Tuesday, March 25, 2014

Pouring Olympic Billions into the Black Sea Like so Much Snow Melt, and Other Irrationalities.

Russia just spent $51 billion on the Sochi Olympics.  Considering the U.S. economy is six and one half times larger than the Russian economy, this is like the U.S. having spent $300 billion on the Salt Lake City Olympics, the equivalent of 3,750 $80 million hospitals, or 40 new San Francisco Bay bridges ($7.5 billion each), or employing 3.75 million teachers for a year!
  • Salt Lake City Olympics $2 billion
  • Vancouver Olympics  $6.4 billion
  • Sochi Olympics $51 billion
Annexing Crimea is not designed to make the most of this investment.  For starters, Sochi was to be the destination for a G-8 Summit this summer. This now won't happen; Russia is no longer in the G8. No, annexing Crimea will not help develop Sochi as an international resort spot.

What Kimberly Marten Fears

Kimberly Marten is a political scientist with Russian expertise at Barnard College.  She spoke with Terry Gross.  Here's her fear.  Putin seems to be throwing his lot in with the ethnic nationalists. This is not a reasonable, or rational, or trivial thing to be doing. It means Russia's actions may not be predicated on rational self-interest in the near future.  Marten fears it is possible Russia will invade Eastern Ukraine and march to Moldova to "protect" the Russian population there, and to occupy Odessa while they are there. Marten does not think this would necessarily provoke a NATO response, but she fears it might result in a Ukrainian insurgency, supported by Poland.  A Ukrainian insurgency supported by Poland, a NATO member, might eventually drag in NATO.


How much deterrence is required to dissuade an irrational, ethnic nationalist power from acting against its own self-interest? Let's not ask John McCain or Mitt Romney.

Russia is Not an Economic Superpower

Today, the economic Superpowers are the EU (~$17 trillion), the U.S. (~$16 trillion/year), China (~$8 trillion/year), and Japan (~$6 trillion).  Russia is not in that club.  When you think Russia, think California, or Canada with four times the population. Russia cannot easily afford to pour $51 billion into the Black Sea like so much snow melt. 
  • Russia GDP  2.55 trillion/142 million pop.
  • California      1.8 trillion/38 million pop
  • Canada         1.5 trillion/35 million pop
  • USA             16.8 trillion/313 million pop
  • China             8 trillion/1.35 billion pop
Russia’s economy is barely growing, inflation is rising, and capital is pouring out of the country. It is the only major country to have lost population the last few years. Annexing other countries, they just acquired ~2.3 million with Crimea, is no way to fight that trend. Inflation is expected to reach 6.9-7.0 per cent in March, up from 6.2 per cent in February. 

Economists predict that Crimea will be a drag on Russia's economy for the foreseeable future, to the tune of  $3 billion per year, which is not an insignificant number in light of the fact that Russia's annual budget is approximately $500 billion, about 15 percent of the U.S. Budget of $3.4 trillion.
  • Russian Budget  $500 billion/2013
  • US Budget        $3.4 trillion/2013

Russia is Not a Military Superpower 

The U.S. annual military budget is $680 billion, the EU military budget is about $274 billion, China's military budget is $166 billion (and growing), ....Russia's military expenditures are ~$91 billion. This is not paltry but no match for NATO's military expenditures which are more than 40 percent of Russia's budget!  

How Much Deterrence?

NATO is not treaty bound to defend Ukraine. Neither the U.S. nor the EU have substantial economic interests that would justify going to war over Ukraine, notwithstanding the fact that Russia is not a match to NATO militarily.  However, any signs that Russia might move into Eastern Ukraine, not to mention moving towards Moldova and Odessa, would put tremendous pressure on NATO and U.S. decision makers to intervene. Such pressure might cause them to intervene in ways that are not, strictly speaking, in the EU or U.S. best interest.

Michael Shear and Peter Baker in the NYT today remind us of some of that pressure:
Mitt Romney, Mr. Obama’s 2012 presidential challenger, made clear his own assessment during the campaign, saying repeatedly that Russia was America’s “No. 1 geopolitical foe” and arguing that Mr. Putin’s aggressive stance demanded a similar response from the American president.
.... In recent weeks, as Mr. Putin’s forces rolled through Crimea with little regard to warnings by Mr. Obama, Republicans have said Mr. Romney has been vindicated, and Mr. Obama proved wrong. In February, Senator John McCain of Arizona, Mr. Obama’s 2008 rival, called him “the most naïve president in history.” 
After Russian troops began taking control of Crimea, Sarah Palin, the Republican Party’s 2008 vice-presidential nominee, took credit for predicting it. “Yes, I could see this one from Alaska,” she wrote on her Facebook page. “I’m usually not one to Told-Ya-So, but I did, despite my accurate prediction being derided as ‘an extremely far-fetched scenario’ by the ‘high-brow’ Foreign Policy magazine.”
And Sunday, on CBS’s “Face the Nation,” Mr. Romney echoed Mr. McCain’s assertion that the president had been naïve about Russia. “His faulty judgment about Russia’s intentions and objectives has led to a number of foreign policy challenges that we face,” Mr. Romney said. “This is not fantasy land. They are not our enemy but an adversary on the world stage.”
So far, Obama is holding his cool and it's a good thing.
“My response then continues to be what I believe today,” he said, referring to his answer to Mr. Romney in 2012. “Which is: Russia’s actions are a problem. They don’t pose the No. 1 national security threat to the United States. I continue to be much more concerned when it comes to our security with the prospect of a nuclear weapon going off in Manhattan.” 
.... In the weeks ahead, Mr. Obama may face more criticism as the confrontation between Mr. Putin and the Western nations continues with no end in sight. But Mr. Obama’s aides have made clear that they have no intention of letting Mr. Romney or Mr. McCain succeed in painting the president as doe-eyed in the face of a harsh reality.
Benjamin J. Rhodes, a deputy national security adviser to the president, said, “Well, look, we’ve been very clear-eyed about our Russia policy from when we came into office, which is that we will cooperate when we have common interests and we can form common positions, but we’ll be very clear when we have differences.” 
Let's hope that scenarios of escalating irrationality remain a poltergeist of wars past, and that Russia will regain its footing to act in its rational self-interest. Let's hope the Russian oligarchs who want to make money win out over the Nationalist Russ spoiling for a self-destructive fight with ethnic minorities and the West. Let's hope the U.S. and NATO continue to act in their rational self-interest and reject those who would counsel to take Putin at his irrational worst and raise the ante with F-16s in Poland, an aircraft carrier battle group in the Black Sea, and red lines that threaten war.

Give those boys a Trombone



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