion that Greece would exit the eurozone, and thus automatically the European Union. (The legalese on this is murky but legal experts agree an automatic exit would be triggered.)

The first thing Greece would have to do is organize stringent capital controls to prevent Greeks from moving their euros to other countries, which would effectively end any economic activity still going on in the country.

Second, Athens would have to quickly introduce a new currency - the New Drachma, say - which would immediately crash against the other main currencies.

For Greek bonds, a new level below junk status would have to be invented. Within 24 hours Greece would be a financial pariah, paying huge interest rates and risk premiums, while its existing loans would balloon, as most loans outstanding to its foreign creditors would still have to be paid in euros. Greece would be Europe's Zimbabwe, with the local economy in tatters; rampant inflation; and mass unemployment, very likely even worse than it stands today.

So Syriza leader Alexis Tsipras stood on the ledge - and bluffed. Merkel folded her arms, smiled told him to go ahead and jump. Bluff called. Tsipras and his party may seem destined to win the upcoming Greek elections, but Tsipras knows he's staring down an abyss much deeper than before.

And so Tsipras decided to stay on the ledge a little longer. Now Merkel wonders whether Tsipras understands that he may call himself Greece's new prime minister after Jan. 25, but he still won't be the one holding any power.

(AP photo)

When the Chess Pieces Move Themselves

Andy Langenkamp is a global policy analyst for ECR Research.

Though 2014 was a year of upheaval, there were some good trends. The U.S. economy appears to be on the right track, though not all the data is reliable. The British economy is growing steadily. Markets are confident in the economic aspirations of new leaders in Indonesia and India. China's growth seems to be on schedule, though many analysts fear inflated, unsustainable asset bubbles.

However, distress in the eurozone continues, and there are questions about the will and capability of Prime Minister Shinzo Abe to put the Japanese economy back on track. Further, analysts worry about the economies of three out of the five so-called BRICS: Brazil, South Africa, and Russia. 

Politics are a determining factor in the economic developments and prospects for the aforementioned countries. Many of the major crises that broke out this year - in Ukraine, Syria and Iraq, Gaza, and Hong Kong - were connected to local politics and to geopolitics. It is thus no accident that most experts regard poor governance as the biggest threat to global security.

In what Gideon Rachman describes as the "democratic age," even leaders who are brilliant geopolitical strategists can easily be thrown off track by financial markets, social media, populist movements, and terrorist acts. The world seems more complex and obtrusive than ever before. Borders - and not just physical ones - are porous. People, capital flows, criminality, information, weapons, ideas, pollution, and epidemics cross the globe at great speed. As Rachman writes, "These days a would-be grandmaster, staring at the global chessboard, is liable to find that the pawns have started moving around on their own."

Although this makes it harder to predict future events, it is still important to have a feeling for the geopolitical and geo-economic questions of greatest importance to financial markets in 2015.

•             In the Middle East and North Africa, arrangements made in the first half of the 20th century - and guaranteed by Western powers - are under internal and external pressure. The reshuffling of power relations and challenges to established borders will end no time soon.
•             Liberal democracy has been under stress since the eruption of the financial crisis in 2007-2008. History professor Mark Mazower wrote that, "by discrediting the more mythical idealisations of the market, it has encouraged the restoration of state power as a goal in itself. This programme is easily harnessed by authoritarian leaders in the name of national sovereignty and democracy." In some cases, we are seeing transitions from moderate authoritarianism to outright totalitarian rule. Conditions have hardened in countries such as China, Hungary, and Turkey, but most of all in Russia. Tensions between these countries and the West could increase.
•             Some 20 countries in Africa are already failed states, or are heading in that direction. These countries are threatened by the spread of disease, extremism, and violence. Not every country is important to the global economy. However, resource-rich states such as Nigeria, Angola, South Africa, and South Sudan are highly relevant to the financial markets. Instability can easily spread from one African country to another.
•             The restructuring of the security and economic order in Asia continues apace. This affects the relations between China and the United States, which remains deeply involved in the region - in Japan, South Korea, Taiwan, the Philippines, and elsewhere. Maritime tensions between China and other Asian countries undermine regional stability, while discord between Japan and the victims of Japanese aggression in World War II remains a concern.
•             Political and economic power continues to shift from West to East and from North to South. In a relative sense, the Americans are losing power. This is all the more true of Europe. Economic data indicates the Continent's dwindling importance. In 2007, approximately 40 percent of foreign direct investment occurred in Europe. By 2012, that had fallen to 20 percent. Ten years ago, 600 of the 2,000 largest companies on the stock exchange were European; now there are fewer than 400.

Markets over the past year seemed unperturbed by geopolitical crises or setbacks in the political economy - records were broken continuously. However, market sentiment is fickle. It could change as the U.S. Federal Reserve tightens its belt. There is also waning confidence in the power of central banks, worries about slowing Chinese economic growth, and general political instability. Overall, despite steady growth in the U.S. and British economies, the emergence of other economies, and the added boon of low oil prices, the prevailing trends and tendencies discourage risk-taking.

(AP photo)

Americans Don't Want a Ground War on ISIS

Most Americans do not want to see ground troops deployed to fight the Islamic State in the Middle East, according to a new poll from the Brookings Institution.

