Russia, Ukraine and parsing politicians' positions on foreign affairs

Wolfgang Münchau's Eurointelligence (How to think about Russia 03/10/2017) links to a nearly three-year-old article by Karl-Heinz Kamp at the Carnegie Europe center, Bad Idea, Vladimir! 04/04/2014, that looks at the standoff between Russia and NATO over Ukraine and Russia's annexation of the Crimea that year. He argues that from the Russian viewpoint, re-annexing the Crimea (which was part of Russia from 1783 until 1954), may have taken on more of a burden than a blessing:

In the context of Russian President Vladimir Putin’s goal to reestablish at least parts of Russia’s bygone empire, the annexation of Crimea looks like a smart move. Yet so far, the cost-benefit analysis of this illegal step seems to leave Russia in the red.

Before the Anschluss, Moscow controlled the whole of Ukraine through the compliant regime of former president Viktor Yanukovych. In the future, Russia will be able to sway only parts of a country that is on a slippery slope toward disintegration. Unwittingly, Putin added another source of instability to his already shaky Russian empire.

The downsides, of course, have a lot to do with the reaction of NATO countries. Kamp describes the lines of confrontation:

However, what looks like a negative cost-benefit analysis for Russia raises concerns in many NATO member states. Since Putin appears too smart to strike a bad deal, it is fair to assume that Moscow assesses costs and benefits differently from the West. If that is the case, Russia might be ready to take even bigger risks than just occupying Crimea to score points at home. The long-standing axiom that Russia would never dare commit an act of aggression against a NATO member because the repercussions would be too dangerous for Moscow could prove hollow.

Baltic governments anxiously ponder the scenario of Russia stirring up unrest among ethnic Russians in their countries to have a pretense to “protect” its citizens abroad. For instance, how would NATO react if Russian forces occupied a 30-mile-wide strip of Estonian border territory as a “safe haven” for ethnic Russians and provided them with Russian passports? Would it send in the NATO Response Force and start a major war over 30 miles of land? Doing nothing would mean the end of NATO as a functioning alliance. [my emphasis]

This is a real dilemma, even if our neocons and "humanitarian hawks" see it as an opportunity, adding the Baltic states to the NATO alliance in 2004 was a reckless move. Or at minimum, not well considered.

Bulgaria, Romania, Slovakia, and Slovenia were also added to the alliance in 2004. Albania and Croatia followed in 2009. But unlike former Warsaw Pact members Albania, Bulgaria and Romania, the Baltic nations of Estonia, Latvia and Lithuania were directly incorporated into the old Soviet Union. It's not hard to understand that, whatever the moral or legal claims may be, the closer NATO's borders get to the border of Russia, the more concerned any Russian policymaker would be about it.

The post-World War II Western decisions about policy toward Russia are still debated today in the historical sub-field of Cold War Studies. The post-1989 Western policies toward Russia will no doubt be debated for a long time, as well. But in 2017, we are where we are.

Kamp links to a Reuters report from 2014 that discusses the position of three former German Chancellors on Russia and the Ukraine/Crimea crisis (Erik Kirschbaum, Putin's apologist? Germany's Schroeder says they're just friends 03/27/2014):

[Gerhard] Schroeder is hardly alone with his criticism of the West. Two other former chancellors, Helmut Schmidt and Helmut Kohl, have also questioned the treatment of Putin and Russia.

Schmidt, a Social Democrat like Schroeder, has called sanctions against Russia "dumb", saying in the latest edition of Die Zeit: "It would be better, in the interest of peace, to sit down and talk instead of threatening sanctions."

Kohl, a Christian Democrat (CDU) like Merkel, told Bild newspaper in mid-March: "The upheaval in Ukraine was not handled intelligently. There's also been a lack of sensitivity with our Russian neighbours, especially with President Putin."

Schröder does have an obvious financial interest in defending Russian foreign policy positions. But that doesn't necessarily mean his advice is bad on the topic. Especially since two other former Chancellors were expressing similar concerns in 2014. It's worth noting that Schröder's Foreign Minister, former Green leader Joschka Fischer, also worked for Russian energy interests after he left office. But he was far more critical of the Russians' actions in Ukraine in 2014. In fact, he leans toward the hawkish side on NATO affairs in general. (See: Ralf Neukirch,
The Eternal Rivalry of Joschka Fischer and Gerhard Schröder Spiegel International 02/15/2010)

The following also notable, in light of current news in the US. A green Member of Parliament is quoting as calling the former Chancellor as basically a Russian stooge:

"Schroeder is spreading the Kremlin's propaganda and everyone should understand that he's now a paid spokesman for Russia," said Manuel Sarrazin, who sits on the European affairs committee of the German parliament for the opposition Greens.

"He's in the service of Russia with a big conflict of interest," Sarrazin told Reuters.

Kirschbaum's report also refers to a TV report, "An ARD TV investigation, called 'The dubious activities of the ex-chancellor on Putin's behalf', said Schroeder took part in a secret meeting at the Russian embassy in Berlin on March 4, three days after Putin announced his right to invade Ukraine."

It's worth mentioning here that Chancellor Willy Brandt had to resign in 1974 after it was discovered that one of his closest staff, Günter Guillaume, was exposed as an East German spy. But he really was a spy. It wasn't a matter of him having some undisclosed meeting with an East German diplomat during a political campaign.

My point here is that we need to take conflicts of interest into account in the position officials or major public figures take on foreign policy. For instance, our ExxonMobil Secretary of State, Rex Tillerson, was previously the CEO of a company that once had a deal for $500 billion worth of business with Russia, a deal that was put on indefinite hold by the Obama Administration's sanctions on Russia over Crimea. It would be foolish to disregard that aspect of his experience.

But having political positions that match up to those of a foreign government or political group isn't a sign of corruption or treason. Though either could lead to that result. Foreign policy is largely about deciding which countries to favor and which to oppose. And on which issues.

And Germany has its own particular national interests with Russia: "Berlin's economic links with Moscow are much stronger than those of other big Western powers. Germany is the biggest buyer of Russian natural gas exports, and its government has tended to tread more carefully than the United States, Britain or France."

