Can Japan Rise Again?

By Patrick J. Buchanan

We can thank Providence that the earthquake was not 150 miles closer to Tokyo, else Japan's dead might number in the millions.

Prime Minister Naoto Kan calls it the worst crisis since World War II. Yet, horrendous as it is, it does not, thus far, compare with that. For the earthquake dead are not 1 percent of those who perished in World War II.

Between 1942 and 1945, Japan was stripped naked of an empire that embraced Formosa, Korea, Manchuria, the entire China coast, all of French Indochina (Vietnam, Laos, Cambodia), Thailand, Burma, Malaysia, Singapore, the Dutch East Indies (Indonesia), the Philippines and the Western Pacific out to Guam and south to Guadalcanal.

She sustained 2 million military dead and 500,000 to a million civilian dead under U.S. carpet-bombing that reduced her great cities to smoldering rubble and Hiroshima and Nagasaki to atomic ash.

Yet, 25 years after the most devastating defeat in modern history, Japan boasted the second largest and most dynamic economy on earth.

Twenty Years After the Fall

From Stratfor
By George Friedman

We are now at the 20th anniversary of the fall of the Berlin Wall and the beginning of the collapse of the Soviet empire in Eastern Europe. We are also nearing the 18th anniversary of the fall of the Soviet Union itself. This is more than simply a moment for reflection — it is a moment to consider the current state of the region and of Russia versus that whose passing we are now commemorating. To do that, we must re-examine why the Soviet empire collapsed, and the current status of the same forces that caused that collapse.

Russia’s Two-Part Foundation

The Russian empire — both the Czarist and Communist versions — was a vast, multinational entity. At its greatest extent, it stretched into the heart of Central Europe; at other times, it was smaller. But it was always an empire whose constituent parts were diverse, hostile to each other and restless. Two things tied the empire together.

One was economic backwardness. Economic backwardness gave the constituent parts a single common characteristic and interest. None of them could effectively compete with the more dynamic economies of Western Europe and the rest of the world, but each could find a niche within the empire. Economic interests thus bound each part to the rest: They needed a wall to protect themselves from Western interests, and an arena in which their own economic interests, however stunted, could be protected. The empire provided that space and that opportunity.

The second thing tying the empire together was the power of the security apparatus. Where economic interest was insufficient to hold the constituent parts together, the apparatus held the structure together. In a vast empire with poor transportation and communication, the security apparatus — from Czarist times to the Soviet period — was the single unifying institution. It unified in the sense that it could compel what economic interest couldn’t motivate. The most sophisticated part of the Russian state was the security services. They were provided with the resources they needed to control the empire, report status to the center and impose the center’s decisions through terror, or more frequently, through the mere knowledge that terror would be the consequence of disobedience.

It was therefore no surprise that it was the security apparatus of the Soviet Union — the KGB under Yuri Andropov — which first recognized in the early 1980s that the Soviet Union’s economy not only was slipping further and further behind the West, but that its internal cohesion was threatened because the economy was performing so poorly that the minimal needs of the constituent parts were no longer being fulfilled. In Andropov’s mind, the imposition of even greater terror, like Josef Stalin had applied, would not solve the underlying problem. Thus, the two elements holding the Soviet Union together were no longer working. The self-enclosed economy was failing and the security apparatus could not hold the system together.

It is vital to remember that in Russia, domestic economic health and national power do not go hand in hand. Russia historically has had a dysfunctional economy. By contrast, its military power has always been disproportionately strong. During World War II, the Soviets crushed the Wehrmacht in spite of their extraordinary economic weakness. Later, during the Cold War, they challenged and sometimes even beat the United States despite an incomparably weaker economy. The Russian security apparatus made this possible. Russia could devote far more of its economy to military power than other countries could because Moscow could control its population successfully. It could impose far greater austerities than other countries could. Therefore, Russia was a major power in spite of its economic weakness. And this gave it room to maneuver in an unexpected way.

