In previous years, my tradition was to review the previous year before launching into new predictions. I find this boring and will now forego the exercise, though in passing I will note that many of the defining traits in 2010 - the secular rise of China and of “The Rest” more generally; political dysfunction in the US; growing fissures in Europe, in contrast to Eurasian (re)integration; the rising prominence of the Arctic - have remained dominant into this year. The major new development that neither I nor practically anyone else foresaw was the so-called “Arab Spring”, as part of a pattern of increasing political stress in many other states: Occupy Wall Street and its local branches in the West; the Meetings for Fair Elections in Russia; Wukan in China and anti-corruption protests in India. I don’t disagree with TIME’s decision to nominate The Protester as its person of the year. However, as I will argue below, the nature of protest and instability is radically different in all these regions. I will finish up by reviewing the accuracy of my 2011 predictions from last year.

1. There is little doubt that Putin will comfortably win the Presidential elections in the first round. The last December VCIOM poll implies he will get about 60%. So assuming there is no major movement in political tectonics in the last three months – and there’s no evidence for thinking that may be the case, as there are tentative signs that Putin’s popularity has began to recover in the last few weeks from its post-elections nadir. Due to the energized political situation, turnout will probably be higher than than in the 2008 elections – which will benefit Putin because of his greater support among passive voters. I do think efforts will be made to crack down on fraud so as to avoid a PR and legitimacy crisis, so that its extent will fall from perhaps 5%-7% in the 2011 Duma elections to maybe 2%-3% (fraud in places like the ethnic republics are more endemic than in, say, Moscow, and will be difficult to expunge); this will counterbalance the advantage Putin will get from a higher turnout. So that’s my prediction for March: Putin wins in the first round with 60%, followed by perennially second-place Zyuganov at 15%-20%, Zhirinovsky with 10%, and Sergey Mironov, Mikhail Prokhorov and Grigory Yavlinsky with a combined 10% or so. If Prokhorov and Yavlinsky aren’t registered to participate, then Putin’s first round victory will probably be more like 65%.

2. I will also go ahead and say that I do not expect the Meetings For Fair Elections to make headway. Despite the much bigger publicity surrounding the second protest at Prospekt Sakharova, attendance there was only marginally higher than at Bolotnaya (for calculations see here). So the revolutionary momentum was barely maintained in Moscow, but flopped everywhere else in the country – as the Medvedev administration responded with what is, in retrospect, a well balanced set of concessions and subtle ridicule. Navalny, the key person holding together the disparate ideological currents swirling about in these Meetings, is not gaining ground; his potential voters are at most 1% of the Russian electorate. And there is no other person in the “non-systemic opposition” with anywhere near his political appeal. There will be further Meetings, the biggest of which – with perhaps as many as 150,000 people – will be the one immediately after Putin’s first round victory; there will be the usual (implausibly large) claims of 15-20% fraud from the usual suspects in the liberal opposition and Western media. But if the authorities do their homework – i.e. refrain from violence against peaceful protesters, and successfully reduce fraud levels (e.g. with the help of web cameras) – the movement should die away. As I pointed out in my article BRIC’s of Stability, the economic situation in Russia – featuring 4.8% GDP growth in Q3 2011 – is at the moment simply not conductive to an Occupy Wall Street movement, let alone the more violent and desperate revolts wracking parts of the Arab world.

3. Many commentators are beginning to voice the unspeakable: The possible (or inevitable) disintegration of the Eurozone. I disagree. I am almost certain that the Euro will survive as a currency this year and for that matter to 2020 too. But many other things will change. The crisis afflicting Europe is far more cultural-political than it is economic; in aggregate terms, the US, Britain and Japan are ALL fiscally worse off than the Eurozone. The main problem afflicting the latter is that it suffers from a geographic and cultural rift between the North and South that is politically unbridgeable.

The costs of debt service for Greece, Portugal, Italy, and Spain are all quickly becoming unsustainable. They cannot devalue, like they would have done before the Euro; nor is Germany prepared to countenance massive fiscal transfers. The result is the prospect of austerity and recession as far as the eye can see (note that all these countries also have rapidly aging populations that will exert increasing pressure on their finances into the indefinite future). Meanwhile, “core Europe” – above all, Germany – benefits as its superior competitiveness allows it to dominate European markets for manufactured goods and the coffers of its shaky banking system are replenished by Southern payments on their sovereign debt.

The only way to resolve this contradiction is through a full-fledged fiscal union, with big longterm transfers from the North to the South. However, the best the Eurocrats have been able to come up with is a stricter version of Maastricht mandating limited budget deficits and debt reduction that, in practice, translates into unenforceable demands for permanent austerity.  This is not a sustainable arrangement. In Greece, the Far Left is leading the socialists in the run-up to the April elections; should they win, it is hard to see the country continuing on its present course. On the other side of the spectrum, the Fidesz Party under Viktor Orbán in Hungary appears to be mimicking United Russia in building a “managed democracy” that will ensure its dominance for at least the next decade; in the wake of its public divorce with the ECB and the IMF, it is hard to imagine how it will be able to maintain deep integration with Europe for much longer. (In general, I think the events in Hungary are very interesting and probably a harbinger of what is to come in many more European countries in the 2010′s; I am planning to make a post on this soon).

Maybe not in 2012, but in the longer term it is becoming likely that the future Europe will be multi-tier (not multi-speed). The common economic space will probably continue growing, eventually merging with the Eurasian Union now coalescing in the east. However, many countries will drop out of the Eurozone and/or deeper integration for the foreseeable future – the UK is obvious (or at least England, should Scotland separate in the next few years); so too will Italy (again, if it remains united), Greece, the Iberian peninsula, and Hungary. The “core”, that is German industrial muscle married to Benelux and France (with its far healthier demography), may in the long-term start acquiring a truly federal character with a Euro and a single fiscal policy. But specifically for 2012, I expect Greece to drop out of the Eurozone (either voluntarily, or kicked out if it starts printing Euros independently, as the former Soviet republics did with rubles as Moscow’s central control dissipated). The other PIGS may straggle through the year, but they too will follow Greece eventually.

I expect a deep recession at the European level, possibly touching on depression (more than 10% GDP decline) in some countries.

4. How will Russia’s economy fare? A lot will depend on European and global events, but arguably it is better placed than it was in 2008. That said, this time I am far more cautious about my own predictions; back then, I swallowed the rhetoric about it being an “island of stability” and got burned for it (in terms of pride, not money, thankfully). So feel free to adjust this to the downside.

• The major cause of the steep Russian recession of 2008-2009 wasn’t so much the oil price collapse but the sharp withdrawal of cheap Western credit from the Russian market. Russian banks and industrial groups had gotten used to taking out short-term loans to rollover their debts and were paralyzed by their sudden withdrawal. These practices have declined since. Now, short-term debts held by those institutions have halved relative to their peak levels in 2008; and Russia is now a net capital exporter.
• I assume this makes Russia far less dependent on global financial flows. Though some analysts use the loaded term “capital flight” to describe Russia’s capital export, I don’t think it’s fair because the vast bulk of this “flight” actually consists of Russian daughters of Western banking groups recapitalizing their mothers in Western Europe, and Russians banks and industrial groups buying up assets and infrastructure in East-Central Europe.
• The 2008 crisis was a global financial crisis; at least *for now*, it looks like a European sovereign debt crisis (though I don’t deny that it may well translate into a global financial crisis further down the line). There are few safe harbors. Russia may not be one of them but it’s difficult to say what is nowadays. US Treasuries, despite the huge fiscal problems there? Gold?
• Political risks? The Presidential elections are in March, so if a second crisis does come to Russia, it will be too late to really affect the political situation.
• Despite the “imminent” euro-apocalypse, I notice that the oil price has barely budged. This is almost certainly because of severe upwards pressure on the oil price from depletion (i.e. “peak oil”) and long-term commodity investors. I think these factors will prevent oil prices from ever plumbing the depths they briefly reached in early 2009. So despite the increases in social and military spending, I don’t see Russia’s budget going massively into the red.
• What is a problem (as the last crisis showed) is that the collapse in imports following a ruble depreciation can, despite its directly positive effect on GDP, be overwhelmed by knock-on effects on the retail sector. On the other hand, it’s still worth noting that the dollar-ruble ratio is now 32, a far cry from what it reached at the peak of the Russia bubble in 2008 when it was at 23. Will the drop now be anywhere near as steep? Probably not, as there’s less room for it fall.
• A great deal depends on what happens on China. I happen to think that its debt problems are overstated and that it still has the fiscal firepower to power through a second global crisis, which should also help keep Russia and the other commodity BRIC’s like Brazil afloat. But if this impression is wrong, then the consequences will be more serious.

So I think that, despite my bad call last time, Russia’s position really is quite a lot more stable this time round. If the Eurozone starts fraying at the margins and falls into deep recession, as I expect, then Russia will probably go down with them, but this time any collapse is unlikely to be as deep or prolonged as in 2008-2009.

5. Largely unnoticed, as of the beginning of this year, Russia, Belarus, and Kazakhstan became a common economic space with free movement of capital, goods, and labor. Putin has also made Eurasian (re)integration one of the cornerstones of his Presidential campaign. I expect 2012 will be the year in which Ukraine joins the Eurasian common economic space. EU membership is beginning to lose its shine; despite that, Yanukovych was still rebuffed this December on the Association Agreement due to his government’s prosecution of Yulia Tymoshenko. Ukraine can only afford to pay Russia’s steep prices for gas for one year at most without IMF help, and I doubt it will be forthcoming. Russia itself is willing to sit back and play hardball. It is in this atmosphere that Ukraine will hold its parliamentary elections in October. If the Party of Regions does well, by fair means or foul, it is not impossible to imagine a scenario in which accusations of vote rigging and protests force Yanukovych to turn to Eurasia (as did Lukashenko after the 2010 elections).

6. Russia’s demography. I expect births to remain steady or fall slightly (regardless of the secular trend towards an increasing TFR, the aging of the big 1980′s female cohort is finally starting to make itself felt). Deaths will continue to fall quite rapidly, as excise taxes on vodka – the main contributor to Russia’s high mortality rates – are slated to rise sharply after the Presidential elections.

7. Obama will probably lose to the Republican candidate, who will probably be Mitt Romney. (Much as I would prefer Ron Paul over Obama, and Obama over Romney). I have an entire post and real money devoted to this, read here.

The US may well slip back towards recession if Europe tips over in a big way. I stand by my assertion that its fiscal condition is in no way sustainable, but given that the bond vigilantes are preoccupied with Europe it should be able to ride out 2012.

8. There is a 50% (!) chance of a US military confrontation with Iran. If it’s going to be any year, 2012 will be it. And I don’t say this because of the recent headlines about Iranian war games, the downing of the US drone, or the bizarre bomb plot against the Saudi ambassador in the US, but because of structural factors that I have been harping on about for several years (read the “Geopolitical Shocks” section of my Decade Forecast for more details); factors that will make 2012 a “window of opportunity” that will only be fleetingly open.

• Despite the rhetoric, the US does not want to get involved in a showdown with Iran due to the huge disruption to oil shipping routes that will result from even an unsuccessful attempt to block of the Strait of Hormuz. BUT…
• While a nuclear Iran is distasteful to the US, it is still preferable to oil prices spiking up into the high triple digits. But for Israel it is a more existential issue. Netanyahu, in particular, is a hardliner on this issue.
• The US has withdrawn its troops from Iraq. In 2010, there were rumors that the US had made it clear to Israel that if it flew planes over Iraq to bomb Iran they would be fired upon. This threat (if it existed) is no longer actual.
• The US finished the development of a next-generation bunker-busting MOP last year and started taking delivery in November 2011. But the Iranians are simultaneously in a race to harden and deepen their nuclear facilities, but this program will not culminate until next year or so. If there is a time to strike in order to maximize the chances of crippling Iran’s nuclear program, it is now. It is in 2012.
• Additionally, if Europe goes really haywire, oil prices may start dropping as demand is destroyed. In this case, there will be an extra cushion for containing fallout from any Iranian attempt to block off the Strait of Hormuz.
• Critically, the US does not have to want this fight. Israel can easily force its hand by striking first. The US will be forced into following up.

The chances of an Azeri-Armenian war rise to 15% from last year’s 10%. If there is any good time for Azerbaijan to strike, it will be in the chaotic aftermath following a US strike on Iran (though the same constraints will apply as before: Aliyev’s fears of Russian retaliation).

From "The Oil Drum"

9. Though I usually predict oil price trends (with great and sustained accuracy, I might add), I will not bother doing so this year. With the global situation as unstable as it is it would be a fool’s errand. Things to consider: (1) Whither Europe? (demand destruction); (2) What effect on China and the US?; (3) the genesis of sustained oil production decline (oil megaprojects are projected to sharply fall off from this year into the indefinite future); (4) The Iranian wildcard: If played, all bets are off. But I will more or less confidently predict that global oil production in 2012 will be a definite decrease on this year.

If investing, I would go into US Treasuries (short-term) and gold to hedge against the catastrophic developments; yuan exposure (longterm secular rise) and and US CDS (potential for astounding returns once SHTF). Property is looking good in Minsk, Bulgaria, and Murmansk. Any exposure to Arctic shipping or oil & gas is great; as the sea ice melts at truly prodigious rates, the returns will be amazing. I do think the Euro will survive and eventually strengthen as the weaker countries go out, but not to the extent that I would put money on it. Otherwise, I highly agree with Eric Kraus’ investment advice.

10. China will not see a hard landing. It has its debt problems, but its momentum is unparalleled. Economists have predicted about ten of its past zero collapses.

11. Solar irradiation was still near its cyclical minimum this year, but it can only rise in the next few years; together with the ever-increasing CO2 load, it will likely make for a very warm 2012. So, more broken records in 2012. Record low sea ice extent and volume. And perhaps 100 vessels will sail the Northern Sea Route this year.

12. Tunisia is the only country of the “Arab Spring” that I expect to form a more or less moderate and secular government. According to polls, 75% of Egyptians support death for apostasy and adultery; this is not an environment in which Western liberal ideas can realistically flourish. Ergo for Libya. I can’t say I have any clue as to how Syria will turn out. Things seem strange there: Russia and Israel are ostensibly unlikely, but actually logical, allies of Assad, while the US, France, the UK, and the Gulf monarchies are trying their best to topple him. These wars are waged in the shadows.

I've got some ways to go before I reach Navalny's demagogic stature.

13. As mentioned in the intro, 2011 has been a year of protest. As I argued in BRIC’s of Stability, in countries like China, Russia, or Brazil they will remain relatively small and ineffectual. Despite greater scales and tensions, likewise in Europe (though Greece may be an exception); these are old societies, and besides they are relatively rich. They won’t have street revolutions. I do not think Occupy Wall Street has good prospects in the US. By acting outside the mainstream (as part of a “non-systemic opposition”, to borrow from Russian political parlance) it remains irrelevant – the weed smoking and poor sartorial choices of its members works against its attaining respectability – and municipalities across the US are moving to break up their camps with only a few squeaks of protest. (This despite the arrests of 36 journalists, a number that had it been associated with Russia would have cries of Stalinism splashed across Western op-ed pages). I say this as someone who is broadly sympathetic with OWS aims and has attended associated events in Berkeley.

The nature of protest in the Arab world is fundamentally different, harkening back to earlier and more dramatic times: Bread riots, not hipsters with iPhones; against cynical and corrupt dictators, not cynical and corrupt pseudo-democrats; featuring fundamental debates about reconciling democracy, liberalism and religion, as opposed to weird slogans like “Occupy first. Demands come later.” Meh.

14. The world will, of course, end on December 21, 2012.

What about the 2011 Predictions?

1) My economic predictions were basically correct: “Today I’d repeat this, but add that the risks have heightened… The obvious loci of the next big crisis are the so-called “PIGS” (Portugal, Italy, Greece, Spain), and Ireland, Belgium and Hungary.”

2) Neither the Iranian war (chance: 40%) or an Azeri-Armenian war (chance: 10%) took place. If they don’t happen in 2012, their chances of happening will begin to rapidly decline.

3) Luzhkov still hasn’t been been hit with corruption charges, but merely called forth as a witness. Wrong.

Prediction of 3.5%-5.5% growth for Russia was exactly correct (estimates now converging to 4.0%-4.5%).

With headlines this December cropping up such as “End is nigh for Russia’s ‘reset’ with US“, my old intuition that US – Russia imperial rivalry couldn’t be set aside with a mere red plastic button may have been prescient: “In foreign policy, expect relations with the US to deteriorate.”

4) Pretty much correct about the US and the UK, though I didn’t predict anything drastic or unconventional for them.

5) “Oil prices should stay at around $80-120 in 2010 and production will remain roughly stable as increased demand (from China mostly) collides with geological depletion.” Totally correct, as usual.

6) China will grow about 9.4% this year, well in line with: “China will continue growing at 8-10% per year. Their housing bubble is a non-issue; with 50% of their population still rural, it isn’t even a proper bubble, since eventually all those new, deserted apartment blocs will be occupied anyway.”

7) 2011 was the warmest La Nina year on record, so in a sense thermometers did break records this year.

“Speaking of the Arctic, as its longterm ice volume continues to plummet and sea ice extent retreats, we can expect more circumpolar shipping. I wouldn’t be surprised to see up to 10 non-stop voyages along the Northern Sea Route from Europe to China, following just one by MV Nordic Barents in 2010.” If anything, I low-balled it. 34 ships made the passage this year! Sea ice cover was the second lowest on record, and sea ice volume was the lowest. So in the broad sense, absolutely correct.

“Likewise, expect the Arctic to become a major locus of investment.” This year, plans were announced to double the capacity of the Port of Murmansk by 2015.

Wrong on the Wikileaks prediction. The insurance file was released by The Guardian’s carelessness (whose journalists, David Leigh and Luke Harding, then proceeded to mendaciously lie about it), not by Assange. And the extradition proceedings are taking far longer than expected, though my suspicions that his case is politically motivated is reinforced by US prosecutors’ apparent pressure on Bradley Manning to implicate Assange in the theft of the State Department cables.

9) On Peter’s enthusiastic reminder, I did get my Russia Presidential predictions for 2012 wrong. Or 75% wrong, to be precise, and 20% right (those were the odds that I gave for Putin’s return back in May). I did however cover it separately on a different post, here. That said, I do not think the logic I used was fundamentally flawed; many other Kremlinologists ended up in the same boat (and most didn’t hedge like I did).

Just as with Russia, the Western media (beholden as it is to its power elite sponsors and anti-Rest ideology) peddles many tropes about China that cloud real understanding of this fascinating civilization-state. In the spirit of Sino Triumphalism, this is my attempt to set the record straight and overturn the lazy arguments used to dismiss, Brezhnev-like, China’s imminent rise to superpowerdom. My message to those Sinophobes: talk cooks no rice. For more on this topic see 1, 2, 3, 4, 5, 6.

十

MYTH: The lack of IP rights curbs innovation, so the Chinese economy will remain based on producing cheap knock-offs of superior Western goods.

REALITY: China now focuses on copying products because its technologically lagging, and as such it is much easier and cost effective to reproduce already existing products than to come up with your own. Much the same can (and was!) said of Japan in the 1960′s, or Germany in the 1880′s – but look at them now!

The lack of IP rights makes this assimilation far easier – why waste money paying rent to foreign software companies when you can use their products for free so easily? You’d have to be their stooge to do this! Throughout history, many successful developers, such as Germany and Britain, flouted IP rights and funded industrial espionage to modernize their economies. They only started praising the virtues of IP rights when they got rich to protect their own new interests.

With China already taking the leading positions in sectors such as High Speed Rail and supercomputers, the time when it joins the developed world in “kicking away the ladder” can’t be far off.

九

MYTH: Corruption and inequality is growing rapidly, which will lead to rising social tensions, economic stagnation, revolts, and collapse. 

REALITY: Corruption is largely irrelevant to economic growth, unless it is cripplingly high (which it definitely isn’t in China). For instance, only 9% of Chinese reported paying a bribe in 2010, which is actually the same as Japan.

True, inequality has risen sharply, with the Gini index reaching 47. This figure is similar to the US and lower than most Latin American countries, albeit far higher than in Europe. However, a peak in inequality is typical of countries in the middle of their industrial development, and is expected to fall in the coming years. Indeed, this seems to be already happening, with the poorer inland provinces beginning to grow faster than the wealthier coastal regions in recent years.

八

MYTH: The brouhaha over China today ignores its bad loans and real estate bubble, which will explode and sink its economy any day now. 

REALITY: Pundits have been ranting about China’s bad loans problem for a decade, but in reality the issue is less acute now than it was then. In the meantime it is the Western financial that collapsed (and had to be bailed out at huge taxpayer expense). Chinese leaders noticed this problem early and nipped it in the bud with a series of restructurings in the 2000′s.

The real estate bubble isn’t really a bubble because, no matter how many empty apartments there are, half of China’s population is still in the countryside and will continue moving into the cities for decades to come.

七

MYTH: Back in the 1980′s, there was the same hysteria about Japan becoming No. 1, and look what happened to them! This Sino triumphalism is nothing but a passing fad.

REALITY: China’s population is TEN TIMES bigger than Japan’s. Realistically, Japan could have never become the world’s biggest economy because doing so would have required its GDP per capita to rise to double that of the US. In stark contrast, China’s GDP per capita needs only be a QUARTER that of America for it to become the world’s largest economy. Some economists think that’s already happened (see below).

六

MYTH: The Communist Party suppresses all freedom of thought, which will inevitable lead to stagnation, regional rifts, and pro-freedom uprisings.

REALITY: First, the idea that the CCP truly suppresses free thought nowadays is a bit quaint. There are plenty of think-tanks – more than in the US – that are discussing exciting new concepts such as deliberative democracy, Comprehensive National Power, and new ways of measuring economic growth.

Second, the leadership is forward-thinking and responsive. To illustrate this, in a recent speech Hu Jintao called for a “circular economy” and “sustainable development.” (Can you imagine Obama voicing similar sentiments? The Republicans would devour him alive.) This is backed by concrete policy measures. For instance, in response to its reliance on coal China invested in renewable energy manufacturing capacity and now produces half the world’s wind turbines and solar panels.