Despite 70 percent of respondents flagging the terror group as the biggest threat in the region, 57 percent of Americans don't want to see U.S. ground troops engaged in combat against the group should airstrikes fail. The reluctance to engage in a ground war against ISIS is predominately felt among Democrats and independents. Brookings found that 53 percent of Republicans would turn to U.S. troops if air strikes fail.

A good reason for American trepidation is a wide-spread belief that U.S .forces would be unable to deal a lasting blow to the Islamic State. Only 20 percent of those polled said the U.S. can defeat ISIS and "ensure they will not return." The majority (56 percent) told Brookings that, much like the Taliban in Afghanistan, the U.S. could defeat ISIS but only temporarily.

Brookings also found a somewhat schizophrenic U.S. view toward Syria and the Assad regime. While 70 percent said Assad was "as bad as ISIS" and that the war in Syria could not end with Assad still in power, 60 percent also said that the U.S. should not fight Assad's army and instead let Assad fight ISIS.

(AP photo)

An End to European Complacency

Three madmen armed with AK-47s on Jan. 7 very likely ended a reluctance most of the mainstream press have until now lived with in Europe. Newspapers, magazines, websites, and radio and TV stations will lead a charge for freedom of speech. There is a risk this will translate into a blanket condemnation of Islam. It should not.

Of all the outrage that filtered online shortly after the massacre at Charlie Hebdo magazine, two reactions immediately stood out. Tony Barber of the Financial Times called Charlie Hebdo's editorial staff "stupid" and lacking in "common sense." The Islamic Council of Muftis in Russia was reported as saying that "the sin of provocation is no less dangerous than the sin of those prone to react." In other words, the provocateurs at Charlie Hebdo got what was coming to them.

As writer Oliver Bullough tweeted, "Russia's official Muslim organization missed a great chance to shut up." Condemnations  by fellow journalists of the FT's comment were no less damning. Tony Barber in his piece seemed to have forgotten that Charlie Hebdo ridicules all religions - not just Islam.

The Debate that Was

Ever since Danish cartoonist Kurt Westegaard went into hiding after his drawings of the prophet Mohammed were published, and the murder of Dutch filmmaker and Islam critic Theo Van Gogh, many in Europe's mainstream news media have refrained from criticizing Islam.

Some held back out of respect for the religion, stating that while you can say anything you want, you should always ask yourself whether you should. This is of course not limited to Europe. Even in the hours after the attack on Charlie Hebdo, the New York Daily News censored a photo of a now-slain editor of the magazine and was widely ridiculed for it on Twitter.

Other media, columnists and comedians have over the past years censored themselves simply out of fear of becoming the next Westegaard (whose house was invaded by armed madmen) or Theo van Gogh.

This is about to change. The danger now is that populists will hijack the debate and push the press into an anti-Islam frenzy. As this was being written, nationalist organizations and proponents of identity wars, such as supporters of the Pegida movement in Germany, were already using the Charlie Hebdo massacre as justification for their anti-Islam stance.

This is precisely what religious fundamentalists seek: to divide the world neatly into pro- and anti-Islam parts, leaving no distinction between mainstream Muslims and the fundamentalist fringe. In reality, no group has suffered more from violence by Islamist extremists over the past decades than Muslims themselves. At around the same time the hitmen exited Charlie Hebdo headquarters, where they killed 12 people, a bomb attack in Yemen killed 37 people and injured scores more.

The last thing media should do now is give the terrorists the divided world they seek. A defiant show of free speech is called for. It should point straight at the hideous monstrosity behind the violence: extremist fundamentalists, of any any stripe - exactly like Charlie Hebdo did. #jesuischarlie.

The Attack in Paris

French President Francois Hollande decried the barbaric attack carried out today against the headquarters of Charlie Hebdo, a satirical magazine that drew the ire of Islamists for publishing controversial drawings of the Prophet Mohammed. Below is a running take of updates culled from European media. All timestamps are in local French time:

    7:00 p.m.: Vigils began at London's Trafalgar Square.