Merkel, looming German economic crisis and her refugee problems

I just quoted Wolfgang Münchau's weekly German-language column in my previous post. But his weekly English-language column, Gloom gathers over the challenges that Germany faces Financial Times 01/17/2016, covers some of the same ground. Which I'll get to further down.

But what jumps out at me here is that her coalition partners, the ostensibly center-left Social Democrats (SPD), are attacking Angela Merkel's immigration policy from the xenophobic side:

Gerhard Schröder, her Social Democratic predecessor, last week came out against the policy with exactly the same arguments as the right-wingers in Ms Merkel’s own party: Germany cannot absorb such a large number. More than 1m refugees arrived in the country in 2015. It could be twice as many this year and the same again next — more if you include family members who will eventually follow.

It is tempting to think of refugees and migrants as a new source of labour. But in this case this just is not true, at least not for now. The majority of those who arrive in Germany lack the skills needed in the local labour market. They will enter the low wage sector of the economy, and drive down wages, producing another deflationary shock. This is the last thing Germany and the eurozone need right now.

I expect that this policy will change at some point this year. What I do not see, however, is a successful political coup against Ms Merkel from inside her own party. What protects her is the grand coalition with the Christian Social Union and the SPD. There is no majority to the right of her, or to the left for that matter. [my emphasis]

I'm not familiar enough with the demographics of the current immigration to Germany to have a good sense of what if any downward pressure it could put on wages. Based on American experience, I tend to be dubious. But I want to learn more of the details.

But the disgusting thing about the SPD is that while the party embraces Merkel's stone-conservative Herbert Hoover/Heinrich Brüning economic policies. But they attack her from the right on immigration. This is just pitiful.

And it's not just Schröder. Sigmar "Sigi Pop" Gabriel, current German Vice Chancellor and current SPD Party Chair, is joining in, as well. (Reaktion auf Kölner Silvesternacht: Vizekanzler Gabriel fordert schnellere Abschiebungen Spiegel Online 08.01.2016; Karl Doemens, Gabriel greift die Kanzlerin an Frankfurter Rundschau 18.01.2016; Aert van Riel, Eine aussichtslose Mission Neues Deutschland 19.01.2016 )

Merkel has been reckless in her policy on the refugees. But pandering to xenophobia only makes it worse. And Merkel's euro policy has contributed mightily to the current toxic nationalism that is surrounding her refugee policy, in Germany and elsewhere. Which brings us back to Münchau's FT column:

Finally, 2016 promises to be the year of backlash against German dominance of the eurozone. That did not happen during the crisis. The leaders of the countries in the eurozone periphery kept their heads down. Under German pressure, they signed up to treaties and legislation, such as the fiscal compact and the new resolution mechanism for banks, that were clearly not in their long-term interest. ... Even if 2016 does not see another eurozone crisis, it could easily be a year of mutual alienation, which is more dangerous in the long run.

While most of the threats appear to be external, they are caused by domestic policy choices. Germany does not have to rely on a single industry to such an extreme degree. And no country finds itself with an 8 per cent current account surplus by accident. Nor did Ms Merkel need to open up further a border that was already open by making so public a pronouncement. She made a choice. [my emphasis]

You're doing a heckuva job, Angie, a heckuva job!

Ukraine: asking the right questions - or not

I don't have any particular insight on the Ukrainian situation.

As Joe Cirincione of the Ploughshares Fund put it in a panel at Netroots Nations this past Saturday, we - the US, NATO - do not have any vital security interest in Ukraine.

Therefore, going to war over Ukraine is highly unlikely. Of course, the bold Maverick McCain is warmongering over it. (Also, the sun rose in the east this morning.)

Still, Western miscalculations could cause big problems. And since the neocons are particularly interested in provoking a more belligerent US stance toward Russia, we all need to be concerned about bad actors on Our Side doing stupid and unnecessary things.

For pretty obvious reasons, no one seems to be taking credit for the shootdown of Malaysian Airlines Flight MH17.

But there also doesn't seem to be any clear evidence of who was behind the shootdown or why. And as horrible as the incident is, it doesn't change the basic stakes for the US and Russia. And Russia clearly perceives itself has having a much greater security stake in Ukraine than the US has.

Investigative reporter Robert Perry and other writers at his Consortium News site have been asking questions that the mainstream press probably needs to be asking more urgently. And almost certainly won't. In What Did US Spy Satellites See in Ukraine? 07/20/2014, Perry observes:

The dog-not-barking question on the catastrophe over Ukraine is: what did the U.S. surveillance satellite imagery show? It’s hard to believe that – with the attention that U.S. intelligence has concentrated on eastern Ukraine for the past half year that the alleged trucking of several large Buk anti-aircraft missile systems from Russia to Ukraine and then back to Russia didn't show up somewhere.

Yes, there are limitations to what U.S. spy satellites can see. But the Buk missiles are about 16 feet long and they are usually mounted on trucks or tanks. Malaysia Airlines Flight 17 also went down during the afternoon, not at night, meaning the missile battery was not concealed by darkness.

With the Pentagon busily collecting bizillobytes of our personal communications data via the NSA, maybe they were too busy to be looking at missiles in Ukraine.

And our intelligence agencies have been known to miss important facts in the past. Hard to believe, I know. But they have surely corrected that problem by now!

More seriously, it's a legitimate question. If the intelligence agencies and the Pentagon claim super-competence, why should we not demand this kind of answers and consistent accountability on such things?

After the Vietnam and Iraq Wars and the almost-war with Syria - not to mention many other cautionary examples just from American history - skepticism about claims that may lead to war or to aggressive policies that heighten the risk of war unnecessarily is certainly in order. Although I doubt the bookers for the Sunday morning news shows see it that way.

I'm particularly interested in the European response to this latest escalation in the Ukraine crisis. It's hard to see how, with the eurozone economy badly crippled by Angela Merkel's austerity economics, the EU could mount a major set of sanctions, particularly with German so dependent on Russian natural gas.

