Friday, June 28, 2019

Stephen Cohen Makes Mistake(s).

I do follow Stephen Cohen's thoughts on international relations in general, and Russian-American relations in particular, but while having respect for his courageous and honest position on the subject, it doesn't mean that I agree on everything with him. His latest piece in The Nation with the title Will US Elites Give D├ętente With Russia a Chance? is not exactly an exercise in precision forecasting. To start with the question in the title, the answer is extremely simple: Absolutely NOT. Detente between the United States and Russia is impossible in principle at this stage for a number of an extremely important reasons ranging from the America's loss of military-technological parity and overall decline, both relative to others and in absolute terms, of the main instrument of American foreign policy, her military, to a near catastrophic economic outlook for the United States. This major, in fact, defining military-technological factor of the American thinking eludes Stephen Cohen, as it does overwhelming majority of American political scientists. And then, of course, there is a growing recognition within Russia of her own role of an emerging power pole and the center of global influence. Finally, did anyone take a stock of US "elites" recently? The decline, even compared to 1980s, of intellectual level is astonishing. Isn't rather sorry present state of the United States a good indicator of those "elites" quality, or, rather, lack thereof? Remaining American common sense realists (and even this term requires serious elaborations) and patriots are literally removed to the fringes of political power and have very little say in a disastrous US foreign policy. Did Stephen Cohen ask himself lately when was the last time the US won any war?

Now we come to this ever important economic issue. Make no mistake, Russia's economic problems are by no means something to be sneezed at, not at all. But it also has to be understood that typical Western monetarist criteria (Cohen, being namely American scholar hardly operates far beyond those criteria) give an extremely distorted picture of Russian economy. Cohen makes an assertion:
Putin’s domestic problem, on the other hand, is economic and social. Russia’s annual growth rate is barely 2 percent, real wages are declining, popular protests against officialdom’s historically endemic corruption are on the rise, and Putin’s approval rating, while still high, is declining. A public dispute between two of Putin’s advisers has broken out over what to do. On the one side is Alexei Kudrin, the leading monetarist who has long warned against using billions of dollars in Russia’s “rainy day” funds to spur investment and economic growth. On the other is Sergei Glaziev, a kind of Keynesian, FDR New Dealer who has no less persistently urged investing these funds in new domestic infrastructure that would, he argues, result in rapid economic growth.    
It is a "loaded" statement, very recognizably affected by Moscow's rumor mill, but let's start with pointing out what is going on here:

1. This "growth" thing. Here is World Bank's assessment:
Real GDP growth in Russia surpassed expectations in 2018, reaching 2.3 percent, mostly due to oneoff effects of energy construction. Forecasted growth of 1.2 percent in 2019 and 1.8 percent in 2020 and 2021 reflects a more modest outlook.Russia’s macro-fiscal buffers remain strong, with fiscal surpluses across all tiers of government and low public-debt levels. When compared to advanced economies, Russia spends less on health and education. Rebalancing in favor of these categories could improve the overall efficiency of public spending. Short-term inflationary risks have abated, with the Bank of Russia signaling a return to a neutral policy rate. Lending activity is recovering, but the banking sector remains afflicted with high concentration and state dominance. Having eased slightly, the poverty rate remains in double digits with many households close to the poverty line and lacking formal employment. Informal employment is rising in the face of close-to-zero net job creation by medium-sized and large formal enterprises.
Did you catch it? Not enough lending for GDP growth, which is, in normal economies, is a sign of, well...look at the US and her corporate debt. 
So, Judging Russia using criteria which provide, mostly virtual, "growth" of Western economies, is akin to judging Russia's military power in Power Projection Forces, which Russia not only doesn't need but will have a fairly easy time defending (that is to say sinking) against them.  

Now, let's take a look at, indeed, the real growth which is defined by, and you have guessed it already, industrial and agricultural fields primarily--the fact denial of which is in the foundation of not only lousy, to put it mildly Western forecasts and "intelligence" on Russia, but also in the foundation of, say, American delusion about true size and capability of own economy. Here is a verified data (from Russia herself) on manufacturing following a dip in January 2019.