Andropov’s Gamble

Andropov proposed a strategy he knew was risky, but which he saw as unavoidable. One element involved a dramatic restructuring of the Soviet economy and society to enhance efficiency. The second involved increased openness, not just domestically to facilitate innovation, but also in foreign affairs. Enclosure was no longer working: The Soviet Union needed foreign capital and investment to make restructuring work.

Andropov knew that the West, and particularly the United States, would not provide help so long as the Soviet Union threatened its geopolitical interests even if doing so would be economically profitable. For this opening to the West to work, the Soviet Union needed to reduce Cold War tensions dramatically. In effect, the Soviets needed to trade geopolitical interests to secure their economic interests. Since securing economic interests was essential for Communist Party survival, Andropov was proposing to follow the lead of Vladimir Lenin, another leader who sacrificed space for time. In the Brest-Litovsk Treaty that ended Russian participation in World War I, Lenin had conceded vast amounts of territory to Germany to buy time for the regime to consolidate itself. Andropov was suggesting the same thing.

It is essential to understand that Andropov was a Party man and a Chekist — a Communist and KGBer — through and through. He was not proposing the dismantling of the Party; rather, he sought to preserve the Party by executing a strategic retreat on the geopolitical front while the Soviet Union regained its economic balance. Undoubtedly he understood the risk that restructuring and openness would create enormous pressures at a time of economic hardship, possibly causing regime collapse under the strain. Andropov clearly thought the risk was worth running.

After Leonid Brezhnev died, Andropov took his place. He became ill almost immediately and died. He was replaced by Konstantin Chernenko, who died within a year. Then came Mikhail Gorbachev — the true heir to Andropov’s thinking — who implemented Andropov’s two principles. He pursued openness, or glasnost. He also pursued restructuring, or perestroika. He traded geopolitical interests, hard-won by the Red Army, for economic benefits. Contrary to his reputation in the West, Gorbachev was no liberal. He actually sought to preserve the Communist Party, and was prepared to restructure and open the system to do so.

As the security apparatus loosened its grip to facilitate openness and restructuring, the empire’s underlying tensions quickly went on display. When unrest in East Germany threatened to undermine Soviet control, Gorbachev had to make a strategic decision. If he used military force to suppress the uprising, probably restructuring and certainly openness would be dead, and the crisis Andropov foresaw would be upon him. Following Lenin’s principle, Gorbachev decided to trade space for time, and he accepted retreat from East Germany to maintain and strengthen his economic relations with the West.

After Gorbachev made that decision, the rest followed. If Germany were not to be defended, what would be defended? Applying his strategy rigorously, Gorbachev allowed the unwinding of the Eastern European empire without intervention. The decision he had made about Germany amounted to relinquishing most of Moscow’s World War II gains. But if regime survival required it, the price had to be paid.

The Crisis

The crisis came very simply. The degree of restructuring required to prevent the Soviet Union’s constituent republics from having an overarching interest in economic relations with the West rather than with Russia was enormous. There was no way to achieve it quickly. Given that the Soviet Union now had an official policy of ending its self-imposed enclosure, the apparent advantages to the constituent parts of protecting their economies from Western competition declined — and with them, the rationale for the Soviet Union. The security apparatus, the KGB, had been the engine driving glasnost and perestroika from the beginning; the advocates of the plan were not going to shift into reverse and suppress glasnost. But glasnost overwhelmed the system. The Soviet Union, unable to buy the time it needed to protect the Party, imploded. It broke apart into its constituent republics, and even parts of the Russian Federation seemed likely to break away.

What followed was liberalization only in the eyes of Westerners. It is easy to confuse liberalism with collapse, since both provide openness. But the former Soviet Union (FSU) wasn’t liberalizing, it was collapsing in every sense. What remained administratively was the KGB, now without a mission. The KGB was the most sophisticated part of the Soviet apparatus, and its members were the best and brightest. As privatization went into action, absent clear rules or principles, KGB members had the knowledge and sophistication to take advantage of it. As individuals and in factions, they built structures and relationships to take advantage of privatization, forming the factions that dominated the FSU throughout the 1990s until today. It is not reasonable to refer to organized crime in Russia, because Russia was lawless. In fact, the law enforcement apparatus was at the forefront of exploiting the chaos. Organized crime, business and the KGB became interconnected, and frequently identical.