Third, not only does democracy or the lack of it have no discernible effect on the speed of development – in fact, China itself is a refutation of that theory – but its not even that oppressive compared to countries commonly called “democratic.” So it jailed Liu Xiaobo for 11 years (who claims China would be better off under colonialism). But in the meantime, the Marxist activist Binayak Sen got life imprisonment in India, and the US is waging a campaign to shut down Wikileaks and imprison Julian Assange. No talk of a Nobel Peace Prize for those two.

Fourth, it is extremely arrogant to claim that China will necessarily want to follow in the footsteps of the West. It may well take its own sovereign road to democracy, such as a democratization of the current NEPist model. Even if it does democratize aka Taiwan, then why should it collapse? Its factories and people will remain in place; so will economic growth, albeit with a blip or two during the transition. And according to our “democratists” wouldn’t such a development make China stronger anyway?

As for George Friedman’s forecasts that a widening gulf between the coast and inland regions will cause the coastal elites to identify with foreign interests such as Japan and the US and break the power of the government… well, this is the same guy who goes on about The Coming War with Japan. No more comment required.

五

MYTH: Outside showpieces like Shanghai and a few other coastal cities the entire country struggles on in Third World poverty, illiteracy and immiseration.

REALITY: This is belied by fairly basic statistics. A country with 67% cell phone penetration, 36% Internet penetration, and more cars sold per year than in the US as of 2009 cannot be “Third World” be definition. Nor does a literacy rate of 97% or an infant mortality rate of 16/1000 jive with this description.

As of 2010, the IMF gives China a real GDP per capita of $7,500 (which is lower-middle income by international standards). However, in reality this is probably an underestimate. For instance, Thailand with a GDP per capita of $9,000 had manufacturing wages of $250 per month in 2009, as opposed to China’s $400 per month. Its consumption stats also indicate a higher living standard (which is all the more impressive given its high savings rate). In any case, China is a decidedly middle-income country.

四

MYTH: The People’s Liberation Army is full of rusty Soviet-era hardware and derelict warships that will be obliterated in a conflict with the US.

REALITY: Now resting on a solid economic foundation, the Chinese military is being rapidly modernized. In recent years it has unveiled its own drones, a fifth-generation fighter prototype, and a “carrier-killing” ballistic missile. It accounts for a third of global shipbuilding capacity, enabling a rapid naval buildup (even as US capabilities degrade due to fiscal problems and cost overruns). A recent RAND study indicates that China is already be able to establish air superiority over Taiwan in the event of a hot war over the straits.

As Paul Kennedy noted in The Rise And Fall Of The Great Powers (of which Chinese strategists are big fans), military power follows naturally in the wake of economic power. The Chinese economy will eventually be so much larger than everyone else’s in the Pacific basin that its neighbors will have no option but to acquiesce to its hegemony, even if it doesn’t win them over by its rapidly growing soft power.

The only military sphere in which China lags the US (and Russia) is in the size and sophistication of its strategic nuclear forces. But even there it may be stronger than it appears. It was recently revealed that it has built 5000km of tunnels in the hills of Hebei province. For all we know hundreds of ICBM’s could be hidden away there.

三

MYTH: The Chinese economy is dependent on exports for its economic growth, meaning that even if the US collapses it will bring the Chicoms down with it.

REALITY: This is a complete myth. Whereas gross exports are at 40% of GDP, what matters are NET EXPORTS – which are at just 7% of GDP. (In fact this past quarter it even reported a trade deficit). Or if we look at it regionally, those Chinese regions which export a lot are all located on the southern and south-eastern coasts, and account for less than 25% of the population; the rest of the country is far more autarkic.

Now true, a collapse in export demand will lead to a temporary rise in unemployment in those export-dependent regions. But the Chinese can do without the “heroic” American consumer. They’ll just consume more of their own production (as it increasingly the case anyway).

二

MYTH: China will grow old before it grows rich.

REALITY: No, it won’t. According to UN projections, its share of the population aged 15-65 will have dropped from 72.4% now to 68.9% by 2030 (by which time it will be a developed country by its current trajectory). For comparison, Japan’s working age population today is just 64.0% – that’s less than China two decades later!

Furthermore, there are still massive productivity gains to be collected from urbanizing another 20%-30% of the population. As peasants continue moving into the cities, the urban workforce which is the source of most added value production will continue growing well past the time China the total labor force begins shrinking. The decline in the numbers of children will enable each one to get a better education.

一

MYTH: Even if it grows at 10% a year, it will take China’s $5.9 trillion GDP decades to catch up to America’s $14.7 trillion GDP growing at 3% a year. That will come no sooner than 2025. And that’s assuming that Chinese GDP figures are accurate (they’re not, of course, given the Communist penchant for lying).

REALITY: This is a very common argument, even in respected venues, but one that shows fundamental economic illiteracy. The $5.9 trillion GDP is China’s NOMINAL GDP, which reflects a very weak yuan. If the yuan were to appreciate against the dollar, growth in nominal GDP will be much faster than real growth – and in fact IT IS, growing at nearly 25% for the past five years.

Its REAL GDP, which accounts for differences in international prices, is far bigger at $10.1 trillion and not far from America’s $14.7 trillion. But even this may be an underestimate. Back in 2008, the IMF and World Bank both reduced their estimates of China’s real GDP by around 40%; these revisions are considered questionable. Using those old figures, China would already be at America’s size. This is supported by comparisons of Chinese consumption (e.g. Internet access; manufacturing wages; etc) to other middle-income countries, which in my approximations give it a real GDP per capita of perhaps $12,000 and implying a total real GDP of $15-16 trillion.

The case for Chinese manipulation of statistics is unproven. One of the primary arguments here used to be that economic growth didn’t track electricity consumption. But that’s not too convincing in light of China overtaking the US in electricity consumption in 2011.

China’s economic growth has tracked South Korea’s very closely but with a 20 year lag (or 15 years using the old, bigger GDP estimates). Its real GDP per capita in 2000 was equivalent to Korea’s in 1980; as of 2010, it was equivalent to Korea’s in 1990. (The story for nominal GDP growth is remarkably similar: China’s number for 2010 is equivalent to Korea’s in 1988). Now if China continues following Korea’s historical per capita trajectory, it should have a real GDP of $22-$30 trillion by 2020 and $40-$55 trillion by 2030 (former figure based off current GDP estimates; latter off the bigger estimates). This means the US should be overtaken by 2020 at the latest and left in the dust soon after. Assuming a steady rate of convergence to international prices, China’s nominal GDP too should become the world’s biggest by the 2020′s.

The groundwork is secure. Human capital is the foremost determinant of economic growth rates, and China’s today is far higher than South Korea’s two decades ago (recent international standardized tests show that performance even in China’s poorest provinces is close to the OECD average, while Shanghai won global gold prize).

Now consider that China’s foremost obstacle to global superpowerdom is highly unlikely to grow quickly, is overburdened by fiscal deficits, and may yet default on its obligations – and that by then, China’s currency will likely be free floating. In that case, the yuan will be the most likely contender for the title of world’s reserve currency. Upon assuming it, its nominal GDP – and weight in the global economy – will become every bit as dominant as its real economy of steel mills and factories.

A Short History of Abundance Industrialism

Driven by an electro-mechanical revolution powered by a windfall of cheap oil, the world registered its highest GDP growth rates in the 1950-1973 period. The era was defined by self-confidence and a secular “myth of progress”, which reached its apogee with the 1969 moon landings. But the next decade saw the arrival of major discontinuities. American oil production peaked in 1970, and went into decline. Saudi Arabia settled into its role as the world swing producer, enabling it to inflict a severe “oil shock” on Western economies in 1973 to punish them for their support for Israel, to be followed by another in 1979 coinciding with the Islamic Revolution in Iran. The decade also saw milestones such as the publication of Limits to Growth, the ending of hyperbolic growth of the world system, and a new emphasis on conservation and sustainability (which led to significant improvements in fuel efficiency and pollution control – back then, the fruits were all low-hanging, so impressive results were not hard to achieve). Yet the first tentative steps towards sustainability were not to be followed through, as the newly-elected Reagan took office proclaiming “Morning in America!”, with its implicit promise of a return to a past with no future. It was a false dawn.

Thus began the “age of diminished expectations”. In the US, physical production by volume and real working class wages stalled in the 1970′s, and have since been on a plateau (slightly tilted up according to official statistics, slightly tilted down according to unofficial ones). The age of Mammon saw rising inequality, both within and between nations (the sole major exception being China whose ascent to world power began in the late 1970′s). As the American industrial base entered its long atrophy, its economy shifted towards construction, services, and finance, – symbolized by metastasizing suburbia – and made possible by new drilling by the oil majors in remoter areas like Alaska, the Mexican Gulf, and the North Sea, a political-security rapprochement with Saudi Arabia, the IT revolution, and the rise of multinational corporations exploiting globalizing markets and cybernetic technology in a flattening world. Sustainability went out the window; quite literally, as Carter’s solar panels were removed from the White House roof in 1986. Finally, the US harnessed its new role as the focal point of the emerging global neoliberal system to open up their economies to the world, unleashing China’s “surplus armies of labor” and the former USSR’s energy resources in the service of Pax Americana.

[Source: Tracking the ecological overshoot of the human economy, PNAS.]

This new era of international neoliberalism and developed country post-industrialism coincided with the genesis of humanity’s ecological overshoot of the carrying capacity of the Earth. Though the first global pollution alarm in the form of the “ozone hole” led to an impressive response involving a global agreement on the withdrawal of CFC production, the reaction to the growing specter of runaway climate change caused by man-made CO2 emissions – which is ultimately a far more serious issue – has been muted right up until 2009′s Copenhagen fiasco and today. Instead, the party continued in full blast throughout the 1990′s, for the US was too busy basking in the glow of the ostensible end-of-history triumph of “Western liberal democracy as the final form of human government”.

These hubristic visions of imminent utopia, of global drive-in democracy, collided with hard reality in the first decade of what was supposed to be a “new American century”. The United States is in a state of severe economic disequilibrium and has been in rapid decline relative to its competitors – a condition reminiscent of the USSR in the 1980′s. The probable decline and fall of the global order of which it is the locus will constitute the defining trend of the next decade.

Shifting Winds: The End of Pax Americana

What is Pax Americana? It is the liberal, internationalist, post-Cold War order, which has extended its reach throughout the whole world barring a few socialist holdovers like Cuba and North Korea. Globalization, rule of law, human rights, liberal democracy, free markets, economic growth – these are its self-defined values, which it considers to be the apex of humanity’s socio-political evolution. Its critics, from Western leftists to Third World nationalists, decry it as an exploitative, ruinous, imperialist, hypocritical, end-of-history theology, with voluminous references to the inconsistent ways in which these values are practiced by their own sponsors, or wielded as weapons against its ideological and geopolitical competitors.

But these arguments will soon become academic. As demonstrated by Robert Ayres, there is a glaring hole at the center of modern macroeconomic theory – accounts of growth neglect the vital role of “useful work” (a function of exergy and technical efficiency), whose contribution far outweighs that of labor and capital combined. Both factors have been flattening in the US in recent years, making further growth unsustainable. Furthermore, studies in systems dynamics indicate that brittle systems, with poor “shock absorbers”, can be subject to so-called “cascade collapse“, in which failures at one node produce a self-amplifying resonance that causes many other nodes to fail. If this is an accurate description of the global System, then a setback in any one sphere – be it economic, financial, geopolitical, etc – could usher in a vicious spiral into anarchic apolarity on the international stage.

Pax Americana and its neoliberal ideological superstructure rests on three pillars: cheap oil, American dollars, and the US Navy. Like the legs of a tripod, they all survive – or fall – together. And today, they are crumbling. Let us examine the forces that will be undermining these pillars in the next decade:

Peak Oil

Contrary to the “doomer” worldview, it is almost certainly possible to sustain an industrial civilization without a drop of oil (though ceteris paribus it will be a materially poorer one, because of oil’s uniquely high EROEI). The problem is that today’s industrial system, especially in the US, is built in such a way – gas-guzzling SUV’s on asphalt roads slithering across endless vistas of soulless suburbia – that cheap oil is indispensable to making the commutes and credit flows, the jet flights and JIT production systems, function. An even bigger problem is that Hubbert’s predictions of a global oil peak are (roughly) on schedule: though delayed by the 1970′s oil shocks, it is likely that either 2008 or 2010 was the all-time peak, and oil production will now decline at an accelerating rate – even without accounting for possible discontinuities like a global credit implosion, a sudden collapse of Ghawar, the spread of revolution to Saudi Arabia, or Iranian mining of the Straits of Hormuz.

[Source: World Oil Production Forecast - Update November 2009, Oil Drum. Click to enlarge.]

The US spent prodigious sums to fight a war to open up Iraq’s oil reserves, but today its oil production is no higher than in 2000 (and hopes of massively increasing it are probably unrealistic). Russia has reconsolidated state control over its hydrocarbon deposits, discounting Western recriminations over its “resource nationalism”, and has successfully pushed back against Washington-backed “color revolutions”. Central Asia never proved to be the black gold lode of American geostrategic fantasy, and in any case it has since been closed off again by Russia. Due to their immense capital costs, environmental impact, and low energy-return-on-energy-invested (EROEI), there can be no salvation in tar sands or shale. Nor have there been any efforts at mitigation of the kind recommended in the Hirsch report. Any energy transition will be a very drawn-out process, considering the sheer scale of the infrastructure that will have to be replaced – and using continuously lower-EROEI energy sources!

As such, it can be said with a high degree of certainty that the world will soon experience a severe shortfall in liquid fuels. Because of its high degree of dependence on cheap oil, this will affect the US disproportionately, which will have to make good with demand destruction. The consequences will include major knock-on effects on consumers, who constitute the mainstay of American economic power.

State Insolvency

The geological realities of peak oil (2005-2010), in combination with soaring demand from industrializing Asia, have led to the worst crisis since the Great Depression, with the free-fall only being checked by a dizzying panoply of monetary flooding, fiscal stimulus, and government bailouts. As if this weren’t enough, the US faces rising entitlements costs as the baby boomers start retiring, a bloated military-industrial complex, and increasing commitments to Afghanistan with no timetable in sight (where there are now more US troops than there were at the peak of the Soviet intervention).

[The US budget deficit is predicted to permanently remain in the red even under the rosiest assumptions. As of now, it is the more pessimistic scenarios that are being born out - Republican refusals to raise tax rates or cooperate on Medicare; Soviet-like rhetoric about "defense cuts" while real military spending continues rising; etc.]

Now the major reason why the US has been able to afford both guns (the US military) and butter (its double deficits) in the face of deindustrialization was by giving its many foreign investors an atrocious rate of return, which they accepted in return for America’s “alpha” – its reputation as the largest economy, sole superpower, and global financial center, in other words, the “safe haven” par excellence. It also draws immense strength from the US dollar’s role as the global reserve currency, for instance by allowing it to comfortably buy oil at $-denominated prices even when the currency is weak. But with its “imperial overstretch” (see Afghanistan), moribund financial system, and a budget deficit north of 10% of GDP and projected to remain in the red for the foreseeable future – by some measures, US debt and fiscal metrics are worse than those of the PIGS on aggregate – will this American “alpha” survive? Probably not for much longer.

The creeping monetization of US debt will destroy investor confidence that they will ever make a positive return on their US bond investment. The withdrawal of a single major investor, especially if it coincides with a geopolitical shock, could set off a “cascading collapse” as other investors scurry away from US Treasury bonds. This will leave the US incapable of generating the primary surpluses to service its negative net foreign investment position, leading either to a compound debt trap or a classic emerging market-style currency crisis. Ice or fire? Given America’s democratic system and the bipartisan consensus on fiscal profligacy, I would bet on the latter.

Economic Decline

The collapse of what in some respects resembles an informal tributary system, channeling global (i.e. Asian) savings to the American consumer, will sound the death knell for Pax Americana. As Paul Kennedy argued in The Rise and Fall of the Great Powers, military power is ultimately subordinate to the economic base which supports it. The industrial base that won the Second World War and forged the American superpower has been in decline since the 1970′s – though on paper it boasted a high productivity growth rate, it masked a huge decline in the size and complexity of its “industrial ecosystem”. Mundane manufacturing, the automotive industry, and machine building have all experienced rapid decline; the heavily-subsidized aerospace and defense industries constitute the only major exceptions to this trend.

Now as long as globalization, free trade, and stability reigned, this did not portend international decline. Industrial hallowing out simply freed up workers into sectors that were more in demand, like restaurants, construction, services of all kinds, etc; and women gained many more economic opportunities. The US could get its manufactures from abroad, like Spain during its (literal) Golden Age. Furthermore, the transition from manufacturing to consumption and finance is historically not without precedents, being observed in the halcyon days of empires like Holland and Great Britain. After these former empires had established their initial industrial supremacy through mercantile means, they transitioned to free-trade regimes designed to reinforce their economic hegemony – and in so doing “kicked away the ladder” from countries trying to catch up. (The United States itself was one of the world’s most protectionist nations until the Second World War, at the end of which it accounted for half of global industrial output and drastically reduced tariff rates).

However, as pointed out above, the crumbling of two pillars of Pax Americana, cheap oil and the US dollar, makes the survival of today’s comfortable globalization highly unlikely. When the inflows of cheap credit from abroad cease; when oil flows decline due to geological, political, and geopolitical factors – the US will no longer be able to maintain its privileged position as the world’s “market dominant minority“, its overstretched armed forces will no longer have access to the lavish funding of the days of yore, and the neoliberal world order they upheld will come to an end.

Geopolitical Shocks

Facing the twinned specter of peak oil and fiscal insolvency and supported by an atrophied industrial base, Pax Americana could in fairness be described as a “brittle system” under a growing threat of collapse. Though it may yet fade away gradually into the night, to be slowly displaced by the state-centered, neo-Westphalian, mercantile reality of “world without the West“, it is altogether possible that geopolitical shocks will make the transition far more abrupt and chaotic than expected.

Though nothing’s certain, it is possible, likely even, that the biggest shock will emanate from a confrontation between Iran and the US in the Persian Gulf. Since 2005, the hardline IRGC paramilitary / intelligence clan, whose figurehead is Ahmadinejad), has been in the ascendant in Iran. Their power was further reinforced in 2009 when the Supreme Leader Khamenei sided with the IRGC in the aftermath of the abortive “Green Revolution” spearheaded by the waning “moderate” clerical clan (headed by Rafsanjani), in response to Mousavi’s electoral loss. These internal Iranian developments occurred in tandem with the rising tensions with Israel, Saudi Arabia, and the US over Iran’s pursuit of an nuclear bomb, amidst the window of opportunity left open to the Islamic Republic by the US quagmire in Iraq. Iran sees the Bomb as the best guarantor of regime security by allowing it to establish a regional hegemony in the Persian Gulf region.

This is unacceptable to everyone in the region. Israel views an Iranian bomb as an existential threat; Ahmadinejad expresses the opinion of 62% of Iranians when he says the Israel state should be wiped off the map. The Jewish state is now ruled  by Benjamin Netanyahu, a man who in 2007 opined: “It’s 1938, and Iran is Germany, and Iran is racing to arm itself with atomic bombs”. Not much room for compromise there. The rulers of Saudi Arabia, beset by Iranian-stoked ferment amongst their Shi’ite population and undermined by the Iran-backed al-Houthi insurrection on their Yemeni border, view the prospect of an Iranian bomb with similar trepidation. Though they will protest in public, they will be quite happy to see an Israeli-American strike on Iran; rumor has it that Saudi officials have given Israel permission to fly over their territory via backdoor diplomatic channels.

The US is hesitant. Striking Iran carries great risks. First, no matter how good and accurate your bombs are – the US has accelerated the development of a bunker-buster capable of penetrating 60m of reinforced concrete – they are only worth their weight if you know precisely where to strike. Iranian nuclear facilities are highly dispersed and concealed, making the extent of US intelligence on them uncertain. Second, Iran can mine the Strait of Hormuz and harass oil tankers with coastal shore batteries, diesel submarines, and merchant raiders. This will put at risk 20% of the global oil supply; even if the blockade proves ineffective, as predicted by most analysts, soaring insurance rates may result in oil prices spiraling into new highs due to unprecedentedly tight supplies. Third, the Islamic Republic has a panoply of retaliatory options at its disposal: a renewed Hezbollah missile barrage against Israel, increased support for Shi’ite insurgencies in the Arabian peninsula, and above all a resurgence of political violence and state instability in Iraq. As mentioned above, hopes have been pinned on Iraq to delay global peak oil by another decade. Yet it has always been a land of unfulfilled potential, its imminent oil production takeoff regularly stymied once per decade – in 1979 with the outbreak of the Iran-Iraq War, in 1991 with the Gulf War, in 2003 with the US invasion. It would not be out of character for its oil production to plummet again in 2012, in the face of renewed internecine warfare, Iranian incursions, and mining of the Strait of Hormuz.

Given all these risks and uncertainties, it is not surprising that the US is pursuing a cautious approach, restraining Israel and pushing for “crippling” sanctions on Iran, targeting its gasoline imports. However, the latter will not achieve much, especially since Russia – which has not received the firm recognition of its sphere of influence over the post-Soviet space that it really wants from Washington – will be able to torpedo any sanctions by allowing Iran to import gasoline through its Central Asian surrogates. Israel may grow impatient and eventually jump the gun without US permission. But Iran will likely consider Israeli and US actions to have been coordinated, and will embark on its “Project Mayhem.” The US may be forced to rush in and respond unprepared to contain the fallout as best it could. Now it is true that alarmist predictions that the US Navy will be crippled by Iranian low-tech swarm attacks are largely unsubstantiated, and there is no question that the US will have no trouble in gaining full air superiority over the obsolete Iranian integrated air defense system. However, defeating Iran’s dispersed retaliatory assets in detail may be a difficult and prolonged undertaking, perhaps even requiring the military occupation of strategic Iranian regions such as Khuzestan and Kish Island.

