The (Ex) Washington Realist

"But if Russia's recovery is real and sustained, its influence in the area resurges. And faced with economic realities, will political leaders in the neighboring states be prepared to But "If Russia's recovery is real and sustained, its influence in the area resurges. And faced with economic realities, reach a new accommodation with the Kremlin? Yuliya Tymoshenko, prime minister of Ukraine and a symbol of the Orange Revolution, once called for the West to help "contain Russia". Now, she stresses how she and her Russian counterpart, Vladimir Putin, "have managed to carry out constructive work and build mutual understanding. Will this be the harbinger of the future?"

I expect so. After all, the whole "Ukrainian independence" thing clearly isn't working out.

The end of "Soviet genocide" left 52 million Ukrainians. Now there are 46 million, and deaths exceed births by about 250,000/year. I'm just wondering what's the plopulation loss at which people will rethink Ukrainian independence. We're closing in on 12%. Do I hear 15%? 20%? 25%?

Or are we to defend Ukrainian independence to the last Ukrainian, just to keep the Evuuul Moskowvites out?
 

Noone should be surprised by the fact that Timoshenko is trying to cozy up to Russia. First, her article on "containment" was written a few years ago, when there was an ideology-driven administration in Washington that could be receptive to such overtures. Second, she has proven herself to be a very opportunistic politician. The "orange" idea is clearly dying, with the EU keeping Ukraine at bay it would be almost suicidal for a politician to pick fights with Russia. Actually, it is opportune to "love" Russia. And third, it is the election season in Ukraine. All presidential candidates of the past have made advances toward Russia to win votes in the East. Be it the linguistic issue, Black Sea fleet or free-trade zone.

Rkka,
Your reasoning seems to follow the line of Joe Biden's infamous interview with WSJ about Russia. The fact that Ukraine's economy is shrinking and it is de-populating does not make it less of a country. All economies in transition have been hit hard. Also, let's imagine for a second that Ukraine and Russia are still one country. So we should be comparing Ukraine's demographic trends with, say, Southwestern oblasts of Russia. What makes you so sure that things would be different from what they are now?
 

Russia, even during the days of ~$30 dollar oil, had a current account surplus. Russia can pay her bills.

Ukraine cannot, and never has been able to. Up until 2004, they had the benefit of energy heavily subsidized by Russia. Since then, they've had troubles covering the bills for gas at a price subsidized to a lesser extent by Turkmenistan. Ukraine is not an independent country, of which there are admittedly relatively few in the world. Ukraine is a dependency, of which there are relatively many in the world.

Many of Ukraine's troubles stem from the fact that their present government irritated their former Russian "sugar daddy" before they acquired a reliable new one.

And as for Joe Biden's reasoning, Russia had more births than deaths in August 2009. For 2009 so far, births are up and deaths are down over 2008, which itself was a better year for Russia than any since the early 1990s.

Pretty dumb move, if you ask me.
 

rkka:

The distinction you made between a dependency and an independent country is a valuable one.

North Korea is an idependent country - but Souith Korea is a dependency, no?
 

No. SK is entirely capable of paying her bills. NK OTOH, requires significant food/fuel aid.

Thank you for appreciating my distinction though.
 

The point that Nikolas makes, though, is that Russia's independence is heavily tied to the price of oil and gas. Russia is not dependent like Ukraine on foreign suppliers but it is dependent on foreign demand. Not the same but still a serious problem when prices are volatile.

On his larger point, I think a great deal of truth to the argument that economic strength is vital to politico-military assertiveness, but I am not sure that the reverse is true, at least in the short run. Countries do not give up key politico-military interests just because they run deficits for a while. You need really serious and sustained economic decline to rein in a nation's foreign policy.
 

"The point that Nikolas makes, though, is that Russia's independence is heavily tied to the price of oil and gas. Russia is not dependent like Ukraine on foreign suppliers but it is dependent on foreign demand. Not the same but still a serious problem when prices are volatile."

Again, Russia's current account was in the black even at the bottom of the oil price fluctuations.

"On his larger point, I think a great deal of truth to the argument that economic strength is vital to politico-military assertiveness, but I am not sure that the reverse is true, at least in the short run. Countries do not give up key politico-military interests just because they run deficits for a while. You need really serious and sustained economic decline to rein in a nation's foreign policy."