The 1990s were a catastrophic period for most Russians. The economy collapsed. Property was appropriated in a systematic looting of all of the former Russian republics, with Western interests also rushing in to do quick deals on tremendously favorable terms. The new economic interests crossed the new national borders. (It is important to bear in mind that the boundaries that had separated Soviet republics were very real.) The financial cartels, named for the oligarchs who putatively controlled them (control was much more complex; many oligarchs were front men for more powerful and discreet figures), spread beyond the borders of the countries in which they originated, although the Russian cartels spread the most effectively.

Had the West — more specifically the United States — wanted to finish Russia off, this was the time. Russia had no effective government, poverty was extraordinary, the army was broken and the KGB was in a civil war over property. Very little pressure could well have finished off the Russian Federation.

The Bush and Clinton administrations made a strategic decision to treat Russia as the successor regime of the FSU, however, and refused to destabilize it further. Washington played an aggressive role in expanding NATO, but it did not try to break up the Russian Federation for several reasons. First, it feared nuclear weapons would fall into the hands of dangerous factions. Second, it did not imagine that Russia could ever be a viable country again. And third, it believed that if Russia did become viable, it would be a liberal democracy. (The idea that liberal democracies never threaten other liberal democracies was implanted in American minds.) What later became known as a neoconservative doctrine actually lay at the heart of the Clinton administration’s thinking.

Russia Regroups — and Faces the Same Crisis

Russia’s heart was the security apparatus. Whether holding it together or tearing it apart, the KGB — renamed the FSB after the Soviet collapse — remained the single viable part of the Russian state. It was therefore logical that when it became essential to end the chaos, the FSB would be the one to end it. Vladimir Putin, whom the KGB trained during Andropov’s tenure and who participated in the privatization frenzy in St. Petersburg, emerged as the force to recentralize Russia. The FSB realized that the Russian Federation itself faced collapse, and that excessive power had fallen out of its hands as FSB operatives had fought one another during the period of privatization.

Putin sought to restore the center in two ways. First, he worked to restore the central apparatus of the state. Second, he worked to strip power from oligarchs unaligned with the apparatus. It was a slow process, requiring infinite care so that the FSB not start tearing itself apart again, but Putin is a patient and careful man.

Putin realized that Andropov’s gamble had failed catastrophically. He also knew that the process could not simply be reversed; there was no going back to the Soviet Union. At the same time, it was possible to go back to the basic principles of the Soviet Union. First, there could be a union of the region, bound together by both economic weakness and the advantage of natural resource collaboration. Second, there was the reality of a transnational intelligence apparatus that could both stabilize the region and create the infrastructure for military power. And third, there was the reversal of the policy of trading geopolitical interests for financial benefits from the West. Putin’s view — and the average Russian’s view — was that the financial benefits of the West were more harmful than beneficial.

By 2008, when Russia defeated America’s ally, Georgia, in a war, the process of reassertion was well under way. Then, the financial crisis struck along with fluctuations in energy prices. The disparity between Russia’s politico-military aspirations, its military capability and its economic structure re-emerged. The Russians once again faced their classic situation: If they abandoned geopolitical interests, they would be physically at risk. But if they pursued their geopolitical interests, they would need a military force capable of assuming the task. Expanding the military would make the public unhappy as it would see resources diverted from public consumption to military production, and this could only be managed by increasing the power of the state and the security apparatus to manage the unhappiness. But this still left the risk of a massive divergence between military and economic power that could not be bridged by repression. This risk re-created the situation that emerged in the 1970s, had to be dealt with in the 1980s and turned into chaos in the 1990s.