Wolfgang Münchau addresses that dependence issue in MH17 und der Konflikt mit Russland: Die fatale Ostorientierung der deutschen Wirtschaftselite Spiegel Online 21.07.2014. He criticizes former German Chancellor Gerhard Schröder for remaining on the board of Nord Stream Pipeline, 51% controlled by the Russian state-owned energy firm Gazprom. I've expressed my own cautions about taking Schröder's comments on the Ukraine crisis in the context of his business commitments.

But in today's world, Schröder's role as a post-office corporate ho' for a Russian-controlled firm doesn't make him an accomplice to every bad act of Russian foreign policy, if that's even what we're dealing with here. Münchau seems to think it does. Or at least, that what we know about the MH14 shootdown at this point somehow morally requires Schröder's resignation from Nord Stream Pipeline.

Münchau also seems to think that the EU will press forward with sanctions. But there are sanctions and there are sanctions. The eurozone economy on the edge of deflation can't afford to take much of an actual economic hit from sanctions against Russia. He thinks the Russian economy is particular vulnerable to economic sanctions from the US and the EU due to the predominance of the dollar, the British pound and the euro in global financial transactions. But he does note that traditional trade sanctions are unlikely to be particularly effective against Russia.

Münchau, somewhat paradoxically, would also welcome European sanctions against Russia in the form of reducing gas imports, because dependency on Russia for natural gas is the EU's "Achilles heel."

But that also means that Europe, and Germany in particular, would be subject to counter-sanctions by Russia to interrupt gas supplies or play all sorts of games to remain the EU how dependent they are.

Münchau calls more broadly for a change of "the fatal Eastern orientation of the German economic elite." But that really is a long-term project. And part of the value of deeper integration of the European and Russian economies is that it creates pressure on both sides to avoid war with each other. It would be easy to overstate that potential. After all, the various European participants in the First World War had a high degree of economic interdependence. But still, building a more peaceful world through greater integration of the international economy has been a key concept of the post-Cold War Western policies.

Tags: angela merkel, austerity economics, eu, euro, european union, gerhard schröder, ukraine

George Kennan on post-Soviet NATO expansion

A reminder that Tom Friedman once did some decent reporting: Foreign Affairs; Now a Word From X New York Times 05/02/2014.

In those days, he wasn't just talking to tech boosters and taxi drivers in various cities who happened to agree with his favorite slogan of the moment. He did an interview with Soviet expert George Kennan about the NATO expansion then under way. It's a reminder that current issues in Ukraine didn't just fall from the sky in 2014.

"I think it is the beginning of a new cold war," said Mr. Kennan from his Princeton home. "I think the Russians will gradually react quite adversely and it will affect their policies. I think it is a tragic mistake. There was no reason for this whatsoever. No one was threatening anybody else. This expansion would make the Founding Fathers of this country turn over in their graves. We have signed up to protect a whole series of countries, even though we have neither the resources nor the intention to do so in any serious way. [NATO expansion] was simply a light-hearted action by a Senate that has no real interest in foreign affairs." [my emphasis]

This is a question I have about today's position, also. I haven't updated myself on the positioning of forces in the eastern parts of NATO, though they have been reinforced some as part of the current diplomatic chess match over Ukraine. But there does seem to have been an assumption, especially risky in the case of the former Soviet Baltic states Estonia, Latvia and Lithuania, that we were taking on a military commitment that would never actually have to be taken that seriously.

"What bothers me is how superficial and ill informed the whole Senate debate was," added Mr. Kennan, who was present at the creation of NATO and whose anonymous 1947 article in the journal Foreign Affairs, signed "X," defined America's cold-war containment policy for 40 years. "I was particularly bothered by the references to Russia as a country dying to attack Western Europe. Don't people understand? Our differences in the cold war were with the Soviet Communist regime. And now we are turning our backs on the very people who mounted the greatest bloodless revolution in history to remove that Soviet regime. [my emphasis]

This seems to be a chronic problem in US foreign policy: not thinking carefully about the allies we take on in given situations or crises, then dumping them without careful thought about the consequences. And the press doesn't help with its superficial, crisis-of-the-moment, how-will-it-affect-the-electoral-politics-of-the-moment obsessions.

It was important in 1998 and remains important today for the United States to have peaceful relations with Russia and especially to cooperate on further reduction of nuclear arms. That still needs to be the overriding consideration in bilateral relations.

"And Russia's democracy is as far advanced, if not farther, as any of these countries we've just signed up to defend from Russia," said Mr. Kennan, who joined the State Department in 1926 and was U.S. Ambassador to Moscow in 1952. "It shows so little understanding of Russian history and Soviet history. Of course there is going to be a bad reaction from Russia, and then [the NATO expanders] will say that we always told you that is how the Russians are -- but this is just wrong." [my emphasis]

The "bad reaction from Russia" was perhaps later in coming than Kennan may have expected, perhaps in part because of new chances for Russian cooperation with the West in the Global War on Terror and because of Germany and the EU having pursued closer economic ties with Russia over the years since.

I've written before about how former German Chancellor Schröder (SPD) has financial reason for being friendly to Russia. That means we should keep that in mind, but not that it requires us to disregard what he says about the situation in Ukraine. And that doesn't mean that his SPD critics on that point should necessarily be considered as speaking from pure concern for intellectual integrity. (Daniel Friedrich Sturm, "Gerhard Schröder hat sich kaufen lassen" Die Welt 30.04.14)

Since he is experienced as Chancellor and does have close ties to German and Russian business circles, it's worth paying attention to what he says. In an interview reported in Gerhard Schrcder verteidigt Feier mit Wladimir Putin Die Welt 11.05.2014, Schröder addressed the subject:

Ebenfalls warnte Schröder Deutschland und den Westen in dem Interview davor, in der Ukraine-Krise weitere Sanktionen gegen Russland zu verhängen. "Man sollte jetzt weniger über Sanktionen sprechen, sondern auch über russische Sicherheitsinteressen", sagte Schröder.

Eine Nato-Mitgliedschaft der Ukraine etwa sei "für Russland nicht akzeptabel. Ich höre stattdessen immer nur, der Westen müsste Russland und Putin isolieren", kritisierte der SPD-Politiker.

