Vladimir Putin Speaks in Moscow.
Vladimir Putin Speaks in Moscow.

By: Harry C. Blaney III

With news that conflict in Ukraine has increased with Russian troops and their insurgent rebels still trying to make brutal advances, in Moscow Putin remains in a state of denial about the Russian economy and gloates over his assumed “victories”. With this, one must wonder what world Putin is living in and will there ever be a revelation of reality and desire to do good for the Russian people?

At home Russia may be in a mini recession of 2% and seems on a trajectory for more drops in its GDP in the coming months.  The Ruble has increased some and oil which also has increased slightly seems to be hitting a plateau but still far from its high, but the long range fundamental economic condition of Russia seems very bleak especially for the majority of average Russian citizens.

On the international stage, Russia has announced the “sale” of ballistic defense systems to Iran.

The offer of the Russian S-300 missile defense system to Iran remains problematic. While it may not be an immediate delivery, as a Russian Foreign Ministry official said on April 23rd, it “is not a matter of the nearest future,” according to Haaretz.  The TASS official news agency reported Deputy Foreign Minister Sergei Ryabkov saying “It is more important that a political and legal decision, which opens up such a possibility, is taken.”  Putin also made overtures to a dangerous North Korea.

In the cyber area, Russian hackers also broke into unclassified networks at the Department of Defense earlier this year, Pentagon Secretary Ashton Carter said on April 23rd. No real surprises there, however an indicator of hostile intent.

NATO’s Jens Stoltenberg, the organization’s secretary general, said on Thursday that it is seeing a “substantial Russian buildup,” along the border with and inside Ukraine. This is violating the Minsk cease-fire agreement and again shows that Russia still is using misinformation and lies as a tool of its diplomacy and propaganda strategy. In the long-run this will undermine Russia’s believability and, when at another time, it will need creditability it will have been lost.  There will be a point, as in Soviet times, when respect at home and abroad is imperiled. Already the outflow of funds indicates that this has already taken place.

The West needs badly a new and serious reassessment of Russian actions and strategy, but it can’t be a kneed-jerk reaction, or an overreaction. It needs to be rather a rational consideration of the dangers from an aggressive Russia and a long-term strategy of turning the relationship around to more productive and safer conditions as we did in the old “cold war.” Then firmness, restraint and engagement worked. One of the best ways to react would be to start a set of strategies within NATO, EU, G-7 and the OECD countries of a growth and productivity strategy rather than the conservative and failed “austerity” programs that have slowed growth, caused large unemployment, and created instability in key countries.

We need to stop the fights within our open society communities and start to jointly move rapidly to increased employment of the “middle and poorer” majority, improving our own infrastructure both physically and intellectually, become fairer, and start to cooperate on the many global challenges that threaten to set asunder our societies and our globe. President Obama has tried to do this, Europe remains divided over Greece, growth, immigration and beset by racist right-wing parties that threaten democracy and progress. These need to be addressed and addressed with vigor and in common. Then, Russia as a regressive nation with a backward looking regime might see a real future in cooperation with a growing and robust West and act in its own interest.


We welcome your comments!    


Will They Do It This Time?: EU Summit, the European Crisis and Little Courage or Hope? And The Manifesto of Two World Renown Economists!

This is written just before the EU Summit on Friday the 29th. The betting remains on “too little too late” as the outcome. Today, Angela Merkel and French President Francois Hollande will meet to see if they can find common ground.  But before the meetings, Ms. Merkel has stated her objections to a “grand deal” to place on the table the institutions and resources to put the crisis to rest.

But there are other dynamics at work that may in time force a systemic and credible European-wide response.  One dynamic is the nasty market and the forces betting on both bringing down the Euro and gaining profit from outrageous interest rates and derivative betting. The other force, and the most important, is the utter disaster that their austerity policies have brought upon their people.  Those who have been hurt are rising up and have already defeated a conservative French President who played with the rich and used racist imagery in his election instead of addressing the needs of the majority of his citizens not comprising the 1% of his nation.

But also at work is the growing realization throughout European society (and we hope American as well), that austerity was the wrong direction.  As almost every good economist has cried from the rooftops, stimulus and growth and directly addressing unemployment have to be at the top priority of society.  Today, Paul Krugman and Richard Layard (from Princeton and the London School of Economics) have an op-ed in the Financial Times with the headline: “A Manifesto for Economic Sense.”  They have asked all who see their plain good sense economic argument to rally to the manifesto they have proposed. I urge all to read this article and ponder its clear call to stop the massive suffering being imposed on the people.

The vitality, prosperity, and security of Europe, the United States and the globe depend on leaders who, at last, will recognize the cliff of depression we are approaching and will radically change their direction.

Crisis at Home, Crisis Abroad: Can we solve both or must we choose one?

What will our America become? That is the question of our age and one that will likely present us with real choices in the debates leading up to the election next November.

There is already debate in Washington and on Main Street about whether or not we should pull back from our overseas commitments and turn our back from the ills of our planet to focus on our domestic problems instead, while ignoring the dragons and humanitarian disasters at our borders.

The same voices that are arguing that we should not, and indeed need not, care for our elderly, our young, our ill, or our unemployed at home, are also arguing that we should not care for the many challenges we face abroad.

Many Americans now buy into this doctrine of indifference and greed; it has been pounded on for so long by the conservative media and politicians–so now many believe it. It has become part of the doctrine of the Tea Party types and thus of the GOP.

They argue that the massive famine in the Horn of Africa is not our business — that it is just the way the world is. They argue that we should not care about the proliferation of nuclear weapons— that too is the way the world is. They care not a bit about and say they do not believe in climate change. The depletion of the seas’ fish and other species and its pollution bothers them not a bit, so long as they can still buy their swordfish steaks.

