O que é este blog?
Este blog trata basicamente de ideias, se possível inteligentes, para pessoas inteligentes. Ele também se ocupa de ideias aplicadas à política, em especial à política econômica. Ele constitui uma tentativa de manter um pensamento crítico e independente sobre livros, sobre questões culturais em geral, focando numa discussão bem informada sobre temas de relações internacionais e de política externa do Brasil. Para meus livros e ensaios ver o website: www.pralmeida.org.
quarta-feira, 26 de novembro de 2014
Isso que dá ficar brincando de aprendiz de feiticeiro. Depois é preciso chamar profissionais para limpar o estrago.
Paulo Roberto de Almeida
Dilma deu autonomia a Joaquim Levy
Valor Econômico, 26/11/2014
Joaquim Levy ficou surpreso positivamente com a liberdade oferecida pela presidente Dilma Rousseff para a sua gestão à frente do Ministério da Fazenda. Ela não impôs condições ao futuro ministro. Deu-lhe garantias e reconheceu que a política econômica precisa passar por um "bom ajuste". A conversa animou Levy, que retorna oito anos depois à Fazenda, onde, sob o comando de Antonio Palocci, ajudou a promover, entre 2003 e 2006, o maior ajuste fiscal já realizado no país.
Primeiro nome convidado pela presidente, Luiz Carlos Trabuco, presidente do Bradesco, estava disposto a assumir o cargo que há mais de oito anos é ocupado por Guido Mantega. Antes de ser convidado e vendo seu nome circular na imprensa, o executivo dizia a quem lhe perguntasse que não poderia aceitar o convite.
Dilma telefonou para Trabuco na quarta-feira da semana passada, depois de acertar com o ex-presidente Luiz Inácio Lula da Silva que faria o convite. O presidente do Bradesco ficou feliz com a oferta e consultou imediatamente seu superior hierárquico - Lázaro Brandão, presidente do conselho de administração do banco. Para seu desgosto, Brandão reagiu mal à convocação.
Nelson Barbosa deve surpreender à direita, diz aliado
Foi assim que Trabuco se sentiu: convocado pela presidente da República. "Se for para valer, não dá para dizer não", comentou ele com os mais íntimos antes de ser chamado por Dilma. Como Brandão não gostou da investida, Trabuco sugeriu ao Palácio do Planalto que ele participasse da conversa com a presidente. E assim foi: os dois principais integrantes da cúpula do Bradesco se reuniram com Dilma, em Brasília, no fim da tarde de quarta-feira.
Durante o encontro, Lázaro Brandão explicou que Trabuco não poderia deixar a diretoria executiva do banco neste momento. Ato contínuo, indicou outro subordinado seu para a Fazenda: Joaquim Levy, presidente da Bradesco Asset Management (Bram).
O nome do ex-secretário do Tesouro já havia circulado como uma possibilidade para o Ministério da Fazenda durante a campanha eleitoral. Seus principais defensores foram o ex-presidente Lula e Palocci, seu antigo chefe. Na ocasião, Dilma não ficou muito entusiasmada.
A presidente conhece Levy desde o primeiro mandato de Lula (2003-2006). Levy foi um secretário do Tesouro marcante, na linha de Murilo Portugal, que ganhou a alcunha de "Dr. No" (título e personagem do primeiro filme da série James Bond) por ter conduzido a instituição, nas gestões dos presidentes Itamar Franco e Fernando Henrique Cardoso, com grande austeridade.
No governo Lula, Levy era odiado pela maioria dos ministros. Os petistas nutriam especial rejeição por ele. Consideravam-no "neoliberal". Mas o então secretário era adorado por Lula e mantinha boas relações com a então ministra Dilma. Em 2007, quando ele já havia deixado o Tesouro, Lula o indicou ao governador Sérgio Cabral (PMDB) para comandar as contas do governo fluminense.
No exercício daquela função, Levy foi o maior adversário da mudança, patrocinada por Lula e Dilma, do regime de exploração de petróleo no Brasil - de concessão para partilha. Foi ele quem deu argumentos a Cabral para tentar convencer Lula a desistir da alteração, principalmente, das regras de distribuição de royalties do petróleo, uma vez que, no regime anterior, o Rio, como maior produtor, era o principal beneficiário.
A concordância de Dilma em convidar Levy mostra sinais importantes para seu segundo mandato. A presidente estaria convencida, dada a gravidade das contas públicas e da proximidade de uma severa crise econômica caso nada seja feito, de que precisa mudar seu estilo centralizador na área econômica. "Ela percebeu que é melhor dar autonomia à equipe econômica", comentou um aliado.
Na entrevista que deu a oito jornalistas pouco depois da eleição, Dilma falou como ministra da Fazenda. Disse o que precisa ser feito e o que não pode ser feito antes mesmo de escolher e anunciar o nome do novo ministro. E repetiu o mantra que enfraqueceu sua atual equipe, especialmente, o presidente do Banco Central (BC), Alexandre Tombini.
"Nós vamos fazer uma política de inflação que leva em conta o fato também de que nós não vamos desempregar neste país. Ponha isso na cabeça", disse Dilma na entrevista. Um jornalista lembrou que essa (o emprego) é uma variável que independe do governo. "Você é que acha", reagiu a presidente. Na conversa com Levy, ela mudou inteiramente o tom, segundo apurou o titular desta coluna.
Outro sinal importante é que Dilma pretendia nomear Nelson Barbosa para a Fazenda, mas não o fez. Ex-secretário-executivo daquele ministério, Barbosa se aproximou da presidente no segundo mandato de Lula, ao defender ideias como a redução do superávit primário das contas públicas para estimular o crescimento econômico. "Desenvolvimentista" como Dilma, ele se tornou o economista mais ligado a ela.
A nomeação para o Ministério do Planejamento pode sugerir a ideia de que Barbosa, com o apoio tácito da presidente, fará um contraponto à esperada gestão conservadora de Levy na Fazenda. Quem conhece Brasília sustenta, entretanto, que não há como isso ocorrer graças à proeminência da Fazenda, ao contrário do que se observava no passado - de fato, nos governos militares os ministros do Planejamento eram bastante fortes.
Nem quando Palocci comandou a Fazenda e Mantega, o Planejamento, houve essa dicotomia. O primeiro a não permiti-la foi o então presidente Lula.
Dilma teria nomeado Nelson Barbosa, nas palavras de um interlocutor privilegiado, para "não desagradar a gregos e troianos". De fato, os petistas não gostaram nem um pouco da nomeação de Levy para a Fazenda e muito menos de Kátia Abreu para a Agricultura. Mas é bom que eles saibam que quem conhece Barbosa na nova fase assegura: "O 'Nelsão' vai surpreender à direita. Em assuntos fiscais, ele está bem conservador".
Rolf Kuntz aborda a cobertura da imprensa sobre os temas do momento.