Ausgangpunkt für die Krise sieht Schröder im Agieren der Europäischen Union. "Der grundlegende Fehler lag in der EU-Assoziierungspolitik", sagte Schröder. "Die EU hat ignoriert, dass die Ukraine ein kulturell tief gespaltenes Land ist."

Schon immer hätten sich die Menschen im Süden und Osten der Ukraine eher nach Russland hin orientiert, und der Westen eher zur EU, sagte Schröder: "Über eine Assoziierung hätte man reden können, aber zeitgleich mit Russland! Das ,Entweder oder' – also entweder Assoziierung mit der EU oder Zollunion mit Russland – war der Anfangsfehler."

[In any case, Schröder warned Germany and the West in the interview against placing further sanctions against Russia in the Ukraine crisis. "One should now speak less about sanctions but rather speak more about Russian security interests," said Schröder.

For instance, NATO membership for Ukraine would be "for Russia unacceptable. I'm always hearing instead, the West must isolate Russia and Putin," criticized the SPD politician.

Schröder sees the beginning of the crisis in actions of the European union. "The basic mistake lay in the EU association policy," said Schröder. "One could have discussed an association, but at the same time with Russia! The 'either-or' - that is, either association with the EU or a tariff union with Russia - was the beginning mistake."]

Tags: george kennan, gerhard schröder, ukraine

Gerhard Schröder, Russia and the Crimea

I'll always respect former German Chancellor Gerhard Schröder for defying Dick Cheney and George Bush on the Iraq War.

But the sad fact is that Schröder has become a shameless corporate 'ho'. And the corporate owner is Russian. Not long after his Chancellorship ended in 2005, he accepted a job with a company 51% controlled by the Russian state-owned energy firm Gazprom, North Nord Stream. He serves as Chairman of the Shareholders’ Committee for the company, which is in charge of the Russian-German gas pipeline that he promoted as Chancellor. (Dietmar Student und Thomas Werres, Die Gerhard-Schröder-AG Manager Magazin Online 09.04.2010; Alexander Schwabe und Carsten Volkery, Neuer Job: Schröder verrubelt seinen Ruf Spiegel Online 12.12.2005)

Gerhard Schröder, German bitnessman

North Nord Steam's website as of this writing describes the project this way:

The two 1,224-kilometre offshore pipelines are the most direct connection between the vast gas reserves in Russia and energy markets in the European Union. Combined, the twin pipelines have the capacity to transport a combined total of 55 billion cubic metres (bcm) of gas a year to businesses and households in the EU for at least 50 years. As the project strengthens the EU energy market and reinforces security of supply, the project has been designated as being of "European interest" by the European Parliament and Council.

We're all too familiar in the Untied States with this kind of close arrangement between the corporate world and corporate-friendly politicians who cash in after leaving office. Student and Werres writes, seemingly admiringly, "Gerhard Schröder gilt als Modellfall für eine zweite Karriere eines deutschen Ex-Regierungschefs. Er ist der erste, der sich in vielen Rollen, die die Wirtschaft anbietet, bewährt und dabei ein ansehnliches Auskommen findet: als Aufsichtsrat, Berater, Türöffner, Konfliktlöser - und als gut bezahlter Redner sowieso." ("Gerhard Schröder stands as a model case for a second career for a German former head of government. He is the first who is proving himself in many roles that business offers and thereby finds a handsome living: as board member, adviser, door-opener, conflict revolver - and as a well-paid speaker.") In their 2010 article, they give an estimate of his annual income at €1.5 million ($2 million or more).

A model case of a corporate 'ho', in other words.

So it's hard not to wonder whether he more-or-less straightforward defense of his friend Vladimir Putin has more to do with which side his bread is currently buttered than the reflections of a retired statesman. In and interview with Die Zeit, he defends Russia's actions in the Crimea. (Ludwig Greven, Putin verstehen mit Gerhard Schröder Zeit Online 09.03.2014; Spiegel Online provides fuller quotes: Ukraine-Konflikt: Schröder macht EU für Krim-Krise mitverantwortlich 09.03.2014)

Schröder expresses doubt that Putin used the right means to achieve his goals in the Crimea. He noted that his government's participation in the Kosovo War of 2009 was "formally" a violation of international law, as he admitted Putin's action in the Crimea are.

He just confessed to having committed a war crime, in other words.

That surprises me far more than his defense of his friend and indirect financial benefactor Putin. It even raises questions about his motivations in opposing the Iraq War.

And just a few days ago, there were reports that Schröder had been offered a job at another Russian oil company, Rosneft. But he denied the report. (Schröder: Kein Spitzenjob bei russischem Öl-Riesen T-online 04.03.2014)

On the Ukraine crisis, Leslie Gelb has some practical-minded comments on How To Solve the Ukraine Daily Beast 03/09/2014. Fred Kaplan also has another piece on it, False Warnings Slate 03/07/2014.

Schröder several weeks ago criticized the EU's actions in promoting the opposition in Ukraine. Ukraine-Konflikt: Ex-Kanzler Schröder schlägt Uno als Vermittler vor Spiegel Online 19.02.2014. I do have the impression that the US and the EU were reckless in supporting a dubious opposition movement against a corrupt and repressive but legally elected government in Ukraine. So Schröder isn't necessarily wrong on all he says about the Ukraine crisis. But we do have to consider the source and his economic interests.

Schröder's red-green government introduced numerous neoliberal "reforms," most notoriously the Hartz IV reforms that had a significant role in reducing job security and holding down income for German workers. So his advocacy for the Russian-German gas pipeline wasn't the only service he did to the corporate world that is now rewarding him so well.

In what seems an ironic moment in the circumstances, Schröder reportedly warned current French Socialist President François Hollande in a recent visit not to follow his example in pressing neoliberal "reforms," because they cost him his Chancellorship in the German election of 2005. ( Michaela Wiegel, Gerhard Schröder in Paris: Nur nicht über Putin sprechen FAZ 03.03.2014)

Tags: gerhard schröder, neolibealism, ukraine

Germany's red-green government of 1998-2005 and neoliberalism

Günther Nonnemacher, Merkel zurück im Europa-Alltag Frankfurter Allgemeine Zeitung 18.12.2013 provides a remarkable quote from German Chancellor Angela Merkel's immediate predecessor in office, Gerhard Schröder of the Social Democratic Party: „Wenn es der deutschen Industrie gut geht, geht es auch dem deutschen Arbeiter gut.“ ("When it's going well for German industry, it's going well for the German worker.")