The current decisions the Russians face can only be understood in the context of events that transpired 20 years ago. The same issues are being played out, and the generation that now governs Russia was forged in that crucible. The Russian leadership is trying to balance the possible outcomes to find a solution. They cannot trade national security for promised economic benefits that may not materialize or may not be usable. And they cannot simply use the security apparatus to manage increased military spending — there are limits to that.

As a generation ago, Russia is caught between the things that it must do to survive in the short run and the things it cannot do if they are to survive in the long run. There is no permanent solution for Russia, and that is what makes it such an unpredictable player in the international system. The closest Russia has come to a stable solution to its strategic problem was under Ivan the Terrible and Stalin, and even those could not hold for more than a generation.

The West must understand that Russia is never at peace with itself internally, and is therefore constantly shifting its external relationships in an endless, spasmodic cycle. Things go along for awhile, and then suddenly change. We saw a massive change 20 years ago, but the forces that generated that change had built up quietly in the generation before. The generation since has been trying to pull the pieces back together. But in Russia, every solution is merely the preface to the next problem — something built into the Russian reality.

Europe Is Obama's First 'Global Test'

From American Thinker
By Soeren Kern

President-elect Barack Obama is already facing his first global test. And it's not coming from the usual suspects like Iran or North Korea, but from America's "allies" in Europe.

European leaders have congratulated Obama on his election victory by sending him a six-page letter in which they benevolently "offer" the United States a "partnership of equals" in order to address global problems in the post-Bush era.

That's right: Europeans are calling on Obama to "accept" Europe as America's equal on the global stage. The idea behind this new man-to-man relationship with Washington was hatched by (surprise, surprise) France, which currently holds the EU's six-month rotating presidency.

French Foreign Minister Bernard Kouchner says the reason for establishing an equal transatlantic partnership is that "the world has changed." Europe has suddenly realized that the United States "is not the only one concerned by the world's problems. The European Union has become more resolute.... We don't want to play a secondary role any more," says Kouchner.

Read the rest of this entry >>

2008 and the Return of the Nation-State

From Stratfor
By George Friedman

In 1989, the global system pivoted when the Soviet Union retreated from Eastern Europe and began the process of disintegration that culminated in its collapse. In 2001, the system pivoted again when al Qaeda attacked targets in the United States on Sept. 11, triggering a conflict that defined the international system until the summer of 2008. The pivot of 2008 turned on two dates, Aug. 7 and Oct. 11.

On Aug. 7, Georgian troops attacked the country’s breakaway region of South Ossetia. On Aug. 8, Russian troops responded by invading Georgia. The Western response was primarily rhetorical. On the weekend of Oct. 11, the G-7 met in Washington to plan a joint response to the global financial crisis. Rather than defining a joint plan, the decision — by default — was that each nation would act to save its own financial system with a series of broadly agreed upon guidelines.

The Aug. 7 and Oct. 11 events are connected only in their consequences. Each showed the weakness of international institutions and confirmed the primacy of the nation-state, or more precisely, the nation and the state. (A nation is a collection of people who share an ethnicity. A state is the entity that rules a piece of land. A nation-state — the foundation of the modern international order — is what is formed when the nation and state overlap.) Together, the two events posed challenges that overwhelmed the global significance of the Iraqi and Afghan wars.

The Conflict in Georgia

In and of itself, Russia’s attack on Georgia was not globally significant. Georgia is a small country in the Caucasus, and its fate ultimately does not affect the world. But Georgia was aligned with the United States and with Europe, and it had been seen by some as a candidate for membership in NATO. Thus, what was important about the Russian attack was that it occurred at all, and that the West did not respond to it beyond rhetoric.

Part of the problem was that the countries that could have intervened on Georgia’s behalf lacked the ability to do so. The Americans were bogged down in the Islamic world, and the Europeans had let their military forces atrophy. But even if military force had been available, it is clear that NATO, as the military expression of the Western alliance, was incapable of any unified action. There was no unified understanding of NATO’s obligation and, more importantly, no collective understanding of what a unified strategy might be.