This is what really defines an actual state of economy and while still represented in monetary (Ruble) units one requires a serious review of overall industrial and agricultural development to have a real feel of economic trends. Yes, there are issues with stagnating wages, yes, there are also issues with poverty, but that is precisely a leftover from monetary policies which kept inflation in check while Russia remains under the unprecedented economic sanctions. And here Cohen makes a huge mistake, Russia's presidential elections were not about electing just President, they were about electing a Commander in Chief first and foremost. One has to keep in mind this crucial distinction.

2. Putin's ratings do not decline, in fact, they remain steady and high when the question of "do you approve of President's work" is asked.
Opinions of American pollsters are not welcomed--they are as fake as US main stream news organizations. In fact, as I stated not for once, most of information on Russia circulating today in the West, unless in is obtained and explained by serious intelligence-analytical organizations (and even then...), is basically a trash. Data provided by Russian media and statistical institutions, even by officially registered as "Foreign Agent" Levada Center (most of Russian "business" media should be also registered as such) proved to be much more reliable and truthful. In terms of identifying short and long trends, for sure. 

3. In this case I also don't get the significance of Cohen elaborating on supposedly "breaking out" of a TWO DECADE+ long discussion between Kurdrin and Glaziev. What's so significant about this massive public discussion in Russia, which is represented widely in media, between Western monetarists and Keynesian-leaning economists? While this discussion, which is not even a news, continues, Russian state returned under own control more than 70 percent of strategic industries and most resources. So, what's so significant about Kudrin saying something? Everybody in Russia knows what he is going to say, but instead of wasting time on his beaten to death arguments, one should really pay attention to how Russia ignored recent Davos forum and why SPIEF grows in global importance. I do understand frustration of "advanced" liberal Russian office plankton and hipster hamsters with Putin, after all they have huge opinion about their very mediocre abilities, but their "protestations" have little effect on a massive shift of Russia away form liberal policies. Russia has money today, it is just the decision on how to open this stream into economy without dis-balancing fairly well-established financial indices, is not made yet.    

So, what struggle Stephen Cohen talks about when states:
It seems unlikely that President Trump or any of the advisers currently around him understand this important struggle—and it is a struggle—unfolding in the Russian policy elite.
I don't know. This struggle, like this discussion, mentioned above, between Kudrin and Glaziev is unfolding now for what, 15 years, maybe 17? As events with Abyzov show, so called "liberal" pro-western "elite" in Russia begins to understand that the only person who separates them and the nooses on the lamp posts, or sharp pitchforks, is none other than Vladimir Putin and his team. In the end, somehow, Putin lately (few months, at least) comes across more and more as a person of a cool and even relaxed disposition who knows that what is needed to be done is being done. 

So, while Russia has some serious problems and there are some protests, I can vouch for this simple fact: MOST--I don't know, 70%, 80%--of population of Russia knows what their country faces today and what it is up against, and that is the main reason why Russia increasingly sought as an ally, no matter if her economy grows 2% (sure, Russia doesn't have Wall Street to fake economic data) or 3%, especially against the background of a tectonic change in global power balance, which Russia and China drive. And while Stephen Cohen's instincts and appeals are good and laudable, he exhibits the same trait characteristic of American Russian Studies field, he misinterprets Russia dramatically. I know, I am writing about this for years. I am almost forced to recall truism attributed to Metternich "Russia is never as strong as she seems, she is never as weak as she seems". Stephen Cohen is a wonderful man and a frequent guest of Russia--I think it is about time we all start operating with hard cold facts. As per summit--do not expect much from it, just another photo-op. United States is NOT treaty-worthy party anymore, especially her current POTUS, so let's drop any pretenses that anything will change between Russia and the United States. No Detente is in plans. Let's say thanks that they at least talk to each-other.   

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