That's pretty much the same as the famous quote attributed to US President Calvin "Silent Cal" Coolidge, "The business of America is business."

If the website This Day in Quotes is correct, that's a shortened form of Coolidge's statement, "the chief business of the American people is business."

In any of those versions, including Schröder's, the idea is the same: the business of the people's democratic government is to serve business owners, corporate executives, industry lobbyists and cater generally to the comfort of the already very comfortable.

Neoliberalism is the term that much of the world uses to describe the free-market ideology that became dominant in the world in the post-Bretton Woods era. The term can be confusing for Americans, because in the US starting in the 1920s "liberal" economic policies referred to policies restricting corporate abuses, activist government and the kind of social-security measures now called welfare-state policies.

Neoliberalism is an application of free-market principles developed originally in the liberal philosophical and economic tradition of the 18th and 19th centuries to the post-Bretton Woods world. The period from 1947 to 1971 was the era in which the Bretton Woods Agreement provided an economic framework for the capitalist world, a framework Yanis Varoufakis et al call the Global Plan. (Modern Political Economics: Making sense of the post-2008 world; 2011)

Broadly speaking, capitalism has always operated under some form of liberal economic theory. What was "neo" about neoliberalism was not that leading figures in its application like Ronald Reagan and Maggie Thatcher had converted away from their conservative outlook. They hadn't. It was the application of old-fashioned, anti-welfare-state doctrines to a world in which the advanced capitalist nations were operating with substantial government insurance programs to protect the health and retirement security of their citizens and economies well-regulated enough to prevent a recurrence of the Great Depression. The collapse of the Soviet Union and the Eastern Bloc in 1989 and the following years strengthened the credibility of neoliberalism in various ways, including removing a major source of external ideological competition and fueling a feeling of triumphalism in western countries.

For conservatives, neoliberalism was a new chance to implement a market fundamentalism that they had always found attractive. But for center-left parties like the Democratic Party in the US and the social-democratic parties in Europe, it meant selling laissez faire, anti-union, anti-regulation, anti-welfare-state policies to their traditional working-class constituencies without at the same time losing all credibility with them. The project of the now-defunct Democratic Leadership Council (DLC) was largely aimed at that purpose, and significantly influenced the Clinton Administration on issues like the NAFTA trade agreement.

In Britain, Tony Blair and so-called New Labour enthusiastically pursued that course. And Gerhard Schröder became the German leader most identified with it. Blair and Schröder even issued a joint statement in 1999 titled, "Europe: The Third Way/Die Neue Mitte." This website from a University of Alberta web address appears to be a mirrored version of the declaration as it once appeared on the Labour Party's website, where I was unable to find it.

The Third Way/Neue Mitte manifesto is fascinating in retrospect. After five years and counting of President Obama preaching deficit reduction and pushing for a Grand Bargain that in practice means nothing other than cutting benefits for Social Security, Medicare, Medicaid and veterans' benefits, it's easy to focus on the phrases that have since become more widely understood as catch-phrases for cutting government services that benefit ordinary working people. Which is also what I'm going to do here.
But it's worth noting that even in 1999, it was not nearly so clear even to people who were committed to maintaining the welfare state - or the social safety net, as we call it in our "exceptional" American political vocabulary - that it was or would soon become nothing but a cynical gloss on conservative policies to be sold to the constituencies of the center-left as not-as-bad-as-what-the-conservatives-want.

For instance, these two points from the Blair/Schröder manifesto sounded in 1999 like something the center-left and progressives could consider necessary, constructive and different than a return to Herbert Hoover economics by the center-left parties:

• In a world of ever more rapid globalisation and scientific changes we need to create the conditions in which existing businesses can prosper and adapt, and new businesses can be set up and grow.
• New technologies radically change the nature of work and internationalise the organisation of production. With one hand they de-skill and make some businesses obsolete, with another they create new business and vocational opportunities. The most important task of modernisation is to invest in human capital: to make the individual and businesses fit for the knowledge-based economy of the future.

But the poison pills are there, with my translation in 2013 American political terms:

Public expenditure as a proportion of national income has more or less reached the limits of acceptability.

2013 Translation: cut gubment spending (except defense!)

Within the public sector bureaucracy at all levels must be reduced, performance targets and objectives formulated, the quality of public services rigorously monitored, and bad performance rooted out.

2013 Translation: Git the gubment off the backs of private business and privatize as much of it as you can get away with to turn it into private business.

Social security systems need to adapt to changes in life expectancy, family structures and the role of women.

2013 Translation: Cut benefits on Social Security, Medicare and Medicaid (or the British and German equivalents) and raise the retirement age.

Social democrats need to find ways of combating the ever more pressing problems of crime, social disintegration and drug abuse.

2013 Translation: poor people are degenerates and criminals.

[In the previous center-left approach:]Too often rights were elevated above responsibilities, but the responsibility of the individual to his or her family, neighbourhood and society cannot be offloaded on to the state. lf the concept of mutual obligation is forgotten, this results in a decline in community spirit, lack of responsibility towards neighbours, rising crime and vandalism, and a legal system that cannot cope.

2013 Translation: poor people are degenerates and criminals.

The past two decades of neo-liberal laissez-faire are over. In its place, however, there must not be a renaissance of 1970s-style reliance on deficit spending and heavy-handed state intervention. Such an approach now points in the wrong direction.

2013 Translation: We'll use the deficit as an excuse to continue the course of the previous neo-liberal laissez-faire policies.

There is a whole section on "A tax policy to promote sustainable growth" that basically offers several different angles of an argument for cutting taxes on corporations and the wealthy.