Paulo Roberto de Almeida
Um drama com histórias paralelas
- Observatório da Imprensa, 25/11/2014
Todos deram algum perfil do ex-secretário do Tesouro. O Estado de S.Paulo citou a opinião desfavorável de petistas e descreveu o ministro Guido Mantega como magoado com a escolha: Levy seria “visto como um contraponto à sua gestão”. O perfil mais detalhado, o da Folha de S.Paulo, lembrou a participação do possível futuro ministro no manifesto “Sob a Luz do Sol – uma Agenda para o Brasil”, divulgado em agosto por um grupo de economistas considerados liberais. “Não sobra nada da política econômica do primeiro governo Rouseff nesse manifesto”, segundo o texto da Folha.
Segundo parte da imprensa, a presidente havia adiado o anúncio para apresentar toda a equipe econômica na mesma data, provavelmente 27/11. Segundo outra explicação, ela havia decidido esperar a votação, prevista para terça-feira (25), de um polêmico projeto de mudança da Lei de Diretrizes Orçamentárias (LDO). Com essa alteração, o governo poderia abater da meta fiscal investimentos e desonerações em valor suficiente para acomodar qualquer resultado. Na prática, a mudança equivaleria a eliminar a obrigação de alcançar um determinado superávit primário.
Dívida sem controle
Enquanto narrava a trabalhosa procura de um nome para a Fazenda, a imprensa noticiava também outros desdobramentos da crise fiscal. Durante a semana, todos os grandes jornais acompanharam a tramitação do projeto de mudança da LDO. Um detalhe especialmente interessante, mencionado só em algumas matérias, foi uma alteração do texto original pelo relator, senador Romero Jucá (PMDB-RR). Ele trocou a palavra “meta” pelo termo “resultado”, eliminando, portanto, qualquer referência a um valor tomado como objetivo da política.
No fim da semana, todos informaram o resultado da nova revisão bimestral de receitas e despesas, uma tarefa cumprida pelo Ministério do Planejamento. Pela nova revisão, a meta do governo central, fixada em R$ 80,8 bilhões no começo do ano, foi agora reduzida a R$ 10,1 bilhões. É um resultado meramente simbólico.
A matéria mais sombria sobre a crise das finanças públicas foi publicada, no entanto, no começo da semana pelo Valor.Segundo a reportagem, “de janeiro até a segunda quinzena de outubro o total de vencimento de títulos superou as novas emissões em R$ 167 bilhões”. Traduzindo: mesmo oferecendo uma das taxas de juros mais altas do mundo, o Tesouro tem sido incapaz de rolar integralmente a dívida pública. Título da matéria: “Tesouro tem dificuldade para emitir”. Esse detalhe, informado na edição de segunda-feira (17/11), deu um toque especialmente dramático à procura de um nome para desatar o rolo das finanças públicas federais. É mais um bom exemplo de uma importante matéria fora da pauta comum.
Brasil perde R$ 100 bilhões por ano em razão da corrupção
- Publicado em 25 Novembro 2014
Novos conflitos no seculo 21 (ou a America Latina nao existe): Walter Russell Mead -The American Interest
While it is difficult to see into the future at all and impossible to make detailed predictions, everything we know about history and human development suggests that the 21st century is unlikely to be a quiet time in international relations.
This testimony was delivered to the House Permanent Select Committee on Intelligence on Thursday, November 13th, 2014.
Iwant to thank the honorable Chair and distinguished Members of this important Committee for inviting me to speak and for affording me an opportunity to offer what help I can contribute to your important work. In my testimony this morning I will offer first a quick overview of the world situation as we look forward into the new century and then present an analysis of current and likely future developments in three regions of particular interest to the United States as they reflect on the question of the nature of the future conflicts for which the United States ought to prepare.
While my testimony will deal largely with the possibilities for conflict, it is important to note here that the permanent and overriding goal of American policy is and should remain the promotion of peace. This country does not prepare for war because we are warlike and welcome war; Americans have learned over the centuries that in order to preserve peace it is necessary to inform ourselves about the dangers we face and, in consultation with likeminded states, to make the necessary preparations for defense.
Introduction and Overview
While it is difficult to see into the future at all and impossible to make detailed predictions, everything we know about history and human development suggests that the 21st century is unlikely to be a quiet time in international relations. As the preeminent world power, one with global interests and concerns, the United States is going to have to navigate the next stage in world history deftly. While our goal is and will remain to avoid major wars by working with our allies and partners to build economic, political, legal and institutional frameworks for lasting peace among the world’s peoples, it would be dangerous to underestimate the challenges this strategy will encounter. For the foreseeable future, the United States must work for peace without neglecting the necessary preparations to be ready if our efforts for peace do not succeed.
A careful examination of the past and the factors that will likely contribute to future change suggests that while national and international conflicts involving significant states and/or engaging the vital interests of the United States are not inevitable, the danger of future conflicts is troublingly high. The rapid pace of economic, technological, and social change around the world puts increasing pressure on existing states and political structures. That is likely to lead to enhanced tension and conflict within many states as well as between and among states.
The relationship between accelerating social and economic change on the one hand and growing risks of war is not new. At the outset of the industrial revolution, European powers began to struggle to keep up with the rapid technological development going on in their societies, and with the attending social forces. They were not, on the whole, all that successful at avoiding bloodshed and political upheaval in their responses. At the same time as the industrial revolution was providing Europe with untold wealth and the tools to project power around the globe, it also began to tear at the political and societal seams of European society.
As the industrial revolution swept east and south from its original base in northwestern Europe, ethnic and religious conflicts developed and ultimately broke up the large multi-ethnic and multi-religious empires of central and eastern Europe and the Middle East (Ottoman, Austro-Hungarian, German, Russian) in a mix of catastrophic war, genocide and ethnic cleansing that lasted from roughly 1880 to 1950. Those conflicts (including both the Kurdish struggle and the Israeli-Palestinian conflict) continue today, but a new wave of sectarian and ethnic tensions stretching east to west from Pakistan to Algeria, and north to south from Crimea to Kenya is taking shape today. While it is not inevitable that the tragic history of 19th and 20th century Europe and the Middle East will be repeated in this zone, the parallels are more than troubling, and wars in Syria and elsewhere underscore the seriousness of the situation in this explosive region.
Well beyond this zone of conflict, rapid demographic change like that taking place in countries such as China and India can lead and in the past has led to greater internal tension and conflict even when economies are growing and living standards are rising. Mass urbanization is a revolutionary process that involves great cultural and social change. In China alone, urbanization has been a driving force behind the lifting of hundreds of millions of people out of extreme poverty, but urbanization has lifted them at the same time into a new political consciousness and is creating new sources of tension within China and, consequentially, in the region around it.
History tells us that as people’s material comfort grows, they do not tend to stop wanting more. In fact, quite the opposite happens as societies move from pre-modern to modern conditions; people gain the time, educational background and security to turn their attentions to political and social desires. At the same time, because state policies matter more to people living in modernizing economies and in urban areas than to illiterate farmers in traditional rural societies, city dwellers tend to be more politicized than peasants, and demand more from their rulers.
Various societies are reacting to mass urbanization in different ways, and they are at different stages in the process. China is in the climactic phases of a dramatic shift while India is still at a relatively early stage with massive movements to the city still to come. In the Islamic world, urbanization has been one key driver of radicalism, as ex-peasants struggle with the conditions of city life.