  • 8:06 p.m from The Guardian: A terse, emotional Francois Hollande, during a speech, intoned, "Vive la republique. Vive la France."
  • 7:55 p.m from The Guardian: Merkel and Cameron received a joint briefing from the directors of M15 and M16. From the newspaper: "The central message given by the UK intelligence agencies to Merkel and Cameron was the killers were determined, well armed, calm and clear and must have carefully prepared, suggesting these may not have been self-starters, but part of an organised group. This information, UK sources said, was not based on specific intelligence, but an assessment based on videos, eye witness reports and past attacks."
  • "Je Suis Charlie" hashtag takes off:
  • Qatar condemns attack.
  • Louis Sarkozy, the son of former President Nicolas Sarkozy, on Twitter:
  • 7:22 p.m. from Le Figaro: Italian Prime Minister Matteo Renzi visited the French Embassy in Rome. Renzi: "This wasn't just an attack on France, it was an attack on Europe's freedom to be Europe."
  • 6:55 p.m. from BBC broadcast: German Chancellor Angela Merkel, who is in the United Kingdom visiting with British Prime Minister David Cameron, said she shared a moving telephone conversation with French President Francois Hollande.
  • Place de la Republique:
  • 6:30 p.m. from El Pais: The official toll stands at 12 dead and four wounded. Autopsies will be performed tomorrow morning, and the list of casualties has been transferred to the French Ministry of Justice so that aid measures can be extended.
  • 6:25 p.m.: Guardian political cartoonist on BBC: Someone has to stand up for the right to "take the piss out of these monsters, these fools."
  • 6:16 p.m.: BBC broadcasts French prosecutor's statements. Hijacked car was a (Renault) Clio. The inquiry is still ongoing, and the killers, at large, are of course very dangerous. Twenty magistrates can be mobilized for eight consecutive days as part of the inquiry.
  • 6:10 p.m. from Les Echos: French prosecutor general confirms that according to witnesses, attackers yelled "Allah Akbar" as they stormed the building.
  • 5:55 p.m. from Le Figaro: National Front leader Marine Le Pen says this act was carried out in the name of radical Islam, and that it's time to "free up our speech" regarding fundamentalist Islam.
  • 5:47 p.m. from Le Monde: Another victim has been named: Michel Renaud.
  • 5:36 p.m.: BBC broadcast reporters said that according to reports, the attackers hijacked a vehicle to escape, later releasing the driver.
  • From Le Monde: Secretary of State John Kerry delivered remarks in French regarding the attack, calling the slain journalists "martyrs of liberty." 

  • John Kerry : « Le pouvoir de la liberté d... by lemondefr
  • 5:06 p.m. from BBC: Charlie Hebdo site back online.
  • The attackers displayed professional professional training, via Long War Journal.
  • 5:05 p.m.from Le Monde: The French Army is activating two additional 100-strong units to support highest-alert security measures.
  • 4:36 p.m. from Le Figaro: Murdered journalist Stephane Charbonnier had been the target of increasing threats in the days before this attack, according to a security source close to the matter.
  • 4:35 p.m.: There are no plans to close the U.S. Embassy today.
  • 4:29 p.m. from BBC: Police remove the car they believe was used by the attackers, from a neighborhood in northern Paris:
  • 4:16 p.m. from The Local: French Muslim leaders fear backlash. "The next victim will certainly be a Muslim," said Samy Debah, the president of the Collective Against Islamophobia in France.
  • 4:09 p.m: Le Monde reached Charlie Hebdo Editor in Chief Gerard Biard, who is in London. Biard: "I am shattered and at the same time indignant. It hasn't hit me yet. ... I hope that this time we won't have to hear that we are ... provocateurs." Going on, he asks: "Have they won? What does a democratic state do in a situation like this?"
  • 4:06 p.m. from El Pais: An employee of Charlie Hebdo told L'Humanite that the assailants spoke perfect French and said they were al Qaeda members.
  • 4:01 p.m. Le Monde tells readers that while they are being inundated with requests for further updates, security forces are reticent at the moment as the operation continues.
  • 3:52 p.m. from Le Monde: Rallies in support of Charlie Hebdo scheduled throughout France this evening:
  • 3:40 p.m. from Le Monde: Economist Bernard Maris among the victims.
  • 3:32 p.m. from Le Monde: Prime Minister Francois Fillon says that the attackers hope to intimidate the French, but "they will only reinforce our courage."
  • 3:26 p.m. from BBC: Reuters is reporting that Jyllands-Posten, the Danish newspaper that triggered protests in some Muslim countries after publishing cartoons of the Prophet Muhammad, has increased its security following today's attack.
  • 3:17 p.m. from Le Monde: The police are asking citizens for help. The number within France: 0805 02 17 17
  • 3:15 p.m. via the BBC: It is not known whether there were two or three attackers.
  • 3:04 p.m. from Le Monde: The Assembly in mourning.
  • 2:56 p.m. from Les Echos: Assailants were armed with Kalashnikovs, but not rocket launchers.
  • "The worst massacre of journalists in France since the Nazi occupation," via The Commentator.
  • 2:24 p.m. from Les Echos: The 42 second-video that shows the violence of the attackers.
  • 1:44 p.m. from Le Figaro: Former President Nicolas Sarkozy: "Our democracy has been attacked."

 

  • Four high-profile cartoon artists among the dead, from Le Monde:

 

Estonia's Digital Strategy Takes Center Stage

If anyone could feel Sony's pain when the company was hacked in late 2014, it was the Estonian government. After all, Estonia in 2007 was the first country to be hit by anything that could be defined as a full-scale cyber attack - an attack that showed just how vulnerable states are in cyberspace. Still, until December last year, cyber warfare had been largely the bailiwick of theoreticians - fodder for think tank studies and NATO roundtables. (Estonia worked hard to push the topic onto the agenda.) The Sony hack changed that. Cyber warfare now sits squarely in the public consciousness, and it's here to stay, whatever the degree of North Korean involvement in the hit.

For Estonia, a global turning point is a national opportunity.

Along with Baltic brethren Latvia and Lithuania, Estonia sits in a geopolitical cage: 1.3 million people huddled in the crevice between the West and Russia. The Baltic states have all taken firm steps to join the Western consensus, acceding to the European Union and to NATO in 2004. Lithuania in January became the most recent state to join the euro; Latvia is now taking its turn to guide the rotating presidency of the Council of the European Union.

