Afghanistan
Still in the fight
The Taliban flex their muscles in Afghanistan
EVEN NATO officials gave grudging respect to the audacity of the Taliban raid that sprang the entire population of the main prison in the southern city of Kandahar on the night of Friday 13th June. But the ensuing speculation that the Taliban may be about to take Kandahar and mount a serious challenge in the south to the Afghan government seems overblown.
The jailbreak, a combined assault by heavily armed fighters and suicide-bombers, blasted open the crumbling mud brick Sarposa prison and sent more than 1,000 inmates scurrying into the nearby countryside. It was reported that the Taliban kept a fleet of mini-buses with their engines running outside to collect the 450 Taliban militants housed in the jail.
Until then, the war in Afghanistan had begun quietly this year. The snow in the mountain passes to Pakistan melted, but the subsequent seasonal Taliban offensive seen in the past three years largely failed to materialise. In Helmand province (see map on next page) and along the eastern border, the dangers to NATO and Afghan troops were no longer the Taliban ambushes and protracted firefights that cost the Taliban dear last summer. Instead, they faced a growing threat from roadside bombs. But it seems the Taliban were saving their best efforts for “spectaculars”. The Sarposa attack cost little but won headlines around the world.
Along the eastern border American forces claimed to have the upper hand against fighters crossing from Pakistan’s tribal territories, until renewed negotiations in April between the Pakistan government and militant groups led to an immediate spike in activity in eastern Afghanistan. This week President Hamid Karzai made one of his angriest outbursts yet against Pakistan’s failure to prevent cross-border incursions, and threatened to send the Afghan army across the border.
Western commanders insist that overall the Taliban are wilting under the pressure. NATO, rather than the Taliban, has been initiating much of the fighting, they claimed, which explains why more Western soldiers are being killed than last year. Indeed, last month for the first time since 2003, more Western troops (23) died in Afghanistan than in Iraq (21).
In the south April and May were dominated by a joint British and American offensive in Garmser, an area of southern Helmand where British and Taliban fighters had faced each other in stalemate for the past two years. The deployment of 2,300 American marines drove up to 800 Taliban fighters out of fixed positions that included trenches, tunnels and bunker systems. NATO reported 200 Taliban killed for the loss of one American marine.
In the weeks after the Garmser operation NATO reported a significant knock-on effect on Taliban activity elsewhere in the province. Western commanders spoke of the poor co-ordination of Taliban activity, their difficulties with logistics and morale, and the increasing prominence of foreign fighters in their ranks. The past week appears to be the Taliban’s riposte. They needed, as one senior British officer puts it, “to show they are still in the fight”.
Not only did the Sarposa jailbreak provide a boost to morale, it gave some substance to the Taliban’s assertion that the Afghan government is not in control across the south. The subsequent days have seen reports of hundreds of Taliban fighters massing in the district of Arghanbad, close to Kandahar city. This allows the Taliban’s tirelessly upbeat spokesmen to announce that they are threatening the city and for the Western press to recall the Tet offensive, which heralded the North’s victory in the Vietnam war.
Arghandab is the sort of “close country” that favours the Taliban, with orchards, narrow lanes and a dense civilian population. It is controlled by the Alakozai tribe, which is in general pro-government. But the Taliban has assassinated three prominent tribal leaders in the past year, and the Alakozai have shown signs of disenchantment, disappointed at not enjoying more influence in and around Kandahar under the Karzai administration.
There is a risk of terrorist attacks in Kandahar in the coming week. But there is no realistic chance that Kandahar city will fall, and the insurgents are unlikely to stand and fight long in Arghandab. In the nearby district of Punjwai, up to 1,500 Taliban were killed in September 2006 when they rashly concentrated their forces around the village of Pashmul. NATO spokesmen boast of the speed with which a battalion of Afghan National Army soldiers was deployed to Kandahar. They said it showed the improving capability of Afghan security forces. That may be true. But in the war of perceptions, the Taliban will consider that they have had the best of the past week.
Obama Promises Change -- But What Kind?