Now that we've seen the United States and the EU pursue Herbert Hooverish economic policies in the face of a repeat of the Great Depression - with some partial exceptions like Obama's initial stimulus program - these points look a lot grimmer than they did to a lot of people in 1999. Being enchanted by some of these ideas is at least a little more understandable in the context of the tech boom's euphoria. The fact that such policies persisted even among center-left parties until now retrospectively indicate how seriously the Third Way leaders took the conservative elements of the neoliberal program, and how empty much of the left-sounding rhetoric has turned out to be.

David Kusnet and Ruy Teixeira captured some of the contradictory nature of the Third Way program in an article for Dissent (Summer 1999), "The Third Way and The Future of Social Democracy" (Kusnet was Bill Clinton chief speechwriter in his 1992 Presidential campaign):

Thus, a leading American advocate of this approach, Al From of the centrist Democratic Leadership Council (DLC), has declared that the third way is "the global generic brand name for the progressive politics of the Information Age." Implicitly, From is arguing that the DLC's style of third way politics - one that targets affluent voters, recommends the partial privatization of social insurance programs, and is wary of what it calls class warfare - should hold the American franchise for "the progressive politics of the Information Age."

But there's a different and better sort of third way. This kind of politics is concerned with economic insecurity and inequality and focused on what progressives have always done best: setting rules, making investments, and building institutions to help working people make their way in changing times. And it is in the spirit of the best traditions of progressive parties throughout the West, in keeping with the appeals that actually elected Clinton, Blair, and Schröder. and an appropriate response to the needs of working families in the Information Age. [my emphasis]

Kusnet's and Teixeira's point that the political appeals "focused on what progressive have always done best" were actually "the appeals that actually elected Clinton, Blair, and Schröder" highlights the role that center-left parties including the Democratic Party, New Labour and the SPD have tended to play in the neoliberal scheme in the years since. They get elected offering relief from the failures of their conservative predecessor and offering solutions attractive to working people in the general tradition of the New Deal, the postwar Labour Party and German social democracy. Then they push they push the kind of pro-corporate, anti-labor policies indicated by the euphemistically phrased programmatic points quoted and "translated" above.

And in doing so, they kick their own base voters in the teeth. So the SPD has done poorly in national politics since Schröder's Chancellorship. They entered Merkel's first Grand Coalition government, which proceeded to raise the retirement age from 65 to 67. Their vote percentage improved in this year's elections after being in the opposition for four years. Now, in entering a second Grand Coalition government, they claim it as a victory in their coalition negotiations that they got some measures included that, if passed, would mitigate some of the problems caused by their raising the retirement age during the first Grand Coalition!

In American politics, we could quibble about whether Clinton's seemingly centrist positions on things like his "Sistah Soljah" moment so beloved by the pundits who worship at the altar of High Broderism or his support for school uniforms were decisive in his Presidential election victories of 1992 and 1996. But the basic point holds. He didn't get elected either time proposing to loosen regulations enough for Wall Street to bring on a re-run of the Great Depression. Kusnet and Teixeira note of Clinton's 1992 campaign:

Far from avoiding anything that sounded like "class struggle," he tapped into public anger at irresponsible corporate behavior, declaring: "It's important to remember that the most irresponsible people of all in the 1980s were those at the top quarter, those who sold out our workers and our country with bad deals and spent billions of dollars on wasteful debt." He linked anxieties about economic stagnation and social breakdown: "Our country is growing apart when we should be growing together." ...

Similar appeals on social and economic issues - most notably the famous "E2M2": education and the environment, Medicare and Medicaid-contributed to Clinton's re-election in 1996. Progressives in the United Kingdom, Germany. and France likewise won as champions of working people pledged to fight unemployment, raise the minimum wage, and defend social insurance. The workforce of the new economy-blue-collar, white-collar, and technical worker-provided their majorities.

Kusnet and Teixeira also define why the neoliberal model since 1999 has proven to be a self-destructive course for the center-left parties, not only in the US, Britain and Germany:

An improved image. although very desirable in the short run, is no substitute for the material accomplishments of a successful political-economic model, one that yields a period of sustained and broadly shared prosperity. Such achievements provide the cement that keeps voters and left parties together over time. Conversely, a party that cannot take credit for these sorts of accomplishments will find voters' loyalties to he tenuous.

Because, without that, "the third way leads nowhere except out of office with relatively little accomplished in the interim."

And, sadly, this warning from their 1999 article still holds for Obamaism. In that article, they were arguing for a "third stage" of progressive policies that would increase the electoral strength of the left, following on a first stage of postwar liberal hegemony in economic policy in the US and a second stage of conservatives successfully blaming Keynesianism and center-left policies for increased economic hardships. Their first stages correspond roughly to the Bretton Woods/"Global Plan" stage and the subsequent stage of the ascendancy of neoliberal doctrine embodied by the Reagan and Thatcher governments.

... breaking the conservative economic consensus creates problems for the third way as a marketing plan. Aggressive, activist government and expansionary policies create a convenient target for conservatives, who arc further aided by the reaction of financial markets to such policies. Swing working- and middle-class voters, whose loyalty to left governments is not yet cemented, may thereby he moved hack into the conservative camp, ending the process before it has even begun.

However, without the success of expansionary policies. a third stage will never be established. So: no risk to the marketing plan, no reward in the long-term. A third way that could successfully hear these risks and arrive at the other end ... would be truly worthy of the name.

One aspect of the Kusnet-Teixeira analysis that unfortunately didn't play out the way they indicated is their observation that advocates of the "third way" in Europe didn't find themselves "find themselves drawn to a politics that wrongly minimizes the problems of economic insecurity and the potential of collective action by working people" to the extent their counterparts in the US did. As it turns out, notably in the case of the SPD, they did.

Finally, Kusnet and Teixeira wrote in 1999 that the Third Way approach was in "its buzzword phase." Unfortunately, in the SPD they took the pro-corporate buzzwords way too seriously and the worker-friendly ones, well, they largely left those a buzzwords. One of the major goals that Kusnet and Teixeira in 1999 were urging the center-left parties to embraces was the idea that "international institutions like the International Monetary Fund should cease their unrelenting focus on fiscal austerity that has imploded one economy after another in the developing world."