These internal developments are likely to create challenging conditions for diplomats and foreign policy makers. Again using the European example, rulers have often found nationalism to be an effective means of building domestic social cohesion and stability in these times of great stress and rapid urbanization, but nationalist passion has consequences for foreign policy. Nationalism, and its embrace by rulers and policymakers in Europe up through World War Two even in non-democratic polities pushed leaders toward policies that made war more likely. Similar pressures are at work today in emerging powers like India and China today – to say nothing of Pakistan, Vietnam and, for somewhat different reasons, Japan.
There is another way in which domestic change and economic development poses challenges for the maintenance of international peace. When rapid technological change hits major world societies, changes in the balance of global power often follow. The rise of China depended on developments in technology and management that allowed for global supply chains in a multitude of industries. China won’t be the last society to go through this process. In the next century we should be prepared to see more nations grow in terms international power due to technological modernization, and we should also be prepared to see other nations fall behind – as, at present, we see in the European Union. The rise (and fall) of great powers is a destabilizing force in world politics, and the 21stcentury will see the emergence of new powers as well as the decline of existing ones.
There is a third reason why ages like ours of rapid change and development pose significant risks of war. In a technologically stable world where the means of warfare change little from generation to generation, it is relatively easy for states to gauge one another’s power and to calculate the likely result from hostilities. In the 21st century, however, such developments as cyberwar make it much more difficult for potential adversaries to understand the balance of forces and the true risks of war.
At the outset of World War One, the local quarrel between Austria-Hungary and Serbia was allowed to grow into a catastrophic global conflict in large part because diplomats and policy makers did not fully understand the implications of rail technology for military strategy and, therefore, for decisions about war and peace once one power started to mobilize its forces. As new methods of cyberwar along with new weapon systems and new ways of waging war proliferate, policy makers in the 21st century could be blindsided as well. 21st century policy makers may, for example, have to respond to cyber attacks of strategic intensity and consequence on a split-second basis; events will move so quickly in a crisis that, absent good intelligence and analysis that enables them to prepare for a crisis before it occurs, our leaders will be as helpless and befuddled as their predecessors were 100 years ago.
There is a fourth way in which rapid technological change tends to destabilize international politics. Technological progress has consequences beyond just the world’s biggest and fastest changing societies. It enables small powers and even non-state actors to wield greater destructive force than ever before. The development of nuclear weapons by small states like North Korea and scientific laggards like Pakistan is a likely foretaste of the future. And it is not just nuclear weapons that are getting easier and cheaper to make. Chemical, cyber, and ultimately biological weapons will place the kind of destructive power once limited to great powers in the hands of small, potentially quite irresponsible states, as well as of non-state actors. Such developments will be harder to track and arms control agreements respecting them will be harder to verify than nuclear weapons have been. We will be less sure who has these weapons, and the reality that states without large populations, land masses or even economies can generate or host non-state actors who generate weapons of strategic destructiveness will complicate the work of diplomats and policy makers in the interesting century that lies ahead.
Finally, one should note that international economic policy has been one of America’s best tools in ensuring the development of a peaceful and stable international order. However, the same rapid change that destabilizes international politics has made and will make the task of international economic management significantly more challenging. It is not only that the international economy is developing both financial and trade linkages that challenge the ability of policy makers to develop effective policies to stabilize the international financial and economic systems. It is also the case that technological advances are steadily transforming financial markets, speeding up the pace of trading, allowing for the development of increasingly complex financial instruments and trading strategies that collectively produce new kinds of risk that both market participants and regulators struggle to understand. Economic theory and economic policy tools are likely to lag behind the new economic realities that will be created in the coming years and decades; this will be an added factor that tends to destabilize international politics.
For the foreseeable future, these realities are not problems to be solved; they are features of national and international life which must be coped with. We are in a longterm period of great risk and potential instability in world affairs. None of this means that great power war is inevitable, and there are many factors that mitigate the dangers noted above. However, if we are to avoid war we must take the full measure of the challenges we face, and it is the responsibility of this Committee to oversee and to assist the activity of some of the most critical agencies of the United States government responsible for assessing the risks around us.
In the next section of my testimony, I offer a quick overview of the situation in three regions of critical interest to the United States: Asia, Europe and the Middle East.
No world region has benefited as profoundly from the era of global stability since 1945 as Asia, but paradoxically, no world region today presents as many risks of great power conflict as the regions of East and South Asia. Leaders in the U.S. and in the region will have to work diligently and think hard to keep Asia on a peaceful path in the tumultuous decades ahead.
While Asia as presents many extremely heartening features – it is on the whole an area of rapid economic and social development with democracy taking root in many countries – unresolved rivalries and a changing balance of power present significant dangers as well.
China as a rising power is frankly revisionist, though it also has many reasons to cooperate with the United States and receives many benefits from the existing world order. As China runs up against the boundaries imposed on its older, weaker self, it is tempted to use its newfound power to seize what it wants. In its territorial waters and to a lesser extent its long land border with India, China has chosen to heighten in a complicated region. By making the Nine Dash line a centerpiece of patriotic education at home and national policy abroad even as it significantly and steadily increases its military spending, China has destabilized the geopolitical situation in its region and cast a shadow over some of the most important sea lanes in the world. Securing all of the territory inside the Nine Dash Line would involve pushing out other claimants including Vietnam, Brunei, Malaysia, Indonesia, Taiwan and the Philippines. The regional tensions and the potential for nation-state conflict that China’s policy is creating are already quite visible and other nations are responding.
Chinese naval vessels have too frequently harassed and even rammed official and unofficial ships from other nations, with serious political consequences. In Vietnam, the anti-China riots that broke out when Beijing placed an oil rig in its territorial waters turned deadly. Emotions are perhaps even higher in the Philippines, where a terrorist plot supposedly intended as a protest against the governments “soft stance” on China was recently thwarted. In Taiwan, what many perceive as Beijing’s aggressiveness and its more recent treatment of Hong Kong, has created a young generation which is extremely suspicious of mainland China.
More seriously for the international balance of power, China’s assertive posture since 2008 has sharpened concerns in Tokyo and Delhi about the future of Asia. Both India and Japan have now shifted toward military and diplomatic policies that seek to counter what they perceive as China’s tendency to overreach.
Japan now seems well launched on a policy of greater defense readiness and diplomatic activism aimed at reviving both the perception and the reality of Japanese power in the region. One should not underestimate the potential effects on the regional political climate and the balance of power. In the 21st century technology is likely to be a more important element of national power than the ability to field large infantry divisions. Japan may have an aging and war-averse population, but drones, robots and many other emerging new weapons have the potential to change the nature of warfare in ways that would redound considerably to the advantage of technologically sophisticated nations like Japan.
China’s regional and global ambitions lead it to want to transcend any kind of regional rivalry with Japan; Japan believes that its independence and security require the maintenance of some kind of parity with China. Thanks to its great technological strength, Japan has more ability to remain in China’s league from a military point of view that appears likely simply by comparing the relative size of the two countries’ populations; this rivalry is a real and a dangerous one whose containment requires serious American participation in East Asian politics and security arrangements for the foreseeable future.