By Victor Davis HansonBy this point in the presidential campaign, the public knows that a charismatic Barack Obama wants sweeping "change." While the national media have often fallen hard for the Illinois senator's rhetoric -- MSNBC's Chris Matthews said he felt a "thrill going up my leg" during an Obama speech -- exactly what kind of change can Obama bring if he's elected in November?
Foreign Policy
Take Obama's foreign-policy pronouncements, which promise a break with the unhappy past. Two doctrines are most prominent. One is to engage our enemies and be nicer to our allies. The other calls for leaving Iraq on a set timetable.
The problem with the first is that key allies like the conservative French, German and Italian governments -- unlike the days of rage in 2003 -- now embrace pretty much the same policies that we do. Britain and the European Union just called for imposing tougher sanctions on Iran, while both France and Britain promise to send more troops to Afghanistan.
In Feb. 2007, Sen. Obama called for American troops out of Iraq by March 2008. But in the last four months since that proposed final departure, violence is way down as the U.S. military and Iraqi army have stabilized much of the country.
The world in January 2009 will not be the same as it was in February 2007. So would a President Obama really engage Iranian President Ahmadinejad just as the Europeans are isolating him, or give up on Iraq when the American military may well gradually draw down in victory, not defeat?
Energy
Gas prices are soaring. Americans are frustrated (and a bit ashamed) that we continue to beg the Saudis to pump another half-million barrels a day on their soil and off their shores to ease global tight supplies, when we could pump much more than that in Alaska, off our coasts and on the continental shelf -- and thus save hundreds of billions of dollars.
Yet Sen. Obama's change probably wouldn't include more drilling; more nuclear power plants; or fuel extraction from tar sands, shale or coal. Instead, his strategy emphasizes more conservation; mass transit; and wind, solar and alternate green energy. All that is certainly wise and could be a winning combination by 2030, but right now it won't fill our tanks.
Taxes
Sen. Obama also wishes to raise trillions in new taxes by upping the capital gains margins, restoring inheritance taxes, raising the income rates on the upper brackets and lifting the income caps on Social Security payroll taxes. Such an old-fashioned soak-the-rich plan will please a strapped public tired of overpaid CEOs and Wall Street jet setting.
Yet forcing the affluent to pay even more won't necessarily reduce annual deficits of the last eight years or pay down the huge national debt -- not when Obama promises more vast entitlements in health care, education and housing and current aggregate federal revenues were increased by past tax cuts that spurred economic growth.
----------------------------------------------
Sen. Obama promises a new style of politics that is issue-based, rather than attack-dog. But so far, he has campaigned in conventional fashion: He's tough on his opponents and as prone to overstatements and mischaracterizations as any other candidate.
The take-no-prisoners Moveon.org, which gave us the "General Betray Us" ads, is now an ally running third-party hit pieces on John McCain. Such outside help is customary in an election but seems inconsistent with Obama's disavowals of the hardball politics of the past.
Sen. Obama has promised a new dialogue on race and tolerance. His own impressive personal journey may make that possible. But his 20-year intimate relationship with the racist Rev. Jeremiah Wright suggests that for years he was heavily invested in the rather tired and predictable identity politics of grievance rather than a vocal advocate of novel racial transcendence.
Overall, Obama's announced policies are sounding pretty much the same old, same old once promised by candidates like George McGovern, Mike Dukakis, Walter Mondale, Al Gore and John Kerry. Of course, a return to the standard big-government nostrums of the past may well be what the angry voters want after 20 years of the Bushes and Clintons. But it is not a novel agenda, much less championed by a post-racial, post-political emissary.
So what are the Democrats thinking? That a mesmerizing, path-breaking African-American candidate -- coupled with Bush exhaustion -- will overcome past public skepticism of Northern presidential Democratic candidates, traditional liberal agendas and Obama's own relative lack of experience.
In other words, we should count on hope rather than change.
Obama and McCain Spout Economic Nonsense
Barack Obama and John McCain are busy demonstrating that in close elections during tough economic times, candidates for president can be economically illiterate and irresponsibly populist.