Estonia, though, has gone a step further to move beyond the constraints of geography. The country's digital prowess is well-known. Estonia is a country of high-tech startups and wireless governance, with a president who philosophizes on Twitter and a Cabinet that casts its votes from laptops and tablets. In an age of innovation, this is a sound way to do business. But Estonia wants more, and has made its push for digital leadership a strategic cornerstone. Two events in 2014 built momentum for this effort.

In December, the country started accepting applications for electronic residency. The e-residency program doesn't extend physical residency to those accepted, but it does allow anyone, worldwide, who wants to establish a business in the country to transact every aspect of their legal affairs online. Taxes can be paid, documents administered, notaries and middlemen avoided, through the use of an electronic signature. The program drew more than 13,000 subscribers in its first week alone - this even though would-be e-residents for now have to physically apply in Estonia. Most of the applicants hailed from EU states, the United States, and Russia.

So close to Russia, so far from Silicon Valley

The e-residency initiative builds on Estonia's reputation as a leader in what is termed e-governance. Estonians can vote online. Signing up for healthcare takes five minutes; setting up a company takes 18. The pitch to entrepreneurs abroad gives outsiders a stake in Estonia's wellbeing - a slow-moving transactional process that can pay dividends, but over the long run.

Of more immediate significance, Estonia in October took stewardship of the European Commission's Digital Single Market portfolio. Led by Commission Vice President Andrus Ansip, Estonia through 2019 has a chance to bring its ideas regarding connectivity, e-governance, and cyber security to the supranational level. The appointment by Commission President Jean-Claude Juncker was wise: It puts those who do electronic governance best in a position to broadly influence the Continent's policies. It's even more important on Baltic shores, because it puts Tallinn in position to export to Brussels an idea of growing urgency in an era of Russian restlessness: That the Baltic states are more than just a bulwark at the edges of the former Soviet space. They are valuable contributors.

Indeed, after the DDoS attack on Estonia, the NATO Cooperative Cyber Defence Centre of Excellence was set up in Tallinn. Estonia in the aftermath of the attack considered but decided against invoking Article 5 of the NATO treaty: What the country did instead is in essence to become the West's leading think tank on cyber security.

For Estonia, 2015 is a year of opportunity amid great uncertainty. The country looks better-placed than ever to use its digital strategy to try to push somewhat past its geopolitical constraints. At the national, supranational and Transatlantic levels, elements of that strategy have matured and promise to bear fruit. If nothing else, Western leaders from Berlin to Washington should take note. They have good reason to put muscle behind their words of support for Baltic states vulnerable to Russian influence.

(AP photo)

Coming Soon: The Russian Foreign Legion

While French military prowess has ebbed and flowed across the ages, one of its most important and most recognizable features has long been the Foreign Legion - Legion Etrangere - a service wing that allows foreign nationals to serve in the French armed forces. Anyone can participate, with very few questions asked - take the American serviceman recently convicted for ditching his military post to serve in the Legion.

Russia's military involvement in Eastern Ukraine currently consists of soldiers and mercenaries from far-flung federal republics such as Chechnya, as well as Ukrainian citizens who are ethnic Russians and wish to support Moscow's efforts to create pro-Russian political entities in the Donbas region. If Ukraine is to serve as a model of Russia's new mode of hybrid warfare, combining special forces and regular military personnel with "rebel" or "militia" formations in areas Moscow deems militarily important, it should be logical to assume that numerous volunteers could be recruited for other such missions. Which brings Russia to the next logical step in its emerging military strategy: allowing foreigners to serve in the Russian armed forces. The main criterium for such service is knowledge of the Russian language.

Back in 2010, the Russian Defense Ministry announced on its website that "according to the Federal Law On Military Duty and Military Service, foreign citizens aged 18 to 30 years old, who are lawfully residing in the territory of the Russian Federation and are Russian-speaking, may enter into the initial contract for military service in the military posts to be filled by soldiers, sailors, sergeants and petty officers in the Armed Forces of the Russian Federation, as well as other troops, military formations and bodies, for a period of 5 years." There were several reasons given for allowing foreigners to serve. According to an analysis published in the Russian daily Komsomolskaya Pravda, Russia's deep demographic deficit had caused "an acute shortage of able-bodied recruits. More than a third of them cannot serve because of various illnesses."

The analysis also noted draft dodgers numbering around 200,000, with nearly 15,000 holed up abroad under various pretexts. Further, the low level of education of many recruits is giving Russian commanders headaches, "considering the increasing complexity of military equipment in the Russian military."

At that time, the proposal generated some interesting comments from Russian civilians and former military members. Retired Vice Adm. Yuri Boyarkin, a former deputy commander of the Northern Fleet, confirmed that the Russian military needs foreign fighters: Boyarkin, noting that the navy in particular needed specialists, said that Tajiks, Uzbeks, Belorussians and Ukrainians served together in Soviet times, and that the decision to open up service to foreigners would allow Russia to benefit from their return.

Others disagreed, saying that Russia has enough able-bodied men, and that such foreigners must at least undergo thorough background checks. One military pensioner remarked: "How many armies throughout the ages were destroyed by mercenaries? During the Russian-Polish war in 1633, Russia suffered a lot from mercenaries. As soon as it got really cold, their spirits fell and they gave us up to the Poles. In our harsh climate, only the true Russian spirit grows stronger."