Not all recent geopolitical news from Asia predicts a bleak future. Just this week, China and Japan announced an accord on the territorial dispute issue that looks like it will seriously reduce the dangerous tensions. Then, Xi and Abe met informally at the APEC conference, breaking a long, deep freeze in highest level relations between Asia’s superpowers. Short term fluctuations in the relationship will continue, and it will be in the American interest to promote good relations between these uneasy neighbors. However, Japan-China relations are likely to be a significant source of tension for some time to come.
The great power ambitions of India must also be taken into account, and in the coming decades India’s struggle to emerge as a regional and global great power is likely to be an important factor. The relationship between China and India is likely to develop into one of the most important and perhaps challenging bilateral relationships in the world, and it is also something of a contradiction. India seems to be one of many Asian nations that want to counter China’s rising naval power, yet both countries express a genuine desire to work together for growth. As an example of the complexities in the relationship, President Xi’s recent visit to India was soured at least in part by a standoff that developed on a remote and disputed border between the two nations.
India’s rise lags behind China’s, but it is no less significant a consideration for anyone thinking about how the United States should position itself for the coming century. Many obstacles remain, Prime Minister Narendra Modi has a strong mandate to accelerate the pace of India’s economic development. Between continuing concerns about Pakistan and rising concerns about China’s perceived push into the Indian Ocean, Modi is likely to accelerate the development of India’s defense capabilities as well. As Japan’s development of an export-oriented arms industry grows, and as Israel continues to excel at the development of high tech weapons systems, India is likely to deepen its defense cooperation with both nations and, to a lesser or at least less visible degree, with the United States as well.
Overall, both East and South Asia, which may increasingly fuse into a single geopolitical theater, are likely to see military buildups and unresolved great power rivalries extending well into the future. War is not inevitable, but cannot be ruled out, and using diplomatic and military tools, backed by strong intelligence capabilities, to protect the peace of this vital region is almost certainly going to be an American concern for decades to come.
This short overview has concentrated only on great power politics in this volatile region. Problems of religious extremism, ethnic and sectarian conflict and the question of North Korea are also part of the picture and add to the risks that we face.
North Korea presents at once one of the most straightforward and also one of the most difficult challenges for U.S. foreign policy. It is a nuclear rogue state, economically desperate and fully totalitarian. Kim Jong Un has proved to be just as dangerous and dictatorial as his father. We know that Pyongyang has a missile program and a nuclear program. Unsettlingly, the top U.S. commander in South Korea recently announced that he thinks that North Korea has the technological capacity to build nuclear missiles. For decades, Pyongyang’s biggest asset has been its client relationship to China. There may be room for progress there; there are early signs that Beijing has started to see the “hermit kingdom” as a liability, not an asset. For the sake of a peaceful 21st century in Asia, let’s hope that trend continues.
In Europe, the United States faces two separate but interconnected problems: the weakness of the European Union and an aggressive Russia. The European Union has been substantially weakened by the immense costs of its ill-advised currency union; these economic difficulties have led and will lead to further cuts in military spending and have substantially undermined the effectiveness of both NATO and the European Union. Americans sometimes underestimate the importance of the European Union to the success of American foreign policy globally and in the EU’s neighborhood, but Europe’s success since World War Two has been one of America’s most important strategic assets. The wealth and stability of western Europe played a decisive role in the Cold War competition between the U.S. and the USSR, and Europe’s enviable levels of prosperity and peace served as a billboard to the world that democratic capitalism in alliance with the United States could improve the living standards, security and freedom of ordinary people. In addition, European diplomatic efforts, human rights policies, and foreign aid generally served both to legitimize and supplement American efforts in much of the world.
Unfortunately, for some time to come we must expect that while Europe will in many respects remain a valuable source of support and an indispensible partner, its capacity for leadership will be diminished. An inward-focused Europe with tight budgets and a long list of internal issues to settle and mutual grievances to hash out is unlikely to provide as much help even in its neighborhood as Americans would ideally wish. This will have consequences for American interests in the Mediterranean, Africa and eastern Europe, and Europe’s weakness will also reduce the energy and effectiveness of a number of important international institutions.
Europe’s weakness and internal preoccupation has been a significant factor promoting President Putin’s decision to move Russia down a path of confrontation with the West, and Europe’s economic weakness and political lack of cohesion is and will remain an important limit on the ability of the United States to pursue an effective Russia policy.
Russia, like China, is a revisionist power that acts under a sense of grievance against what many there see as an unjust world order. It is a much weaker country than China, but it almost every way its revisionist agenda is farther along. Its state power is concentrated almost exclusively in the hands of Vladimir Putin, who has said that he sees the breakup of the Soviet Union as the greatest historical tragedy of the 20th century. As though to remove any doubt that he understood the consequences of his grandiose statement about the breakup of the Soviet Union, President Putin remarked explicitly this week that he does not think there was anything wrong with Hitler and Stalin’s Molotov-Ribbentrop pact that carved up Central and Eastern Europe into spheres of influence and ignited the worst fires of the Second World War.
One should be careful not to over-interpret Putin’s increasingly frequent verbal provocations and statements of disdain for the West. It was George Kennan who first pointed out in his famous “X” article in Foreign Affairs that domestic conditions in the Soviet Union made a hostile relationship with the West necessary for Soviet leaders. Only on the theory that the Soviet Union was surrounded by hostile and predatory enemies could the Soviet leadership justify the political and economic sacrifices they imposed on their subjects. President Putin’s Russia is no Soviet Union, but Putin needs a hostile West as much as his Soviet predecessors did, and those who believe that the West can win his friendship through concessions and soft words misunderstand the nature of his political trajectory as profoundly as Henry Wallace and his associates misunderstood U.S.-Soviet relations back in 1947.
As a result, we find ourselves in something less than a new Cold War; despite Putin’s best efforts Russia’s power remains a shadow of Soviet strength. However, given the weakness of the European Union, the lack of focus and strategic thinking in its eastern policies and America’s own distraction and illusions, Putin has been able to play a weak hand to good effect.
In Ukraine as in Georgia, Putin has found that a territorial campaign abroad can strengthen his position abroad and at home. Western leaders’ response to Moscow’s aggression in Ukraine has been largely ineffectual. The West does not seem to have made up its mind even today whether it can or will help Ukraine. At the level of rhetoric, officials denounce Russian aggression and express sympathy for Ukraine, but seem not have reached a consensus over the kind of steps that would be necessary to give Ukraine a chance against its stronger, wealthier and better administered neighbor. Thanks more to the deus ex machina of lower oil prices than to sanctions or other official action, the Russian economy is coming under pressure. Under the circumstances, however, that is more likely to confirm Putin on his course of hostility to the West than to induce a change of heart. Economic weakness will lead Putin to double down on control of the political process, and both the economic pain and the limits on freedom that will he will now need to impose on the people will make the path of national mobilization against perceived foreign enemies even more essential to the survival of the regime.