The US finds itself caught in a Catch-22 situation. Let Iran be, and it develops a nuclear deterrent allowing it to make a bid for regional hegemony – if it is not preempted by an Israeli strike. Attack Iran, and needless to say, anything worse than the most optimistic scenarios (in which the Strait of Hormuz only remains blocked for a few days) will constitute a tremendous physical and psychological shock for Pax Americana, a shock in which all its three pillars come under strain in the form of oil supply disruptions, financial turbulence, and prolonged aeronaval operations.

Endgame

In conclusion, given the inherent fragility of the neoliberal world order and the mounting stresses on it in the years ahead, stresses that could be explosively released in a major geopolitical crisis – possible in Iran, though major clashes in other hotspots like the Caucasus or the East China Sea cannot be dismissed – it is unlikely that Pax Americana will survive the decade.

Yet its collapse will not herald a global collapse and a sudden descent into the Olduvai Gorge, for Pax Americana is ultimately just a subsystem of a larger system – that of global industrialism, the System that encompasses virtually the entire world, with the sole exception of hunter-gatherer remnants in the Amazonian fastnesses and a few mystical recluses. The American empire, much like the Soviet one, will retreat from globalist pretensions, while maintaining a continental hegemony. In the meantime, powered by domestic coal and a new kind of resource tributary system - one based on bilateral deals instead of open markets – China will be well on its world-historical “great reconvergence” with the West, making it the preeminent superpower of the age of scarcity industrialism.

The geopolitics of scarcity industrialism are the topic of the next monograph in this series.

Politics & Democracy

In the US, there are two main parties that form a “bipartisan consensus” on most of the truly important topics. Both parties are beholden to corporate interests (Democrats more Wall Street; Republicans more Big Oil). Obama’s foreign policy is no real change from that of the later Bush administration. The political and mass media establishment is more than happy to criticize foreign countries for human rights abuses, real or perceived – especially those they dislike, like Russia or Venezuela – while similar or identical things happen in the US itself. A good example is the criticism towards the breakup of unsanctioned Russian political protests, which have exact parallels in the US; just as I was writing this post, 100 antiwar activists and 35 Bradley Manning supporters were arrested.

(The double standards thing is every bit as prevalent in the UK too, by the way. For a good summary see this article by Mark Sleboda.)

There is a strong “culture war” element to US politics, with a strong liberal vs. conservative struggle on hot issues such as global warming, the power of unions, gun rights and abortion. The US also has far more direct democracy at the state level than either the UK, not to mention Russia. For instance, when California needs to decide whether to decriminalize marijuana or gay marriage, it consults the voters; in most of the rest of the world, the decision is left to unelected “experts”.

Though it has three major parties, the sphere of political opinion is even narrower in the UK than in the US. On most issues, the Tories/Lib Dems and Labour can all be arraigned within the confines of the Democratic Party. There is, at least, a real difference in views on social rights (e.g. abortion; environmental protection; etc) between the Democrats and Republicans, whereas it is hard to distinguish even these differences between New Labour and the Conservatives. Effectively fringe movements, like the Green Party or the nationalist BNP, have slightly more formal political power than in the US through their own parties. Such pressure movements in both the US (e.g. the Tea Party) and Russia (e.g. the DPNI; greens; liberals) tend to exert political influence through the Establishment (respectively, the two-party system and the Kremlin).

The political consensus in Russia is represented by the Kremlin (with its tightly interlinked political, security and oligarchic elites) and its “party of power” (United Russia). But in contrast to the USSR, modern Russia has no real ideology beyond the national interest and vague allusions to its Great Power traditions (derzhavnost’). Its political economy is a melange of traditional Muscovite patrimonialism, Gaullist statism, and even libertarian elements like the flat tax. Its political space is much wider than in the Anglosphere, ranging from right-wing liberals to the (unreformed) Communist Party; but this is of little account, since the old ideological struggles, e.g. the Slavophiles vs. the Westernizers (Tsarism), or the Communists vs. the liberals (1990′s), are now over. The current system is best characterized as a Kremlin-moderated debate, carried on between different personalities and factions, about how to best modernize Russia, and the pace and extent of liberalization.

Igor Sechin, Deputy PM, is commonly regarded as the leader or spokesperson of the siloviki.

The two major factions, or “Kremlin clans“, are the siloviki and the civiliki. The siloviki, or “power people”, are typically men drawn from the security agencies – primarily the FSB and Interior Ministry – whose fortunes rose with the ascension of Putin to power. Their unofficial leader is Igor Sechin. The civiliki are composed of economically-liberal economists, lawyers and technocrats, as well as the Anti-Narcotics Agency and GRU military intelligence, who form a loose coalition around Dmitry Medvedev, the current President. There is also a third grouping who owe allegiance directly to Putin, most prominently Vladislav Surkov, who is the chief ideologue (e.g. inventing the term “sovereign democracy”).

Though Putin’s position as PM is formally weaker than the President’s, this is counterbalanced by his leadership of the party of power, United Russia. Some analysts regard Putin as the most powerful man in Russia, with Medvedev a distant second, third after Sechin, or even a puppet. I think that each member of the ruling “tandem” has about equal power, with Sechin a distant third. It is certainly a mistake to see the dispute between the two factions – to the extent that one exists, as there is also a lot of cooperation – as a kind of struggle between democracy / transparency / markets vs. authoritarianism / corruption / statism. The relations between these “clans” are largely symbiotic, not confrontational.

Garry Kasparov, leading Russian liberal, meeting with Georgian President Saakashvili, after Russia fought a war with him in 2008. I'm sure things like this do wonders for the liberals' popularity.

One common but totally misguided characterization of Russian politics is that of an authoritarian Kremlin (brutally) suppressing the liberal opposition. Only in their own fantasies. The liberals’ proud association with the 1990′s and its accouterments (e.g. mass impoverishment under the liberal reforms; criminal oligarchs; etc), lack of constructive solutions (their slogans are pretty much limited to “Putin Must Go!” and variations thereof) and worshipful adulation of everything “European” or “Western” as “civilized” (as opposed to attacks on Russia, or “Rashka” as they like to call it, as irredeemably corrupt and barbaric) filters down their support base to about 5% of the population. (Though that doesn’t stop them from presenting themselves as the genuine voice of the Russian people, especially to credulous Western journalists). There’s no FSB bogeymen or Kremlin “web brigades” marginalizing the Russian liberals; they do it well enough by themselves.

It should also be stressed that the real opposition, to the extent that one exists, aren’t the aforementioned liberals but the Communists. The former have the support of 5% of the population; the latter have the support of 25%. Main problem is that pensioners marching with red flags aren’t quite as photogenic and chic to Western journalists as the airbrushed representatives of the liberal movements.

For a fuller explanation, I highly recommend these articles: A Short Overview of Russian Political Discourse (“kovane”); On The Politics Of Russia (Alexandre Latsa); The Kremlinologist Catechism (yours truly).

For “political freedom indices”, most of which (e.g. Freedom House) aren’t worth the bandwidth they take up, I think the Polity IV is the most accurate. (Not to mention my own Karlin Freedom Index).

Myth: Russia Is A Dictatorship

The "Russian dictator" Vladimir Putin.

Several times in the US, I’ve been asked what I think of the “Russian dictator Vladimir Putin”. I don’t like getting into old arguments, so my usual response is a demurral that I’m not interested in politics. But in reality the very question is pretty laughable to me. The Internet is completely uncensored. There are many articles in the major newspapers that are deeply critical of the government, and two major media outlets are run by the liberals who do little else (Novaya Gazeta & Echo of Moscow; the latter, by the way, is owned by state company Gazprom). You can complain, shout or publish pretty much anything you want about how corrupt, tyrannical or treasonous Russia’s leaders are (and it’s not just the liberals who do it; nationalist / far-right rhetoric is even more hysterical, flaying the Kremlin for selling out Russia by allowing in dark-skinned Gastarbeiters). This is not to say that the Russian government never abuses the rights of its citizens or acts in stupid and/or counterproductive ways against these “dissidents”; you can find dozens of examples of this, such as the deaths in pre-trial detention of a lawyer investigating police corruption or the police confiscating copies of Boris Nemtsov’s screed against the the “Putin regime”. But if occasional corrupt and ham-fisted actions like this made Russia an authoritarian dictatorship it would have virtually every other country in the world for company.

The US also has its “dissidents”, ranging from the edges of the Establishment (e.g. Ron Paul, James Hansen) to complete outsiders (e.g. anti-globalization; antiwar; anarchist). But it hardly makes the front page news in the US when they’re put on “domestic terrorist” watch lists, their houses are raided, or their protests broken up. Generally speaking, you can only find out about that kind of stuff on alternate news media and the exceedingly rich American blogosphere.

A Quick Note On Putin Himself

The current PM has managed to maintain an approval rating of 70%+ for the past decade, which is almost unheard of for a leader in the UK or the US. Some argue that it’s because the state media creates a cult around him (some liberals refer to his young supporters as Putlerjugend), others because of some ingrained Russian yearning for a “strong hand”. Largely, I think he’s popular because he’s essentially a moderate conservative who is associated with uncontroversial values such as stability, patriotism, and rising incomes; the theory about government propaganda creating Putinoid drones is undermines by the fact that he is as popular amongst the young and university-educated (i.e. they have Internet access and many know English) as he is amongst pensioners (i.e. who generally rely on TV for news). But my favorite explanation is the one offered by Cracked: that he’s the craziest badass!

Socialism and Markets

Many Americans and British are concerned, even disturbed, by the reemergence of the Russian state as a central player in society and the economy. But this is to project British and American mentalities, in which the state has traditionally played a subsidiary role, to Russia, whose experience has been entirely different: a state (gosudarstvo) that has always been at the forefront of modernization; and a state that has guaranteed Russia’s security against numerous invaders down the centuries (whereas the US and Britain haven’t been successfully invaded since 1066, and whose citizens have come to view their own states as potentially the greatest threat to their rights and liberties).

But not only are Russians accustomed to viewing their state as having a far greater and more central role than in the Anglo-Saxon countries, but they also underwent a far deeper collapse in state power than experienced in either the US or the UK for at least the past century; during the 1990′s, the salaries of state workers went unpaid for months, and elementary state prerogatives such as the monopoly on violence and on money creation slipped out of its control. After such travails, no doubt the Americans and British too would have pined for the return of a strong state*.

* I found a poll a few days ago that pretty much confirms this. In the wake of the economic crash and bank bailouts, the percentage of Americans believing in the free market economy as the best system fell to 59% by 2010 (from 71% in 2005), compared with 55% of Britons (from 66%) and 52% of Russians (up from 43%). It’s telling that after just three years of economic turmoil, Americans are barely more pro-free market than Russians who lived through 70 years of socialism, followed by a decade of hyper-depression and a decade of pretty fast growth under a market economy.

Politics is rarely a topic for conversation in the US or Britain, unless its on Facebook, and the number of ideological positions one can “respectably” take is far more circumscribed than in Russia. For instance, it is perfectly acceptable to call oneself a Communist or a Marxist; not surprising, since 15-20% of the population votes for them. Doing so in the UK will not endear you to polite society, while in the US it is hurled around as a term of abuse in political discourse. Actually admitting to being a socialist, let alone a Communist, will get you shunned in most American circles. It’s pretty hilarious to see the Republicans painting Obama as a radical leftist, when in much of Europe he’d be regarded as a corporatist centrist.

The Weird Ideological Alliance Between Far Right Republicans And Russian Liberals

There is a surprisingly strong affinity between the Tea Party and Russia’s liberals, the main exception being that the former are far more mainstream. Some 28% of US adults call themselves supporters of the Tea Party movement, whereas Russia’s liberals have at most 5% (being generous). Both dislike big government, have 19th century conceptions of what liberalism is about (emphasizing free enterprise, private property, etc). Illarionov, the libertarian economist who fell out with Putin, is also a Tea Partier and has protested in the US against Obama’s healthcare reforms and condemned the Kyoto Protocols. Another prominent Russian liberal, Latynina, believes global warming is a scam to enrich or empower “the global bureaucracy” and supports disenfranchising poor Russians. Yet another, Novodvorskaya, supports Westerners bombing undemocratic and uncivilized Third World countries. No wonder, then, that Russian “liberals” find so much common cause with the nuttier elements of the Republican Party.

Why do these rightist views have much bigger support in the US? Quite simply, the majority of Russians – about 70% of them, according to opinion polls – are essentially statists, who believe the state has a duty to extensively interfere in the economy to protect the weak and assure everyone a safety net. That is similar to attitudes in Europe. The US, in contrast, has a starkly different political culture that has traditionally stressed values such as self-reliance, asperity, the “self-made man”, the “free enterprise system”, etc; which don’t work, at least nowadays, nearly as well as the rhetoric of their proponents. One consequence of this is that there is a far greater degree of “false consciousness” in the US than in Russia.

Oligarchs

Glaring divisions of wealth are far more evident in Russia and America. Whereas the UK has 33 billionaires for 61 million people, Russia has 101 billionaires for 143 million and the US has 412 billionaires for 308 million people.

Steve Jobs, CEO of Apple, is a veritable superstar among hip American youth.

Furthermore, whereas the British affluent stress Weberian values of keeping a low and modest profile, many American billionaires enjoy a cult-like status (Bill Gates; Warren Buffet; Steve Jobs…) and Russian oligarchs flaunt their wealth with absolute abandon.

This makes some Russians bitter, since most of the Russian billionaires obtained their assets in the anarchic 1990′s through shady, dubious, and semi-legal (at best) ways; in contrast, US billionaires are either self-made or inherited their wealth. However, the more common sentiment amongst younger people isn’t so much hatred or envy but a desire to emulate them (what that says about their values I’ll leave to you).

One factor that probably diminishes Russians’ ill feeling about the wealth of the oligarchs is that – to a far greater extent than in the West – they are now firmly under the Kremlin’s thumb. Their property rights aren’t secure, as in the West; instead, they are conditional on their political loyalty and their help in maintaining social stability. E.g.,

• Roman Abramovich funded infrastructure and social services as governor of the remote region of Chukotka from out of his own pocket.
• Viktor Vekselberg repatriated imperial-era art objects, including luxury Fabergé eggs – created for the Tsars and taken out of the country after the Revolution – and loaned them to Russian state museums.
• They are expected to maintain employment rates and pay wages on time, even if it’s unprofitable for them. When Oleg Deripaska failed to do so in Pikalyovo, he was publicly chastised by Putin, after which he promptly reversed course.
• A consortium of oligarchs provides financing for flagship Kremlin projects such as the 2014 Sochi Olympics and the Skolkovo technology center.

In return for these services, Russia’s oligarchs get to keep and profit from their assets. The Russian state is also generous about providing them help with penetrating foreign markets, on the many occasions when oligarch economic interests coincide with the Kremlin’s foreign policy interest, e.g. acquiring steel mills in Ukraine, or stakes in West European energy companies. This system is, in some circles, called “Kremlin, Inc”.

The American model of billionaire-political interaction is much more one-sided; basically, whereas the oligarchic elites have in Russia have decisively come under the heel of the political and security elites since 2003*, the political system in the US has come to be extremely influenced by the billionaire class – especially after the Citizens United judicial decision that removed limits to corporate funding of political of political campaign. The Koch brothers’ bankrolling of the Tea Party movement and war against social rights and environmental protections is only the tip of the iceberg.

* The symbolic occasion was the arrest and imprisonment of Mikhail Khodorkovsky, the richest oligarch at the time. Formally, the charges were tax evasion; in actuality, it was for using his wealth to manipulate the political process, such as funding opposition parties and buying out parliamentary deputies to lobby for lower taxes on the oil industry.

Patriotism & Nationalism

Political correctness is far more developed in the US and Britain than it is in Russia; if you hate immigrants or think women should stay in the kitchen, you’d be best off keeping it to yourself when in ordinary company. In contrast, Russians have no problems mouthing off shockingly racist comments about dark-skinned people (“black-asses”) or telling you that the country is degenerating and needs another Stalin*. However, I don’t think this indicates that Russians are backwards so much as that Westerners are more practiced at concealing their true feelings. If you want proof, one need look no further than the anonymous comments sections on sites like FOX News or The Telegraph; they are full of Islamophobia (and Russophobia, Sinophobia, etc.), anti-immigrant sentiment, war-mongering, paeans to the superiority of Western culture, etc.

* For whatever reason, every single Russian taxi driver I’ve ever hitched a ride with happened to be a hardline Stalinist.

There is a high level of civilizational nationalism in the US: the flag is omnipresent, in the conservative states elementary school students recite the Pledge of Allegiance every morning, politicians and pundits go on about how ”exceptional” the US is and why it should exercise ”global leadership.” Though it sounds quaint at best to Europeans – including the British who let go of messianic complexes by the 1960′s and the Russians by the 1990′s* - the fact is that many Americans truly believe in this vision of the US as a “city on the hill” with a civilizing global mission. While the official rhetoric about “freedom promotion” and “democracy building” mostly elicits cynical smirks from the politicos in the End Of History-type places like the Bay Area, it is treated with the appropriate gravitas in Middle America.

* To summarize: The British had an empire; the Russians miss their empire; the Americans run an empire, but don’t want to admit it.

Famous photo of Red Army soldier hoisting the Soviet flag over Berlin. (The US equivalent has American GI's raising the flag on Iwo Jima).

Russian patriotism is based on appreciation of its culture, values, and a shared history that reaches its apogee in the Great Patriotic War (1941-45). The shared sacrifices incurred in that struggle – 27 million dead in the USSR, including 13 million Russians – for survival bind together not only Russian citizens, but all the peoples of the former Soviet Union. The Kremlin has encouraged its emergence as the primary national myth consolidating the modern Russian nation-state.

Arguably, Russian patriotism tends to be less bombastic and immediately visible than in America, but is every bit as deep-seated; certainly the Russian flag is nowhere near as omnipresent as in the US (though more so than in the UK or Germany). British patriotism is as real as Russian or American, but tends to be more low-key and even self-deprecatory.

It is hard to deny that the pageantry of the Russian state – as in its anthems, songs, marches, flags, symbols, monumental architecture – is some of the deepest and most moving and inspiring in the world. E.g. see this video of the 1945 Victory March in Moscow.

Ethnic based nationalism is an extremely fringe movement in the US, despite sites like Stormfront and books like The Turner Diaries. It has a far more visible presence in Russia, where skinhead gangs make parts of some cities unsafe for people with the wrong skin color, especially after events like football matches*. Though the gangs themselves number no more than a few tens of thousands, the slogan of “Russia for [ethnic] Russians” is approved by nearly half the population.

* It is common for supporters of rival football clubs to duke it out at set times and places on Russian streets. The police keep a watch on these brawls, but don’t interfere as long as they doesn’t spiral out of control. I heard that some decades ago there used to be similar scenes in Britain, but nowadays the police take a far harder line against football hooliganism.

Party Systems

One of the great strengths of the two party system in the US is that whenever one of its halves loses legitimacy (as indicated by elections), the other half takes over and starts out with a clean slate. But members of both parties are drawn from the ranks of the same power elite that never loses its standing in this system of dynamic equilibrium. There is a similar dynamic in Britain, although it has 2.5 major parties; their “first past the post” electoral system prevents small parties from playing any significant role, as is common in Europe.

In contrast, the current Russian arrangement is metastable, i.e. in a delicate equilibrium that is maintained by popular approval for the Kremlin and its leading personalities. The Kremlin may resolve this long-term stability problem by encouraging a genuinely competitive politics, e.g. by splitting United Russia into conservative (merge with LPDR) and social democratic (merge with Fair Russia) wings. But as it currently stands, if its political legitimacy were to fade away, e.g. if economic stagnation sets in, then the consequences may be unpredictable.

The Media

The UK print media is dominated by The Guardian (liberal left; pro-Labour; readers nicknamed “Guardianistas” by right wingers); The Daily Telegraph (right conservative; pro-Conservative); The Independent (very liberal, left; vaguely pro-Liberal Democrat); the centrist Times; The Financial Times (The City’s paper); and the tabloids The Sun (right populist) and The Daily Mail (centrist populist; nicknamed ”The Daily Fail” by critics). The most important magazine is The Economist, whose most valuable service, IMO, is not the spread of good information or analysis – they follow a blatantly pro-Western, pro-free markets line and try to force everything into that narrow narrative - but the provision of good insights into the mentalities of the political/financial Anglo-Saxon elites. My favorite British paper is The Independent (you can comment on almost every article) and The Guardian (its investigative journalism is unparalleled); but in fairness, The Telegraph and even The Daily Mail have interesting stuff. Certainly, British conservatives are far more reasoned than their American counterparts. I also used to like The Times, but haven’t checked back since they raised a paywall.

On TV, the British Broadcasting Corporation (BBC) pretends to be neutral and editorially independent, but that’s not the case now if it ever was; back in 2004, its head was sacked for alleging – not without cause – that the government “sexed up” the case for the Iraq War. The rot has only festered since. What makes this particularly annoying is that to watch TV at all in the UK, you have to pay a tax specifically for the upkeep of the BBC, even if you have no intention of ever watching it. The most interesting and controversial voices tend to appear on Channel 4.

Stratfor produces concise analysis on major issues of the day, supported by detailed research.

In the US, the two major papers are The New York Times (centrist, largely pro-Democrat; nicknamed “The Gray Lady” and regarded as the paper of record), The Washington Post (centrist), The Wall Street Journal (right-wing paper of the financial/business class), The Washington Times (neocon jerks), The Christian Science Monitor (intelligent centrist), The LA Times (pretty good), the San Francisco Chronicle, etc. My favorites are the NYT, WaPo, and CSM.

The US also has a huge variety of high-quality journals dedicated to specific issues or opinion, e.g. Foreign Affairs, Salon, The Atlantic, The Nation, The National Interest, etc. Of particular note is STRATFOR. Its best feature is that it does not, like the mass media, try to fit events into some ideologized narrative, e.g. by peddling myths such as that the reason France or the US got involved in Libya is because of human rights or democracy. Instead, its combination of good intelligence, focus on geopolitics and realism, and disavowal of ideology enables excellent analysis. Tje subscription fee isn’t cheap but well worth the money.