The analysis concluded that "a lot of young men from near and far abroad, who know the Russian language and had time to get a higher education, are a welcome boon for the General Staff ... According to our data, volunteers are already available. So it is very possible that in the near future, the Russian military will have its own foreign legion."

The future has arrived: On Jan. 2, President Vladimir Putin signed a law allowing foreigners to serve in the Russian military as contract personnel. Said Putin: "In accordance with universally recognized principles and norms of international law, international treaties undersigned by the Russian Federation, and the legislation of the Russian Federation, all military personnel who are foreign nationals can carry out military tasks under martial law, as well as in situations of armed conflict."

Russia has many sympathizers around the world, and it is not unreasonable to believe that we will soon observe military formations made up of foreigners participating in Russia's wars.

(AP photo)

Europe's American-Style Middle Class Squeeze

All across Europe, political parties are under strain. After years of high unemployment and flatlining economies, voters have had enough of austerity and budget cuts. They don't want any more rhetoric about tightening belts - they want promises of milk and honey. Just one problem: There is no money left.

Europe is experiencing is a classic middle-class squeeze - a typical fixture of American politics that has crossed the pond to pester European politicians. Leaders across the Continent are left facing this dilemma: How to strengthen the middle class in an adverse environment where money is tight, debts are high, and budget deficits loom large?

It gets worse.

Recently, another European think tank released yet another graph projecting the aging of populations in the coming 20 years. The findings revealed deep trouble for a country thought to be at a peak of economic power: Germany. And even as its population starts to shrink and age, resulting in a smaller labor work force and dwindling fiscal contributions to social programs, the demands of Germany's middle class are increasing.

Germany never had a minimum wage, so the government is launching one by popular demand. Next up are expensive repairs to its pensions system. Germans have long mocked France's cosy welfare state arrangements - now they're copying them.

And if rich and wealthy Germany is headed for trouble, what to say of the countries that are already in dire straits? In EU nations such as Great Britain, Spain, and Italy, matters seem worse. Are they?

Not according to the think tanks. The reason: immigration. For all the hubbub about waves of immigrants flooding the United Kingdom, the prospects for the country's work force appear much improved thanks to immigration. The Netherlands is much smaller than Germany, but thanks to immigration, the future of its labor force is not as bleak as that of its powerful easterly neighbor.

Unsurprisingly, a large chunk of the middle class has come to see immigration as a threat, not as an opportunity. Politicians who aim to enlarge and strengthen the middle class, though, should try in earnest to promote immigration, instead of mimicking those parties that wish to shrink that middle class and invite economic chaos in the near future.

Perhaps European politicians should take their cue from the United States, whose current president took executive action on immigration, and where a former president (and husband of the expected front-runner of the Democratic party, who has yet to announce) is steadily harping the message of strenghening the middle class.

(AP photo)

A Former Leader's Plea for the Donbas

As the anti-Kiev insurgency continues to batter Eastern Ukraine, Former Ukrainian President Viktor Yushchenko told reporters that there is little of Ukraine actually left in the Donbas region.

"Our language is almost non-existent there, and our memory, our church, and our culture are basically absent," Yushchenko said in an interview with the Ukrainian Truth.

Despite the changes wrought by conflict - and Yushchenko in the interview noted that many of the peculiarities that bind nations have been lost in the region - Yushchenko still believes the Donbas should remain part of Ukraine.

"This is my land, I will do everything so that this small piece of land will never be in the hands of anyone but our state and our nation.... At the same time, there are people - many people - who think otherwise," he said.

Its unclear whether Yushchenko's statements were heartfelt or political. As a rather ineffective opposition leader, his fate is unclear in the new Ukraine - a country split three ways by Russia's presence in Crimea and by the pro-Russian opposition in the Donbas. In a faint echo of Moscow's official stance, which blames Ukraine's unrest on the protests in Kiev's Maidan Square, he claimed to be highly skeptical, and even fearful, of what took place there: "I fully understood back then...that the political leaders who appeared during those protests may have had an entirely different agenda from the protesters...When I saw that normal and healthy demands by protesting youth were turning into a short-term transformation of power at the top, I understood that our nation was headed for calamity."

Back in 2010, Ukrainian voters lost confidence in the man who had once led Ukraine's pro-Western Orange Revolution - Yushchenko only netted 5 percent of the votes in the presidential election that year. Support for the former president now is marginal, though his political future could turn depending on how the current Ukrainian administration handles the myriad crises plaguing the country: a collapsing economy, an uncertain geopolitical future, and a pro-Russian rebellion that shows no signs of abating.

Meanwhile, the pro-Russian Komsomolskaya Pravda reported that the city of Donetsk, the would-be capital of the self-declared Donetsk People's Republic, has become a "city of volunteers," as regular citizens try to help each other out in the face of a full-blown crisis: "People are organizing on social media to share information and try to help each other in any way possible - with moves to a safer part of the country, transport of belongings, finding a doctor, help with repairs... people are paying for each others groceries in the supermarkets... Normal city dwellers have become very attentive to each others' needs and do not pass by those who are in need."