In Raleigh, N.C., last week, Sen. Obama promised, "I'll make oil companies like Exxon pay a tax on their windfall profits, and we'll use the money to help families pay for their skyrocketing energy costs and other bills."
Set aside for a minute that Jimmy Carter passed a "windfall profits tax" to devastating effect, putting American oil companies at a competitive disadvantage to foreign competitors, virtually ending domestic energy exploration, and making the U.S. more dependent on foreign sources of oil and gas.
Instead ask this: Why should we stop with oil companies? They make about 8.3 cents in gross profit per dollar of sales. Why doesn't Mr. Obama slap a windfall profits tax on sectors of the economy that have fatter margins? Electronics make 14.5 cents per dollar and computer equipment makers take in 13.7 cents per dollar, according to the Census Bureau. Microsoft's margin is 27.5 cents per dollar of sales. Call out Mr. Obama's Windfall Profits Police!
It's not the profit margin, but the total number of dollars earned that is the problem, Mr. Obama might say. But if that were the case, why isn't he targeting other industries? Oil and gas companies made $86.5 billion in profits last year. At the same time, the financial services industry took in $498.5 billion in profits, the retail industry walked away with $137.5 billion, and information technology companies made off with $103.4 billion. What kind of special outrage does Mr. Obama have for these companies?
Sen. McCain doesn't support the windfall profits tax, but he can be as hostile to profits as Mr. Obama. "[W]e should look at any incentives that we are giving," Mr. McCain said in May, even as he talked up a gas tax "holiday" that would give drivers incentives to burn more gasoline.
This past Thursday, Mr. McCain came close to advocating a form of industrial policy, saying, "I'm very angry, frankly, at the oil companies not only because of the obscene profits they've made, but their failure to invest in alternate energy."
But oil and gas companies report that they have invested heavily in alternative energy. Out of the $46 billion spent researching alternative energy in North America from 2000 to 2005, $12 billion came from oil and gas companies, making the industry one of the nation's largest backers of wind and solar power, biofuels, lithium-ion batteries and fuel-cell technology.
Such investments, however, are not as important as money spent on technologies that help find and extract more oil. Because oil companies invested in innovation and technology, they are now tapping reserves that were formerly thought to be unrecoverable. Maybe we are all better off when oil companies invest in what they know, not what they don't.
And do we really want the government deciding how profits should be invested? If so, should Microsoft be forced to invest in Linux-based software or McDonald's in weight-loss research?
Mr. McCain's angry statement shows a lack of understanding of the insights of Joseph Schumpeter, the 20th century economist who explained that capitalism is inherently unstable because a "perennial gale of creative destruction" is brought on by entrepreneurs who create new goods, markets and processes. The entrepreneur is "the pivot on which everything turns," Schumpeter argued, and "proceeds by competitively destroying old businesses."
Most dramatic change comes from new businesses, not old ones. Buggy whip makers did not create the auto industry. Railroads didn't create the airplane. Even when established industries help create new ones, old-line firms are often not as nimble as new ones. IBM helped give rise to personal computers, but didn't see the importance of software and ceded that part of the business to young upstarts who founded Microsoft.
So why should Mr. McCain expect oil and gas companies to lead the way in developing alternative energy? As with past technological change, new enterprises will likely be the drivers of alternative energy innovation.
Messrs. Obama and McCain both reveal a disturbing animus toward free markets and success. It is uncalled for and self-defeating for presidential candidates to demonize American companies. It is understandable that Mr. Obama, the most liberal member of the Senate, would endorse reckless policies that are the DNA of the party he leads. But Mr. McCain, a self-described Reagan Republican, should know better.
Forecast Update: Faster Growth, Higher Inflation, Higher Interest Rates
Recent economic data suggests real GDP growth is already accelerating out of the sluggishness we experienced in the last quarter of 2007 and the first quarter of 2008. In the past three months, “core” retail sales have increased at a 10.2% annual rate, exports are up at a 19.7% rate, and the construction of business buildings is up at a 16.8% rate.
Meanwhile, our models that use weekly data on unemployment claims are consistent with real GDP growth of about 2% in Q2.