I’ve never bothered to get a TV in the US, but from the stuff I’ve seen, it was a good decision. Ads are long and news coverage is juvenile and more slanted than in the UK (let alone Europe).

Though a great deal is made of the US media being privately owned, and therefore editorially independent, there is no such connection; to the contrary, being reliant on advertising revenue, private media has to cater to popular stereotypes (by reducing everything to simplistic, good vs. evil narratives) and to maintain good relations with the government (to get the approved leaks and inside sources that make news stories; plus, the media’s parent companies sometimes generate some of their revenue from contractual relations with the government itself). Even the NYT, the most highly regarded US newspaper, has on numerous occasions acted to conceal information deemed embarrassing to the government (and not a threat to national security, as claimed). The simple fact is that where the state does not set the editorial line (e.g. the BBC; most of Russian TV), journalists tend to self-censor themselves anyway.

PS. Here I should make an important semantic note. Whereas “liberal” tends to mean leftist in the US (often with social liberal connotations), and to mean a social liberal in the UK and Europe (for instance, the Liberal Democrats are more socially liberal than New Labour; but they are further to the right economically), in Russia it tends to imply right-wing economics and pro-Western orientations. The opposite of liberal, in the Russian political discourse, is “patriot”, and typically has leftist and pro-Russian/pro-Eurasian connotations.

The Russian print media is dominated by Komsomolskaya Pravda (leftist); Vedomosti (liberal right; features good coverage of political and/or corruption scandals); Kommersant (centrist, financial); Argumenty i Fakty (left-patriotic); Izvestia (centrist-patriotic); Nezavisimaya Gazeta (liberal left); Novaya Gazeta (very liberal; the voice of the liberal intelligentsia); Trud (very leftist; the voice of the Communists); Rossiyskaya Gazeta (responsible for publishing new laws, official paper of record). Also of note is Lenta.Ru, an Internet-based publication. Then there’s the infamous Pravda, which is tabloid trash and, contrary to popular opinion, has nothing to do with the old Soviet paper of the same name. My favorite papers are Kommersant, Argumenty i Fakty, and Vedomosti.

This is a gross generalization, but my impression is that (serious) Russian newspapers tend to have more details on global events than major Western ones; they are certainly far better at giving both sides of the story when it involves the West vs. Someone Else. For instance, in contrast to the good guys vs. bad guys narrative spun by most US/UK newspapers on Libya, the Russians were far earlier and more insistent on raising uncomfortable questions, such as: Are the rebels truly more human rights-respecting than Gaddafi? Do they actually have more popular support? Are they militarily competent, and if not, might a ground intervention not become necessary? What about their ties to radical Islamists? Is NATO’s goal to provide civilian protection, as allowed by UN resolution, or regime change? The only major Western publications that are as probing and skeptical on these issues as the likes of Kommersant or Lenta.Ru that come to mind are STRATFOR and Spiegel.

Russia’s TV channels are, pretty explicitly, pro-government (though unlike British (BBC) or American ones (FOX News – “fair and balanced”) they don’t bother making claims to impartiality). The main independent broadcast media are Ren TV (which airs controversial documentaries and prominently features opposition liberals and socialists) and the Echo of Moscow radio station.

I can’t really comment in any detail on the differences between Russian, British, and American TV because I haven’t watched the box in many years.

Western news channels unleashed a barrage of propaganda during the South Ossetian War, portraying it as an unprovoked Russian invasion of free democratic Georgia.

Whereas many Western political scientists make a big deal of the division between the “free” US (UK, etc) press and the “controlled” Russian press, I’m hard-pressed to spot a difference. When the Western political elites are united on a particular goal (e.g. the months leading up to the Iraq War in the US), then their broadcast media follows in step; plurality only appears when the elites divide (e.g. in the aftermath of that same Iraq War, when prominent politicians began to question the wisdom of the adventure).

The best demonstration of the myth that Western media is in any way exceptional lies in its coverage of the 2008 South Ossetia War, in which the uniform line was that Russia was the aggressor against Georgia. The inconvenient facts that it was the Georgians who had started the war by shelling the Ossetian city of Tskhinvali and the Russian peacekeepers guarding it remained unknown and unaired to viewers of the mainstream media throughout the war. CNN presented pictures of Georgian destruction in Tskhinvali as Russian destruction of the Georgian town of Gori. Of course, the Russians too were actively involved in this “information war”. As this Wikipedia article makes clear, both Western and Russian journalists where driven not by the search for truth but by the agendas of their editors, bosses and political handlers back home.

Russia has what its fans call a “dissident press”; small publications, typically liberal or socialist, online (e.g. the liberal Ezhednevny Zhurnal, whose denizens are called “ezhiki”, or hedgehogs; and Left.Ru for socialists).  The US has them too, where they are called the alternate media; examples include The Daily Cos, Alternet, Antiwar, Counterpunch, Exiled Online, and they are usually populated by leftists, anarchists, and libertarians.

Russia Today's real sin is that it asks uncomfortable questions that others are too afraid to ask.

Interestingly, Russia Today – the English-language broadcasting arm of the Russian state (who main political analyst Peter Lavelle I interviewed here), which is criticized for spreading anti-American propaganda by some and defended as encouraging Westerners to “question more” by others, is favorably cited by the aforementioned US dissidents. Their mirror image are the Russian dissidents who tune in to Radio Liberty / Radio Free Europe or Voice of America, which mainstream Russian politicians dismiss as propaganda channels seeking to undermine Russia. The symmetry is amusing to say the least.

While Russia Today is critical of many US policies, especially foreign policy, if you were to call it “anti-Western”, then you’d have to call the vast majority of Western media outlets “Russophobic” for consistency. For instance, it is one of the very few media outlets that covers US antiwar protests, e.g. at Fort Benning where several RT journalists were arrested. Similarly, Western media outlets devote a lot of attention to Russian liberal protests (but not Communist, anarchist, etc.) than Russian journalists.

Unauthorized protests in the West get broken up too, you know...

That said… American journalists are still far, far better at covering the US than the Russian journalists digging around for horror stories of American healthcare; just as Russian journalists are far better at covering Russia than British or American journalists on two year assignments in Moscow who may not even know the language and believe that liberal protests are the cutting edge of Russian political life.

(PS. One important point on which the symmetry breaks down is that whereas the Western media frequently claims that the Russian media is controlled, the reverse practically never happens. For instance, in the lead-up to the Wikileaks Cablegate, The Christian Science Monitor patronizingly wrote:

WikiLeaks ready to drop a bombshell on Russia. But will Russians get to read about it? WikiLeaks is about to release documents on Russia, but the tightly-controlled Russian media is unlikely to report them the way Western media attacked the documents about Afghanistan and Iraq.

Which is of course why state news agency RIA and Kommersant both reported it on the same day! Not to mention that describing the Western media’s (largely negative) response to Wikileaks in such glowing terms can only be ironic…

And this is one example from literally thousands. Again, I can’t be emphasize just how annoyingly repetitive and willfully ignorant the Western media tends to be on their Russian counterparts).

Right-wing political analysts in the US and Russia like to predict each other’s collapse. For instance, in its global forecasts, the CIA has repeatedly predicted the breakup of the Russian Federation into its constituent ethnic parts and demographic takeover by Muslims within the next few decades. Meanwhile, some analysts linked to Russia’s intelligence community, such as Igor Panarin, have predicted the breakup of the US, and the annexation of its southern borderlands by Mexico. Needless to say, they should all be writing sci-fi novels.

The final three Russian publications of note are RIA Novosti (a state-owned international news agency but liberal leaning); The Moscow Times (an independent publication for Western expats in Russia that is full of liberal sensationalism); and Inosmi (a site that translates Western news items, mostly about Russia, into Russian for a patriot-leaning audience that then proceeds to discuss them or mock them).

Both Russia and especially the US have rich blogospheres, which are in some cases threatening to supplant the centuries-old dominance of the mainstream media altogether.

Internet Culture

Internet penetration is near universal in the US and the UK. It is also near universal amongst younger Russians, although this has only come about in the last few years. The fastest Internet is on the East Coast, followed by the West Coast including California, followed by the UK, followed by Russia. Stuff like Internet businesses and Internet shopping remains the most developed in the US, less developed in the UK, and far less developed (but growing very fast) in Russia. Also, it is typical for cafes and other public places to have access to Wifi in the US; this is still very rare in both the UK and Russia.

Americans are an opinionated people, hence the richness, variety and zaniness of its blogosphere. Every Joe wants a say. While the majority aren’t worth listening to, nonetheless, practically every subject under the sun has at least one very knowledgeable pundit plugging away at the keyboard: North Korea watchers; Arctic aficionados; Afghan tribe trackers; peak oil theorists; etc. The most fascinating fact is that many of these people don’t even work in universities, think-tanks, governments, corporate research, etc.; they are amateur enthusiasts whose works blow away those of the self-proclaimed experts.

Another aspect of the American blogosphere is that at its heights, it has begun to merge into the mainstream and traditional media. For instance, at the pinnacle, it is unclear whether The Huffington Post is even a blog or a news site. Like the American body politic, the blogosphere is rife with “culture wars”; some of the biggest battalions marshal at the blog of Matt Yglesias (the liberals) and Michelle Malkin (the conservatives). Generally, I think there are far more conservatives at the nuttier ends of the spectrum than liberals, though certainly there are also many liberals who veer from well-meaning criticism of US policies to Americanophobia. Other wars and sub-wars carry on in the dark depths of cyberspace. I’m well acquainted with three.

The “Russophiles” vs. “Russophobes” (encountered when I first started blogging, though fortunately in more recent years the Russia debate has largely transcended these simplistic categories). The “deniers” vs. “warmists” is a huge war between those who accept the reality of anthropogenic global warming and those who deny it. And the “doomers” vs. the “cornucopians”, which I encountered when I took an interest in concepts like peak oil and the technological singularity; roughly, the former think civilization will soon collapse and we’ll die out, while the latter believe – just as absurdly – that the Earth can sustain unlimited (economic, demographic, etc.) growth.

A putztriot's dream.

The main culture war in Russia is fought on multiple fronts (as opposed to liberals vs. conservatives in the US). You have the “patriots” (generally like Putin; skeptical towards Western intentions; sometimes steer into nationalism; called “putztriots” by their liberal detractors); the liberals (most love the West, and especially the US, unconditionally; blind hatred of Putin; accused of sucking up to the West; are called “liberasts” or by their patriot detractors, and are said to belong to “demschiza“, i.e. pseudo-democratic schizophrenics); the Communists (love socialism, and frequently Stalin; nostalgia for USSR; many dislike Putin regime for tolerating oligarchs and parasites; called “kommunyaks” and “sovoks” by liberals and some patriots); the foshists (the fascists – liberals tend to think patriots are all fascists, and at times the line can be blurry; nonetheless, there are real and significant differences, namely that patriots aren’t racist, while fascists hate the Putin regime for allowing Russia to be “polluted” by Jews, Caucasians, etc.); and Kremlin supporters (called the “kremlyad” and “Putinoids” by detractors; most often by liberals and fascists, but anti-Kremlin patriots and Communists have been known to use it too).

All groups criticize dermoktariya (lit., “shit democracy”), but it means different things for everyone. For Kremlin supporters and most patriots, it primarily refers to the perceived sham democracy of the 1990′s (as opposed to the “sovereign democracy” of today); for liberals, it refers to the current system (as opposed to the 1990′s Golden Age of freedom); for many Communists, it refers to the post-Soviet system in general; and the fascists equate all democracy with dermoktariya.

Across the entirety of “Runet”, i.e. the Russian Internet, I would estimate that of the politically inclined: 50% are patriots; 30% are Kremlin supporters; 20% are Communists; 20% are liberals; 10% are fascists. These groups overlap extensively (see below).

A liberast's dream.

The most loathed group are the radical liberals, the ones who hate Russia; faced by them, the patriots, Communists and Kremlin supporters tend to unite to suppress them on the political message boards or LiveJournal blogs. But frequently, a patriot or a Communist would mock a Kremlin supporter, because, say, the former doesn’t like the Kremlin’s corruption or perceived tolerance for illegal immigration, and the latter doesn’t like inequality, corruption, crime, etc., and all the other things they think were better in the good old Soviet days. Interestingly, your typical patriot and Communist is actually more anti-Western than the straight-laced Kremlin supporters.

Eddie Limonov: "We will need children from the new people... Permit polygamy, free associations. Women should get pregnant continuously and to bear fruits... Education will become short and will be different. Boys and girls will be taught to shoot from grenade throwers, to jump from helicopters, to besiege villages and cities, to skin sheep and pigs, to cook good hot food and to write poetry."

There is also a lot of overlap between groups. Most patriots, and many Communists, and even a few liberals, do actually support the Kremlin (note that the Kremlin itself is divided between “patriots”, and the patriot-liberals clustered around President Medvedev). Other, more marginalized, chimeras include liberal nationalists (pro-Western, but with ethnic Russian nationalist leanings; the most prominent such is Alexei Navalny, mentioned in the first part of this series); Communists with liberal leanings, who would be social democrats or greens in Europe; and nationalist Communists, such as the wacky National Bolsheviks (their leader, Eduard Limonov, is an especially colorful character: a playboy émigré who returned to Russia in the 1990′s to preach a weird synthesis of Nazism and Stalinism, he was imprisoned for plotting a revolution in Kazakhstan; since then, he has joined forces with the liberals against the Kremlin, which is ironic to say the least since those same liberals would be first up against the wall in the fantastical scenario that the NatsBols ever come to power).

Throughout the blogosphere, these culture wars are characterized by rudeness, extremism, censorship, etc., on all sides, including those who call themselves liberals or democrats and pretend to worship free speech. Fun anecdote: the Russian liberals frequently accused their opponents of using “web brigades” – bands of Kremlin-paid commentators posting under changing usernames – to defeat them on Internet discussions. So unfair! So what do some of them decide to do? They created web brigades of their own to attack the “bloody regime” and its defenders! That is, until the plot was revealed by a disillusioned insider. While this liberal web brigade operated, it succeeded at influencing the outcomes of practically zero discussions. Ironically, their greatest victory was to prove the infeasbility and uselessness of “web brigades” – be they liberal, Kremlin, or Martian – in the first place.

To a large extent, the British blogosphere is tied up with the American one, due to the common language.

The Anglo-Saxon blogosphere mostly uses blog platforms like WordPress (excellent) and Google Blogger (mediocre). Most Russians use LiveJournal – which is far more profiteering, restrictive, and generally crappy – for no good reason I can see.

Google dominates search engines in both the US and the UK. In Russia, a viable competitor to Google (in its own country, not abroad) has emerged in the form of Yandex. The premier online shopping hub in the US and UK is Amazon; in Russia, it is Ozon. The social network of choice for the British and American middle class is Facebook (the best network). The lower classes use MySpace (pretty crappy), though many of them have began migrating to Facebook in recent years. The Russia network of choice used to be Odnoklassniki (which is pretty crappy), but the more advanced elements have switched to Vkontakte (a substandard copy of Facebook, even down to the color scheme); however, Facebook is growing very fast, albeit from a very low base. Twitter remains largely dominated by Americans.

Corruption

One common stereotype is that Russia is much more corrupt than the US or the UK. This is true for small scale corruption. Slipping in a bill – or a bottle of cognac for male, a box of chocolates for female bureaucrats – will tend to enhance your chances of getting a driving license, getting documents processed faster, having a ticket written off by the traffic policeman, etc. That said, corruption is certainly far from ubiquitous and it is almost always possible to have everything go through legal channels. The small scale corruption is now in retreat, as bureaucrats are becoming subject to more stringent checks and controls; the result is that with increased risk, the size of the average bribe has nearly doubled in the last few years. According to various opinion polls, 15% of Russians say they paid a bribe in the past year, compared to about 2% of both Britons and Americans.

In my view, the main reason that lower-level corruption is far more prevalent in Russia than in the developed West is that the cost/benefits are more skewed in corruption’s favor, due to lower salaries, far more red tape, and weaker anti-corruption mechanisms. For instance, no California policeman is going to risk his cushy, full-benefits, $60,000 job even for big bribes from motorists. Consequently, as a rule, mostly it is billionaires or very rich people who can enjoy the benefits of corruption in the US or Britain, e.g. the billionaire pedophile / sex trafficker Jeffrey Epstein who got a one year home arrest (and free to leave for work 16 hours per day!) for what would usually be a 20 year mandatory minimum sentence. In Russia, similar privileges are available for mere millionaires and regional political bigwigs, e.g. Ludmila Shavenkova, daughter of a United Russia deputy in Irkutsk guilty of vehicular manslaughter, got a 2.5 year sentence but only due to start in 14 years – by which time she would most likely have been quietly acquitted… And even that symbolic sentence was only imposed after a big citizen outcry.

I used to believe that corruption at the higher levels of government and business was also far more prevalent in Russia, but the financial crisis – and the cozy ties between regulators, banks and politicians that it revealed, and the $100′s billions that well-connected financial institutions received in bailouts from the US and UK governments – has made me reconsider. While there can be little doubt that Russian elites sock away a lot of money to offshore havens – e.g., state pipeline operator Transneft was recently discovered (by Navalny) to have socked away $4 billion through an elaborate network of shell companies and offshore havens - at least they do it far more discretely now than in the 1990′s, when the graft was visibly, even proudly, in the open.

In stark contrast, the rot at the heart of the Western economies has become increasingly evident since 2008 and the bailouts, which unleashed a cascade of corruption in which trillions of dollars of free credit were unaccountably transferred from American taxpayers to rich individuals and corporations, which in turn lent the money back to the government at (higher) market rates. The difference is the billionaires’ subsidy. As in Russia, most of what we know of corruption at the highest levels comes not from the traditional media, which is beholden to the power elites, but investigative reporters working for smaller “alternate” publications, such as Matt Taibbi for Rolling Stone. Similar financial shenanigans have also become prevalent in the UK.

One major difference between corruption in Russia and the US is that in the latter, much of it is “legalized corruption”; i.e., what would count as corruption in Russia (and in European countries in general) goes as a matter of course in the US. Some examples of this “legalized corruption”:

• Politicians receive the bulk of their money from corporations. Lobbying is not only a legal but an integral part of US political life. Corporations enjoy individual rights, such as freedom of speech (though not so much their detractors, who can be sued for libel), and under the Obama Presidency, the Supreme Court has removed limits to corporate funding of political campaigns. Much of what passes for lobbying in the US would invite criminal investigations in Europe.
• Government regulators not only enjoy good relations with institutions they’re supposed to regulate, but a “resolving doors” culture means that every few years they actually swap places! E.g., the Securities & Exchange Commission (SEC) that is supposed to investigate suspected Wall Street fraudsters is actually more interested in protecting them.
• Symbiotic relations between private prison companies and the justice system; between pharmaceutical companies and doctors; advertisers and the news media; the privatized anti-terrorism sector and the politicians at the money spigots.
• Plea bargaining is a central element of the justice system; threats, rewards and coercion from the side of the prosecutors can steer results from the just legal outcome, as innocents are frequently tempted to settle for a lighter term in exchange for not running the risk of incurring a very heavy one.

Overall, corruption is far less prevalent in the UK, at least outside the financial sector. There is a long and ongoing scandal about M.P.’s expenses, in which politicians tabbed expenses unrelated to their work such as buying cars or redecorating apartments. But what stands out about them is that ultimately, the sums involved, going no higher than the $100,000′s, are really pretty modest by Russian standards, where typical political corruption scandals can run into the millions, tens of millions, and higher.

The most well-known corruption index is the Corruption Perceptions Index (CPI) compiled by Transparency International, in which for 2010 the UK gets 7.6, the US gets 7.1, and Russia gets 2.1. The main problem with it is that it is not a measure of corruption per se, but of corruption perceptions; those who do the perceiving are mostly various Western experts and businesspeople; not only do they rely on the Western media extremely negative coverage of Russia, but as covered in the documentary film Inside Job, many of these same experts and businesspeople enable or even participate in corruption in their own countries!

I do not think Russia’s score, wedged in between Zimbabwe (2.2) and Equatorial Guinea (1.8), reflects its real level of corruption. While no-one disputes corruption is extremely prevalent in Russia, it does provide social services – in some sectors, like education, relatively good ones – to its population, and is surely far from those kleptocracies on any objective corruption scale. In fact there are a lot of other, similar absurdities in the CPI: for instance, Saudi Arabia – where most oil rents flow to a few thousand members of the House of Saud – is apparently cleaner than Italy, which is just WTF? See this comments thread for a critique of CPI’s methodology.

I think a fairer index is the Global Integrity Report, which actually analyzes the specific policies and laws rather than relying on something as fluffy as perceptions.  My own ranking would go, from least corrupt to most, something like: (Sweden) – UK / (Germany) – USA / (Italy / Belarus / 1980′s USSR) – Russia / (Greece) – (Ukraine / Mexico) – (Saudi Arabia / Nigeria) – (Equatorial Guinea / Congo / Somalia).

One aspect of corruption in which Russia may perform better than the US and the UK is in tax compliance by big corporations (though not small ones, in which under the table payments remain widespread). Simplified tax laws since 2000 have created more incentives to pay up, while the prosecution of Mikhail Khodorkovsky – widely condemned in the Western media – has made many big businessmen too afraid of using tax havens for tax avoidance. Tax collection has risen from around 50% of the expected take in the 1990′s to 90% by the mid-2000′s. Tax avoidance by big companies in Britain and the US seems to have become endemic in recent years, to the extent that a grassroots organization called Uncut has arisen to protest and harass them.

The Environment

At the popular level, only about half of Britons believe in anthropogenic global warming (AGW); especially after the Climategate (non-)scandal. That said, environmental consciousness is undoubtedly most developed in Britain (if nowhere near the extent in Germany or Scandinavia). At least, one Green Party M.P. got elected in the last elections; whereas both US and Russian green parties are extremely marginal in the political process, and their activists are widely vilified.