The Russian paper noted that while much of the aid arriving in the Donbas comes from Russia, a lot is also coming from the rest of Ukraine, despite the fighting. "There is assistance from Ukraine - not from the government, but from ordinary people from Kiev, Dnepropetrovsk, Odessa, Zaporozhye, Kharkov and even Lvov and Rovno (in the more anti-Russian, Western portions of the state). Help is sent despite the current public mood, with an understanding that the residents of Donetsk should not starve, that the ongoing blockade is inhumane."

Vladimir Putin Embodies the Russian Mindset

(ELBLĄG, Poland) -- Comedian Norm Macdonald was fond of pointing out that Germans love David Hasselhoff. As true as it may have been (and may still be), Germany's infatuation with "The Hoff" pales in comparison to Russia's admiration of Vladimir Putin, that archaeology-loving, race-car-driving, tiger-tranquilizing, bare-chested survivalist known affectionately to some former world leaders as Pooty-Poot.

A new poll by AP-NORC Center confirmed yet again that, despite a deeply troubled economy, international notoriety, and a ruble that has collapsed in value, Russians are standing by their man with a stunning 81% approval rating. This is not a fluke result. The Levada Center, which has conducted monthly opinion polling on Mr. Putin since he first became prime minister in August 1999, shows similar numbers. (See chart.)

The raw data provided by the Levada Center via RussiaVotes.org indicates that Mr. Putin has maintained an approval rating of 61% or higher since he has assumed high public office. (The only exceptions were his first two months in office when many Russians still didn't know who he was.)

What can we conclude from this? An Eastern European political observer commented that Russians may be afraid to admit that they disapprove of Mr. Putin. While the data does not preclude that explanation, I find it unconvincing. Mr. Putin's popularity went soaring within months of his taking office, well before he began his autocratic consolidation of power. Moreover, his approval rating has remained high for 15 years. The more tyrannical he behaves, the more popular he becomes.

Putin's popularity, therefore, is likely to due something else: Russians don't think highly of Western-style democracy.

The Moscow Times, reporting the results of a different Levada Center poll, wrote that 45 percent of Russians believed a Western-style democracy would be destructive to the country. Along similar lines, an op-ed in USA Today explained that "in Russia's political tradition, where the leader stands above the law, Putin is popular because he is powerful."

The unsettling conclusion is that an anti-democratic, tyrannical bully who is willing to invade his neighbors for the sake of Russian glory is exactly the sort of leader Russians want. Mr. Putin is not acting in defiance of the will of the people; rather, he is the embodiment of the Russian mindset. This is deeply troubling.

Last year, I wrote an article in response to Mr. Putin's NYT op-ed titled, "The Dangers of Russian Unexceptionalism." At the end, I concluded that I wished that "Russians will get the truly exceptional leader that they have always deserved." Unfortunately, I was wrong. Russians want Putin as their leader, and thus, they deserve whatever economic catastrophe likely awaits them in the not-too-distant future. 

As ye sow, so shall ye reap.

(AP photo)

Central Europe Seeks a New Way Forward

Twenty-five years ago, the peoples of Central and Eastern Europe could begin to hope. They could hope for lives free of the fear of Communism and the threat of war. They could look west and see a European Union that was consolidating and inviting their countries to sign on to its drive for enlargement. When the NATO-Russia Council was formed in 2002, it even seemed like Russia might be ready to partner with the West.

Hopes started to fade in 2004. The Orange Revolution in Ukraine seemed to bring the Russian bear out of hibernation. Moscow saw the movement as being engineered by the West and spent the next decade working to avert the risk of a pro-Western Ukraine. 
 
By 2014, hope has given way to fear for these states - fear that Russian aggression could once again reach out to them. The rest of Europe, it seems, has other problems and priorities. The French and Spanish are focused on internal budget debates and the stability of the eurozone, while the countries of Southern Europe are left to address the social fallout of low employment. But the populations of Central and Eastern Europe are  increasingly aware of something history has taught them to call the "Russian danger." This question is one of degree: In the greater fight against revanchist Russia, how much support do the countries of Central and Eastern Europe have? And what do these states need to do to enhance their security moving forward?

A friend in Brussels
 
The Ukrainian crisis has done much to show the constraints NATO and the European Union face. The institutions have been at the core of Central and Eastern European countries' foreign policies since the early 1990s, as these countries became members and took the first steps toward integration. But there is no foreign policy alignment at the supranational level - EU leaders are still prioritizing national interests that often differ and sometimes diverge, even as Brussels publishes bland common statements condemning Russian aggression. So how reliable a partner is Brussels? The breakout of the Ukraine crisis itself indicated a failure of the EU Eastern Partnership initiative, but on the other hand it is because of local support for the diplomatic efforts of the European Union that the pro-Russian government in Kiev was overthrown, and a pro-EU government is in power now. The European Union has taken diplomatic measures against Moscow in the form of economic sanctions, and it has supported Moldova and Georgia's efforts to maintain a pro-EU stance. Thus we see the European Union's power of influence remains ponderous, even if its policies are limited to the minimum common denominators that its member states share.
 
NATO has problems of its own: With no European army, and with Western European defense budgets at an ebb, the transatlantic alliance depends on the United States for 80 percent of its operational capacity, while it continues to abide by the consensus rule to approve any action. Divergent priorities among European NATO members - notably Germany and France - proved stark as alliance member states pursued their own strategic interests within the NATO framework during recent crises. (The bellwether example being the intervention in Libya in 2011.) However, NATO in its own way has made notable attempts to support its Eastern European members. U.S. forces are on permanent rotation in the region, and NATO troops participate in military joint exercises with member states' armies here. 