As a result, we are lifting our forecast for Q2 real GDP growth to a 2% annual rate (previously 1.5%). The table above provides a breakdown of the sources of real GDP growth in Q2 in our forecast, by major component.
We also expect continued acceleration of real GDP growth into the second half of 2008. Not because of the tax rebate checks but because monetary policy is loose, the Fed has finally stopped cutting, tax rates are relatively low, and the long-term productivity boom continues.
As the table below shows, we expect the inflation problem to worsen in the quarters ahead, with GDP prices starting to catch up to the inflation that is already evident in the Consumer Price Index. As a result of faster growth and more widespread inflation, we are now making a more aggressive forecast that the Fed will start raising rates at the August meeting and push the federal funds target to 3% by year end, with more rate hikes in 2009. If the Fed ends up standing pat at the August meeting, that raises the odds of larger rate hikes in the meetings that follow.
Caracas Connection
Here's one where we would have been happy not to have the chance to say we told you so. In a January 8, 2007 editorial, "Mr. Monroe, Call Your Office," we warned of what we called an Iranian strategy "to gain anti-American allies within striking distance of our shores." We wrote, "the Venezuela-Iran connection has included trade deals, numerous photo ops, and the exchange of national decorations between the two presidents." We followed up with a January 16, 2007 editorial, "Enemy in Our Back Yard," that warned, "Until recently, Mr. Chavez and his fellow Latin American leftists were an annoyance for advocates of free trade and good governance. Now that they've allied themselves with Islamic extremists, however, they've become a great deal more dangerous." We predicted, "Although economic in nature, this entente will eventually become a military one."
Sure enough, it did. Yesterday, the U.S. Treasury Department confirmed our premonitions, outlining ties between Venezuela and the deadly anti-American Iranian-backed terrorist group Hezbollah. "It is extremely troubling to see the Government of Venezuela employing and providing safe harbor to Hizballah facilitators and fundraisers," said the director of the federal Office of Foreign Assets Control, Adam Szubin. He froze the assets of a man who served until recently as a top Venezuelan diplomat in Damascus, saying the man, Ghazi Nasr al Din, "arranged the travel of Hizballah members to attend a training course in Iran." Another Venezuela-based man, Fawzi Kan'an, "met with senior Hizballah officials in Lebanon to discuss operational issues, including possible kidnappings and terrorist attacks" and "traveled with other Hizballah members to Iran for training." The threat from the South is gathering.
Obama could win vote, lose election
| |
| ||
| |
Until 2000, it hadn’t happened in more than 100 years, but plugged-in observers from both parties see a distinct possibility of Barack Obama winning the popular vote but losing the Electoral College — and with it the presidency — to John McCain.
Here’s the scenario: Obama racks up huge margins among the increasingly affluent, highly educated and liberal coastal states, while a significant increase in turnout among black voters allows him to compete — but not to win — in the South. Meanwhile, McCain wins solidly Republican states such as Texas and Georgia by significantly smaller margins than Bush’s in 2004 and ekes out narrow victories in places such as North Carolina, which Bush won by 12 points but Rasmussen presently shows as a tossup, and Indiana, which Bush won by 21 points but McCain presently leads by just 11.
One possible result: Even as the national mood moves left, the 2004 map largely holds. Obama’s 32 new electoral votes from Nevada, New Mexico, Colorado and Virginia are offset by 21 new electoral votes for McCain in Michigan and New Hampshire — and despite a 2- or 3-point popular vote victory for Obama, America wakes up on Jan. 20 to a President McCain.
According to Tad Devine, who served as the chief political consultant for Al Gore in 2000 and as a senior adviser to John F. Kerry in 2004, “it certainly is a possibility. Not a likelihood, but it is a real possibility.”
See also
Some observers, such as Joseph Mercurio, a political consultant and pollster who worked on Sen. Joe Biden’s Democratic primary bid, see this as unlikely given the dramatic increase in Democratic Party enrollment and President Bush’s near record-low approval rating. Also skeptical is Nate Silver, a political cult-favorite blogger whose statistical model — which factors in population change since electoral votes were last allocated in the 2000 census — shows McCain as more likely than Obama to lose the Electoral College while winning the popular vote.
