EDITORIAL: Russian Roulette

EDITORIAL

Russian Roulette

“Let him first respect his own signature.”

That was French Foreign Minister Bernard Kouchner, talking last Saturday at a meeting of the European Union in Avignon, France.  He was talking about the “president” of Russia, Dmitri Medvedev, calling him worse than a liar, someone who signed a formal written promise and then broke it.  Kouchner says that Medevedev has violated at least half of the key terms he agreed to in a France-brokered ceasefire which sought to resolve the Georgia crisis.  For a diplomat from any country, much less France, to use language this stunningly tough (this, indeed, larussophobian) is sure and certain proof of just how utterly Russian foreign policy has come a cropper.  Even though Russia hasn’t used nearly as much military force in Georgia as the U.S. did in Iraq, and hasn’t deposed the country’s ruler as the U.S. did, the world’s reaction has been wholly different. Russia has been villified and condemned, and now stands in exactly the position it wished to place the U.S. in when it opposed U.S. action.  This is neo-Soviet failure, laid bare.

Writing in the Moscow Times on Monday Richard Hainsworth, CEO of RusRating, a Moscow-based credit rating agency, scathingly condemned the barbaric behavior of the Russian government during the Georgia crisis.  He began this way:

When Russian troops moved into Georgia, foreign investors moved out and the Russian market plummeted. When U.S. troops moved into Iraq, foreign investors hesitated but the U.S. market barely blipped. Is this a double standard? Not really.

Why not?  Because of simple fact that all the world, but not Russia, clearly understands.  As Hainsworth puts it: “Russia’s actions in Georgia were unpredictable and unexpected. Its aims and goals — starting with official pronouncements and ending with its actions on the ground –were difficult to disentangle.”  In other words, the manner in which the U.S. and Russian governments behave is as different as night and day. Hainsworth explains:

Whatever the reasons or motivations for Russia’s invasion into the sovereign territory of another country, investors were not prepared for this unpleasant surprise. Their investment models did not include this factor. When U.S. troops go anywhere, they are accompanied by journalists, news conferences and public warnings. Investors may not like a military conflict and they may be severely damaged by it, but they are prepared.

Russia hides from the truth.  It lies, and it gets caught in lies.  People who have money on the line don’t like this kind of behavior.  They don’t mind the use of military force, they understand its going to happen.  But they want it to be done in a manner that is predictable and reasonable, mature and responsible.  For all the criticism of U.S. president George Bush, as the American saying goes “money talks and B.S. walks.”  The international markets had no real problem with the Iraq invasion, but they were appalled by what Russia did in Georgia because Russian actions made it clear:  Today it’s Georgia, tomorrow it’s you.

As MT columnist Alexei Bayer has written: “Mark Twain remarked that history may not repeat itself, but it rhymes a lot. If so, recent events in Russia are starting to rhyme with some of the worst pages of the country’s history.”

The markets see not even the vaguest hint in Russian civil society of any introspection, any acknowledgement of fault or mistake, because the Russian government has ruthlessly purged Russian civil society of that aspect.   But all businessmen know that it is absolutely essential, and if it is not happening then the regime is bound for the scrap heap — and so would their money be if they left it in place.  Investors don’t want to put money into a crazed, arbitrary authoritarian regime. Hainsworth puts it this way:

The fundamental problem is that Russia’s reactions to a variety of events — whether it be in the Caucasus or in business — have traditionally been difficult to predict. After a lengthy, almost unnoticed buildup of tension in Georgia, Russia reacted . . . by moving in overwhelming force and continuing to act without any regard to international concerns or consequences.

Russia has been, in other words, barbaric.  Hainsworth states the unavoidable conclusion with brutal frankness:

In Russian roulette, when the trigger is pulled and nothing happens, everyone relaxes and it seems that the game is not so bad after all. But when the trigger hits a loaded chamber, the result is lethal. There is a long-term danger that Russian investment will be considered as a proxy for Russian roulette. A model like this will influence the sort of investors who will come to Russia. Sane and sober investors will stay away, but risk-taking and foolhardy rogues will flood in. The returns on investments will be massive because of the perceived risks, and the profits enormous because in most cases there will be no loss. But once in a while, the trigger will land on a loaded chamber and the loss will be catastrophic.

This is the kind of society Russia has become. Rather than attracting responsible investors interested in building a future, Russia attracts riverboat gamblers interested in grabbing a quick buck and disappearing. Rather than building high-level relationships with the world’s leading countries, Russia prefers to assemble a rogue’s gallery of outlaw nations, from Syria and Iran to Venezuela and Cuba.  Rather than choose new leaders prepared to break from the failed methods of the Soviet past, Russians have given landslide victories to a proud KGB spy.

It is, indeed, not only investors who have played Russian roulette, but the people of the country as well.  And no matter how many times Russians managed to spin the wheel and escape disaster, there is at least one bullet in the chamber and sooner or later they will find it, just as the Tsarist and Communist regimes did before them.  Russia is rapidly exhausting its ability to reconfigure itself; no nation can survive collapse after collapse caused by the repetition of the same mistakes.