In pursuit of an alliance architecture
 
Wariness of Russia already spurred Central Europe to consider new strategic alliances before the outset of the Ukraine crisis. These took the form of regional initiatives such as the Visegrad Group, or the emphasis on bilateral relations between Poland and Romania. All of these efforts aimed to deepen cooperation and enhance defense capabilities. To this point, they remain more a matter of intent than a reality - the Visegrad Group exists only on paper - and have borne little tangible result.  

The security needs of each country in this borderland region involve a constant struggle to balance the influence of, and countries' dependence on, Russia and the West. Recent demonstrations in the region show the extent of concern over the growth of Russian influence. During recent protests in Hungary that were ostensibly about domestic policies, demonstrators shouted their opposition to Budapest's friendly relationship toward Moscow. In the Czech Republic, the anniversary of the Velvet Revolution was marked by demonstrations against what the public perceived to be the president's pro-Russian stance. During the brief demonstrations after the announcement of the surprising electoral result in Romania, crowds in the country's largest cities exulted at the victory of President Klaus Iohannis. They waved American and British flags, and they put their antipathy for Moscow and their affinity for the United States in full view. 
 
The process of forming and maintaining a governing coalition following the parliamentary elections in Moldova will test the sustainability of that country's Western orientation. While Moldova is party to the EU's Eastern Partnership initiative, launched in 2009, Chisinau's ties to Moscow are deeply rooted in its history as a former Soviet republic. On the other hand, ties to the European Union have yet to yield substantial benefits. Yet, while the ballot outlined a divided and highly vulnerable society, it also showed a willingness to align with the West. It seems that a visa liberalization regime proffered by the European Union, and Brussels' continued rhetorical encouragement of Moldova's efforts, have yielded positive results. Romania has also actively supported linking Europe to Moldova, a country that seems to still be searching for its soul.
 
Poland has boosted the European Union's profile in Moldova through high-level visits to Chisinau this year. Poland is one of the chief backers of the Eastern Partnership, and Warsaw has always portrayed itself as a regional leader and a bulwark on the borderline between Russia and the West. Warsaw views its partnership with Bucharest as ever more crucial - it sees the Black Sea, post-Crimea invasion, as a theater of operations just as important as the Baltic Sea.
 
One key area where Poland and Romania share similar views is in the energy sector: Both believe the European Union needs a common policy on energy, with the goal to diminish dependence on Russian gas. EU Council President Donald Tusk, formerly Poland's prime minister, has made it a mission for his mandate to build an EU energy union, replacing the current status quo of a union formed of inefficient "energy islands." However, experience tells us that coordinating among the 28 European states is a hard task, especially since some member states, such as Hungary and Bulgaria, are going to need plenty of persuasion to diminish their reliance on relatively cheap Russian gas supplies, even after the demise of the South Stream project. Meanwhile, others worry that a more unified system would expose their national energy champions to external competition. National protectionism is still powerful force in the European Union. 

Europe has tried to diversify its energy sources. Liquefied natural gas terminals are being built in the Baltic region, Poland included, and the European Union scored a tactical victory against Russia on South Stream. But so long as it lacks an aligned foreign policy, Central and Eastern Europeans will continue to see Europe as a soft, reactionary power. In the post-post Cold War period, image matters only until realpolitik intervenes - as we've seen in Ukraine. 

Russia is far from weak, but its power has been undercut by economic problems. The Russian economy was already slowing before the crisis over Ukraine erupted. Tensions have only made the situation worse. Russian economic growth is flat, the ruble will continue to slide, oil prices are now falling, foreign investment has been cut by 50 percent, and capital flight will reach $100 billion by the end of the year. The Ukrainian crisis, the confrontation with the West, and sanctions have severely stressed Russian leadership. Russia doesn't resemble the Soviet Union prior to 1980, when leadership was supported by an ideology that was either believed or feared. Putin is not Stalin, and even if he is a powerful Russian leader, he is not omnipotent - he has to take into account the wishes of his supporters. This is why he will need to keep lines of communications with the Europeans open.

The European Union is weakened and divided, facing what Commission President Jean-Claude Junker has called "an existential crisis." European disagreements affect NATO consensus. The United States is revisiting its role in the region without disengaging from other crises in the world. All of this creates a necessity to craft regional alliances to engage with the United States and draw it further into European affairs. As Russia has built its belt of frozen conflicts from Eastern Ukraine to the Caucasus, the Central and Eastern Europeans need to counter with a regional belt of shared economic and military concerns - a belt bound by Western values. 

Looking Ahead to a Russian Centennial

In less than three years, Russia will mark an occasion sure to arouse controversy and emotion: the 100th anniversary of the October 1917 Revolution, one of the defining moments of the 20th Century. The revolution uprooted the Russian population, split the country, and in the upheaval that ensued, millions lost their lives or fled their homes to join diasporas overseas. What followed was the establishment of a Communist regime that would remain one of the dominant global forces until the early 1990s: The Soviet Union's birth pangs were of war and unprecedented devastation. As the dust settled, the victorious Communist Party set out to establish total control of their territory's social and historical narrative, ensuring that only the Soviet side of the story was seen as official, or indeed even seen at all.  