The tension was not only between the United States and Europe, but also among the European countries. This was particularly pronounced in the different view of the situation Germany took compared to that of the United States and many other countries. Very soon after the Russo-Georgian war had ended, the Germans made clear that they opposed the expansion of NATO to Georgia and Ukraine. A major reason for this is Germany’s heavy dependence on Russian natural gas, which means Berlin cannot afford to alienate Moscow. But there was a deeper reason: Germany had been in the front line of the first Cold War and had no desire to participate in a second.

The range of European responses to Russia was fascinating. The British were livid. The French were livid but wanted to mediate. The Germans were cautious, and Chancellor Angela Merkel traveled to St. Petersburg to hold a joint press conference with Russian President Dmitri Medvedev, aligning Germany with Russia — for all practical purposes — on the Georgian and Ukrainian issues.

The single most important effect of Russia’s attack on Georgia was that it showed clearly how deeply divided — and for that matter, how weak — NATO is in general and the Europeans are in particular. Had they been united, they would not have been able to do much. But they avoided that challenge by being utterly fragmented. NATO can only work when there is a consensus, and the war revealed how far from consensus NATO was. It can’t be said that NATO collapsed after Georgia. It is still there, and NATO officials hold meetings and press conferences. But the alliance is devoid of both common purpose and resources, except in very specific and limited areas. Some Europeans are working through NATO in Afghanistan, for example, but not most, and not in a decisive fashion.

The Russo-Georgian war raised profound questions about the future of the multinational military alliance. Each member consulted its own national interest and conducted its own foreign policy. At this point, splits between the Europeans and Americans are taken for granted, but the splits among the Europeans are profound. If it was no longer possible to say that NATO functioned, it was also unclear after Aug. 8 in what sense the Europeans existed, except as individual nation-states.

The Global Financial Crisis

What was demonstrated in politico-military terms in Georgia was then demonstrated in economic terms in the financial crisis. All of the multinational systems created after World War II failed during the crisis — or more precisely, the crisis went well beyond their briefs and resources. None of the systems could cope, and many broke down. On Oct. 11, it became clear that the G-7 could cooperate, but not through unified action. On Oct. 12, when the Europeans held their eurozone summit, it became clear that they would only act as individual nations.

As with the aftermath of the Georgian war, the most significant developments after Oct. 11 happened in Europe. The European Union is first and foremost an arrangement for managing Europe’s economy. Its bureaucracy in Brussels has increased its authority and effectiveness throughout the last decade. The problem with the European Union is that it was an institution designed to manage prosperity. When it confronted serious adversity, however, it froze, devolving power to the component states.

Consider the European Central Bank (ECB), an institution created for managing the euro. Its primary charge — and only real authority — is to work to limit inflation. But limiting inflation is a problem that needs to be addressed when economies are otherwise functioning well. The financial crisis is a case where the European system is malfunctioning. The ECB was not created to deal with that. It has managed, with the agreement of member governments, to expand its function beyond inflation control, but it ultimately lacks the staff or the mindset to do all the things that other central banks were doing. To be more precise, it is a central bank without a single finance ministry to work with. Unlike other central banks, whose authority coincides with the nations they serve, the ECB serves multiple nations with multiple interests and finance ministries. By its nature, its power is limited.

In the end, power did not reside with Europe, but rather with its individual countries. It wasn’t Brussels that was implementing decisions made in Strasbourg; the centers of power were in Paris, London, Rome, Berlin and the other capitals of Europe and the world. Power devolved back to the states that governed nations. Or, to be more precise, the twin crises revealed that power had never left there.

Between the events in Georgia and the financial crisis, what we saw was the breakdown of multinational entities. This was particularly marked in Europe, in large part because the Europeans were the most invested in multilateralism and because they were in the crosshairs of both crises. The Russian resurgence affected them the most, and the fallout of the U.S. financial crisis hit them the hardest. They had to improvise the most, being multilateral but imperfectly developed, to say the least. In a sense, the Europeans were the laboratory of multilateralism and its intersection with crisis.