Ukraine has done far worse than merely run deficits for a while. Ukraine (and the Baltics) combine economic and political insanity with far worse demographic problems than Russia's much-commented on difficulties. Each of these countries has a population decline rate that is 4-6 times as great as Russia's when expressed in percentage terms. The time will come when the people will demand something more productive than blind Russophobia of their governments, however much that quality makes these governmens popular in D.C. and London.

It may be happening now. You do know that Vladimir Putin is the most popular politician in Ukraine?
 

Tymoshenko's recent "cozying up to Russia" is within limits.

She recently indicated support for the Russian naval presence in Crimea to end after the current lease runs out. On that issue, her position contrasts from some other Ukrainian politicians, who aren't against the possibility of a new lease agreement.

She continues to not show support for an official two language (Russian and Ukrainian) policy in Ukraine.

Politically, Tymoshenko falls somewhere between Yanukovych and Yushchenko.
 

Kraine as independent state is like New Jersey being independent. Will N.J. fight against the Union?
 

Michael Averko,

Of course Timoshenko falls 'somewhere between Yanukovych and Yushchenko'. She is -- has always been -- out for the main chance. At the moment, her opportunism is best served by trying "cozying up to Russia" sufficiently to enable her to take votes from Yanukovych -- while not not going so far that she utterly alienates the former supporters of Yushchenko.

But one should be thankful for small mercies, should one not? At least she is not Yushchenko -- or Saakashvili.
 

Rkka,
Yes, the Baltic countries (especially Latvia) and Ukraine have been hit hard by the global recession. And the whole region experiences negative demographic trends. What does this have to do with the "blind russophobia" of their rulers? The Baltics were doing quite well before the crisis and Estonia seems to be weathering it with reasonable success. Ukraine was not an independent country for some 300 years, do you really expect it to "make it" in 20 years?
As for Russia being able to pay its bills at $30 per barrel of oil, it all depends on the fiscal policy. If one can afford to starve out the populace, then the balance sheet can look good even at $1 per barrel.

Mike,
Wrote this before seeing David Habakkuk's post, I essentially second his opinion:
Perhaps anyone aspiring for the presidency of the whole Ukraine (not a fraction of it) would opt for limited rapproachment with Russia as Timoshenko has done. While "Yuschenkovites" may be unpopular, they are still a loud and voluble constituency in Ukraine and especially in the diaspora. They can paint Timoshenko as a Kremlin proxy and that charge will stick. Hence her cautious "cozying up" to Russia.

Anonymous 8:52,
Here is a quote to support your NJ theory: "...our Garden State is like a huge barrel, with both ends open, one of which is plucked by New York and the other by Pennsylvania".
 

"The Baltics were doing quite well before the crisis"

Um, running a yearly current account deficit of about 15-25% of GNP in order to fuel a property and retail boom =/= "doing quite well".

"Ukraine was not an independent country for some 300 years, do you really expect it to "make it" in 20 years?"

I don't. Like I said, alienating the Russian "sugar daddy" before acquiring a reliable new one was a really dumb move, driven mostly by Yush's vocal supporters among the diaspora.


"As for Russia being able to pay its bills at $30 per barrel of oil, it all depends on the fiscal policy."


All that would happen is that a bunch of Oligarchs would lose the foreign investments they leveraged up to acquire. Would serve 'em right, if you ask me.


"If one can afford to starve out the populace, then the balance sheet can look good even at $1 per barrel."

Um, you do know that Russia is a substantial grain exporter, don't you? You do know that Russia's livestock herds are growing again after being massively slaughtered/starved back in the "reform" time, don't you?

I guess not.

All $30 oil would do to the Russian diet would be to deprive Tyson's Chicken of its biggest chicken parts export market as Russia embarked on a massive export substitution effort.
 

At this discussion, there doesn't appear to be much disagreement over Tymoshenko.

I just wanted to respond to any suggestion that she has become some kind of a Russian plant.

Such manner has been exhibited elsewhere.

Of the known three leading contenders for the Ukrainian presidency, Yanukovych remains in the lead.

For lack of better categories, the more Russia friendly grouping in Ukraine has the upper hand over the not so Russia friendly category.

The latter has greater influence than their actual numbers.
 

rkka,

Although Russia exports grain and other products, its government revenue depends heavily on oil and natural gas exports. I don't think anyone in Russia sees the country's long-term future in terms of this dependency. With a world class educational system there should be a more diversified economy and tax base.