But others, pointing to the competitiveness of the past two elections, predict that this will be another such tight race. If they’re proven correct, this would be the fourth in the past five elections, making for the most closely contested run of presidential contests since those spanning the popular vote-Electoral College splits of 1876 and 1888.Hank Sheinkopf, president of Sheinkopf Communications and an adviser to Bill Clinton in 1996, warns that such a split “is anything but impossible.” While he gives Obama a slight edge in the general election “because he doesn’t have George Bush riding with him,” he predicts that “Obama’s going to get big votes for a Democrat in the Southern states but not enough to win any new electoral votes. So it’s a distinct possibility that he could lose the entire South, split the Midwest” and end up not as president but rather as the second ccoming of Al Gore. When asked the odds of this playing out, he offers “50-50.”
Devine points out that Bush’s strategy in 2004 “was predicated on massive base turnout” that pushed up margins in safe states. He doesn’t “expect the McCain campaign to be directed the same way — using issues like gay marriage on the ballot to get the base to the polls — so McCain won’t have the same forces at play to drive out the popular vote.”
Recalling the impact of Ralph Nader’s third-party run in 2000, Devine also wonders if Bob Barr’s Libertarian run might play out differently, costing McCain popular — but not electoral — votes, while producing another popular-electoral split.
Lloyd M. Green, who served as research counsel to George Bush in 1988, also rates Obama a slight favorite and predicts that, if the Democrat does win, he’ll do so with “even larger margins in New York and California than in the last several elections [in 2004, Kerry won the two states by a combined margin of a little more than 2.5 million votes], and yet with all that margin run-up in safe states, this will end up a tight general election.”
In a sentiment also expressed by Sheinkopf and Green, Devine sees little chance of this happening if Obama wins the popular vote by more than 4 points. “But if he gets it by 2 or 3 points, it is plausible," he said. "Absolutely.”
Green, who sees “about a 20 percent chance” of Obama winning the popular vote while losing the Electoral College, doesn’t expect anything resembling a blowout: “Given that the only clear and clean majorities [since 1992] were in 1996 and 2004, ... this election will have the ferocity of all recent elections.” It’s a tough trend to buck, he argued, noting that “Americans traditionally change their religious affiliations more often than their party affiliations.”
A war that needs a definition of victory
By Philip Stephens
The question that western donors to Afghanistan might have asked themselves at this week’s Paris conference was an obvious one: why are we there? In the event it was easier to write the cheques. Winning in Afghanistan is perhaps the most consistent mantra of western security policy. As long, that is, as no one defines what is meant by winning.
President Hamid Karzai knows what he wants: another $50bn (€32bn, £26bn) in foreign development assistance to create something resembling a modern state. He will not get that much, not least because it is beyond the capacity of his government to spend it honestly. The money, though, will keep flowing. The west sees no other choice.
Afghanistan is the good war – a conflict fought in self-defence and one, unlike Iraq, blessed from the outset by the international community. No dodgy intelligence here. Barack Obama won the Democratic nomination for the coming US presidential election promising to pull out US troops from Iraq. He wants a bigger effort in Afghanistan.
Mr Obama is not alone. I have given up counting how often in recent months I have heard politicians and policymakers, leftwing and rightwing, Americans and Europeans, say the west cannot afford to lose in Afghanistan. I am still unsure as to what constitutes winning. So, I think, are they.
You catch the confusion in public statements and interviews as well as private conversations. The west is there to defeat the Taliban, one European leader will say. Nato is defending the elected government of Mr Karzai, another will offer. The international community is helping to build democracy in the Muslim world, a foreign ministry expert will add.
Al-Qaeda, hiding out in the frontier badlands of Pakistan, must be denied the bases that allowed it to attack New York and Washington: this is an objective that Mr Obama can sign up to every bit as much as President George W. Bush. The west, though, also says it is safeguarding the rights of women: girls are back at school, women assured a role in politics.