While Putin’s territorial gains have been limited to a few fragments of Georgia and some chunks of Ukraine, the damage he has inflicted on western prestige and the international system is profound. Putin has demonstrated that the promises of the UN Charter, a whole series of agreements in Europe and the additional commitments to Ukraine that the western powers undertook to persuade Ukraine to transfer its nuclear arsenal to Russia following the collapse of the Soviet Union are largely hollow. The reality that even today Russian backed thugs can roam across Ukrainian territory more or less at will with only the most tepid responses from the West deeply undercuts American prestige all over the world. Barring some stroke of policy or fortune that changes the picture, the consequences of western policy failure in Ukraine will drag on American foreign policy for a long time to come.
Strategically, that is extremely dangerous. Leaving aside questions of moral obligations and sovereignty, the weak and inconclusive Western responses to Putin have not minimized the potential for future conflict, including great power conflict. To draw lines in the sand and then to fail to react when they are crossed teaches our opponents that we are not serious, and it erodes the credibility of our threats.
From where Putin is sitting, it may look as though NATO, too, is a paper tiger. There is nothing to suggest that his designs on Latvia, Estonia, Moldova and Estonia are any less nefarious than they are on Ukraine. The Central Asian republics must understand at some level that it will be fear of China rather than respect for international law or regard for the West that limits Putin’s ambitions on their independence. There is also nothing to suggest that Putin has finished with Ukraine. Quite to the contrary, given Ukraine’s weak military and the presence of Russia-backed militias he has the ability to plunge Ukraine into crisis at will.
Many in the United States may believe that the era of great power rivalry has come to an end. Putin, who is not alone in this, disagrees, and is reshaping the international arena in ways that make that conflict harder to manage and harder to ignore.
The conflicts now raging in the Middle East combine conventional wars between nation states, between national governments and tribal or ethnic insurgents, revolutionary upheavals, tribal conflicts, ideological conflicts and sectarian wars. This complex series of conflicts may be a foretaste of what the 21st century holds in areas where strong religious, tribal and ideological passions overwhelm the power of weak states to hold them in check. One could well see conflicts of this type engulf more of sub-Saharan Africa or Central Asia, and one could expect in some cases that, like the long series of civil wars in Lebanon, these conflicts could sputter along bloodily but inconclusively for decades at a time.
The 2011 revolutionary wave and the American withdrawal from Iraq have created a geo-political vacuum in the Middle East that has been filled by everything from ISIS in Syria to former Gaddafi-regime generals in Libya. But the salient feature of the past few years has been the creation of ideological blocs attempting to assert hegemony in the region and the breakdown of state boundaries as part of a larger crisis of the collapsing façade of the post-World War I order that has shaped the Arab world for the past hundred years. Thus the process that seems to be playing out, the creation of new national entities by means of extraordinary violence and ethno/sectarian cleansing, is not a unique one in world history and as such there are significant lessons to be drawn from similar experiences in the past.
The proximate cause of the current wave of conflict in the Middle East was a combination of Bush and Obama administration policies and an unhappy and unplanned synergistic relationship between them. President George W. Bush smashed the hard and brittle shell of the Saddam Hussein regime in Iraq, leading to the establishment of Shi’a power in what had been a Shi’a majority but Sunni ruled state. Then President Obama withdrew from Iraq without securing effective guarantees for the interests of the Sunni minority. These two steps in combination tipped the balance of power in the Middle East decisively in the favor of Iran, leaving what many Sunnis began to call a “Shi’a Crescent” between Basra and Beirut. With Hamas also linked to and sponsored by Iran, it appeared to many Sunnis that the United States had given the keys of the Middle East to the Shia.
The beginning of the Syrian Revolution gave the United States an opportunity to restore the sectarian balance in the Middle East by helping the Sunnis take control in Syria. In effect, this would have amounted to an exchange: the Shi’a would gain in Iraq, where they were the majority, and the Sunni would be compensated by gaining control in Syria and Lebanon where, overall, they were in the majority. (The Sunni are a minority in Lebanon, but Lebanon began as a colonial gerrymander by the French to create a majority Christian ally in the Levant. In the combined Syria and Lebanon, Sunnis form a substantial majority.)
The United States for a mix of reasons good and bad chose not to exercise this opportunity to rebalance the Middle East, and when, with heavy Iranian support, the Shi’a minority showed signs of winning the resulting Syrian War, the momentum among many Sunnis toward more extreme positions and toward the mentality of sectarian war accelerated. With the United States apparently bent on supplementing its ‘betrayal’ of the Sunni cause in Syria by reaching a nuclear compromise that would end sanctions against Iran, Sunni anger and fear could no longer be contained. U.S. relations with key Arab allies (to say nothing of Israel) frayed as the region’s wars grew bitter and more difficult to end.
Today, three blocs of nations are vying for control primarily in the war zones of Libya, Syria, and Iraq. The conflict isn’t just fought on the ground, but in the court of international opinion, and in a race to secure the backing of the great powers. The first, and arguably the most successful of these forces so far is the coalition led by and supporting Iran. Iran has deftly positioned itself as the great pillar of international Shi’ism, pulling the strings, supplying the guns, and even giving the orders in Baghdad, Damascus, and Beirut. Tehran has not always succeeded—Iran seems to have been as shocked by the rise of the Islamic State as the United States was. But its overall strategic approach remains sound, and there are no indications that any of Iran’s major allies—Hezbollah, the Assad regime, significant segments of the Iraqi government as well as Iraq’s Shi’a militias—are in danger of being defeated.
The Obama administration’s apparent decision not to link its nuclear diplomacy to Iran’s geopolitical behavior in the region sent waves of shock and fear through the region. For some, the fear of an Iranian nuclear weapon is less than the fear of what Iran and its allies can achieve on the ground once sanctions are lifted and Iran’s economy begins to revive.
After Iran and its allies, the second bloc of states vying for control in the region includes Israel, Saudi Arabia, the UAE, and Egypt. These countries, historically, have been some of America’s closest allies, as well as the clear regional powerhouses. Today, however, things look different. All of these countries remain to some degree dependent on the United States, but those dependencies are edgier and more fragile than before. All these countries today are gravely concerned about the lack of stability on their borders, Iranian support for groups directly opposed to their interests, and perhaps above all, the fear of what Iran could do either with a bomb or with the economic resources it would gain when sanctions are lifted following a nuclear agreement.
An unlikely group of ill-assorted partners, this group has nonetheless achieved a significant degree of cooperation, both tacit and explicit, across the region despite a lack of American support and, in the case of Egypt and Israel, despite relations with Washington being at their lowest point in decades.
The group agrees on something else that has put it at odds with both the Obama administration and Iran: opposition to the forms of Sunni Islamism represented by the Muslim Brotherhood, Turkey’s AK Party and Hamas. Rather than looking to popular Islamism, even in its ‘moderate’ forms, this group of states look to regime figures and strongmen in Syria, Libya, and Yemen as being the key to reestablishing stability.