On the plus side, Russia does not have the idiotic, ideologized AGW denialism that has taken over one of the main US parties, the Republicans.  That far north, the effects of global warming are clear – especially after the Great Russian Heatwave of 2010, in which a third of its grain crop was destroyed – and the only real question is about whether it should actually do much about it. After all, theoretically, a moderate degree of global warming would actually benefit Russia, by opening up agricultural lands in the north, clearing the Northern Sea Route, and making remote resources exploitable for the first time. However, there is a sizable number of people who view global warming as a natural climatic cycle (including Putin); many others, as in Canada, argue that even if it’s caused by humans, it would nonetheless be a positive development for the country, and that it should just bask in the sun and let the warming take its course.

Many Russians and Americans tend to assume the “cornucopian” view that there are few, if any, limits to growth on the planet. Though it is fast gaining political acceptance in Europe (including Britain), peak oil remains a fringe theory in the US (with the exception of California, which has a lot of unconventional thinkers, and survivalists), while Russia has many proponents of the theory of abiogenic petroleum origin, which holds that oil is created by constant geological processes, instead of biological processes in the distant past. As a high-density country that imports most of its energy and mineral resources, Britain is understandably far more concerned about the possibility that oil supplies won’t last forever.

The Military

Americans view their military very positively; in fact, the Armed Forces are the single most trusted institution in US life. To its fiscal woe, cutting the military budget – in nominal terms, almost as big as the rest of the world’s combined – is as unthinkable for Democrats as it is for conservative Republicans. This is despite the fact that military procurement is one of the most inefficient (and probably corrupt) sectors of the US economy. Seemingly innocuous gestures, such as arguing for cuts to the military, or questioning whether the US is over-reliant on military power in its dealings with the rest of the world, can get one labeled as unpatriotic; suggesting that the US may be repeating the mistakes of the USSR, which massively over-invested in military spending to the detriment of its civilian economy, can bring on apoplexy.

The British view their military positively, but without the overbearing reverence more typical of Americans. This means that defense cuts are politically feasible, and are indeed now being carried out by the Conservatives (if in a rather slapdash and incompetent way, as with most of their other policies). Their end result is that within a decade, the UK will cease to be a leading military Power. Instead, more resources are planned to be allocated to foreign aid for unstable countries such as Pakistan; it is clear that the plan is to put more emphasis on “soft power”.

I have already covered Russians’ views on the military in the first part of the series, in which I talked about conscription. As with  the US and the UK, though the military is viewed positively, opinions are split about the desirability of conscription and there is some doubt about its ability to defend the country. This is in part a result of two decades of degradation, of both the military and the military-industrial complex, after the fall of the Soviet Union. There is a huge rearmament plan in the works for the 2011-2020 period that the Kremlin hopes will decisively reverse these negative trends, and assuming oil prices stay high, it should be affordable too.

Employment & Social Welfare

Real wages for the majority of both American and British workers have stagnated since the 1970′s, while inequality has soared. The American Dream, with its promise of social mobility, has largely faded. In recent years, academic studies have shown that social mobility – as measured by your children’s chances of switching socio-economic classes - is now lower in the US than in practically all developed countries except Britain. This is a very worrying development, since social mobility has traditionally been an antidote to America’s high levels of inequality; without it, it begins to resemble the socially stratified and politically unstable Latin American countries.

That said, I believe the US remains by far the best deal for two kinds of people: the rich, and the entrepreneurial. Income taxes are low by UK (and European) standards, and property is far more secure than in Russia. Furthermore, as a rich, technologically advanced country covering half a continent with more than 300 million souls, the US offers unparalleled opportunities for all kinds of leisure activities and hobbies: flying planes; sailing; skiing; rock climbing; surfing; horse riding; gourmet dining; white water rafting; etc. Unskilled workers have less rights and more insecurity than in most of Europe, but for the upper middle class America is truly an oyster.

The US is an extremely attractive place for business development. The bureaucracy is minimal and registration of a Limited Liability Company (LLC) – the optimal structure for most S&M businesses, especially online-based ones – can be done over the Internet for about $200 (the best places for setting up an LLC are Nevada and Delaware, which are referred to as “onshore offshore” among some circles). The US consumer market is gargantuan, and for most categories of products, around five to ten times larger than the UK’s or Russia’s. The weirdest stuff, like bounce shoes, or medieval catapult replicas, or kombucha tea, finds its niche in the US.

Bureaucratic hurdles and a much smaller consumer market make the creation of small businesses more difficult in Russia. In fact, the country comes 123rd in the world in the World Bank’s Ease of Doing Business index, in comparison to the 4th position of the UK and the 5th position of the US. The best opportunities in Russia now tend to be in the state sector. In contrast to the impoverished 1990′s, state coffers are now flush with money and salaries for managers in state companies, academia, the bureaucracy, etc., are increasing fast. Though relative to developed countries, salaries remain low – about $700 per month, or $1000 in Moscow, is typical – their impact is multiplied by cheaper staples (e.g. potatoes, meat, etc. cost 1.5-2x less than in the US or the UK), very cheap utilities (gas, water, electricity) and cheap transport. Since the mid-2000′s, Russia’s “brain drain” to the West (primarily Germany, the US, and Israel) has abated, while economic migrants have poured in at an accelerating rate.

Most "everyday" products in Russia are cheaper than in the West.

Russian consumers are now relatively well-off by global standards. The GDP per capita, taking into account international price differences, is estimated at $19,000 by the World Bank for 2009. This compares to about $36,000 in the UK and $46,000 in the USA. Obviously Russia still has a lot of catching up to do, but it is no longer a struggling, collapsed superpower where the poor struggle to even feed themselves, as in the 1990′s, but an upper-middle income country not that far from Portugal ($25,000), Korea ($27,000), or even Italy ($32,000). The material accouterments of development, such as cell phones and Internet access, are now widely in evidence.

Got this done by a street artist in Moscow for 300 rubles ($10) back in 2003. Nowadays, such deals are much harder to find.

One consequence of high oil prices and economic growth has been a rise in prices relative to international levels. Back in the early 2000′s, it was possible to do cool stuff for a pittance, e.g. $25 for an hour of flying time. Now they are little different from prices in the US, and you’re better off doing your “geoarbitrage” – exploiting differences in international prices to have the most fun for the least money – in places like Argentina or China.

Though state sector jobs have usually been comfortable in both the UK and the US, their prospects have dimmed considerably due to their fiscal crises. Britain has decided to radically trim down the share of public workers in the labor force, but it’s unlikely that the private sector will be able to reabsorb most of them (thus, I expect many years of heightened unemployment, falling house prices, and depressed consumer activity). The budget cuts in the US are more symbolic, but some states are cutting down ferociously; thus, while federal employees are largely secure for now, the prospects of workers in local government are more uncertain.

One thing that all three countries have in common is that few of their citizens save any of their money. In fact, given Anglo-Saxon habits of treating their houses as a piggy bank, net household debt is on the order of 100% of GDP and quite a lot of Americans and Brits are now underwater. This figure is much lower in Russia, but only because its private lending sector is far less developed than in the West; credit-based purchases were just beginning to take off in 2007-2008, until the economic crisis short-circuited them.

Labor Rights

Americans are by far the most overworked (c.2000 hours / year). Holidays are few and far between, bosses are very powerful. (Combined with easy access to guns, this creates a few “going postal” incidents every year, in which angry employees gun down their bosses and coworkers). Testing employees for drugs is commonplace, which would be considered pretty absurd by most of Europe. Russians and British also work a lot (c.1700 hours / year), though not as much as Americans. (By comparison, central Europeans are real slackers, clocking in just c.1300-1500 hours / year). The workplace atmosphere in the UK and Russia tends to be more relaxed and easygoing than in the US. A Russian company of 10 people usually has 30 office birthday parties a year.

One of the foundations of the British welfare state.

In the private sector, dismissals are quick and easy in all three countries. Unions are very weak; the prospect of them grinding the country to a halt, as regularly happens in France, is unthinkable. Americans live paycheck to paycheck, and rely for health insurance on their employer. Unemployment benefits are small and run out after 26 weeks; credit cards may fill the gap in the meantime. Russian labor laws are likewise ungenerous, and benefits are meager to the extent that most unemployed persons don’t even bother registering . In the UK, one could get very modest unemployment benefits (“Jobseeker’s Allowance”) for a year before the state forces you into a make-work job; however, IIRC, this has recently been shortened to 3 months.

The Homeless

There are far more beggars on the streets of US cities, though they are very noticeable in Russia and the UK too. The reason for the big rates of US homelessness is partly to do with the unstable nature of economic life, especially the dangerous dependence on debt for education, medical procedures, etc; another reason is that by law, it is much more difficult to institutionalize the mentally ill in the US (this is not necessarily a bad thing, as the procedure can be abused by unscrupulous family members).

Most of Russia’s homeless have become so through alcohol or drug addiction (though some became homeless because they were ethnically cleansed from parts of the former USSR in the anarchic 1990′s; others lost their homes to “black realtors”, the bands of thugs who use violence and trickery to steal housing; finally, many didn’t get just compensation for having their old apartments knocked down to make way for more elite developments).

The same major causes – drug addiction and alcoholism – appear to have been at play in the US too, at least until 2008, but since then the homelessness has exploded; in Berkeley, where I now live, I’d estimate their numbers have doubled or tripled. Their social composition also changed. Before 2008, probably 75%+ were African-American males; now, there are a lot of whites and women, too. I think this development is largely linked to the flood of foreclosures sweeping the US in the wake of the housing bubble collapse (foreclosure fraud has also become disturbingly prevalent). The economic situation in Britain is pretty similar to that in the US, so I wouldn’t be surprised if homelessness there has also increased in the past few years.

Prisons

The US and Russia, in this order, are global leaders in incarceration rates. Russian prisons are the toughest, as they involve forces labor, brutal criminal hierarchies, and rampant diseases such as tuberculosis and AIDS. However, sentences are much shorter than  in the US. The typical sentence for murder is 6 to 15 years, while only terrorists and serial killers get life sentences. Many Russian prisons are located in Siberia, where the main obstacles to escape aren’t guards or walls, but the remote, inhospitable location. The system’s most famous prisoner is Mikhail Khodorkovsky, Russia’s richest man until 2003 when he was arrested for tax evasion. About 0.58% of the Russian population is imprisoned.

Alcatraz Prison, San Francisco; the most famous US prison, held Al Capone, now a tourist attraction.

Even relatively minor felonies in the US can get you very long jail sentences. For instance, California’s “three strikes law” means that someone convicted of three felonies (e.g. burglaries, car thefts) may well never see freedom again. God help you if end up in a supermax. Prisoners are organized around race-based gangs (white Aryans, Hispaniacs, blacks), which maintain hierarchies and war with each other.

There is forced labor in US prisons. Many prisons are privately owned, and thus have an incentive to band together and lobby for harsher sentences; critics even point to the emergence of a “prison-industrial complex“. The prison population has quintupled in the past 30 years, so that now 0.75% of the US population is behind bars.

Though British prisons are no song either, at least by Scandinavian standards, they are far preferable to both Russian and American ones. The rate of imprisonment has risen in the past decade and overtaken most European countries, but at 0.15% of the population, the situation is still a lot better than in Russia or the US.

You want to stay out of a US supermax.

Why is this? Unlike Europeans, Americans tend to view crime not as an inevitable phenomenon borne of adverse socio-economic conditions (e.g. inequality, community breakdown), but as individual transgressions by bad men and women. This religious-tinted perspective, based on clear conceptions of what is good and what is evil, perhaps, also explains the relative harshness of US punishments. You have a higher chance of dying in a Russian prison, but you’ll stay much longer in a US one.

After extensive use in the Soviet period, Russia implemented a moratorium on the death penalty from the mid-1990′s. Though 65% of Russians supported capital punishment in 2005 (down from 79% in 2002), it’s not coming back any time soon due to its agreements with the Council of Europe. The death penalty was abolished in the UK in the 1960′s, and likewise its reintroduction is extremely unlikely (despite a slight majority of the British population being in favor).

The US had a moratorium from 1967 to 1977, but the death penalty is applicable in most states outside the North-East nowadays. While there is opposition to the death penalty in liberal pockets of the US, by and large it enjoys a lot of popular support, and is unlikely to make an exit any time soon. One recent improvement is that underage offenders can no longer be executed. Most executions are by lethal injections, and each one attracts a mass of anti-death penalty activists.

Freedom & Regulations

The TSA has courted controversy with its "naked body" scanners.

There is a lot of rhetoric in the US on freedom as an unalienable right. But things aren’t that straightforward. Many security-for-freedom compromises have been made under the rubric of the “war on terror”, and at least for practicing Muslims, or for those passing through an American port of entry, the Homeland now differs little from an authoritarian regime.

Speaking of airports… American ones have prying, time-consuming and ineffective anti-terrorist measures (some find them humiliating, I find them annoying). They can demand your fingerprints, and take away your notebook and other electronic belongings, without explanation. Russian and UK airports aren’t pleasant either in this respect, but somewhat better than American ones.

But in most cases, the US still far better on the free speech thing than our other two alternatives. Britain’s libel laws are (in)famous for being exploited by corporations and rich individuals all over the world for silencing those who publish unsavory or incriminating information on them; frequently, the threat of exorbitant legal fees is enough to force removal of the material. They can also obtain gag orders to prevent publication of such documents in the first place. The mere act of owning literature like the Anarchist Cookbook or “justifying” terrorism gives you a small chance of landing a hefty jail sentence.

Alexei Navalny, whistleblower & liberal nationalist, is the big Russian media sensation of 2011.

In Russia, libel lawsuits have emerged as one of the most powerful defenses of corrupt politicians against valid criticism. It is the worst country of the three for “leakers”, whistleblowers and investigative journalists. Before you can air the elite’s dirty laundry you must get some kind of political cover, as Navalny almost certainly did when exposing corruption in state pipeline operator Transneft. But if a lowly police officer tries to expose his superiors’ corruption, the likelier outcome is that he’d be fired, and may even go to prison for “corruption” himself.

The situation in the US is far better. It has been widely criticized for its extralegal campaign against Wikileaks, but in a way, the very fact that the Department of Justice is finding it so hard to charge Julian Assange with anything is a testament to the robustness of its institutional safeguards.

On the positive side, Russia's police have excellent fashion sense.

The police in big Russian cities, especially in the Metros, are omnipresent and provoke a sense of foreboding rather than security. They have the right to stop you at will and demand to see your documents (i.e. an internal passport); if you don’t have them, and a bribe doesn’t suffice, then it’s off to the police station to confirm your identity. But in practice, as long as you don’t have Central Asian or Caucasian features (i.e. a potential illegal alien or terrorist) or a young Slavic man (i.e. a potential draft evader) then you’re very unlikely to get stopped. (By the way, the recent immigration bill in Arizona effectively gives its police the same powers as those “enjoyed” by their Russian counterparts).

Most Russians dislike their police, which is unsurprising given their penchant for corruption and brutality. Americans and especially Britons regard their police much more positively, mostly seeing them as honest upholders of the laws. (Of course, certain groups such as African-Americans in the US, don’t share these views).

Russia has an onerous system of registration. To access social services, you have to be officially registered as living in the area of their provision. This shows up in your internal passport. There is no such system in the UK or the US.

That said, in one very real sense, Russians are far freer than Westerners. That is in the laxness of regulations or their non-enforcement. One advantage of life being more chaotic and improvised is that Russians don’t have to worry nearly as much as Americans or Britons about offending some local ordnance, getting a parking ticket, etc.

Gun Rights

The freedom to get armed and dangerous is one of America’s most cherished rights, to the extent that some states like Texas even allow concealed carry onto campuses. The most liberal firearms policy is supported by most of the US population, with the sole exception of some urban liberals.

Me at a California shooting range. Probably 2006.

You can go buy a gun after a quick background check (and you don’t even have to undergo that if you talk to the right people at one of the many gun fairs going on year round). Hunting rifles, shotguns, pistols (the Glock 17 is my favorite; costs about $400), semi-automatics (like the cool FS2000, costs about $3,300) are all good for the taking. There is a ban on the manufacture for civilian use of fully-automatics after 1986, resulting in soaring prices due to competition for the remaining stocks; an AR-15 of this type will cost around $15,000-20,000.

Citizens have the right of “concealed carry” in most of the conservative states; recently, Texas even allowed students to carry them onto campus. Except for a few limp-wristed liberals in degenerate areas such as the Bay Area, the vast majority of the American public supports gun rights.

As mentioned above, private gun ownership is very restricted in the UK. The main exceptions are low-capacity shotguns; single-shot rifles (e.g. bolt-action); low-caliber semi-automatics; and air guns. All kinds of handguns and fullbore semi-automatics are banned. This stance is supported by the vast majority of the population. There are rifle ranges where enthusiasts can practice rifle shooting (I did it at my school for free, though it was atypical in its close relations with the military), but ordinary Britons are far less into guns than Americans.

It's easy to obtain a license for the Saiga-12 semiautomatic shotgun in Russia.

Russian laws are in between the two Anglo-Saxon countries. Acquiring licenses for shotguns and hunting rifles is easy. Getting one for a pistol is far harder; from what I heard, one common ploy is to register yourself as an employee of a security company (the authorities rarely bother checking up on it). Most Russians concerned with self-defense just get an air pistol instead. IIRC, its possible to get a license for a fullbore semi-automatic, but it requires a good reason and 5 years of possessing a license for other guns without incident. In practice, there are a lot of unregistered guns floating around in Russia, especially in the unstable North Caucasus region.

Many Brits and Russians smugly criticize the Americans for the “recklessness” of their gun laws, arguing that it leads to higher crime, etc. But they aren’t borne out by the facts. The homicide rate in Russia is 15/100,000; granted, it’s down from 30+/100,000 in the 1990′s and early 2000′s, but it’s still more than twice as high as in the US. The reason for this has nothing to do with guns. The average Russian murder, statistically speaking, is from stabbings or blows during a drunken argument between two middle-aged guys at an apartment. So these Russian critics are pretty hypocritical.

Britain is far safer, with a homicide rate of about 1.5/100,000 compared to America’s 6/100,000; perhaps a better argument for gun control? But then again, gun ownership in the US is concentrated in affluent suburbia, which are just as safe if not safer than their British equivalents. The rates of petty crimes such as burglaries and car thefts are certainly far lower. Homicide rates only truly go out of control in the inner city areas of places like Washington DC or Atlanta, rising to as high as 70/100,000; but these are caused not by (legally registered) guns, but by turf wars between drug gangs using unregistered guns. Due to the “war on drugs”, prices are high and so as profits, and people will kill for money no matter what. The solution to this problem is drugs legalization, not gun criminalization.

Alcohol Rights

Typical scene at a Russian get-together.

The equivalent sacrosanct liberty in Russia is the right to be drunk. Gorbachev’s attempts at partial prohibition were unpopular and may have even contributed to disillusionment with the Soviet system. In public, on park benches or underneath them, or trundling in for the work day, nowhere will you see as many drunk people as on the streets of any Russian city.

The legal drinking age is eighteen, but I’ve never seen anyone being checked, including visibly underage buyers. It’s common to see people milling around beer stalls in public parks or tourist attractions, including teenagers. Beer is considered more as a soft drink than an alcoholic beverage.

In contrast, I’m always asked for an ID when shopping for booze in the US (unless I wear my camo pants and black wife-beater, in which case they ask no questions). This isn’t to say that there aren’t any shops or bars willing to sell alcohol to people under 21, but generally speaking they’re either in isolated rural areas or you have to really look for them. The situation is easier in the UK, because the legal age is 18; furthermore, even 16-17 year olds don’t face unsurmountable problems in getting served. The going rate for fake ID’s seems to be about $200 in both countries (there are cheaper alternatives but they tend to be unreliable).

Travel Rights (Passports)

If you like to travel, the UK passport isthe best there is. Thanks to its “special relationship” with the US, and links to the British Commonwealth and the EU, a British national can visit some 166 countries without a visa. The US passport is almost as good with 159 visa free countries (though Cuba is banned outright unless you have an approved reason for it). The Russian passport is far behind with just 95 countries. Good for traveling through Central Asia and the Middle East, you’ll need a visa to visit the developed world bar Israel.

Good for getting out of town.

Though many Britons complain about the difficulties of getting a Russian visa, they pale besides the troubles Russians experience with visiting the UK. They have to fill in multiple forms with confidential financial and personal information, and can be – and frequently are, after the Litvinenko Affair – refused entry for no discernible reason.

Russia operates on the principle of ”visa free travel must be reciprocal between states”, which IMO is a respectable stance; hence, if the British (or Europeans, Americans) want to visit Russia without hassle, they should pressure their own governments to simplify or remove visa procedures for Russians.

You might not get what you want from them, but British Embassies are by far the most pleasant of the lot. Russian ones are staffed by rude people and rather anarchic; there was something close to a riot the last time I was in the SF Russian Consulate. American embassies are protected by intimidating layers of armed men, and their staff tend to be the most arrogant of the lot.

ASBO’s

Are an anti-freedom specific to the UK? The ASBO (Anti-Social Behavior Order) is a restraint order that allows for your activities – even if they’re legal – to be restricted by court order on the “balance of evidence” (i.e. not even proof of guilt). They can be imposed based on anonymous denunciations. Violating their terms can result in a prison term. Usually used against troublesome teenagers.

Gambling Rights

Now that's what I call dedication to the cause!

Gambling is without doubt the most liberalized in the US. The main centers of the gambling industry are in Las Vegas, Atlanta City, and Reno. The latter is particularly suitable for North Californians, especially if they also like skiing (Tahoe is just an hour’s drive away from Reno). The glitzy mega-casinos of Las Vegas used to be the global gambling mecca, but in the recent years it has been decisively overtaken by Macao.

Any one of dozens of casinos in Vegas dwarf the biggest casino in Britain, where they are much more restricted (recently there were plans to allow the construction of a few “super-casinos” in the UK, but IIRC they’ve fallen through).