Now, of course, in Europe even the IMF has been hinting that Merkel's aggressive, Herbert Hoover/Heinrich Brüning style austerity policies in the eurozone have gone too far. But the SPD has agreed, and apparently agreed cheerfully, to continue them for another four years. German and European politics would probably start looking more hopeful if the SPD agreed to merge with Merkel's Christian Democrats and the Greens and the Left Party merged to form a single opposition party. Because it's hard to see any kind of encouraging future for the SPD on the path they're on now.

Tags: angela merkel, austerity economics, eu, euro, european union, gerhard schröder, neoliberalism, spd

Another measure of the German SPD's corporate fawning

I'll always respect the SPD Chancellor Gerhard Schröder, who served in office 1998-2005, for his determined stand against the Cheney-Bush Administration's invasion of Iraq. It was a major violation of the international laws against preventive wars. Schröder and his Green Foreign Minister Joschka Fischer were on the right side of that issue, and the Cheney Administration and its supporters could not have been more wrong.

The Frankfurt School philosopher and sociologist Jürgen Habermas, who is often referred to as Germany's most respected public intellectual, wrote in 2004 ("Wege aus der Weltunordnung" Blätter für deutsche und internationale Politik 1/2004), referring to the development of the laws against preventive war:

Man muss sich diesen enormen Schub der Rechtsevolution vergegenwärtigen, um den radikalen Bruch zu erkennen, den die Bush-Regierung herbeigeführt hat – sowohl mit einer Sicherheitsdoktrin, die die geltenden rechtlichen Voraussetzungen für den Einsatz militärischer Gewalt vorsätzlich ignoriert, wie auch mit dem Ultimatum an den Sicherheitsrat, die aggressive Irakpolitik der Vereinigten Staaten entweder abzusegnen oder selbst in Bedeutungslosigkeit zu versinken.

[One must bring to mind the evolutionary thrust of the law to recognize the radical break that the Bush government precipitated - and even with a security doctrine that intentionally ignores the binding legal requirements for application of military force, as well as the ultimatum to the Security Council to either approve the aggressive Iraq policy of the United States or to sink itself into irrelevance.]

Just after the SPD/Green alliance won a second term in the 2002 Bundestag election, present-day Chancellor Angela "Frau Fritz" Merkel went to Washington to make nice with the Cheney Administration. It was quite a contrast. But her friends in that Administration were already spying on her mobile phone by 2002, according to a new report in Spiegel Online, NSA-Überwachung: Merkels Handy steht seit 2002 auf US-Abhörliste 26.10.2013. The article linked doesn't say what date in 2002 the spying on her phone started. Maybe that's part of why the Cheney-Bush crowd knew she would be a willing patsy for their war propaganda? This is part of how Angie the Great got a reputation for being loyally "pro-American." But her American pals obviously didn't and don't trust her much more than they trust the leaders of your run-of-the-mill rouge state. Go figure.

But it was also the red-green government of Schröder and Fischer that pushed through the neoliberal Agenda 2010 "reforms" that significantly reduced job security and income among German workers, which Frau Fritz has of course been happy to continue. The most notorious among the measures is known as Hartz IV, which promoted mini-jobs. In no small part as a result of "Aus der einstigen Auf- wurde eine Abstiegsgesellschaft" ("The upwardly-mobile society became a downwardly-mobile society"), wrote Albrecht von Lucke in Angela Merkel, sicher ist sicher Blätter für deutsche und internationale Politik 9/2013. Agenda 2010 wasn't the only thing that caused that effect. Von Lucke's point is that it was one of a series of events, including the depression that struck to Northern Atlantic world in 2007-8 and still continues, that contributed to a feeling of general insecurity among the German electorate, on which the SPD has failed to capitalize for their political benefit. They've spent so long being Frau Fritz' loyal followers, both in and outside of governmental coalitions with her, that they don't seem to be able to visualize much else.

The Die Zeit report on yet another sad symptom of this SPD trend in

The Süddeutsche Zeitung and Kraft bremst bei der Energiewende Süddeutsche Zeitung 26.10.2013 Hannelore Kraft bremst bei der Energiewende Die Zeit 26.10.2013. Germany is undertaking a program to transition to renewable energy, known as the "Energiewende," literally energy change or turning point. "Wende" is often used is German politics to designate some signficant political or policy inflection. Not surprisingly, it is a project with challenges, as Alexander Neubacher explains in Reality Check: Germany's Defective Green Energy Game Plan Spiegel International 10/25/2013. But Merkel's commitment to the Energiewende, including her decision to phase out nuclear power in Germany, allowed her to co-opt the environmental issue at the expense especially of the Green Party.

Now comes Hannelore Kraft, Minister-President (Governor) of the state (province) of North Rhine-Westphalia (NRW), criticizing the Energiewende for going too fast and possibly endangering jobs and raising energy costs for businesses. As Bauchmüller and Dörries put it, Kraft "wants to decisively represent the interests of the steel and energy industry in the coalition negotiations in Berlin" ("Hannelore Kraft will in den Koalitionsverhandlungen in Berlin entschieden die Interessen der Stahl- und Energieindustrie vertreten").

In other words, in the deal-making involved in building a new government with Frau Fritz' CDU, Kraft will be pushing to delay the push toward renewable energy, i.e., negotiating with Merkel's conservative party from the right, on behalf of the steel and energy industries. And up until a couple of weeks ago, Kraft had been the most prominent advocate for considering the alternative of going into opposition with the Greens and the Left Party instead of going meekly into another Grand Coalition as junior partners to Merkel's CDU. In other words, Kraft was seen as being to the left of the current national leaders of her party.

According to their report, both the energy company RWE and steel giant Thyssen-Krupp had recently threatened to eliminate jobs in NRW over the energy policies. When don't business lobbies make such threats?

Kraft's government in NRW is a red-green coalition. This latest Wende of hers will presumably complicate relations with the NRW Greens.

Kraft is heading the negotiations on energy for the SPD in the national coalition negotiations.

This is the neoliberal SPD.