Then, of course, there are drugs. There was a big fuss this week about the successful seizure of a cache of cannabis worth hundreds of millions of dollars. A drop in the ocean. Afghanistan’s opium crop supplies 90 per cent of global heroin demand. It also finances the Taliban. Western self-interest does not end there. Millions of Afghanis have returned home since 2002, easing immigration pressures in Europe.
When the questioning gets tough, the fall-back is as much about the west as about Afghanistan. The Nato alliance must be re-engineered to face new threats: cross-border terrorism, the proliferation of unconventional weapons, failing states. Afghanistan is the test. Failure would spell the beginning of the end for the world’s foremost military compact.
There is nothing ignoble about these aims. The strategic significance of Afghanistan is obvious enough. As the west discovered during the 1990s, benign neglect is not an option. Yet while governments are sincere about the cost of defeat, they are unwilling to invest enough to win. The fragmentation of effort holds up a mirror to confusion about objectives.
I find it curious that western military commanders cite the Taliban’s increasing resort to suicide bombers and improvised explosive devices as evidence of impending victory. Another way of looking at the insurgents’ shift in tactics is to say they are adept at adapting to circumstances. This week a suicide bomber took to 100 the toll of British fatalities in the conflict.
That said, things are better than they were. A year or so ago it seemed that vast tracts of the country might well slide back into the hands of Taliban fighters. Nato forces have now pushed them back from their strongholds and forced an effective military stalemate in the south.
The military points to other advances. France’s willingness to commit more troops to Afghanistan and Italy’s to lift the caveats on deployment of its forces have eased, for the time being, some of the tensions within Nato. Successful US strikes against al-Qaeda leaders in Pakistan have greatly inhibited its offensive capabilities.
All this may be true, but in candid moments diplomats and military commanders will admit that these are tactical rather than strategic gains. The bigger picture is one of a government whose writ extends barely beyond Kabul, of competing warlords and high-level corruption, and of conflicting tribal loyalties.
The inadequacies of the west’s security and development effort have been well documented. The military still lacks vital equipment as well as boots on the ground. Can it really be true that Europe has no more helicopters? Reconstruction projects are divided between legions of national and multilateral aid agencies; much of the funding goes to foreign consultants.
The latest spat between Washington and Islamabad – over the killing of Pakistani soldiers during hot pursuit operations against the Taliban – was a reminder that a coherent strategy also demands the co-operation of Afghanistan’s neighbours.
In recent years America and its allies have had a policy towards Pakistan centred almost entirely around President Pervez Musharraf – a Musharraf policy, I have heard it called. They need a Pakistan policy. Six years ago Iran was an ally against the Taliban. Now it seeks to destabilise western forces. I recently heard a senior European diplomat ask, rhetorically: when did a government defeat an insurgency without control of its own borders?
Things can be fixed, albeit some more easily than others. If Nato, the United Nations and the European Union and the rest cannot better co-ordinate their efforts, they deserve to lose. A new president in the White House will have the opportunity to recast the US relationship with Pakistan and, hopefully, with Iran.
A less ideological US administration might also accept that it is impossible to kill every Taliban fighter. Some will have to be won over. Europe in such circumstances might be shamed into contributing more troops to the vital task of building security.
All this, though, is irrelevant unless there is agreement on what constitutes winning. It should not be so hard. Afghanistan is not about to become a shiny new democracy. Any political system must pay its respects to history, geography and culture. The ambition should be for an Afghan government strong enough to defend the country’s borders and to deny havens to terrorists, and sufficiently honest and pluralist to guarantee fundamental rights. That should be the aim of the international effort.
Respect for the law is in Russia’s interest
A burglar breaks into your house, ties you up and starts loading your possessions into a bag labelled “swag”. From behind your gag, you say: “May I suggest that behaving in this fashion is not in your long-term interests?” That could be true. But the remark still sounds a little weak.
Such bleating, however, tends to be the stock response of western businesses when they run into nastiness in Russia. The current dispute between BP and its Russian partners does not involve overt law-breaking. But BP executives may feel that they are being subjected to a sort of legalised mugging.