All casinos in Russia were banned in 2009, except in four remote regions without any existing facilities; idiotically, poker was amongst the “gambling” games banned, and as such Russian players typically go to Ukraine, Kazakhstan, or further abroad to Europe. As such, most remaining casinos in Russia are necessarily underground operations, that pay for police and/or political protection (the Prosecutor General’s son was implicated in a casino racketeering scandal a week ago). Being more risk-averse and less capitalistic than Americans, the conservative stance of the UK and Russia on gambling is broadly supported by the population.

EDIT 4/16/2011: The era of permissive US attitudes towards gambling may be waning, in the wake of the shutdown of the three largest online poker sites and arrest warrants for their CEO’s. Formally, what they were doing has been (arguably) illegal since 2006, but for whatever reason the Feds have only decided to move now. Online poker remains legal in the UK, (even) Russia, China, and most of Europe.

Violence & Nudity Rights

Grand Theft Auto, a quintessential American video game.

It’s cliché that American culture is violent, while Europeans are oversexed. I find this generally accurate. A German once told me about a video game in which some enemy characters were topless green fairies. When it came out in the stores, the Americans censored out the nipples; the Germans censored out the blood splatter. Nudity is far more prevalent on TV in Europe, even prime time, which would be unthinkable in the US with its more puritanical instincts. On the other hand, many aspects of American culture invoke the righteousness of controlled violence: Western shootouts; the Second Amendment; Grand Theft Auto; the entire zombie genre; grindhouse flicks (e.g.Texas Chainsaw Massacre); etc.

The UK has the worst – or the best – of both worlds. Violent imagery is not condoned as in the America and its gun laws are some of the most restrictive in the world (suffice to say that their Olympics pistol shooting team has to practice in France). And the general attitude towards nudity is still best exemplified by “No sex please, we’re British.” The placidness of British life is interrupted in sudden jolts by Friday night binges, in which they try to make up for days of rain-filled monotony with paroxysms of drunken licentiousness that is the stuff of legends throughout civilized Europe.

Female toplessness, let alone full nudity for men or women, is illegal in public for all three countries (if you want more liberality, then Germany, Scandinavia and Canada is where it’s at). On the other hand, it is not uncommon for young Russian women to wear see-through vests during summer. Their American counterparts like to wear opaque tights, while British girls have a penchant for short skirts.

The Americans and British favor swimming shorts for men and two-piece bikinis for women on the beach. Topless or clothing-free areas are atypical. Nowadays, Russia is drawing closer to the European mainstream in which female toplessness is more prevalent on the beaches. Russian men tend to wear swimming briefs, which are decidedly uncool in Britain and the US. Thongs have become popular in all three countries, but most remain too shy for string bikinis at the beach.

TV & Video Games

Russians are all round extremists. Back in the 1990′s, even prime-time TV was filled with images of the most blood-drenched inanity – what the eXile referred to as “death porn” – as well as real, hardcore pornography. Some sense of sobriety has since been restored to the TV stations and such scenes are now limited to late hours as in normal countries. The old atmosphere continues to reign on the Internet. It’s common to see photos of partial nudity on the more tabloid newspapers, which is unheard of on American ones and rare on British papers (to the extent that “Page 3″ is known by everyone to refer to The Sun‘s photos of topless models on, erm, the third page).

Not in Britain, please.

The British have by far the strictest ratings system for video games, with some like Manhunt 2 being banned outright. Almost nothing is banned in the US thanks to the First Amendment, though the age classifications system is pretty authoritarian. If there exists a video games classification agency in Russia, no one I know has ever heard of it; besides, it would be totally redundant since all video games are pirated there anyway.

One positive thing to say about Britain is that it has by far the most tolerable advertising on TV. It is shorter and not as in-your-face buy-my-product in style. The length of commercials makes watching TV in the US or Russia rather excruciating. One telling thing I’ve noticed is that about 25% of commercials in the US and Russia reflect their respective healthcare crises of obesity and alcoholism: high-carbohydrate, high-saturated fat foods in the US; beer in Russia. When watching Russian TV, you can tell when it strikes 10pm without consulting a clock, as the commercials become infested with beer promotions. One day about seven years ago I was watching a documentary on Russia TV that bewailed the nation’s economic and social crises and the government’s indifference – yes, contrary to what the Western media says, Russian TV does criticize the government – and one segment ended with some demographer citing the numbers of alcoholics in the country as evidence of social decline. This was immediately followed by a commercial for Baltika beer, as if determined to prove him right!

Abortion Rights

All three countries have abortion rights. The US since Roe vs. Wade in the 1970′s; the UK also since that period; Russia since Stalin’s death (and during 1920-1936). In the UK, a woman can get an abortion up until 26 weeks. IIRC, there are similar laws in the US; though conservative states put up a great deal of bureaucratic obstacles to women getting abortion. Some abortion doctors were even assassinated by religious fundamentalists.

In Russia, abortion is legal on request to 12 weeks, and for social reasons to 22 weeks. The country has the dubious distinction of having the world’s highest abortion rates. There were 2-2.5 abortions for every live birth in the post-Stalinist USSR, where it was used as a major component of birth control; though this indicator began to fall consistently from 1993, it was not until 2007 that live births exceeded abortions.

Driving Rights

In the UK, you can take a driving test at the age of 17. They are far more rigorous than in Russia or the US. Many people fail multiple times. In the US, it depends by state: IIRC, the California driving age is 16, and it’s as low as 14 in some of the more rural states inland.

Russians can take driving tests from the age of 18, IIRC. They seem to be about as hard as US tests, but the passing criteria can be lowered depending on the size of your bribe to the instructor.

In all three countries, there is a written (computerized) and a driving component to the test. The written material is hardest in the UK, and one section actually involves watching videos and making split second decisions on what to do in dangerous situations. The written tests in all three countries involve answering fairly simple multiple-choice questions from a booklet that you study beforehand.

As a rule of thumb, it is legal to drink one pint of beer, or a glass of wine, but NOT two, when driving in Britain and the US. It is very unusual to see drunk people behind the wheel in both countries. There are a lot of drunkards on Russian roads, however the problem has decreased markedly since the mid-2000′s when a no tolerance policy towards driving and drinking was introduced (having the slightest traces of alcohol in your body leads to a suspension of your license).

You drive on the left hand side of the road in the UK, but on the right hand side in Russia and the US.

Drugs Rights

The cool states are colored green.

The US has a reputation for maintaining a hard line against marijuana, but the situation is more nuanced in practice. In someplace like Tennessee, you could go to jail for mere possession. In Berkeley, California, you can light up a joint at any public park. Policing marijuana possession here was put on the very lowest priority, below jaywalking, so obviously no-one cares. You can extend weed coverage to the rest of the California by telling the doctor that you “suffer” from some kind of “disease”, e.g. “migraine headaches” that can only be “alleviated” by smoking marijuana. The doctor will give you the medical certificate for a small fee and you can go hit the bong.

Drugs off all kinds are far easier to acquire in the US than in the UK according to, erm, acquaintances. I don’t know about the situation in Russia.

Piracy rights

In theory, Russia has copyright law; in practice, 90% of software in Russia is pirated and the chances off getting in trouble for it are virtually non-existent. Fire sharing is all prevalent. In the US it is an extremely serious offense, about on par with rape, thanks to the political power of the record companies. But fortunately for its tens of millions of illegal file downloaders, the individual’s chances of being detected and prosecuted are very low. Piracy is illegal and prosecuted in Britain, though the rare convictions that happen don’t tend to result in absurdly huge fines like in the US.

Conscription

Both the US and Britain have professional armies. The last time the US had conscription was during the Vietnam War, and though it is extremely unlikely to be used again, men have to register with the Selective Service System upon turning 18 in case of a future mobilization. They can theoretically be called up until the age of 25. Britons had a system of National Service from World War 2 until the early 1960′s.

At the Military Commissariat.

Conscription remains a major institution in Russian life. The bulk of its military is made up of conscripts, though the numbers of contract soldiers are rising. Conscription is slated to last until at least 2020. In the recent past, the length of service has recently been shortened from two years to one year. This was accompanied by a narrowing down of deferments, and greater efforts to crack down on draft evasion. There are biannual drafts in the spring and autumn.

In a typical scenario, the future conscript receives a letter from the local Military Commissariat (voenkomat) upon turning eighteen, informing him of his obligation to appear at their office. Unless one has a valid deferment (e.g. a place in a university) or resides overseas, failing to do so is a fairly serious offence. Then he has to go for a medical checkup with military doctors to ascertain suitability for service; they will, of course, try to prove that he’s healthy and fit to serve. This is followed by travel to the marshaling ground, where he is assigned and transported to his unit in another corner of the Russian Federation. Alternate service lasts longer and is very unprestigious, involving dirty work like cleaning sewers, so few opt for it.

Many wealthy and well-connected families can find ways for their sons to evade conscription or to get assigned to elite units where there’s little hazing. The most common method is to get a “white ticket”, certifying an illness that makes one unsuitable for service. Sometimes the illness is real, but more often it is imagined and paid for; the going rate amongst doctors for signing the appropriate papers is $2,000-$5,000. However, this “white ticket” (its real color is red) often results in future job discrimination; furthermore, it is unreliable because the Military Commissariat may insist on its own medical tests if they have suspicions about the existence of the illness (the correct response is to deny them this request in writing; legally, they cannot force those medical tests on someone).

Therefore, other methods of draft evasion are preferable, e.g., a direct bribe to the officers of the Military Commissariat. Not everyone can afford this; even a few years ago, the typical payment was around $5,000-10,000 (the amount depends on the Military Commissariat: some are cheaper, some are expensive, others actually don’t accept bribes). Since then, there has been a fall in the numbers of eligible conscripts (due to the collapse in birth rates during the 1990′s), a halving of the length of service, and an increasingly serious anti-corruption campaign. This means that a rising proportion of each year’s male cohort has to be called up to maintain the Armed Forces at one million soldiers. As a result, successful draft evasions have fallen, while typical bribe sizes have soared well above $10,000.

Russian soldiers.

Though training and conditions of service are better than in the cash-strapped years after the collapse of the Soviet Union, they are still very substandard and extensively criticized by human rights groups. In particular, hazing – called dedovschina (lit. “rule of the grandfathers”, i.e. of soldiers nearing the end of their service) – is prevalent in many units and directly results in the deaths of a few dozen soldiers every year. (In total, about 200-300 commit suicide in total out of the one million-strong armed forces; some would have done so anyway, but others are surely caused by hazing).

It was hoped that the reduction in length of service would reduce incidents of hazing, because it would (by definition) eliminate the “grandfathers”, but it actually may have had the opposite effect. When administered through the grandfathers, the system had a certain framework of rules and traditions to it; today, the hierarchy is no longer set by length of service, but by the rule of the jungle. With no tradition of a strong NCO corps, checking this chaos will be a major challenge in the coming years.

All that said, I stress that far from everyone regards the Armed Forces with fear and loathing. Of those I know who served in the Russian Army, most describe it as an exercise in pointlessness and boredom; what bullying they experienced happened to other people in other units. A few even look back in fondness. According to opinion polls, Russians are evenly split on whether to continue conscription. Some say it helps build character and discipline; others regard the Army as a dangerous prison, or at best a waste of time.

1. The USA is still undoubtedly the world’s leading superpower. It has China’s (gross) economic size, matches Russia’s strategic military power, and is as technologically advanced as Japan with 2.5x its population. Meanwhile, its conventional military power, power projection capabilities and cultural influence remain globally hegemonic. But its Number One position isn’t secure. Political capture by special interests at home and “imperial overstretch” abroad has made its fiscal situation patently unsustainable. This in turn threatens its dominant military position, especially coupled with accelerating Chinese military modernization. Finally, the very globalization that underpins Pax America also users in developments that actually undermine it, e.g. the economic rise of the BRICs and the growing influence of non-Western media outlets (e.g. Al-Jazeera, Russia Today). CNP – 100.

2. China is rapidly emerging as the next global superpower, now boasting the world’s largest manufacturing sector and (arguably) the biggest economy in terms of real GDP. Furthermore, they have calculatedly taken a lead in many of the world’s most prospective and hi-tech sectors, e.g. renewable energy, hi-speed railways and supercomputers. China’s rapid military modernization has already yielded it the world’s biggest navy by warship numbers and advanced drones and stealth fighters. This is all founded on a literate, 1.3bn-strong populace driving 10% economic growth rates (and there’s no reason these should fall drastically any time soon, since average Chinese incomes have plenty of space left to catch up with the West). Now assuming unforeseen shocks such as political collapse or an abrupt peaking and decline in coal production don’t derail progress, it’s very likely China will supplant the US as the global hegemon as early as 2020. CNP – 75.

3. Though Russia‘s population and real GDP (c. Germany) are respectable, they are out of the Big Two’s league (in terms of raw power, it was probably overtaken by China in 2008 because of the depth of its recession and Chinese military catch-up). Nonetheless, it may deserve the title of “third superpower” by dint of its nuclear parity with the US, military-industrial strength, and vast resource base. Covering northern Eurasia, and informally dominating Central Asia, Russia is both self-sufficient in energy and minerals, and has the armed strength to defend them. The world’s increasing food and fuel supply challenges place Russia in an enviable position to exploit its strength. Furthermore, global warming is melting the Arctic, opening up shipping routes, energy sources and living space – a development Russia is uniquely positioned to take advantage of. CNP – 60.

4. In terms of power politics, France is a lot like the US, just 5x smaller in scale. It is influential globally and in the EU, has a self-sustained nuclear arsenal and MIC, and its own semi-satrapies in West Africa. It also has the healthiest demographic indicators in ageing Europe; its economy is versatile, productive and robust; and its nuclear power industry and links with the Maghreb nations make for a (relatively) secure energy future. Overall, it is likely that France will be the predominant West European power of the next decades. CNP – 35.

5. Germany has a powerful economy, and its fiscal rectitude and export competitiveness have made it the dominant influence in the Eurozone. In the longterm, however, Germany’s prospects dim: its demographic problems are the most intractable in the European continent (fertility rates fell below 1.5 children per woman back in the 1970′s and remained there since). Hence the reliance on exports to provide savings for its rapidly aging population. What would Germany do if the Mediterranean breaks from the Eurozone and the outside world becomes more protectionist? Its conscript army is obsolete and nuclear weapons non-existent, but these can be quickly fixed. CNP – 30.

6. Japan is similar to Germany, but with 1.5x its population, several times its problems (e.g. even more rapidly aging population; 220%-of-GDP debt) and without Germany’s key advantage (a continental market). It is militarily weak and utterly reliant on food, fuel and mineral imports, many of which pass through waters over which China claims preeminence. Though one of the most technologically advanced nations on Earth, it faces an uncertain future as the US wanes and China’s rise eclipses it. But like Germany, it’s theoretically capable of rapid transformation into a leading military power. CNP – 30.

7. The UK is ostensibly similar to France, but has critical weaknesses that now undermine its Great Power status. It has a fiscal hole little better than that of Ireland or Greece; the current government is disinvesting in the future (university education) and the military; suffers from a smaller version of US “imperial overstretch”; is falling into an energetic black hole; and the City of London, which is a giant source of tax revenue, has poor longterm prospects. CNP – 25.

8. Though at first glance India might appear similar to China, or at least following in its footsteps, the real situation is far gloomier. The (educational) human capital of Chinese youth is now equal to (or above) the OECD rich country average; India still hasn’t finished eradicating illiteracy. This is of great import since educational levels are the single biggest influence on growth prospects. China has 10x more manufacturing output, 6x more Internet users and 3x more infrastructure spending. Though India’s land forces are more than capable of crushing Pakistan, its navy is quantitatively and qualitatively inferior to China’s, a matter of some import given that both countries are dependent on fuel and mineral supplies from the Middle East and Africa. And the precariousness of India’s food situation in a warming world – and its inability to pay for imports or seize them – makes its longterm prospects decidedly glum. CNP – 25.

9. With its ample lands and resources, not to mention its successes with sugar cane-derived ethanol, Brazil is set to enjoy – much like Russia – a comfortable existence as a regional hegemon in a world of rising demand for food, energy and minerals. (Though its military is much weaker than Russia’s, it doesn’t need to be particularly strong given Brazil’s geographical isolation). It is also playing an increasingly visible global role, together with countries like Turkey and South Africa, as a representative of “The Rest” (as distinct from “The West”). But its future prospects for true superpowerdom are constrained by its low educational human capital. CNP – 20.

10. Though Canada or South Korea or even Italy could just as easily take this spot, in the end I decided it should go to Turkey. It’s not just that it has a rapidly developing economy, or that it has the most powerful conventional forces in the Middle East, or that its control of river headwaters gives it leverage over states like Iraq and Lebanon. It is the major Muslim country that is most comfortable with integrating religious tradition with socio-economic modernity. This makes it a role model – and possible future leader – for many Muslims in the Middle East; then it also has ethno-linguistic connections with Turkic peoples to the east, in Azerbaijan, western Iran, and even Central Asia. Its soft power and willingness to exercise sovereignty in the international sphere earns it the tenth place. CNP – 20.

There are other countries with a similar CNP of 20. These include Canada (a potential future superpower as the Arctic opens up – assuming the US doesn’t swallow it first); South Korea (vibrant economic base, but has many of Japan’s strategic problems and is preoccupied with the North); and Italy (a modern France-sized economy but not much else).

Further down the list, with a CNP of 15, we get Saudi Arabia (world’s swing oil producer but backwards, politically fragile and reliant on US support); Iran (most visible challenger to the current international order and has leverage over its capability to shut down the Strait of Hormuz); Mexico; Australia; Spain; Venezuela (soft power through ideas of 21st century socialism); and South Africa (mineral resources and informal spokescountry for sub-Saharan Africa).

Note – So I don’t have to cover this in the comments. Many “analysts” will jump on my back for neglecting to mention the salubrious effects of India’s democracy, or how corruption dooms Russia to eternal slippage. The reason – as I’ve endlessly argued on this blog – is that these kinds of arguments are frequently flawed even where only living standards and civil rights are concerned (e.g. I’m sure the 47% of Indian children who are malnourished have nothing but praise for their glorious democracy, as does the rights activist Binayak Sen given a life sentence for supporting Maoism), not to mention completely nonsensical when comparing and projecting national power (e.g. Russia’s corruption is fairly standard for middle-income countries, and the Chinese authoritarian system of state capitalism has arguably very much helped rather than hindered its development).

(1) Last year, I wrote: “World economy continues an anemic recovery, though there are significant risks to the downside.” Today I’d repeat this, but add that the risks have heightened. Many countries in the developed world, from Spain to the US, now run patently unsustainable fiscal policies. I don’t know when the bond vigilantes would strike (and even if I did I’d rather get rich than tell you), but sooner rather than later they will. The obvious loci of the next big crisis are the so-called “PIGS” (Portugal, Italy, Greece, Spain), and Ireland, Belgium and Hungary.

But obvious isn’t preordained. Iberia, at least, is covered by the EU’s €440bn rescue fund, while Italy’s 120%-of-GDP debt is counterbalanced with a 0.9 ratio of receipts to outlays (i.e. for every €1 it spends it collects €0.9 in tax). The UK has the worst budget deficit amongst the big European countries, but it’s insulated by an average debt maturity of 14 years. Japan has the most apocalyptic sovereign debt figure at 220%-of-GDP, but also has immense foreign savings. Finally, though the US appears to be in one of the worst positions all round, with an debt maturity of just 4 years, a 0.6 receipts to outlays ratio and an ideological rift that precludes a political solution, it is still buffered by the $’s status as the global reserve currency.

Which of these dominoes will fall first, and when, must remain a matter of speculation, and may ultimately be contingent on unforeseeable shocks and triggers. For instance, a damning Wikileaks expose of Bank of America? Iran blocking the Strait of Hormuz in response to an Israeli strike (as I speculated here)? It’s all possible.

[Michael Pollaro's collection of budget and debt metrics. Note that on aggregate, the US is in a worse position than the faltering PIGS.]

(2) Possible wars. My analysis remains the same as last year’s, with two changes: (1) The likelihood of a US/Israeli strike against Iran rises from 25% to 40% because the Stuxnet worm can not longer be relied upon to sabotage Iranian nuclear progress, the US development of the MOP, and Obama’s domestic weakness in light of the GOP’s resurgence; (2) The chance of an Azeri-Armenian war over Nagorno-Karabakh has risen from small to 10% in view of heightened rhetoric, skirmishes and exploding Azeri military spending.

(3) My Russia predictions. Back on October 8th, I predicted: “Within the next 3 months Luzhkov is going to get hit with corruption charges and will either go on trial or seek political asylum in the West.” Still more than three weeks to go!

Barring another catastrophic heatwave or natural disaster, Russia’s population should resume growth in 2011 (as in 2009, but probably will just miss out in 2010). The life expectancy should approach (or slightly exceed) 70 years; the total fertility rate will approach (or exceed) 1.6 children per woman; the birth rate will be in the 12.5-13.0 / 1000 and the death rate in the 13.5-14.0 / 1000 range. The justifications for these predictions should be well-known to S/O readers but for refreshers see here and here.

Symbol of modernization: Skolkovo

Consensus is that the Russian economy will growth by 3.5-5.5%. This will be lower if there is a second global financial crisis, but the results on growth are almost certain to be far less severe than in 2009 (-7.9% growth) because today’s Russia Inc. is much less dependent on foreign credit inflows. See Russia 2010: Growth but state-led recovery is bad news by Ben Aris.

In foreign policy, expect relations with the US to deteriorate, on account of the rise of hardline Russophobes amongst Republican Representatives. On the other hand, the France-German bloc – increasingly estranged from the Mediterranean South – will be more willing to engage Russia’s non-indebted, growing and expanding (see Kazakhstan & Belarus customs union) markets.

(4) US politics will be mired in domestic issues, with Republicans doing their utmost to hack away at the healthcare legislation, calling for cuts to social (but not security) spending, harassing the EPA, and perhaps even trying to shut down government around March. The joblessness of the recovery and dim economic prospects will dim Obama’s political prospects, but they may be just about rescued if the Republicans overreach themselves.