Tags: angela merkel, gerhard schröder, hannelore kraft, joschka fischer

Being an ex-head of government is profitable

Profil reports today that Alfred Gusenbauer, Social Democratic Chancellor of Austria 2007-8, is under investigation by Austrian federal officials for possibly passing secret parliamentary files to the dictatorial government of Kazakhstan. It's not clear from the report how serious it might be for Gusenbauer.

But I was struck by the information in the report that the Kazakh regime of Nursultan Nazarbayev has several former heads of government working for it as paid consultants, including Britain's Tony Blair, Gusenbauer, Poland's Alexander Kwaśniewski, Italy's Romano Prodi, and Germany's Gerhard Schröder. (Ulla Kramar-Schmid and Michael Nikbakhsh, Causa Aliyev: Alfred Gusenbauer unter Spionageverdacht 01.06.2013)

They write, "Es gilt als offenes Geheimnis, dass Nasarbajew seine Triple-A-Konsulenten jährlich mit siebenstelligen Beträgen entschädigt, wobei Tony Blair mit kolportierten neun Millionen Euro Jahresverdienst ganz oben steht." ("It is taken as an open secret that Nazarbayev compensates his Triple-A consultants with seven-figure amounts, whereby Tony Blair with a supposed nine million euro annual service stays at the very top.") That would be about $12 million at current exchange rates.

That's staggering. They add, "Was man dafür leisten muss?" ("What must they do for that?") A very good question.

Tags: alfred gusenbauer, tony blair, gerhard schröder

Another sign of how the neoliberalism adopted by Germany's SPD is causing them problems

I did and do respect former German Gerhard Schröder's (SPD) foreign policy performance, especially his opposition to the Iraq War.

But his downside was his open-armed embrace of the neoliberal economic doctrines that are now, in their Angela Merkel-ified form are strangling much of Europe. In Chancellor Altkanzler Schröder warnt Sozialdemokraten vor Hollande, Die Zeit reports that neither the experience of countries like Greece and Spain, nor the electoral problems of pro-austerity social-democratic parties in those two countries and others, have persuaded him that some rethinking may be in order.

Schröder is saying no, no, the SPD should actually copy the French Socialist Party's successful course under François Hollande, oh no, that won't do at all!

Taking pretty much an Angiebot line, Schröder said, yes, some kind of growth measures or other would be nice, "kritisierte aber die mangelnde Bereitschaft, Strukturreformen beispielsweise auf dem Arbeitsmarkt oder in der Verwaltung umzusetzen." ("but he criticized the insufficient readiness [of Hollande] to adopt, for instance, structural reforms in the labor market or reorganize the bureaucracy.") In the neoliberal vocabulary, labor market reforms = lowering wages, weakening unions; reorganizing the bureaucracy means cut government services.

And he emphasizes that, goodness me, you can't raise taxes on the Job Creators! He didn't actually use the Job Creator phrase the Republicans apply to the One Percent, but it wouldn't surprise me if he started doing so. The SPD is formally in agreement with the former Chancellor on that, sadly enough.

It's not clear from that report whether Schröder supports or opposes the SPD current position that they will vote for Angie's fiscal suicide pact only if fiscal stimulative measures accompany it. The SPD's position certainly leaves them wiggle-room to agree to some basically cosmetic stimulus proposal from Angie as an excuse to approve the fiscal suicide pact, officially named the Intergovernmental Treaty on Stability, Co-ordination and Governance in the Economic and Monetary Union.

The fiscal suicide pact is a screamingly bad idea. It essentially outlaws counter-cyclical Keynesian stimulus policies even in a depression like this one, when they are most needed. Because it's based on debt ratios to GDP, it makes stimulus especially difficult in times like this, when GDP's are shrinking or growing very slowly.

Hollande is threatening to reject the treaty if the text isn't renegotiated to allow stimulus. We'll see how serious he is about that over the next month. It's hard to see how any responsible treaty that protected the need for deficit spending in a depression could contain the provisions that Angie likes the most, the ones that restrict public borrowing especially during the worst economic times.

The fiscal suicide pact isn't worth adopting unless it's changed to the point that it no longer is a fiscal suicide pact. It would write Chicago School economics into the constitutions of the countries foolish enough to ratify it.

Tags: angela merkel, austerity economics, eu, euro, european union, françois hollande, gerhard schröder, spd

Spain and Germany Try to Work Out Differences

It's entirely possible that in 20 years, maybe less, people will look back at this time and say that the most important development for freedom and democracy in the world was not the military dominance of the United States or the fight against Islamic extremism, but the development of the European Union.

German Schancellor Gerhard Schröder just met with Spanish President José María Aznar to discuss a range of European issues including easing tensions arising from Spain's support of the US and Britain on the Iraq War.

Schröder is the most prominent social-democratic leader in Europe right now, with many EU countries under conservative governance and Britain's Tony Blair badly damaged in Europe by the Iraq War. Aznar is one of the most respected conservatives in Europe, because he's credited with transforming his Partido Popular (PP), which is the historical successor to Franicsco Franco's party, into a fully democratic force.

The tone of the meeting was friendly, which was important in itself. As the EU Observer notes, "Mr Schröder teased the Spanish conservative that he [Aznar] could not greet him with his bandaged right arm, jokingly noting 'of course it is the right that is broken'." Although in reality, the PP has stronger voter support at home than Schröder's "red-green" coalition right now.

Aznar's support of the Iraq War did not alienate Spain from its EU allies to the extent that Blair's did with Britain. But both Aznar and Schröder are committed to strenthening the EU, though they have differences on the new European Constitution now being debated. Aznar has also been critical of the exceptions given to Germany (and France) allowing them to exceed EU targets on budget deficits.

They also discussed the development of common European armed forces. Aznar made a point of publicly emphasizing that the EU common force was not meant to compete with NATO or to rival the US. That's the position of Germany, as well. But what no EU country wants to say publicly is that the Bush Administation's unilateralism, especially in Iraq, has drastically undermined Europe's confidence in the NATO arrangement.

Tags: deutschland, españa, gerhard schröder, germany, josé maría aznar, iraq war, spain