Sunday, February 23, 2014

Putin at the crossroads.

Vladimir Putin and I share a special bond. We both grew up believing that the Ukraine was part of Russia. My father's family was Russian, or so the story went. One parent was from the city of Uman, south of Kiev, and the other from the long-disappeared town of Ivangorod.

When I went to Kiev in 1989 as part of an international finance commission, there was no mention of the Ukraine as the nation-state it would become just two years later. It was still the Ukrainian Soviet Socialist Republic, just one of many teetering Soviet Republics being held together by Mikhail Gorbachev's vision of restructuring and openness that might forestall the urge to independence and democracy. But even then it was the Ukraine. Dating back a more than a thousand years to its inception as the Kievan Rus, it remained the integral southern realm of the Russian state.

When we met with an emissary of the Metropolitan (head prelate in charge) of the Ukrainian Orthodox Church--a man with the long black beard and colorful vestments of one's imagination--he said nothing of independence or statehood. Rather, he worked himself up into a full rage as he described the seizure of the land and murder of the clerics of his church by the Uniate Catholics in the western Ukraine. For centuries, the Ukraine was riven by the sectarian tensions between the Orthodox and Catholic branches of Christian faith, and the bordering nations--primarily Catholic Poland and Orthodox Russia--played a tug-of-war for control, as the borders shifted from one century to the next. Now, our host assured us, as Communist control was weakening, the war of ages was ramping back up, and the Orthodox Church was preparing for battle with its Roman antagonists.

Faced with this raging scarlet-faced prelate, I betrayed nothing of my own Russian roots. Even in the wake of the Orange Revolution that came a little more than a decade after our lunch with the Ukrainian Church emissary, both Putin and I remained unconvinced of the independent status of the Ukraine. For me, it remained a question of identity. Russia is a nation with a long history and deep cultural roots. The literature. The poetry.The massive scale of Siberia. The massive suffering of the Gulag. To acknowledge Ukraine as a nation meant that I must recast my own roots from Russian to Ukrainian. 

The challenge for Putin is tougher. He has made clear that his identity is not simply Russian, but Soviet. The collapse of the Soviet Union was, in his terms, the greatest catastrophe of the 20th century. And the center of the Soviet Union was Russia and the Ukraine. Subduing Ukraine's schismatic wars and crushing the aspirations of the Ukrainian peasant farmers (kulaks) was central to the formation of the Soviet empire under Joseph Stalin.

Not to belabor the details, but Simon Sebag Montefiore's biography of Stalin In the Court of the Red Tsar, describes Nikita Krushchev's rise from Ukrainian Communist Party leader to inside member of Stalin's court largely on the basis of his ability to outperform his quotas of Ukrainians killed month after month until the numbers totaled in the hundreds of thousands. This is the history whose loss Putin laments.

The Sochi Olympics that close this week were supposed to mark the culmination of Putin's career. Over the past few months alone, Putin was named the most powerful man in the world by Forbes magazine, he strategically out-maneuvered the Americans in Syria, exposed and thus undermined Saudi threats to fund attacks against the Olympics, and offered refuge to American public enemy number one, Edward Snowden. Last week, Putin stood at the opening ceremony in Sochi in his great coat like a commissar of old on the Kremlin wall. At the apex of his power, he broadcast images of himself as the post-modern Soviet man riding horseback bare chested across the Siberian taiga, dressed in camouflage after slaying a tiger in the wild, and in his martial arts attire after hand to hand combat.

Then it all fell apart. First, the Russian team was humiliated in Olympic Hockey. Then, just as Putin thought things could not get worse, the Ukrainian protests exploded into public view. With Putin's support, Ukrainian President Viktor Yanukovych plied the Syrian gambit. The regime labeled the protesters terrorists and unleashed the anti-terrorist units of the Ukrainian armed forces. But it was to no avail. The Syrian gambit, it now appears, demands a ruthless absolutism at the top and loyalty across the officer corps that Yanukovych did not possess. Within days, the protesters and the Parliament assumed control, the Orange Revolution constitution was reinstated, and Russia's southern flank lay exposed.

Control over Ukraine has been the cornerstone of Putin's goal of reestablishing the Soviet empire in fact if not in name. Ukraine's departure from the Russian orbit--if not undone by some act of force or diplomatic miracle--looms to undo all that he has accomplished in his decade and a half in power. The looming presence of the Russian military that keeps authoritarian regimes across Russia's near abroad in line will have been shown to be a chimera. Putin's arguments that the opposition in the Ukraine was primarily instigated by the Roman Catholic Church and the American CIA have been rendered quaint. Ukraine, even Putin must be coming to realize, is a real place.

What happens next is unclear. It is easier for me that for Putin. It seems my family was Ukrainian after all, and I will just have to deal with that. I will have to unfriend my former compatriots Anna Ahkmatova and Aleksandr Pushkin. I can continue to embrace Nikolai Gogol. I will remain skeptical of my Grandmother's claim that we were related to Leon Trotsky.