Tony Hayward, BP’s chief executive, is struggling to rescue the situation. Last week he issued the standard, futile appeal to Russian self-interest, arguing that the country’s economic future depends on “consistent application of the rule of law”.
BP’s Russian partners may, in fact, have some legitimate grievances about the management of their joint venture. But the sudden pressures being applied to BP have a distinctively Russian flavour. They include raids by the security police, mysterious tax investigations and the denial of visas.
Western businesses involved in disputes in Russia are getting wearily familiar with this sort of thing. Shell was forced to sell part of its stake in a $20bn (€13bn, £10bn) energy project in Sakhalin to state-owned Gazprom – after months of pressure and investigations by the Russian environmental regulatory agency. A senior Shell executive likened the experience to eating “a polonium sandwich”.
Russian businesses have also discovered the cost of falling out of favour with the powerful. Most famously, Yukos – a huge energy company – was destroyed after tax investigations. Its former boss, Mikhail Khodorkovsky, is currently in prison in Siberia.
Speaking at the St Petersburg Economic Forum in Russia last weekend, Rex Tillerson, chief executive of Exxon Mobil, told his audience bluntly that “there is no confidence in the rule of law in Russia today”.
Mr Tillerson and the other foreign executives tried to warn their Russian audience that they would pay a price for this. But the fact that the bosses of Shell, BP and Exxon had all chosen to appear on the same platform in Russia rather undermined the message. The oil and gas are in Russia – so the big western energy companies cannot afford to walk away from the country.
Under the circumstances, the Russian authorities might be tempted to ignore self-interested warnings by foreigners about the rule of law. With the oil price soaring, why change anything? In fact, there are at least three reasons Russia needs to take the rule of law more seriously.
The first is that the country cannot afford to be a one-club economy. The Russian government keeps insisting that it wants to diversify away from oil and gas. Dmitry Medvedev, the new Russian president, told the St Petersburg forum of his ambitions for Russia to become an important financial centre. But while the energy companies are compelled to operate in Russia, the same is not true for other businesses. Nobody has to site a manufacturing plant or a trading floor in Moscow. If foreign companies have no faith in the legal environment, they are less likely to open up in Russia.
The second reason for Russia to pay attention to the rule of law is that the country now has an image problem that goes well beyond the business world. In its dealings with smaller neighbours such as Georgia, Ukraine and the Baltic states, the Russian state has a growing reputation for using legal pretexts to justify thuggish intimidation. So when the Ukrainians find their gas cut off in mid-winter, the Russians insist that it is just a business dispute about unpaid bills and pricing. The rest of the world, however, assumes that this is politically motivated intimidation.
This kind of behaviour – whether in business or in foreign policy – means that foreigners increasingly talk of Russia as a gangster state. One big western businessman claims that dealing with the Kremlin is just like dealing with the Mafia – partly because job title and function bear little relationship to each other.
A Mafia-style reputation can be useful in getting your way, in the short term. In the long run, it means that even when Russia has a strong case it will be treated with suspicion.
But the biggest reason for the Russian government to get serious about the rule of law is the welfare of its own citizens. Wealthy foreign businessmen can ultimately look after themselves. It is ordinary Russians who suffer most from a lawless environment. They are the ones forced to pay bribes to get into university or to get medical care – and who know that, if things go wrong, they can be muscled out of their possessions by the well-connected.
Mr Medvedev can be frank about Russia’s shortcomings. In an interview with this paper last March, he called Russia “a country of legal nihilism”. He has promised to take on the “monumental” task of improving matters. The St Petersburg forum was full of similar-sounding talk about the importance of corporate governance, transparency and the rule of law. Russian companies increasingly look and sound like their western counterparts. But appearances can be deceptive. St Petersburg itself was constructed to be a model European city – but remains a quintessentially Russian place. And Russia, after all, is the country that invented the Potemkin village.
Mr Medvedev’s biggest task is to end this gap between appearance and reality. As he must know, it really is in Russia’s long-term interests.
No hay comentarios.:
Publicar un comentario