I think the ConDem coalition in the UK will last the year, albeit with a lot of acrimony and backstabbing. The Lib Dems have lost half their electoral support, the students whom they betrayed, so they’ll want to hang in with the Tories as long as possible.

(5) Oil prices should stay at around $80-120 in 2010 and production will remain roughly stable as increased demand (from China mostly) collides with geological depletion. If there is a second global economic crisis, I doubt we’ll see prices plummeting to $40 as we did in early 2009, when investors abandoned stocks and commodities for the perceived safety of bonds. But since the next big crisis will probably be a bonds crisis, the most attractive safe havens may well become commodities, and the government bonds of emerging markets (where commodity consumption is rising).

(6) China will continue growing at 8-10% per year. Their housing bubble is a non-issue; with 50% of their population still rural, it isn’t even a proper bubble, since eventually all those new, deserted apartment blocs will be occupied anyway. What is of concern is that China’s coal production – now almost 50% of global production - is close to plateauing. This is of some consequence given that coal is China’s primary energy driver.

Solar irradiance.

(7) Despite NASA reporting that 2010 may be the hottest year on record, the thermometers may break limits again in 2011. That is because, despite the unprecedented temperatures – manifesting in a great Russian heatwave that destroyed 40% of its grain crops and flooding in Pakistan that displaced millions – 2010 actually correlated to the end of a minimum in solar irradiance. Solar irradiance has a forcing effect on global temperatures, independent of the secular rise in atmospheric CO2. Based on the graph above, we can expect another peak in the next few years. Since greenhouse emissions continue unabated and are indeed joined by feedback emissions such as methane from melting Arctic permafrost, we can confidently expect several major climate events this year.

Speaking of the Arctic, as its longterm ice volume continues to plummet and sea ice extent retreats, we can expect more circumpolar shipping. I wouldn’t be surprised to see up to 10 non-stop voyages along the Northern Sea Route from Europe to China, following just one by MV Nordic Barents in 2010. Likewise, expect the Arctic to become a major locus of investment – if not in 2011, then in a few more years – as lucrative companies and ports are privatized in Arctic Russia.

(8) Wikileaks will not be “shut down”, as the Internet is too resilient. If Assange is successfully extradited to the US to face espionage or computer misuse charges – I’d give a 50% chance of that happening – then expect fireworks to go off as the “insurance file” is released.

What about the 2010 Predictions?

Consider this post on 2010 predictions and my prediction of the 2010 Ukrainian elections.

(1) “World economy continues an anemic recovery”: mostly true, though I should have clarified that I was referring to the developed countries. Though some, like Germany, did really well.

(2) “Republicans will carry the mid-term elections in 2010, but there is a strong mood of apathy and a sense that what is really needed is a new party, a new politics“: Bingo! Republicans won – check. Social disillusionment – check Gallup. A new party, a new politics – the Tea Party.

“Rising violence in Iraq… a false quiet in Afghanistan”: Got them wrong way round.

“In the UK, Gordon Brown (New Labour) will almost certainly lose to James Cameron (Conservatives) in the mid-2010 elections”: Totally correct.*

(3) None of the wars I mentioned happened, but I didn’t necessarily expect them to, as all of them were given as probabilities.

(4) “[Russia's demography will] continue improving further in 2010 and that the year will see the first year of positive population growth since 1994 (or 2009)… Birth rate = 12.5-13.0 (reasons), Death rate = 13.5-14.0 (a reason), Net Migration = 1.5-2.0, all / 1000.”: The Great Russian Heatwave of 2010, causing 44,000 excess deaths, threw many of my predictions off kilter. For now I’m basing it all on Jan-Nov 2010 stats, as December isn’t in yet. The birth rate during this period rose from 12.4 / 1000 to 12.6 / 1000, so I got that right. Unfortunately, the death rate rose from 14.1 / 1000 to 14.4 / 1000, due to an extra 28,300 deaths; if we exclude the 44,700 excess deaths accruing to the heatwave, the death rate would have been 14.0 / 1000, and so just within predicted range. A substantial falloff in net immigration, which I didn’t expect – surely more people should have left during the recession? – means that Russia’s population growth will almost certainly dip into negative territory this year.

“Economic growth of around 3-5% of GDP sounds reasonable.”: Most estimates are now converging at around 4%, so completely correct.

“Lots of privatizations and corruption investigations as part of the Surkov clan’s struggle against the siloviki and “their” state companies.”: True for the first part; not so much for the second, as most efforts have instead been diverted to ousting the last 1990′s-vintage regional barons.

“Yushenko will almost certainly (95%+) be kicked out of the Presidency in the coming Ukrainian elections… Ukraine under Yanukovych will join Eurasec or the Russia-Belarus-Kazakhstan customs union, but is yet unlikely to join the CSTO or give Russian 2nd language status.”: Correct; wrong & wrong; right & right. I still expect Ukraine to join a Eurasian common economic space. As George Friedman points out in his “geopolitical journey” (see the part “European Dreams”), the Kiev intelligentsia has little sense of national identity, and dream of a Europe whose foundations are in fact crumbling let alone considering further expansion. By far the most logical alternative for Ukraine, in the long-term, is something resembling what it has been since 1654.

In late January, 2010: “Adding up these figures, Yanukovych gets 50% of the votes, whereas Tymoshenko gets 46%… It is safer to say that Yanukovych will win with a gap wide enough that Tymoshenko will not have grounds to make a legal wrangle out of it – though that is just about possible if she’s very lucky and comes within 1-2% points of Yanukovych. But my prediction is a Yanukovych win by 5-10% points over Tymoshenko”: During the second runoffs on February 7th, Yanukovych got 48.95% and Tymoshenko got 45.47%, making a gap of 3.5%. My first, allegiance-tallying method was virtually perfectly correct (50%-46%); the one that involved factoring in opinion polls led me to miss my mark. But nonetheless, I still ended up predicting the correct result.

(5) “Oil production in 2010 will be around the same as 2009 – increased demand will collide with geological depletion to keep output stable. Oil prices in H1 will remain at 70-90$, and will rise to 90-110$ in H2″: More accurate to say $70-90 for the whole year with dips and rises, but you wouldn’t have lost money taking my advice (and that after making big bank in 2009: “…a rebound in oil prices from around 40-50$ per barrel in the first half, to 60-80$ in the second”).

(6) “No major AGW-related physical events (except for a heatwave or two), given that solar irradiation remains at an unusually long trough – expect the fireworks by 2012-15″: Well, and quite a few floods. But dead on about the “heatwave or two.”

“AGW skepticism will become more popular in the wake of Climategate“: Yes – see the Republican Party.

“China and its proxies will prevent any more significant action being taken at the next UN climate change summit in Mexico, than was “achieved” in Copenhagen”: Correct, though actually it was the entire world (save a few countries like Bolivia), not just China, that colluded in making a worthless agreement.

“By year-end the performance of the world’s top supercomputer will exceed 3 petaflop/s (repeat of 2009 prediction)”: Still not there, as the current top supercomputer, the Chinese Tianhe-1A, achieved a performance level of 2.57 petaflop/s. Next year for sure though.

(7) “China’s growth will slow from around 8% in 2009, to perhaps 5% in 2010… expect China to continue keeping a low profile as the US insists on shooting itself in the foot.” So wrong! Ouch.

* EDIT. A reader wrote in to tell me I meant David Cameron is the leader of the Tories, even though James (the film-maker) might be preferable. LOL. For me to get it wrong not once (when writing) but twice (when reading) there must have been some serious Freudian slippage going on!

BTW, the image above is of the Xue Long (雪龙) icebreaker in the Arctic. It represents the intersection of several major current trends: The multifaceted rise of China; the growing importance of the Arctic; climate change.

Year in Review: 2010

As usual, I will begin by reviewing the defining trends of this year (Part 1), before making predictions for the next and finishing up by reviewing the accuracy of my 2010 predictions (Part 2). The main global theme of 2010 is the continuing Rise of the Rest – led by but not limited to the BRICs (Brazil, Russia, India, China) – set against the background of the accelerating political, economic and above all institutional and soft power decline of the old Western order.

(1) China keeps getting stronger, on every facet of national power, at an exhilarating rate. A comprehensive overview is well beyond the scope of this post, but a few examples give an idea of the general picture. A country that first displayed its UAV’s in 2006, has now exhibited more than 25 different models. One of them, the WJ600 – boasting a jet engine, multiple missiles and stealth features – might even be more advanced than any US or Israeli model. Just as the year rolled to an end, leaked photos showed that the Chinese now have their own fifth-generation fighter, the Chengdu J-20. Bearing in mind that Russia also revealed its PAK FA this year (after around 25 years of development), I think it’s safe to say that the Chinese have now fully caught up with Russia in non-strategic military technology*.

However, unlike the USSR, China is not a largely one-dimensional military power. What’s far more significant is that in sector after sector it is investing massive resources into R&D and espionage to achieve qualitative near-parity with Western products (e.g. Japanese trains, German machine tools, etc) then seizing their market shares abroad through its lower labor costs. China now produces half the world’s wind turbines and solar panels, a hugely strategic sector given current energy prospects; it has the world’s most powerful supercomputer (and is now second overall to the US in supercomputing); and finally, PISA international standardized tests have confirmed that Chinese youth are now as skilled in reading, math and science as their (far richer) Western and Japanese counterparts.

One can stretch these examples almost indefinitely, but the main point is that “the rise of China” isn’t just 1980′s Japan-style hype; its tenfold larger population makes it the real deal. If you wish, dismiss it by referring to its aging problems (might be an issue by 2030) or its property bubble (when 50% of its population is still rural). But don’t be surprised by not-so-distant headlines such as “China becomes world’s biggest economy by GDP” or “RAND analysts claim PLAN has achieved military superiority in the West Pacific”.

(2) While China is its main champion, many other countries traditionally considered to be economically stagnant, politically unstable and socially backward are emerging as major regional Powers in their own right, and beginning to project global cultural influence. In its adroit PR handling of the flotilla incident, Turkey has staked out its claim to regional prominence by challenging Israel and appealing to global Muslim sentiment. Brazil and Turkey enjoyed blistering growth rates. Russia has resolved its differences with Belarus in recent weeks, and together with Kazakhstan has finalized the timetable for a customs union; with the election of Yanukovych to the Ukrainian Presidency and Ukraine’s (partial) reorientation towards Eurasia, it too may join in the next year or two. Non-Western outlets such as Russia Today and Al Jazeera are now major participants in the global media discourse along with the likes of CNN and the BBC.

(3) The ideological rift between pro-stimulus Democrats and pro-scrouging Republicans – and their mutual capture by special interests (the financial sector, the military-industrial complex, etc) – has become increasingly evident this past year. This now puts the probability of the US ever resolving its budget problems by choice, slim to begin with, at next to zero. At this point, the only realistic chance of returning to fiscal sustainability without unleashing massive social disarray is to increase taxes on the rich, cut security spending, reign in the financial and “homeland security” mafias and rule out future stimuluses (whose effects tend to be crude and non-lasting) in favor of targeted social spending. However, ideological factors preclude this (The Tragedy of Obama: “a corporatist centrist giving endless concessions to Republicans who (successfully) portray him as a radical leftist”).

(4) How not to close awning budget deficits: the UK (I regret to say that I blogged in support of the ConDem coalition). While any idiot can see that the UK is on a fiscally unsustainable path, the ways in which cuts are being made, with a sneering classism that hits the poorest and least-privileged; commercialization of state social functions; and dumping of state assets, is incredibly shorttermist, foments social disarray and undermines longterm prospects. From 2011, the UK will implement the highest university tuition fees in the world. The headlines say it all: “McDonald’s and PepsiCo to help write UK health policy”, “Students could boost marks by showing ‘corporate skills’”, etc.

(5) In Europe, the German corporatist model, the Swedish welfare state, and to a lesser extent French dirigisme, have acquired ideological supremacy over the UK and Irish neoliberal models and the bureaucratized Mediterranean states. In a low-key meeting at Deauville in October, Sarkozy appeared to agree with Merkel’s proposals that would penalize countries that require bailouts by denying them votes in EU councils and placing them under Brussels supervision. Will the Mediterranean accept these Diktats or will it fracture the EU? Is even Germany, with its own high debts and demographic problems, capable of guaranteeing them? In any case, one thing we can say for sure is that this development reinforces the trends towards a multi-speed Europe, with the power of the traditional Franco-German core reinforced further by their (relative) economic resilience.

(6) The posturing by North Korea is, as usual, a show meant to extract concessions. Not worthy of the alarmist headlines.

It appears that the main reason Israel has so far restrained itself from striking Iran – as I still think will happen, eventually – is the remarkable success of the Stuxnet worm at sabotaging its uranium enrichment processes. But in all likelihood – I give it 75% – this strike will come sometime in the next few years.

Afghanistan is as unwinnable as always, but ideological inertia and the “psychology of previous investments” conspire to keep the US there.

(7) If you want the single best example of declining US soft power, consider this: even as prominent US politicians called for the assassination of a controversial foreign journalist for “espionage” or “information terrorism” – and even better, while touting its plans for World Press Freedom Day in May 2011 (presumably Assange isn’t on the invite list) - and Britain imprisoned him on what are almost certainly politically-motivated rape charges from Sweden, the President of Ecuador offered him asylum and the Russians mooted giving him a Nobel Peace Prize. Now I certainly don’t mean this portrayal of Assange’s travails to demonstrate that countries like Russia are altruistic crusaders for transparency and journalistic freedom; to the contrary, its safeguards for leakers are not so much abysmal as non-existent. However, Wikileaks illustrates that when the Western power elite is challenged so openly, forced to go through the political version of the airport body scanners it foists on its own citizenry, all pretensions to lofty ideals such as “rule of law” are tossed out of the window**.

But Wikileaks is more than just a collection of political gossip, or revelations such as that the British train Bangladeshi death squads and US contractors traffic in children for Afghan warlords, or inspiration for national and regional leaker websites such as Indoleaks (Indonesia), Rospil (Russia) or Euroleaks (EU), or even confirmation of “radical” viewpoints such as that the political elites of most European countries take their marching orders from the State Department.

The Wikileaks Saga is a historical crossroads that will determine the future balance between privacy, freedom and security in the West. Down one road, the powers that be will clamp down on journalistic freedoms and the unrestricted Internet, and so confirm the dominance of the one-way “surveillance state”; down the other, the transparency virus unleashed by Wikileaks will destroy the effectiveness of state ”authoritarian conspiracies”, leading to citizen empowerment and “universal sousveillance“ (two-way surveillance). Since technological development makes increasing surveillance inevitable, and consequently serves to concentrate power in the hands of materially and legally privileged actors such as states and corporations, I think the kind of citizen sousveillance represented by Wikileaks is indispensable for preserving personal freedoms and people power in our cyberpunk future.

(8) In the hottest year on record globally, which saw a devastating heatwave in Russia and unprecedented flooding in Pakistan and Australia, AGW denialism claimed victories in the US Congressional elections and the inconsequential summit in Cancún (without verification or penalties, any targets or commitments aren’t worth the paper they’re on). The climate crisis is now so self-evident and imminently devastating that the only psychological option is to draw in the runaway train curtains and prosecute anyone who peeks out and points out the broken bridge ahead. Geoengineering it will be (attempted).

(9) On Russia, Nikitin has summarized the year with a report card. Swell job. (Apart from the bizarre Khodorkovsky apologetics – talk of teachers’ pets!).

In short. The economy is so-so: though 4% growth is respectable, it should be seen in the context of an 8% GDP decline in 2009. (On the other hand, updated Real GDP per capita calculations by the World Bank and OECD/Eurostat have indicated that Russia’s is around $20,000, higher than the previous estimate of c.$15,000. This makes it similar to Poland, Croatia or Estonia; and in overall size comparable to Germany, and far above France or the UK). Its demographic situation has remained mostly unchanged from 2009, a small rise in births being more than canceled out by a rise in death rates caused by the 44,000 excess deaths due to the heatwave. In the political realm, the biggest developments were: (1) the uneasy survival of the Reset with the US, in which Russia cooperates with the West in return for more technological access; (2) the huge $700bn rearmament program announced for the next decade; and (3) the increasing drive towards recentralization and technocratic management encapsulated by the ouster of Mintimer Shaimiev (Tatarstan) and Yuri Luzhkov (Moscow).

(10) The melting of Arctic sea ice and local warming is creating the foundations for a sustained economic boom. This year the MV Nordic Barents steamed into the record books as the first foreign flagged vessel to sail from Europe to China through the entire Northern Sea Route without stopping at any Russian harbor. With traffic through the North Sea Route expected to increase tenfold over the next decade, ports being expanded, and power and transport infrastructure built up at a furious pace, the Arctic represents the next investment El Dorado after the BRICs. Follow S/O’s sister blog Arctic Progress to stay on top of things at the top of the world!

* Of course, this isn’t to say that all Chinese military tech is now up to Russian standards. E.g. Russia is well ahead in air defense. On the other hand, China’s naval technology is now arguably better. On average, I’d say the qualitative level of conventional arms is now roughly equal.

** Just as they are with the Third World victims of Western imperialism, or its own repressed minorities in urban ghettoes, or Muslims, but when it happens to English-speaking white guys it’s far more serious.

Stay tuned for Part 2 in which I make predictions for 2011 and review those from last year. Meanwhile, please feel free to point out any major events or trends I missed out.

I have been a diplomat: I have written reports like the ones leaked and I have read many. And my conclusion is that some report writers are better informed than others. So it is with a strange sense of déjà vu that I have read the Wikileaks on US reports.

My sources for the following are the reports presented at this Website (passed to me by Metin Sonmez – thank you):  (Direct quotations are bolded; I will not give detailed references – search the site). The reports published there are a small sample of all the communications that would have passed from the posts to Washington in August 2008. They are, in fact, low-grade reporting tels with low security classifications and only a partial set at that. Nonetheless they give the flavour of what Washington was receiving from its missions abroad. (It is inconceivable that the US Embassy in Tbilisi was reporting everything Saakashvili told it without comment in one set of reports while another said that he was lying; that’s not how it works).

One of the jobs of embassies is to inform their headquarters; in many cases, this involves passing on what they are told without comment. But passive transmission does not justify the fabulous expense of an Embassy – official statements are easy to find on the Net – informed judgement is what you are paying for. We don’t see a lot of that in these reports. What struck me immediately upon reading the reports from Tbilisi was how reliant they were on Official Tbilisi. Had they never talked to Okruashvili, or Kitsmarishvili? They could have told them that the conquest of Abkhazia and South Ossetia was always on the agenda. They actually did speak to Kitsmarishvili: he says he met with Ambassador Tefft to ask whether Washington had given Tbilisi “U.S. support to carry out the military operation” as he said the Tbilisi leadership believed it had. He says Tefft “categorically denied that”. How about former close associates of Saakashvili like Burjanadze or Zurabishvili who could have told them how trustworthy he was? (The last’s French connections may have helped insulate Paris from swallowing Saakashvili’s version whole).

The first report from Tbilisi, on 6 August, deals with Georgian reports of fighting in South Ossetia. This doesn’t mean anything in particular – sporadic outbursts have been common on the border since the war ended in 1992 – they are generally a response to the other side’s activities. What’s important about this particular outburst is that it formed the base of Saakashvili’s Justification 1.0 for his attack. We now must remind readers of his initial statement to the Georgian people when he thought it was almost over: “Georgian government troops had gone ‘on the offensive’ after South Ossetian militias responded to his peace initiative on August 7 by shelling Georgian villages.” His justification changed as what he had to explain grew more catastrophic. The US Embassy in Tbilisi comments (ie not reporting what they were told:comments are the Embassy speaking) “From evidence available to us it appears the South Ossetians started today’s fighting. The Georgians are now reacting by calling up more forces and assessing their next move. It is unclear to the Georgians, and to us, what the Russian angle is and whether they are supporting the South Ossetians or actively trying to help control the situation”. The comment sets the stage: the Ossetians started it and Moscow may be involved. There appears to be no realisation that the Ossetians are responding to some Georgian activity (itself a reaction to an Ossetian activity and so on back to 1991, when the Georgians attacked). Shouldn’t Tefft have wondered at this point why Kitsmarishvili had asked him that question a few months earlier? (Parenthetically I might observe that there is never, in any of the reports that I have seen, any consideration, however fleeting, of the Ossetian point of view. But that is the Original Sin of all of this: Stalin’s borders are sacrosanct and Ossetians are nothing but Russian proxies).

On 8 August comes what is probably the most important message that the US Embassy in Tbilisi sent to its masters in Washington: “Saakashvili has said that Georgia had no intention of getting into this fight, but was provoked by the South Ossetians and had to respond to protect Georgian citizens and territory.” Thecomment is: “All the evidence available to the country team supports Saakashvili’s statement that this fight was not Georgia’s original intention. Key Georgian officials who would have had responsibility for an attack on South Ossetia have been on leave, and the Georgians only began mobilizing August 7 once the attack was well underway. As late as 2230 last night Georgian MOD and MFA officials were still hopeful that the unilateral cease-fire announced by President Saakashvili would hold. Only when the South Ossetians opened up with artillery on Georgian villages, did the offensive to take Tskhinvali begin. Post has eyes on the ground at the Ministry of Interior command post in Tbilisi and will continue to provide updates..,. If the Georgians are right, and the fighting is mainly over, the real unknown is what the Russian role will be and whether there is potential for the conflict to expand.” The Embassy also reported “We understand that at this point the Georgians control 75 percent of Tskhinvali and 11 villages around it. Journalists report that Georgian forces are moving toward the Roki tunnel”. How wrong can you be? The Georgians did not control 75% of Tskhinval and they were not approaching Roki; at this time their attack had already run out of steam, stopped by the Ossetian militia.