But it was not a European problem in the end. What we saw was a global phenomenon in which individual nations struggled to cope with the effects of the financial crisis and of Russia. Since the fall of the Soviet Union, there has been a tendency to view the world in terms of global institutions, from the United Nations to the World Trade Organization. In the summer of 2008, none of these functioned. The only things that did function effectively were national institutions.

Since 2001, the assumption has been that subnational groups like al Qaeda would define the politico-military environment. In U.S. Defense Department jargon, the assumption was that peer-to-peer conflict was no longer an issue and that it was all about small terrorist groups. The summer of 2008 demonstrated that while terrorism by subnational groups is not insignificant by any means, the dynamics of nation-states have hardly become archaic.

The Importance of the State

Clearly, the world has pivoted toward the nation-state as the prime actor and away from transnational and subnational groups. The financial crisis could be solved by monetizing the net assets of societies to correct financial imbalances. The only institution that could do that was the state, which could use its sovereign power and credibility, based on its ability to tax the economy, to underwrite the financial system.

Around the world, states did just that. They did it in very national ways. Many European states did it primarily by guaranteeing interbank loans, thereby essentially nationalizing the heart of the financial system. If states guarantee loans, the risk declines to near zero. In that case, the rationing of money through market mechanisms collapses. The state must take over rationing. This massively increases the power of the state — and raises questions about how the Europeans back out of this position.

The Americans took a different approach, less focused on interbank guarantees than on reshaping the balance sheets of financial institutions by investing in them. It was a more indirect approach and less efficient in the short run, but the Americans were more interested than the Europeans in trying to create mechanisms that would allow the state to back out of control of the financial system.

But what is most important is to see the manner in which state power surged in the summer and fall of 2008. The balance of power between business and the state, always dynamic, underwent a profound change, with the power of the state surging and the power of business contracting. Power was not in the hands of Lehman Brothers or Barclays. It was in the hands of Washington and London. At the same time, the power of the nation surged as the importance of multilateral organizations and subnational groups declined. The nation-state roared back to life after it had seemed to be drifting into irrelevance.

The year 1989 did not quite end the Cold War, but it created a world that bypassed it. The year 2001 did not end the post-Cold War world, but it overlaid it with an additional and overwhelming dynamic: that of the U.S.-jihadist war. The year 2008 did not end the U.S.-jihadist war, but it overlaid it with far more immediate and urgent issues. The financial crisis, of course, was one. The future of Russian power was another. We should point out that the importance of Russian power is this: As soon as Russia dominates the center of the Eurasian land mass, its force intrudes on Europe. Russia united with the rest of Europe is an overwhelming global force. Europe resisting Russia defines the global system. Russia fragmented opens the door for other geopolitical issues. Russia united and powerful usurps the global stage.

The year 2008 has therefore seen two things. First, and probably most important, it resurrected the nation-state and shifted the global balance between the state and business. Second, it redefined the global geopolitical system, opening the door to a resurgence of Russian power and revealing the underlying fragmentation of Europe and weaknesses of NATO.

The most important manifestation of this is Europe. In the face of Russian power, there is no united European position. In the face of the financial crisis, the Europeans coordinate, but they do not act as one. After the summer of 2008, it is no longer fair to talk about Europe as a single entity, about NATO as a fully functioning alliance, or about a world in which the nation-state is obsolete. The nation-state was the only institution that worked.

This is far more important than either of the immediate issues. The fate of Georgia is of minor consequence to the world. The financial crisis will pass into history, joining Brady bonds, the Resolution Trust Corp. and the bailout of New York City as a historical oddity. What will remain is a new international system in which the Russian question — followed by the German question — is once again at the center of things, and in which states act with confidence in shaping the economic and business environment for better or worse.

The world is a very different place from what it was in the spring of 2008. Or, to be more precise, it is a much more traditional place than many thought. It is a world of nations pursuing their own interests and collaborating where they choose. Those interests are economic, political and military, and they are part of a single fabric. The illusion of multilateralism was not put to rest — it will never die — but it was certainly put to bed. It is a world we can readily recognize from history.