This is in direct contrast with the third group that has most actively supported the Muslim Brotherhood and associated Islamist groups: Qatar, and Turkey. Although the 2013 coup against Mohamed Morsi constituted a major setback for their goals, Turkey and Qatar both continue to influence events. Turkish refusal to support American aims in Syria has significantly undermined our strategy there, while active Turkish and Qatari support for Islamist groups, including Hamas and various militant groups in Libya, continues. Qatar, in particular, continues to wield significant soft power through its media including the Al Jazeera Networks and, always, its money. Likewise, the large American military presence in Qatar protects it from interference from both Iran and Saudi Arabia.
The final group of actors, the various radical jihadi movements ranging from Al-Qaeda to ISIS and beyond, present even deeper challenges for American power and diplomacy.
This complex set of actors each with different goals, ideologies, and historical understanding of the present situation makes peace in the region unlikely but not impossible. Islamic radicalism, military regimes, conventional movements of national liberation, gulf monarchies, Shi’a internationalism, ethno-tribal systems are all competing in the current wars to determine what the Middle East will look like for the next hundred years. Agreements between these groups will be difficult to broker, and the general conflict now raging across the region may not fully end for a long time to come.
This kind of layered, complex conflict may spread to other parts of the world in the 21st century. In Africa, for example, we’ve already seen conflicts of this type in the Great Lakes region and Sudan. With increased religious polarization in the region and the spread of radical jihadi groups, religious hatred could mix with the tribal identity politics and resource wars that have already proven so devastating. As Africa continues to develop, we can expect that armies in these conflicts will be become better armed and better funded, and perhaps, if great powers like Russia and China continue to pursue strategies aimed at limiting American power, factions in these struggles will be able to appeal to outside powers for arms and diplomatic support.
In my testimony today I have spent much more time pointing to dangers and problems than pointing to the strengths, resources and advantages that continue to support the quest of the United States and its allies and partners to build a better and more peaceful world. The network of international institutions and common interests that underpins the current world system has in some ways never been stronger, and the same disruptive forces of innovation change that threaten to disrupt the existing international order will also offer new resources and new methods for building the kind of world we would like to live in. On balance, I am more of an optimist than a pessimist about the future of the world.
However, the dangers that we face are real and in some respects they are growing. American policy makers and their counterparts in other countries are going to have to rise to the level of the challenges that confront us if we are to reach the better world that lies ahead.
To make the smart choices and develop the strategies that we will need in the years to come, American policy makers will need to be equipped with the best in intelligence and analysis. The responsibility to oversee this effort is a solemn one, and much depends on the ability of this Committee to carry out its duties wisely and effectively. If my testimony this morning has been of any help to the Members and staff, I am happy to have been of use.
segunda-feira, 24 de novembro de 2014
Economia da corrupção
“O governo funciona como nas capitanias hereditárias”, disse o executivo de uma grande empreiteira com quem conversei longamente nos últimos dias. Em cada área do governo que uma empresa vai, para discutir projetos, ela é enviada para falar com um político. Num dos negócios que fez, há dois anos, o executivo teve que conversar com Paulo Maluf. Ministros da presidente Dilma sabiam do encontro.
Os detalhes das abordagens são sempre espantosos. Meu interlocutor nega pagamento de propina, mas conta que às vezes fala-se abertamente que a área “pertence” a um partido. Há quem apenas diga indiretamente, mas há quem seja franco, como um prefeito de uma cidade de Tocantins, que pediu “luvas” apenas para não revogar negócio já feito na administração anterior. Concessões, mesmo depois de ganhas, passam a ser pontos de chantagem porque a autoridade sempre pode decretar a caducidade do contrato. Ministros do governo admitem nada poder fazer diante do veto de uma pessoa de terceiro escalão, sob o argumento de que aquela é a “área” de outro grupo ou líder político. É uma total inversão da ordem hierárquica. De fato, tudo funciona como nas velhas capitanias.
Nada me convence, no entanto, de que as empreiteiras, principalmente as maiores que têm décadas de comprovada capacidade, atuação no exterior, não tenham o dever de quebrar o pacto de silêncio. Por que se submetem a ouvir de pessoa do segundo ou terceiro escalão do governo, ou de um gerente da Petrobras, que negócios líquidos e certos só poderão ser feitos se eles pagarem?
Portanto, elas não são vítimas. Se ficam em silêncio, pagando ou não, são cúmplices, são parte da mesma tragédia que se abate sobre o Brasil.
A pessoa com quem conversei sobre as entranhas dos negócios com o setor público brasileiro, e outros executivos com quem tenho falado, não tem dúvidas em dizer que a corrupção, evidentemente, não é coisa nova, mas a escala a que se chegou nos governos do PT não tem precedentes. E justifica o bordão do ex-presidente para louvar seus feitos: “Nunca antes na história deste país."
— Quando o sub do sub se dispõe a devolver US$ 100 milhões, como é caso de Pedro Barusco, é porque a escala do roubo é grande demais — disse o empresário.
A explicação dele é que os governos do PT abriram ao mesmo tempo várias frentes de obras, depois de um período de paralisia dos investimentos no governo Fernando Henrique. Na Petrobras, por exemplo, que não fazia refinaria há 20 anos, foram iniciadas quatro. Ele acha que isso explica a escalada da corrupção. Isso não explica, no entanto, os vários casos de sobrepreço em cada contrato de importação, fretamento de navio, cada operação de compra da empresa. Tudo era pretexto para se armar a cena em que o empresário é enviado ao “operador” de um dos partidos da base.
A justificativa inicial é que o partido precisa de financiamento, mas, quando se oferecem doações legais, em geral eles ouvem que não é o suficiente. Nos últimos tempos, ficou claro para os empresários que era também para enriquecimento pessoal.
Há empresas que cresceram rapidamente da noite para o dia, sempre à sombra dos seus protetores, verdadeiros fidalgos da corrupção e que têm o poder de abrir a torneira de recursos públicos, ou garantir a vitória em licitação mesmo com todas as evidências de que não estão tecnicamente preparadas.
O dirigente de uma empresa fornecedora de serviços procurou um ministro influente do governo Dilma e explicou que era possível apenas com bom gerenciamento melhorar muito um setor no qual o Brasil tem deficiência crônica. “Parem de gastar dinheiro”, disse o executivo, e mostrou como era possível. Em vez de fazer novas obras, usar a eficiência no que já fora construído para elevar a qualidade do serviço. Foi despachado do gabinete com a afirmação de que não era isso que se procurava.
A presidente Dilma está se comportando como se a operação Lava-Jato fosse patrocinada por ela. A operação é sim uma oportunidade para o país, mas é seu governo que está no meio do turbilhão. Há fios soltos demais que, se puxados, levarão a decisões e negócios feitos nos últimos quatro anos, ou nos últimos 12 anos, no setor de energia, que sempre esteve sob seu controle.
Vale a pena ler com atenção.
Paulo Roberto de Almeida
Russia: 21st Century Empire?
Roubini's Edge - Economic Insights of a Global Nomad
Nouriel Unplugged, November 24, 2014
Russian President Vladimir Putin has gone on record stating that the breakup of the Soviet Union was one of the worst catastrophes of the 20th century.
Putin’s statement—which is ominous in its own right—takes on an even more menacing tone in light of recent events in the nations of the former Soviet Union. The most obvious example is Ukraine’s conflict with Russia, which perhaps more than any other recent event in the region, has seized the attention of the West.