In this connection I read with concern the recent report (true?) of an extension of Russian export restrictions on intellectual property to include humanities scholarship (!). I remember the U.S. spending to prevent a "humanities gap" with Russia during the Cold War. Are the Russians now thinking like this?

Regarding Ukrainian interest in drawing closer to Russia, I would be interested to know how the poll numbers break down by ethnic group and how many of each group are voting with their feet. The Russian government seems sensibly to be more interested in attracting Russian immigrants than in annexing doubtful neighbors. Are there any poll numbers showing that ordinary Russians want the non-Russian republics to rejoin?
 

The number of stated ethnic Russians in Ukraine is in the just under 20% range.

These three links concern Ukrainian domestic views, as well as Russo-Ukrainian relations:

http://www.gallup.com/poll/121976/Approval-Ratings-Ukraine-Russia-Highlight-Differences.aspx

http://www.rb.com.ua/eng/politics/research/2009/757.html

http://grahamstack.wordpress.com/2009/06/05/would-the-real-ukraine-please-stand-up/

According to the linked Gallup poll, no other country's population has a lower opinion of their government than Ukraine. A recent Ukrainian poll conducted by the Research & Branding Group (noted in the last two links), ranks Putin and Medvedev as the most popular of worldwide political figures in Ukraine - with Ukrainians having an overall higher opinion of Russia when compared to how Russians view Ukraine. These last two points conform with the finding of the referenced Gallup poll.

A view in the last link suggests that Putin would would win the Ukrainian presidency, if he were eligible and ran.

The last two links address how Ukrainian citizens feel their republic should be vis-a-vis Russia.

The following three links are listed in the present polling order of the two leading candidates for the Ukrainian presidency and the current Ukrainian president.

http://www.partyofregions.org.ua/eng/

http://www.tymoshenko.com.ua/eng/

http://www.president.gov.ua/en/

Taras Chornovil on the extremism he has faced in Ukraine:

http://zik.com.ua/en/news/2009/09/02/194528

Excerpt:

"What is being said about Yushchenko now was plain truth to me back in 2003 when I published my article titled 'It will be a horrendous presidency.' I had no serious plans to support Yanukovych. In August-September, I had several talks with him, telling him that I could back him up on some issues but would not be seriously involved in campaigning. However, I had been pushed to do this by Lviv politicians and their side-kicks who tried to put my house on fire, wrote obscenities on my fence, took shots at my windows, harassed my relatives and aides. Did I have any choice?"
 

Excerpted from Stack's article:

"R&B’s survey also finds that 35% of Ukrainians would like to see Ukraine united with Russia, Belarus and Kazakhstan, compared to 22% who wished to join the EU, and 10% who wanted a restored Soviet Union.

These results were confirmed by a poll published June 17 by the Kyiv International Institute of Sociology (KIIS). According to KIIS president Valery Khmelko, 23% of Ukrainians desire full unification with Russia – compared to only 12% of Russians wishing the same.

Doubtlessly due to the 2008-2009 political and economic crisis wracking Ukraine, the number of Ukrainians desiring ‘reunification’ has risen over the last year from 20% to 23%, and the number of Russians in favour has fallen from 19% to 12%.

'These findings also indicate that the prevailing willingness of Russians to append Ukraine to their country forming one state’ is an erroneous idea as the overwhelming majority of Russians do not want such a union,' notes KIIS president Khmelko.

While only a quarter of Ukrainian respondents want full unification with Russia, 68% want an EU-style border-free regime with Russia, with Russia and Ukraine being ‘independent but friendly states’ without a visa regime or custom controls.

Only 7.8% of respondents were in favour of Ukraine’s relations with Russia becoming the same as relations with other countries, i.e. with border controls, customs and visas.

This in fact contrasts even with sentiment in Russia, where respondents are far more cautious about union with Ukraine. Perhaps due to the Ukrainian leadership’s antagonistic policies towards Russia, amplified by the Russian state-controlled media, only 50% of Russian respondents want to see a border-free regime between the countries. 29.1% want relations with Ukraine to be the same as for other countries.

'Ukrainians’ attitude to Russia is much better than Russians’ attitude to Ukraine; over 90% of people in Ukraine have a positive attitude to Russia – and it has become even better over the past year,' points out Khmelko.

According to Lyashenko, the Ukrainian affection for Putin and Medvedev is most concentrated in East Ukraine, where 75% are positive. However, even in the West Ukraine districts where Russian is hardly spoken, around 25% of respondents described their relationship to the Russian leaders as positive.