Nor does it bother them that poverty is widespread around the world, that children lack any kind of health care.  Why should they care about children dying in Somalia since they want to deprive fellow Americans and children of affordable universal health care at home?

One argument that is being made is pure mendacity: we can’t afford to help our own and thus we can’t afford to help those in need abroad nor can we afford to address the national security threats to our nation emanating from around the world.

Some argue we only need a strong military, yet most of the world’s true dangers have no simple military solution. The head-in-the-sand approach to our needs at home and abroad is frankly both nonsense and pure deceit.

The reality is that we are an extraordinarily rich nation controlling some 40% of the world’s effective resources with the capacity to grow at rates of 4-5%, which can bring unemployment down to reasonable levels, fund our debt and growth in large part through higher taxes on those who have 6 homes around the world, private planes, and billions in income that the average taxpayer has help them build by cheap US government subsidies. All this can be accomplished without taking away our nation’s safety net, including Medicare, Medicaid, and social security and above all the provision of good education for our children.

The only thing that stops us is the overarching goal of the conservative Republicans to stop Obama and to control our nation’s government to benefit the very rich. What we need is a major stimulus package along the lines of the FDR recovery plan. We can’t grow our nation by a policy of depression as dictated by Rep. Cantor and crazies like Rand Paul.  Such a grand policy would also give us a sense of purpose that would move us to engage again in global multilateral solutions to our international challenges.

America will be defined in history as either the nation that faced its challenges and overcame them or it will be seen like Rome, as a great civilization that by inner corruption and indifference to the forces forming beyond its borders, succumbed to decline and destruction…bringing most of Western civilization to the “Dark Ages.”

We welcome your comments.

By Harry C. Blaney III.


Message from London: National Security and the Global Economy

One of the meetings here in London was at the Royal Institute of International Affairs (Chatham House) on November 17th which focused at the impact of the economic crisis on foreign policies and power.  The speaker was Gideon Rachman of the Financial Times (on-the-record).  He made a key point on the relation of the economic capability and prosperity to strategic and foreign policy. Rachman indicated that the U.S. engaged in a deflationary policy because of the Republican desire to cut public support for the economy. This trend is mimicked by similar conservative governments in Europe through their culling of government programs, especially for the poor. Simultaneously, China, a command economy, grew at 9% last year with developed market industrial economies trailing China at 1-2%. There is no doubt that ourselves and China are following inverse trajectories, we have willfully pursued a diminished influence and smaller role in world affairs while China is on the rise and capitalizing on our financial mistakes. Growth, not deflation, is the best strategy to deal with deficits and increase our power relative to China.

In this case it appears that the policies of the Western European governments will shortly create a semi-depression if they continue with their brutal cuts in expenditures and mass firings. In the U.S. Obama tried to float the economy by injecting money into our economy to help modernize our infrastructure. But now it looks like we may go down economically, just as Europe likely will, by the inability of Republicans to support economic policies that encourage growth rather than encourage a longer and more profound recession.

The point was the economic growth is a key factor in global power and we are paradoxically opting for less influence as the world becomes more dangerous. We have become captives of ideology and the consequences for this myopia will be a sustained recession and atrophy of our hard and soft power. A great country needs a great educational system, top science and technology, modernization of its productive resources towards common needs of the entire population, and ability to care for its population rather than the forces of a cruel market place where the rich get richer but the nation as a whole gets poorer.

NYT Editorial: British Nukes vs. British Troops

(This article was originally published by the NYT on October 2, 2010)

The pledge by Britain’s coalition government to drastically slash spending is bad economics and bad public policy. Budget tightening is needed, but not this much, this fast or this way. The cuts to be announced this month will put recovery at risk, unfairly squeeze poorer Britons, and make it hard for government departments to work. That includes defense — targeted for a 10 to 20 percent reduction over the next five years.

How those cuts are apportioned will make a huge difference in what kind of world role the country will be able to play in the years ahead.

Put simply, the most important choice is between nuclear weapons and troops — specifically, whether to build four new nuclear missile-launching submarines or to preserve an army large enough to contribute to allied missions overseas. Even with painful cuts in other areas, there will not be money enough for both.

Britain’s annual military budget is $58 billion. Replacing all four submarines — as the Conservatives, the lead partner in the coalition government, want — would cost $30 billion over the next decade, or roughly $3 billion a year. Eliminating 20,000 army troops will save less than $2 billion a year. Scaling back the submarine replacement plan — or deferring it, as the junior partner, the Liberal Democrats, urge — could save enough to keep the army at its current strength of 105,000.

There is no reason for Britain to press ahead with the submarines now. The current fleet, built in the 1990s, will remain operational for another decade — longer if Britain relaxes its cold war policy of keeping at least one sub continuously at sea. (United States subs stay in service for 40 years.)

It is also hard to see why — in today’s world — Britain needs four new subs, each of which can carry up to 160 nuclear warheads. Only a fraction of that capacity is currently used, roughly 48 warheads per submarine, for a total of 192. There are, of course, still nuclear dangers out there, most notably North Korea and Iran. But the United States nuclear umbrella plus a smaller Trident force should provide Britain with full deterrence.

Britain has vowed that its army strength will not be reduced as long as it has ground forces in Afghanistan. (Prime Minister David Cameron says he expects those forces to be withdrawn by 2015.) That is welcome. But unless other savings are found, that will require even steeper force cuts later in the decade and more drastic reductions in navy and air force equipment purchases.

Britain has been America’s most reliable military ally and a backbone of NATO. That is good for Britons — for their security and for their continuing influence. Britain will not be able to deliver if this government decides to sacrifice troop numbers for nuclear symbolism.

A version of this editorial appeared in print on October 3, 2010, on page WK7 of the New York edition.