During the last year, the conflict in Ukraine has come perilously close to a state of full-blown though undeclared war.
Looking back over the past 12 months, we’ve seen a seismic shift in the political makeup of the region. Russia has effectively annexed the Crimean Peninsula, which includes the city of Sevastopol, home of the Russian Black Sea Fleet—and critically, the Russian Navy’s only warm-water port. In the political sphere, Ukraine’s unpopular president, Viktor Yanukovych, abandoned his vast estate along the Dnieper River, fled into exile in Russia, and was soon after impeached by the Ukrainian parliament.
Despite these momentous events, the conflict, which began on November 21, 2013 in Kiev’s Independence Square, grinds on. In Eastern Ukraine, Russian separatists—some wearing what appear to be Russian military uniforms—continue to battle the Ukrainian Army, with both sides suffering casualties despite several cease-fire agreements.
But in a larger sense, the crisis in Ukraine represents a metaphor for Putin’s increasingly imperial ambition. While the situation in Ukraine is grave and could escalate into an even more dangerous crisis, it’s still just one piece of a much broader puzzle.
Unlocking that puzzle begins with Vladimir Putin—and what are, by all appearances, his plans for reconstituting the Russian Empire.
Moscow’s Long Arm—A Firsthand Experience
I personally experienced the long arm of Vladimir Putin’s political machine two years ago, just as I was preparing for a trip to Moscow.
In May of 2012, the Financial Times published an op-ed piece I had written with my good friend, the political scientist Ian Bremmer. In the article, Ian and I said we believed that Russia was on the wrong path.
We listed many reasons why: Russia’s intervention in state capitalism; a pervasive sense of authoritarianism; and a population in demographic decline, as well as rampant socially driven diseases like alcoholism. We recognized early on some of the problems—economic, political, and social—that Russia might face.
A few days after the FT ran our op-ed piece, Ian and I were going to meet with senior policymakers in Moscow. When I arrived, half of the people I was scheduled to meet with suddenly decided to cancel.
I suppose there could have been a nasty spring flu going around the United Russia party that May; but more likely, people who hold dissenting views from Russia’s party in power will suddenly have their meetings politely canceled.
This isn’t surprising: corruption in Russia has become endemic to the political system.
Transparency International’s Corruption Perceptions Index, which measures the way public-sector institutions are perceived, ranks the Russian government 127th out of a total of 177 countries rated—which is hardly an endorsement of Mr. Putin’s style of governance.
Empire Building, 21st-Century Style
Russia has always considered itself an empire—even before the Bolshevik Revolution.
In Tsarist days, Imperial Russia was a great power that believed buffer states were necessary to maintain its security and its place in the world. After the Bolshevik Revolution, during the era of the Soviet Union, Russia maintained client states in Eastern and Central Europe to control a sphere of influence far larger than its own national territory.
During the time of the tsars, Ivan the Terrible expanded the Russian Empire by enlisting the support of the Cossacks. Now the organizational complexity of the 21st century has given empire builders a new tool to consolidate their power: the supranational union.
The Creation of the European Union
On January 1, 1999, 11 democratic European countries, including the most economically powerful nations in Western Europe, officially united to create a common currency—the euro.
The eurozone, along with its free-trade counterpart, the European Union, represents a culmination of work toward a united Europe that had begun decades earlier.
Perhaps it isn’t surprising that Putin’s latest attempt at empire building has taken on this distinctly modern form, using the European Union and the eurozone as templates for consolidating power.
The Eurasian Economic Union (EEU), which will formally go into effect on January 1, 2015, is Putin’s latest bid to unite the territories of the former Soviet Union. The original territories to be included in the union were Russia, Belarus, and Kazakhstan—but the treaty was amended in October to include Armenia. The nation of Kyrgyzstan may soon follow suit.
The Eurasian Economic Union: A Rival EU?
The Eurasian Economic Union is something economists refer to as a “customs union”—a free-trade zone with a common tariff applied to foreign goods.
But the EEU is still in a gestational phase. The history of the European Union suggests that over time, the integration of a free-trade area expands—which may well be Putin’s goal.
Putin doesn’t want to simply create another North American Free Trade Agreement (NAFTA). His aim is to create another EU—a rival EU—with the Kremlin exercising the real power behind the scenes.
To understand the empire-building project that Putin has embarked upon, it makes sense to think of the EEU as a political union first. Putin’s ability to consolidate power politically was a necessary first step, leading to progressively greater economic integration.
As a customs union grows, it establishes trade, financial, and investment links among its constituent states. Then, as time goes on, member states may stabilize their currency exchange rates, eventually becoming interconnected enough to develop a common currency.
The eurozone experiment suggests that sustaining a monetary union requires banking, fiscal, and full economic union. When you begin to trace the trajectory of the eurozone experiment, the outlines of Mr. Putin’s plan begin to come into focus.
If Russia wants to establish the Eurasian Economic Union as a rival to the EU, then it must include Ukraine, Russia’s largest neighbor to the west.
As Jimmy Carter’s National Security Advisor Zbigniew Brzezinski once wrote: “Without Ukraine, Russia ceases to be an empire, but with Ukraine suborned and then subordinated, Russia automatically becomes an empire.”
And indeed, what started as a customs union is now becoming a broader economic union for the three members of the EEU in 2015. Russia has already heavy-handedly suggested to Kazakhstan and Belarus that they should start to stabilize their currencies and eventually think about a common currency in the future. There are even proposals for the beginning of a banking union, with joint regulation and supervision for banks in the EEU. Kazakhstan has already balked at the idea of a common currency that would be a stepping stone for a fuller banking, fiscal, economic and eventually political union.
But Russia is pressing the issue, and the delicate political transition in Kazakhstan may give Russia an opportunity to “pull a Ukraine” in Kazakhstan, as we will discuss below.
Putin’s rhetoric is that Russia should protect Russian ethnic minorities wherever they are in the former Soviet Union—and about 25 million ethnic Russians live in those former Soviet republics.
What a Sanctions War Would Do
In the geostrategic sense, Ukraine plays a key role in the development of the EEU, but there are additional risks to an escalation of the conflict there.
The nightmare scenario for the West—and for investors—is an escalating sanctions war with Russia.
Thus far, Western sanctions have targeted only key individuals and companies in Russia, and have been limited mostly to specific organizations, such as the energy sector, the military, and state banks. Essentially, the sanctions have tried to encourage financial markets to price in a greater risk premium for Russian investments, but have steered clear of broad trade restrictions.
Russia retaliated with counter-sanctions, specifically a ban on food imports and restrictions on imported clothing, cars, and other products for government ministries. Coupled with a much weaker Russian ruble, which reduces Russia’s purchasing power in the world, Russian imports from Europe have collapsed. The Russian government is now trying to replace these goods with domestic production.
But the real concern is energy. Approximately one-third of Europe’s gas supply comes from Russia—and about half of that gas is transported through Ukraine.