Surprisingly, in contrast to geography, age group does not influence the attitude towards Russia and its leaders, according to the polls.

'Ukrainians preference for Russian state-controlled television, and the desire for strong leadership in crisis times, also play a role,' says Lyashenko.

'But the main cause that Medvedev and Putin score so high,' he adds, 'is the endless conflicts and score-settling in Ukrainian politics that make them look good'.”
 

Rkka,
I would not group all three Baltic countries together. Yes, Latvia was running an account deficit while operating an under-deveopled economy heavily reliant on tourism, agriculture and natural resources. And it is now paying a dear price for such policy, some prominent economist even calling it "new Argentina". Estonia and Lithuania have sizeable mid-tech and high-tech sectors, especially compared to other post-Soviet countries. And the two experienced "organic" (rather than speculative) growth in 2000s and are in a better position to weather the crisis now.

By "starving out" the populace I did not mean literal starvation, there is plenty of land to grow potatoes anyway. But I meant measly (or unpaid) salaries and pensions, benefits that are impossible to claim, etc., while the country is running an account surplus. And that is what can happen at a price of oil of $1 per barrel.

As for Russia as a "sugar daddy" for Ukraine, I believe the acrimony of the Russian and Ukrainian ruling elites is a two-way street. Russia did its share in bringing the Russo-Ukrainian relations to what they are today.

David Billington,
Yes, one could say that the Soviet Union had a world-class education system, but now it is a shadow of its former self. Granted, education is widely and readily available, but its quality varies tremendously. As far as the number of degrees awarded is concerned, the population of Russia can probably be considered very educated. And you are right to point out that such people cannot be content with Russia being a hydrocarbon supplier. However, very little is done "from above" stimulate change. And the growth of indigenous knowledge-based economy is quite difficult in a business climate that is less than nice (to put it mildly) to small and medium size enterprise.
 

Mr. Billington:

"Although Russia exports grain and other products, its government revenue depends heavily on oil and natural gas exports."

Agreed. However, over a medium term, this problem is managable by accumulating financial reserves. This time around, oil is back around $70/barrel with only about 1/3 of Russia's foreign currency reserves spent. And Russia's back to buying Euros/dollars to slow Ruble appreciation again.

The real problem for the economy this year wasn't really the oil price, but the sudden evaporation of credit last fall. That's what really hammered over-leveraged oligarchs. That's manageable by being prudent in the economic empire-building.


"I don't think anyone in Russia sees the country's long-term future in terms of this dependency. With a world class educational system there should be a more diversified economy and tax base."

Sure. However, considering where Russia was when Putin took over in 1999, there is no doubt that using the energy sector to drive Russian growth was the right thing for him to do.


Leo:
"I would not group all three Baltic countries together. Yes, Latvia was running an account deficit while operating an under-deveopled economy heavily reliant on tourism, agriculture and natural resources. And it is now paying a dear price for such policy, some prominent economist even calling it "new Argentina". Estonia and Lithuania have sizeable mid-tech and high-tech sectors, especially compared to other post-Soviet countries. And the two experienced "organic" (rather than speculative) growth in 2000s and are in a better position to weather the crisis now."

All three had deficits well into the double digits in 2007, although I agree that Latvia was the most flagrant abuser of Scandinavian loans.

"By "starving out" the populace I did not mean literal starvation, there is plenty of land to grow potatoes anyway. But I meant measly (or unpaid) salaries and pensions, benefits that are impossible to claim, etc., while the country is running an account surplus. And that is what can happen at a price of oil of $1 per barrel."

That is manageable by taxing away energy windfalls and accumulating reserves. To do this, of course, the Russian government had to break the independent political power of the Oligarchs. If the Russian government hadn't done so, 2008 would have been a repetition of 1998.

"As for Russia as a "sugar daddy" for Ukraine, I believe the acrimony of the Russian and Ukrainian ruling elites is a two-way street. Russia did its share in bringing the Russo-Ukrainian relations to what they are today."

And Ukraine is *so* much better off than she was in 2004. The fact that the Ukrainian elites are so arrogant, combative, hypersensitive, and unconcerned for the welfare of Ukrainians as demonstrated by the experience of 2004 to the present, indicates that that they are pretty much impossible to get along with.

These are not advantageous qualities to have towards someone who is supplying you heavily subsidized energy.