But for Putin, this is a tougher moment, and his options would appear to be limited. Unlike the Russia-Georgia war, there is no standing army against which to fight. Unlike his Chechen wars, Ukraine cannot be brutally subdued outside of public view. Certainly putsch's can still work--the Egyptian military has proven that recently--and a terror campaign against domestic opponents is not out of the question--as Putin has himself supported in Syria. But each of those both demand a ruthless Ukrainian leadership and a supportive Ukrainian military, they cannot simply be imposed from the outside. And then there is Khrushchev's approach, but for all of Putin's posturing, he does not have the will to power of a Stalin or a Khrushchev. 

Putin has the resources in place for a military response. His armies lie across Ukraine's northern border, and his Black Sea Fleet remains berthed in its Ukrainian home port of Sebastopol, on the southern tip of the Crimean peninsula. The annexation of all or part of the Crimea to preserve Russia's naval access to the Bosphorus is not out of the question. Unlike Kaliningrad Oblast, the Russian outpost on the Baltic Sea, separated from the Motherland by Lithuania and Belarus, the Crimea is adjacent to Russia across the Strait of Kerch. But a military assault from the north against the entire Ukraine in the absence of a complicit host government and military is inconceivable.

Putin could choose to adapt to a the reality. He could offer the new Ukrainian government the $15 billion aid offer that he put on the table early on in the crisis to forestall Ukraine's acceptance of the Association Agreement with Europe. This would demonstrate goodwill and further bind Ukraine's economic future to Russia's. 

But that would be a weak response. Losing Ukraine means losing his position as an historical Russian figure. Instead of comparisons to Peter the Great, who expanded the Russian empire into the Ukraine, Putin's place would be alongside Mikhail Gorbachev, an earlier handmaiden of Russian decline and humiliation. To Russian nationalists, it would bring cries of 'who lost Ukraine', and it would send the message across Russia's near abroad that Putin's plans for the reassertion of the Soviet sphere of influence have come crashing back to earth. It would compromise the leadership of authoritarian regimes in each of the lesser states that Putin has wrapped so tightly around Russia's perimeter. Even Russian democrats would be given succor. 

The Sochi Olympic Games were supposed to mark the pinnacle of Putin power and prestige, but instead it may mark the moment of his undoing. Ukraine's success would show Putin's to be a Potemkin regime, with little behind the facade of strategy and power but the machinations and ego of one man.

Putin must have another plan. He must have something more. He must have one more move to change the trajectory of the Ukrainian drama. Because if he doesn't, all that he tried to build will come crashing down, and that will be his legacy. Just one man riding across the taiga, a bare chested leader with no one following behind.

Saturday, February 08, 2014

Rage of a privileged class.

Tom Perkins, co-founder of the iconic venture capital firm Kleiner Perkins Caufield & Byers, caused a stir recently with his Wall Street Journal letter "Progressive Kristallnacht Coming?" Perkins fears that recent protests over Google buses in San Francisco and growing resentments around income inequality could ultimately turn to violence against the wealthy.

As protests have grown against the white Google buses plying the streets of the Mission to bring young techies down to the Silicon Valley, it was the Counterforce anarchists breaking Google bus windows that for Perkins evoked images of Kristallnacht. One might have thought that as a long time resident of the area, Perkins would have a greater sense of perspective. Protest--whether about income inequality, bank lending practices, gentrification, LGBT rights, Black Power, immigrant rights, the wearing of animal fur, the list goes on--is deeply rooted in Bay area culture and history. And the periodic involvement of self-styled anarchist groups--be it the Counterforce, Anonymous or the Black Bloc--have periodically elevated the tenor of otherwise peaceful protests, increasing the potential for property damage along the way. Protest happens, and in the worst cases the police show up. Sometimes it leads to greater public attention on important issues. Sometimes it contributes to constructive civic debate.

Perkins was roundly vilified for his use of a Nazi metaphor. We have seen this story before, as when billionaire Steven Schwarzman compared an Obama administration proposal to require financiers like he and Perkins--along with Warren Buffett and Mitt Romney--to pay the same income tax rates as the rest of us to Hitler's invasion of Poland.

The thing about Nazi metaphors is that they end conversations rather than encourage them. Perkins actually had a real point to make. There is real and growing animosity in the Mission, and it should be a cause for concern. Not very long ago, the Google buses were a source of bemusement rather than resentment. They began as a symbol of hip, socially responsible capitalism--a sort of corporate carpooling that takes cars off the road and mitigates the adverse environmental impacts of rapid economic growth in the tech sector. Similarly, the burgeoning techie population in the Mission began as a benign phenomenon, just one more population migration into a city that has long attracted post-college kids, bringing new energy to the city, along with a plethora of new restaurants and cafes.