According to Eurostat, the EU’s official statistics reporting agency, Germany gets about one-third and Sweden almost one-half of their imported energy from Russia. Poland, Slovakia, Bulgaria, and Lithuania depend on Russia for 90% or more of their imported energy, excluding intra-EU trade.
Europe’s Energy Imports
If the West were to impose stricter sanctions against Russia, Russia might then retaliate with the supreme sanction against the West—cutting off the supply of natural gas to Europe.
If the conflict between Ukraine and Russia were to escalate into a full-blown war, which for the moment at least does not seem likely, the risk of a disastrous energy embargo would rise dramatically—though this would damage the Russian economy as much, perhaps even more, than it would hurt Europe.
As recently as 2009, a pricing quarrel arose between Russia and Ukraine when Gazprom, the Russian gas giant, refused to renew a contract due to concerns over Ukraine’s outstanding debt. The dispute was ultimately resolved by Vladimir Putin and then Ukrainian Prime Minister Yulia Tymoshenko, but not before it threatened real catastrophe.
By the time the two leaders had brokered an accord, gas pressure had already dropped in Poland and the Czech Republic—sending ripples of fear about energy supply through Western Europe that winter and causing waves of selling in European equities.
Russian gas lines crisscross Ukraine
So in the event of a Russian gas embargo of Western Europe, where would Russia sell its natural gas?
While Putin could attempt to redirect sales of natural gas to his trading partner China, the infrastructure required to transport that gas has not yet been completed, and the construction required to make it operational will take years to complete.
Despite limitations in the transportation infrastructure, the Russians already have a steady agreement in place to sell gas to China—driven in some measure by Russia’s insecurity about its relationship with the West.
On the other side of the equation, tensions with Russia have already led some European countries to sign contracts with the United States for future natural gas delivery. (At present, US law does not allow for the export of meaningful amounts of liquefied natural gas [LNG], but new LNG licenses are being issued.) The US is also increasingly exporting its excess supply of coal to Europe, as the domestic shale gas and oil boom reduce US coal consumption.
It’s Not Just Ukraine
I recently traveled to the Central Asian nation of Kazakhstan, which is a former Soviet republic and founding member of Putin’s Eurasian Economic Union. Russia has deep and longstanding economic ties with Kazakhstan, especially in the trade of raw materials and finished goods.
Kazakhstan is the largest landlocked nation in the world, and the ninth-largest country by overall landmass. Its northern border with Russia is longer than 4,000 miles. Roughly one-quarter of Kazakhstan’s population of 17 million is ethnic Russian—but in the north and west of the country, ethnic Russians account for between 40-50% of the population.
This August, in a disturbing turn of events, President Putin remarked that Kazakhstan has never had independent statehood and was historically “part of the large Russian world.” He also said that Kazakhstan’s citizens of Russian descent needed to be protected—and that they would insist on protection if tensions were rising.
The Kazakhstanis naturally bristled at this rhetoric, made especially ominous by the fact that Putin had made nearly identical remarks about the ethnic Russians in Ukraine. Putin also made special mention of Kazakhstan’s current president, Nursultan Nazarbayev, praising him for having “created a nation” where none had existed before.
This leaves many Kazakhstanis concerned about what Putin’s plans for Kazakhstan may be after Nazarbayev eventually disappears from the scene. Nazarbayev is now in his mid-70s and has run the country since its independence without a clear plan of succession. There are also additional concerns about whether the ethnic Russian population of Kazakhstan will rise to the bait and begin to assert their “rights” with force, as they already have in Ukraine. President Nazarbayev has already responded to this perceived risk by appointing more Russian ministers to participate in his government.
Kazakhstan has played a fascinating balancing act between Russia, China, and to a lesser extent, the West. Indeed, Kazakhstan now sells more than half of its resource exports to China.
I don’t believe there is any reason for great concern about Kazakhstan in the short term—but the uncertainty about succession after Nazarbayev leaves the presidency could make Kazakhstan vulnerable.
Unlike many other countries in the region, Kazakhstan has some significant economic advantages—including sizable resource exports and earnings, the fact that it has managed to save some of its oil earnings in its sovereign wealth fund. All of this gives Kazakhstan some bargaining power vis-à-vis Russia—at least as much bargaining power as a country a tenth the size of Russia can command.
Putin has also engaged in similar bullying tactics in Armenia, Moldova, Kyrgyzstan, and Tajikistan—all of which are relatively poor, landlocked nations, with few resources and limited wealth, and which now seem likely to join the EEU at some point in the future.
While these territorial conflicts may seem distant from Western investors, taken as a whole, they amount to a pattern of behavior in a potentially volatile region of the world that investors should not ignore.
Challenging Global Infrastructure
Also on the geopolitical front, Russia and its BRICS partners—Brazil, India, China, and South Africa—are working on creating a development bank that will serve as a BRICS alternative to the Western-controlled International Monetary Fund (IMF) and the World Bank. This is yet another troubling example of Russia’s apparent desire to turn its back on the West.
In another example, there has been speculation that Russia and China are planning to create an international payment system to replace the SWIFT system in order to limit the capacity of the US and Europe to impose financial sanctions against them. Support for some of these ideas has cooled in China, though, where the notion of replacing the SWIFT system has been rejected, while many analysts in the West think the idea is nothing but a pipe-dream.
In addition, recent revelations of electronic surveillance by the US may lead Russia and other illiberal states to restrict Internet access and create their own nationally controlled data networks.
Creating a full Eurasian Economic Union that is less tied to the West through trade, financial integration, electronic payment, and communication may be a romantic fantasy for Russia given the fiscal costs the project would entail—costs that Russia cannot afford.
Moreover, the recent fall in oil prices—which is perhaps driven in part by Saudi Arabia’s goal of punishing Russia for its role in Syria and the Middle East, as well as the sanctions against Russia by the West—have led to a free-fall of the Russian ruble and a near-recession in Russia this year and possibly next year as well.
Despite these headwinds, Putin is still very popular at home where a controlled media has spun a tale of a strong Russia helping its ethnic cousins in Ukraine. But as the economy falters, the neoimperial goals of Putin will be increasingly challenged.
Nevertheless, for now the Eurasian Economic Union dream is a dream to which Putin dearly clings—and he is nothing if not tenacious.
Taken as a whole, Vladimir Putin’s behavior suggests that his endgame is to keep the former member states of the Soviet Union unstable enough to give up on closer ties with the West. His plan is multifaceted—part political, part military, part geostrategic—and focused on maximizing Russia’s influence in the region as well as increasing the power of the fledgling Eurasian Economic Union.
Counterbalancing those risks in the region are the central banks of the G4—the Fed in the United States, the European Central Bank, the Bank of England, and the Bank of Japan—which have kept interest rates low enough to suppress market volatility.
So far, that support from central banks has served as an effective counterweight to the perception of geopolitical risk in places like Ukraine. With a few short-term exceptions, stock market prices have remained relatively stable since the crisis in Ukraine began almost a year ago.
There’s still plenty of risk in the world today. As an investor, you should pay attention to those events, but don’t automatically assume that geopolitical risk will translate into a massive correction in asset prices.
Vigilance and careful observation are a must—panic is not required.
Copyright 2014 Roubini's Edge