“Saakashvili and the Georgian leadership now believe that this entire Russian military operation is all part of a grand design by Putin to take Georgia and change the regime.” Already we see that Tbilisi is preparing the ground for Justification 2.0. I refer the reader to Saakashvili’s “victory speech” made on Day 1. As I have written elsewhere, when Saakashvili saw that his war was not turning out as he expected, he changed his story. The Embassy reports the beginnings of Justification 2.0 without comment: “Saakashvili, who told the Ambassador that he was in Gori when a Russian bomb fell in the city center, confirmed that the Georgians had not decided to move ahead until the shelling intensified and the Russians were seen to be amassing forces on the northern side of the Roki Tunnel.” From the US NATO delegation we get the final version of Justification 2.0: “Crucially, part of their calculus had been information that Russian forces were already moving through the Roki tunnel into South Ossetia. Tkeshelashvili underlined that the Russian incursion could not have been a response to the Georgian thrust into South Ossetia because the Russians had begun their movements before the Georgians.” But, really – think about it – would Georgia have invaded in the hope that its forces could beat the Russians on a 60 kilometre road race into Tskhinval that the Russians had already started?

But at last we begin to see some scepticism: “It is increasingly difficult to get an accurate analysis of the military situation because of the fog of war and the fact that the Georgian command and control system has broken down.” By the 12^th Georgian reports are accompanied by some caution: “Note: Post is attempting to obtain independent confirmation of these events. End note.” At last it is comparing the different stories: “Merabishvili said that 600 of his MOIA special forces, with their Kobra vehicles (armored Humvees with 40-mm guns), took Tskhinvali in six hours, against 2,000 defenders. He claimed that in the future they will use the attack to teach tactics. He returned again to the subject, noting that ‘we held Tskhinvali for four days despite the Russians’ bombing. Half of our men were wounded, but none died. These guys are heroes.’ (Comment: Post understands MOIA control of Tskhinvali was actually closer to 24 hours. End Comment.)”

Nonetheless the Embassy passively transmits: “bombed hospitals”; “Russian Cossacks are shooting local Georgians and raping women/girls”; “The Georgians suffered terrible losses (estimated in the thousands) overnight”; “Russian helicopters were dropping flares on the Borjomi national forest to start fires”; “Russia targeted civilians in Gori and Tskhinvali”; “the Backfires targeted 95 percent civilian targets”; “raping women and shooting resisters”; “stripped Georgian installations they have occupied of anything valuable, right down to the toilet seats”.

However, enough of this: it’s clear that the US Embassy in Tbilisi believed what it was told, had not in the past questioned what it was told and, for the most part, uncritically passed on what it had been told. The US Embassy reports shaped the narrative in key areas:

1.     Ossetians (and maybe Moscow) started it;

2.     The Russian forces were doing tremendous and indiscriminate damage;

3.     Possibly the Russians wanted to take over Georgia altogether.

Many reports deal with attempts to produce a unified statement of condemnation from NATO and show differences among the members. On the one hand, “Latvia, echoed by Estonia, Lithuania, and Poland highlighted their Presidents’ joint statement on the crisis and invited Allies to support that declaration. Each of these Allies expressed that Russian violence should ‘not serve the aggressor’s purpose’ and that NATO should respond by suspending all NRC activity with the exception of any discussion aimed at bringing an end to the conflict. Bulgaria liked the idea immediately”. But not everyone bought into Washington’s contention that Ossetia or Moscow had started it: “Hungary and Slovakia called for NATO to take into account the role Georgia played at the beginning of this recent conflict, suggesting that Georgia invaded South Ossetia without provocation.” Germany is even described as “parroting Russian points on Georgian culpability for the crisis” and described as “the standard bearer for pro-Russia camp”. Would Berlin’s scepticism have any connection with the fact that Der Spiegel was the only Western media outlet that got it right: “Saakashvili lied 100 percent to all of us, the Europeans and the Americans.”? Eventually, after a lot of back and forth, there is agreement that Moscow’s response was “disproportionate”. (But how much was that judgement affected by Tbilisi’s hysterical reports of indiscriminate bombardment, casualties in the thousands and the exaggerated reports about the destruction of Gori? To say nothing of meretricious reporting by Western media.)

The Western media – with the exception of Der Spiegel – was no better. Perhaps the best example of its slanted and incompetent coverage was passing off pictures of Tskhinval as pictures from Gori: one newspaper even tried to pass off a Georgian soldier – wearing a visible Georgian flag patch – as a Russian in “blazing” Gori.  It was months before the New York Times or the BBC, for example, began to climb off their Tbilisi-fed reporting.

During the war I was interviewed by Russia Today and I said that, sitting at my computer in my basement in Ottawa, far from the centre of the world, I had a better take on what was happening than Washington did. I see nothing in these reports to change my opinion. I also said that the war would be a reality check for the West when it was understood that Moscow’s version of events was a much better fit with reality than Tbilisi’s. And so it has proved to be.

Why did I do better? Assumptions. The American diplomats assumed that Tbilisi was telling the truth (despite the strong hint from Kitmarishvili). People in Warsaw, Riga and other places assumed that Russia wanted to conquer Georgia. On the other hand, my assumption was that Tbilisi hardly ever told the truth – I had followed all the back and forth about jihadists in Pankisi or Ruslan Gelayev’s attack on Abkhazia. I knew about Saakashvili’s takeover of Imedi TV. I knew that Ossetians had reasons to fear Tbilisi years ago and more recently. I knew that they were only in Georgia because Stalin-Jughashvili had put them there and that they wanted out. I remembered the Gamsakhurdia years when all this began. I was not pre-disposed to believe Tbilisi on this, or, truth to tell, anything else. Assumptions are everything and that is what we see in these reports. Russia is assumed to be evil, Georgia assumed to be good.

But, what a change in only two years: today NATO courts Russia and Saakashvili courts Iran.

Patrick Armstrong received a PhD from Kings College, University of London, England in 1976 and started working for the Canadian government as a defence scientist in 1977. He began a 22-year specialisation on the USSR and then Russia in 1984, and was Political Counsellor in the Canadian Embassy in Moscow from 1993 to 1996.

Russia is expanding arms exports, seeking ties beyond its traditional partners India and China. (Burns correctly predicted that the Russia – China arms relationship will wane due to Chinese reengineering, copying and reproduction of Russian military products). The capture of most NATO and former Soviet markets by US and European military companies is the primary economic agent behind Russia’s courting of states that Washington has bad relations with. In reply to Western objections, Russia tends to reference “multilateral arms controls regimes (e.g. Wassenaar Group, MTCR, etc.), UN resolutions, or Russian law” in justification; and US protests against its entertainment of “Chavez’s grandiose regional visions” are believed, by the RF Foreign Ministry and Russian defense experts, to spring from “a “Monroe doctrine” mentality, and not real concerns over regional stability.” Finally, a lack of economic diversification actively PUSHES Russia into the arms trade: as Anatoly Kulikov pithily notes, ”Russia makes very bad cars, but very good weapons.”

Burns then notes that the Russian MIC is an “important trough at which senior officials feed”, citing as an example ”Russia’s decision to sell weapons that the Venezuelan military objectively did not need.” If true, isn’t this just Venezuelan stupidity or corruption? But according to Burns, this is because it’s in the “interest of both Venezuelan and Russian government officials in skimming money off the top.” Color me skeptical. According to Burns’ own sources, the 2006 arms trade between Russia and Venezuela totaled more than $1.2bn, and included “24 Su-30MK2 fighter-bombers and 34 helicopters”; more recently, the two countries began to negotiate the “sale of three Amur class submarines” in a prospective deal worth $1bn. This implies price tags of c.$50mn per fighter and c.$350mn per sub. However, according to my calculations, despite having unit production costs similar to Russia’s, the prices of US gear sold to Arab states are several times higher – c.$170mn per F-16 fighter to Iraq and a cool $360mn per F-15 fighter to Saudi Arabia. This implies that the US sells fighter jets of 1970′s vintage to at least one country AT A HIGHER UNIT PRICE than at which Russia sells its most modern diesel SUBMARINES to Venezuela!  So not much spare room at Russia’s side of the “feeding trough”, at any rate…

Then it’s argued there is also a cultural element to Russia’s arms trade policy, namely, an “inferiority complex” with respect to the US that translates into a kind of overcompensating need to prove itself as an independent Great Power in the eyes of the world and its own citizens. This is meant to explain its desire for the “thrill of causing the US discomfort by selling weapons to anti-American governments in Caracas and Damascus.” These arguments are mostly sociological truthiness that I think don’t merit detailed rejoinders.

The analytical decline towards the end is reflected in toothless recommendations, such as a more concerted policy by European, Sunni Arab and Latin American governments, as well as the US itself, to pressure and cajole Moscow into easing back on its weapons sales to “rogue” and US-unfriendly states. Whether or not the recommendation was followed, it is evident that it’d be destined for failure, and I think Burns himself acknowledged this in the cable (“American concerns are interpreted cynically, as the disgruntled complaints of a competitor, and viewed through the prism of a 1990′s story line in which the West seeks to keep Russia down”).

Ultimately, with today’s Russia, it is geopolitics and quid pro quo deals that influence its conduct. To take one germane and ongoing example: The US made concessions during the Reset, e.g. easing back on US companies getting involves with Russia’s modernization and even mooting selling Russia some of its military techs; in return, Russia formally declined to sell the S-300 air defense system to Iran, thus (ostensibly) losing a major lever against Washington. But with the recent Republican victory and rumors of covert US rearming of Georgia, there appeared countervailing rumors of S-300 radar parts making their way to Iran via Russia’s proxy states. The lesson is one that Burns no doubt understands, but cannot state forthright: one rarely gets a free geopolitical lunch.

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S E C R E T SECTION 01 OF 04 MOSCOW 005154

SIPDIS

SIPDIS

EO 12958 DECL: 10/09/2017
TAGS PREL, ECON, MARR, MASS, PARM, PINR, PINS, RS
SUBJECT: ADDRESSING RUSSIAN ARMS SALES
REF: A. STATE 137954 B. MOSCOW 3207 C. MOSCOW 3139 D. MOSCOW 3023 E. MOSCOW 557 F. MOSCOW 402

Classified By: Ambassador William J. Burns. Reasons 1.4 (b) and (d).

¶1. (C) Summary: FM Lavrov’s disinterest in establishing an expert level dialogue on arms sales begs the question of how best to address our concerns over Russia’s arms export policy. Russian officials are deeply cynical about our motives in seeking to curtail Russian arms exports to countries of concern and the threatened imposition of U.S. sanctions has not proven successful so far in modifying Russian behavior. Russia attaches importance to the volume of the arms export trade, to the diplomatic doors that weapon sales open, to the ill-gotten gains that these sales reap for corrupt senior officials, and to the lever it provides the Russian government in stymieing American interests. While Russia will reject out of hand arguments based on the extraterritorial application of American sanctions, Russian officials may be more receptive to a message couched in the context of Russian international obligations and domestic legislation, the reality of American casualties, and the backlash to Russian strategic interests among moderate Sunni governments. In making our argument, we should remember that Russian officialdom and the public have little, if any, moral compunction about the arms trade, seeing it instead as a welcome symbol of Russia’s resurgent power and strength in the world. End Summary

Russian Arms Sales Matter

¶2. (C) Russian arms sales are consequential, totaling approximately USD 6.7 billion in 2006, according to official figures. This amount reflects a 12 percent increase over 2005, and a 56 percent increase since 2003. Russian arms sales are expected to total at least USD 8 billion in 2007. Russia has made a conscious effort to improve after-sales customer service and warranties, which has added to the attractiveness of its weapons. As a result, Russian weapons command higher prices than previously. Russia is ranked second only to the United States in arms sales to the developing world, and a sizeable portion of its arms trade is with countries of concern to us.

¶3. (C) While no sales were reported in 2006 to Iran, Syria, or Sudan, in 2007 Iran reportedly paid Russia USD 700 million for TOR-M1 air defense missile systems. While Syrian economic conditions are a natural brake on trade with the Russians, as a matter of principle the GOR is prepared to sell “defensive” equipment such as anti-tank missiles and Strelets (SA-18) surface-to-air missiles, as well as upgrade MiG-23 fighters. The GOR barred the sale of Iskander-E tactical missiles to Syria only after intense international pressure. Venezuela remains a growth market, with arms transfers in 2006 totaling more than USD 1.2 billion, including 24 Su-30MK2 fighter-bombers and 34 helicopters. Russia has an “open arms” approach to Venezuela, and whether it’s the transfer of more than 72,000 AK-103 assault rifles or negotiations for the prospective sale of three Amur class submarines (valued at USD 1 billion), Russia is prepared to entertain Chavez’s grandiose regional visions.

¶4. (C) Defense experts emphasize that the American and European domination of traditional NATO markets and capture of new entrants (and old Soviet customers) from Central and Eastern Europe means that Russia must court buyers that fall outside the U.S. orbit. By definition, Iran, Syria, and Venezuela are good markets for Russia because we don’t compete there.

¶5. (C) While concrete numbers are hard to come by, our best figures indicate that Russian arms sales to its traditional big-ticket customers — China and India — are growing. Russian experts, however, predict a declining trajectory in the medium term. In 2006, Russia completed approximately USD 1.4 billion in sales to China, including eight diesel submarines and 88 MI-171’s, which means the PRC only narrowly edged out Chavez as Russia’s most important customer. Russian defense experts underscore that as China’s technological sufficiency and political influence grow, the PRC will develop increasing military self-sufficiency and greater ability to challenge Russia as a supplier. At the same time, sales to India totaled only USD 360 million. Russia and India, in fact, have signed arms deals worth USD 2.6 billion, but not all deliveries and payments have been made. While Russian experts still downplay the ability of the U.S. to displace Russia in the Indian arms market, for reasons of cost and the legacy of decades’ old dependence, they recognize increasing American inroads and growing influence. Other notable Russian markets include Algeria, Czech Republic, Vietnam, South Korea and Belarus.

A Legalistic World View

¶6. (S) As the recent 2 2 consultations confirmed, Russian officials defend arms sales to countries of concern in narrow legal terms. In answering our demarches, MFA officials always identify whether the transfer is regulated by one of the multilateral arms controls regimes (e.g. Wassenaar Group, MTCR, etc.), UN resolutions, or Russian law. Senior officials maintain that Russia does take into account the impact on the stability of the region in determining whether to sell weapons and shares our concern about weapons falling into terrorists’ hands. This Russian decision-making process has led to a defacto embargo on weapons transfers to Iraq, where Russia is concerned over leakages to Iraqi insurgents and Al-Qaida; to a hands-off policy towards Pakistan, the country Russia views as the greatest potential threat to regional stability (with then-Russian Foreign Minister Igor Ivanov ruling out weapons sales to Pakistan as far back as 2003); and to a moratorium on “offensive” systems to Iran and Syria. Concern over leakage has prompted Russia to tighten its export controls, with the recent institution of new provisions in arms sale contracts for Small Arms and Light Weapons (SALW) that require end-user certificates and provide Russia the right to inspect stockpiles of weapons sold.

¶7. (S) What Russia has not done is accept our strategic calculus and rule out the possibility of sales to Iran, Syria, Sudan, or Venezuela. The arguments made are broadly similar:

– With Iran, we are told that that Russia will not sell any weapon that violates a multilateral or domestic regime, nor transfer any item that could enhance Iranian WMD capabilities. Sales, such as the TOR-M1 air defense missile system, are justified as being defensive only, and limited by their range of 12 kilometers. While DFM Kislyak told us October 18 that he was unaware of any plans to sell Iran the S-300 long-range surface-to-air missile system, MFA officials previously told us that such sales, while under review, would not violate any Russian laws or international regimes.

– With Syria, Russia also argues that its transfers are defensive in nature, and points to its decision to halt the sale of MANPADS. The MFA maintains that Russian weapons used by Hizballah in 2006 were not a deliberate transfer by the Syrian government, but involved weapons left behind when Syrian forces withdrew from Lebanon. Russia argues that tightened end-user controls will prevent any future transfers.

– With Sudan, the GOR denies any current arms trade with the regime, and maintains that Russia has not violated UN sanctions or Putin-initiated decrees. However, based on our demarches, it is clear that — in contrast to Syria — Russia has adopted a “don’t ask, don’t tell” approach to Sudan’s adherence to its end-use requirements for its existing inventory of Russian/Soviet weapons.

– With Venezuela, both MFA officials and Russian experts believe that a “Monroe doctrine” mentality, and not real concerns over regional stability, is behind U.S. demarches.

What Is Behind the Russian Calculus

¶8. (C) A variety of factors drive Russian arms sales, but a compelling motivation is profit – both licit and illicit. As former Deputy Prime Minister and senior member of the Duma Defense Committee Anatoliy Kulikov told us, “Russia makes very bad cars, but very good weapons,” and he was among the majority of Russian defense experts who argued that the laws of comparative advantage would continue to propel an aggressive arms export policy. While Russian defense budgets have been increasing 25-30 per cent for the last three years, defense experts tell us that export earnings still matter. The recent creation of RosTechnologiya State Corporation, headed by Putin intimate Sergey Chemezov, which consolidates under state control RosOboronExport (arms exports), Oboronprom (defense systems), RusSpetsStal (specialized steel production), VSMPO (titanium producer), and Russian helicopter production, is further proof of the importance the Putin government places on the industry.

¶9. (C) Likewise, it is an open secret that the Russian defense industry is an important trough at which senior officials feed, and weapons sales continue to enrich many. Defense analysts attribute Russia’s decision to sell weapons that the Venezuelan military objectively did not need due to the interest of both Venezuelan and Russian government officials in skimming money off the top. The sale of Su-30MK2 fighter-bombers was cited as a specific example where corruption on both ends facilitated the off-loading of moth-balled planes that were inadequate for the Venezuelan Air Force’s needs.

¶10. (C) A second factor driving the Russian arms export policy is the desire to enhance Russia’s standing as a “player” in areas where Russia has a strategic interest, like the Middle East. Russian officials believe that building a defense relationship provides ingress and influence, and their terms are not constrained by conditionality. Exports to Syria and Iran are part of a broader strategy of distinguishing Russian policy from that of the United States, and strengthening Russian influence in international fora such as the Quartet or within the Security Council. With respect to Syria, Russian experts believe that Bashar’s regime is better than the perceived alternative of instability or an Islamist government, and argue against a U.S. policy of isolation. Russia has concluded that its arms sales are too insignificant to threaten Israel, or to disturb growing Israeli-Russian diplomatic engagement, but sufficient to maintain “special” relations with Damascus. Likewise, arms sales to Iran are part of a deep and multilayered bilateral relationship that serves to distinguish Moscow from Washington, and to provide Russian officials with a bargaining chip, both with the Ahmedinejad regime and its P5 1 partners. While, as a matter of practice, Russian arms sales have declined as international frustration has mounted over the Iranian regime, as a matter of policy, Russia does not support what it perceives as U.S. efforts to build an anti-Iranian coalition.

¶11. (C) A third and related factor lurking under the surface of these weapons sales is Russia’s inferiority complex with respect to the United States, and its quest to be taken seriously as a global partner. It is deeply satisfying to some Russian policy-makers to defy America, in the name of a multipolar world order, and to engage in zero-sum calculations. As U.S. relations with Georgia have strengthened, so too have nostalgic calls for Russian basing in Latin America (which Russian officials, including Putin, have swat down). While profit is still seen by experts as Russia’s primary goal, all note the secondary thrill of causing the U.S. discomfort by selling weapons to anti-American governments in Caracas and Damascus.

Taking Another Run At Russia

¶12. (C) As FM Lavrov made clear during the 2 2 consultations, Russia will not engage systematically at the expert level on its arms export regime. While the prospect of Russia changing its arms export policy in response to our concerns alone is slim, we can take steps to toughen our message and raise the costs for Russian strategic decisions:

– Although U.S. sanctions are broad brush, the more we can prioritize our concerns over weapons sales that pose the biggest threat to U.S. interests, the more persuasive our message will be. Demarches that iterate all transactions, including ammunitions sales, are less credible. Since Lavrov has rejected an experts-level dialogue on arms transfers, it is important to register our concerns at the highest level, and to ensure that messages delivered in Moscow are reiterated in Washington with visiting senior GOR officials.

– In the context of potential violations of international regimes and UNSCR resolutions, Russia needs to hear the concerns of key European partners, such as France and Germany. (In the wake of the Litvinenko murder and subsequent recriminations, UK influence is limited.) EU reinforcement is important for consistency (although Russia tends to downplay the “bad news” that European nations prefer to deliver in EU channels, rather than bilaterally).

– Regional actors should reinforce our message. Russian weapon sales that destabilize the Middle East should be protested by the Sunni Arab governments that have the most to lose. Given Russia’s competing interest in expanding sales to Saudi Arabia and the Gulf states, the protests of our moderate Arab partners could also carry a price tag for Russian defiance. The same is true for Latin America, whose leaders to date have not made sales to Chavez an issue on their bilateral agenda with the Russians.

– The appearance of Russian weapons in Iraq, presumably transferred by Syria, and the prospect of American and coalition casualties as a result could change the calculus of Russian sales to Damascus. The more evidence that we can provide, the more Russia may take steps to restrict the Asad regime. At the same time, we need to be prepared for the Russian countercharge that significant numbers of weapons delivered by the U.S. have fallen into insurgent hands.

– Finally, providing the Russians with better releasable intelligence when arguing against weapons transfers to rogue states is essential. Our Russian interlocutors are not always impressed by the evidence we use to prove that their arms are ending up in the wrong hands. While we doubt Russia will terminate all its problematic sales for the reasons described above, more compelling evidence could lead the GOR to reduce the scope of its arms transfers or tighten export controls.

Final Caveat

¶13. (C) There are few voices in Russia who protest the sale of weapons to countries of concern and no domestic political constraints that tie the hands of Russian policymakers on this score. The pride that Russian officialdom takes in the arms industry as a symbol of Russia’s resurgence is largely shared by average Russians. American concerns are interpreted cynically, as the disgruntled complaints of a competitor, and viewed through the prism of a 1990’s story line in which the West seeks to keep Russia down, including by depriving it of arms markets.

Burns