It is not yet clear what line Russia's contemporary leaders will take in marking this centennial. During the Cold War, the Soviet government ensured that its revolutionary victory was celebrated as a massive, countrywide pageant in which the entire state must participate. Its purpose was to elicit a patriotic outpouring of gratitude for the achievements of the Soviet regime. Soviet media and Moscow's massive propaganda machine portrayed the actions of the Communist revolutionaries as just, necessary and inviolate. The "Reds" - Communist forces and their allies - were the good guys, while the "Whites" - counterrevolutionaries, monarchists, the pro-Tsarist nobility, Western imperialists and former Tsarist military elites - were represented as antagonistic, unjust, evil, and representatives of a rotten regime whose time had come. "Whites" had to be destroyed in order to make way for a new country whose bright future would be guided by social, economic and political egalitarianism. 

A chance to review history

Following the dissolution of the USSR, when a more objective view of the October Revolution could be attained - with archives and numerous documents declassified - many competing narratives emerged about events that had been so carefully guarded by the Soviet government - including what really transpired during the bloody civil war of 1917-1920. Vladimir Putin will face a dilemma in 2017: how to mark the anniversary of the demise of the a Russian Empire that lasted 400 years, and whose former glory he is seeking to partially reestablish, while at the same time according credibility and respect to the events that birthed a massive Soviet superpower. 

In fact, 1917 was marked by two Russian revolutions - the abdication of Tsar Nicholas II in February, followed by a Communist coup in October of that year. The former event led to the establishment of a democratic Russian parliament as the central ruling authority - the Provisional Government - while the latter was followed by a civil war that wrecked the country's economy and destroyed its social strata and political order before the emergence of a strong, centralized Soviet Union. 

During that pivotal year, the Russian Empire and its newly formed government faced a confluence of adverse factors that led to its eventual downfall: Its economy was under enormous economic strain due to World War I - millions of soldiers were manning the front lines and not the factories or farms. Meanwhile a string of military defeats at the hands of Germans begat a lack of confidence in the ruling elite's ability to assert the glory of the empire and lead the nation. The Provisional Government - made up of liberals, socialists and otherwise reform-minded politicians - had no answer for these vast challenges. Throughout society, competing political narratives and principles emerged to challenge Russia's monarchy and its political and social structures. 

At that pivotal moment in the country's democratic infancy, pro-Communist forces seized the initiative and led a coup in October that disbanded the Provisional Government, seized control of the capital - Petrograd - and pitted many competing interests against each other in what would eventually become a civil war of - Reds against Whites. Soviet propaganda later portrayed revolutionary actions as necessary in order to save the nation, rescue it from economic and political decline, and establish a strong, centralized regime with the ability to lead the nation and realize its full potential. In the Soviet view, the bloody civil war was needed to sweep aside any reactionary forces that sought to return the Empire to the status quo - either by restoring the Tsar to the throne or by keeping the power in the hands of the nobility and the emerging capitalist classes who had driven Russia's integration into the global economy.

Following the events of 1917, Soviet propaganda rallied the masses to eventual victory with simple slogans that criticized "Western imperialist" meddling in Russian affairs and sought to portray capitalist entities as foreign to Russian historical and social principles. While the industry that brought modernization to the Russian Empire prior to World War I produced the working classes so intrinsic to Soviet revolutionary victory, they were seen as agents of foreign influence and of principles that stood in the way of a unique system championed by the Communist Party across the former Russian Empire. 

In the past several years, Putin's government has employed a socio-political narrative that capitalizes on Russia's failed transition to a full market economy and to Western-style democracy between 1991-2001. Today, large segments of Russian society rue that decade. It is seen by many as a time of unrealized hope, of loss of economic power and global prestige, of a breakdown of the rule of law, a rise in criminality, and of military instability in regions such as Chechnya and the Caucasus. Putin's popularity is owed in large part to the real and perceived steps he has taken to centralize power for the sake of the country's economic and social stability. Even today, as the Russian economy and state face considerable pushback to their actions in eastern Ukraine, the majority of the population supports the government against what many view as Western influence in territories that were historically under Russian influence. 

As the anniversary of both 1917 revolutions approaches, Putin's government will have to choose how to celebrate events with so much importance to the history of Russian state. Authorities could draw a parallel between the months from February to October 1917 and the years from 1991 to 2001, emphasizing that Western liberal notions of representative democracy and capitalist economic principles have repeatedly failed to address the need for stability of a large state with so many social, economic, ethnic, and cultural nuances. And while troves of information about Red and White excesses during the civil war are readily available to the Russian population, Putin would not let slip by a chance to emphasize that the October revolution led to the establishment of the Soviet Union as a superpower. Russians are already indulging in a revival of cult Soviet personalities such as Joseph Stalin, and Putin has called the dissolution of Soviet Union in 1991 "the greatest geopolitical catastrophe of the century."  As the 2017 centennial dates approach, the Russian government will try to strike a balance: acknowledging the negative consequences of the February and October events, while seeking to drive home the idea that it was all for Russia's greater good.

(AP photo)