There is no small irony in the demographics of the street protests. The community of artists, progressives and bohemians who now find themselves being squeezed out by a new, wealthy hipster population themselves arrived in the Mission and the adjacent Noe Valley neighborhood a few decades ago, when they in turn displaced the working class, largely Latino, residents at that time. The gentrifiers are being gentrified.

But it was Perkins words as he walked back from his Nazi allusions that were most illuminating. He is, after all, not Steven Schwarzman. He is not a big Republican contributor. He is not even a billionaire. He is friends with and voted for Jerry Brown, and intends to again "even though he raised my taxes 30%." And he agrees that income inequality is "probably and possibly" the number one challenge facing the nation.

Yet even as he sought to put the controversy behind him, he remained--like Schwarzman--trapped within his own sense of entitlement, of being unfairly victimized by an unappreciative world. He was unable to look at the circumstances and seek to understand how others might experience it. "It’s absurd to demonize the rich for being rich and for doing what the rich do, which is get richer by creating opportunity for others.... Let the rich do what the rich do, which is get richer. But along the way, they bring everybody else with them when the system is working."

Is it really absurd? For many in the American middle class, letting the rich do what the rich do has not been an effective formulation for increasing either economic opportunity or outcomes. The three greatest forces that have undermined middle class incomes over the past several decades have been the advent of free trade, technological change, and financial deregulation. Each of these have created cohorts of winners and losers. Free trade was heavily supported by and benefitted corporate America, which saw increased profitability and capital mobility through outsourcing, and along the way it benefitted the American consumer and lifted millions around the world out of abject poverty. These are good things, but they did not come without a price, and that price was paid by the domestic manufacturing sector and the industrial middle class.

Similarly, technological change has dramatically increased domestic productivity--defined as economic output per hour of labor worked--which has driven corporate profitability to new heights. It has transformed society and created a new class of young, uber-wealthy entrepreneurs. But this increased profitably and labor productivity again did not translate into higher domestic wages, and along the way new technologies destroyed myriad occupations upon which millions derived their living, as technologist Jeron Lanier has observed.

And little needs to be said about the impacts of financial deregulation.

These changes have been largely enabled by federal legislation, supported, if not instigated, by the lobbying and political contributions of those who would benefit. The rich, to use Perkins' formulation. However, it should be noted, particularly in light of the current protests, that the wealth in the tech sector in particular has been the least directly enabled by federal legislation, though the entire online world comprises companies that are effectively free riders on years of federal investment. The core value of Google, Facebook and others lies in their use of user data and user generated content, control over which has been effectively ceded to them voluntarily by users. Thus, the artist in the Mission has been an unwitting co-conspirator in the accumulation of wealth in the tech sector. As Jaron Lanier has observed, this ceding of value is exchange for "free" services has neither a necessary nor preferable outcome for the mass of users of the Web, and it has been a further contributor to the issues of economic stratification underlying the protests in San Francisco.

In that light, is it not reasonable that artists or others living in the Mission might feel some resentment toward the rich? Could they not interpret the past several decades--years of flat real incomes for many cohorts of society--as ones in which the rich continually adjusted the rules to their own benefit, but largely failed, as Perkins suggested, to bring everybody else with them. For those who saw their livelihoods directly undermined by these changes, is resentment not a natural response? Is it reasonable, as Perkins would have it, that instead they reflect equanimously on the larger benefits to the world--and to the rich--of free trade and new technologies, and say to themselves, well, if my livelihood is the price of progress, that is fair enough... I will just have to start over.

Class resentments--I use the term class deliberately as it is the term that Perkins chose to describe the rich--are a problems common to many societies, exacerbated by images of elites using their political and economic power to solidify their advantages. The challenge for democratic societies has always been to build both economic structures that enable people to believe that they or their children will not be shut out of the opportunities that the future may bring, and political institutions that enable conflicts and differences to be addressed, if not resolved.

Increasingly, we are failing on both accounts. Perkins' plea to the artists and anarchists in the Mission that the rich be appreciated, respected and left alone to do their thing stands in stark contrast to a national political climate in which the defaming and demonizing of groups across society has been elevated to an art form. In recent years, teachers, public employees, retirees, union members, immigrants and others have been the target of withering political assault for partisan political purposes. The demonization of bankers and the rich is really just the most recent evolution in a toxic political climate where the notion of respecting and appreciating the diverse roles that different groups play in our national economy and civic life has been ground into the dust. If appreciation and respect is what Perkins wants, he should engage directly with the communities involved rather than complain about the lot of the rich on the pages of the Wall Street Journal. And perhaps he should consider that respect and appreciation are rarely given to those who do not show it to others.

Against that backdrop, the current protests have really been unremarkable. Hopefully, they will lead to real engagement and understanding across groups within the community. Reaching out, rather than lashing out. And Perkins should take comfort from the comment on one anarchist website. Things could be worse: "So, what, the Irish starved because Oliver Cromwell took their land, the Ethiopians are having their land taken away from them now, and all the bloody far left can do is to protest Google Buses."