Friday, May 16, 2014

World Scale Theater of the Absurd

Progress being the ideal situation in which we seek to find ourselves at all time, we do not mind being in a steady state condition once in a while if it lasts for only a short period of time. What we do not tolerate is a state under which the conditions around us begin to shrink. This is when we spring into action and do what we can to offset what is diminishing around us.

And nothing is more true about that set of preferences than in matters concerning the economy of the nation. Steady growth is what we seek for the economy at all time; a short period of stagnation is what we can accept once in a while; shrinkage of the economy (better known as recession) is what we do not tolerate. When this happens, we hurry to do something about it, something like stimulating the economy using the monetary and fiscal tools at hand.

There are other ways to stimulate the economy, one of them being trading with foreign countries. But it can happen at times that a dispute arises with a country we have established a two-way flourishing trade, and something political – having nothing to do with trade – gets in the way. A decision must be made to put pressure on the other party, and it usually comes in the form of using the existing trade relation to punish them. The trouble with this form of punishment is that it happens to be a double edged sword which normally hurts both the intended victim and the perpetrator.

We have an example of this in that we live at a time when the world is abuzz about the economic center of gravity shifting toward the East, and China overtaking the US in economic output. Yet, despite all this, there are voices in the West who call for the further disruption of their own economies by applying economic sanctions on Russia, an important trading partner of Western Europe. The dispute that arose to trigger such calls has to do with Ukraine, a one time province of the old Soviet Union, now an independent state that the New Russian Federation seeks to bring back into the fold. To this end, Russia seems to be employing methods that do not conform to acceptable international norms.

America being the Western nation having the least economic interaction with Russia, it harbors the most vociferous voices calling for the punishment of Russia with forceful economic sanctions. Europe, on the other hand, has the most elaborate set of interactions, thus displays the least inclination at using the double-edged sword of trade to punish Russia.

It is inevitable that when a set of conditions accumulate in which the stakes are this high and this varied, a human drama of epic dimensions should arise. We have a glimpse of one such performance as it plays itself out in the form of a Wall Street Journal editorial that came under the title: “Putin's European Enablers” and the subtitle: “France moves ahead with a $1.6 billion arms sale to Russia.” It was published on May 16, 2014.

The Journal editors set the scene: “U.S. officials and Russia's neighbors are protesting France's plan to sell Putin's navy assault ships, and rightly so.” As if this were not enough, the editorial continues: “But the French are hardly the only Europeans who want to continue business as usual with Russia.” It goes on to paint the character of the current French President as being the most enthusiastic for doing business with Russia, and chides the previous French president for setting the stage that made the current scene possible.

With a sense of bitterness, the editors tell the story of the French who thought that Russia had become one of them after the events of 1991; of the Americans who pushed for Russia's entry into the G-8, the WTO and the OSCE among other Western clubs, only to discover that Russia is stuck in a pre-1991 mentality.

The editors lament that Britain's prime Minister has ruled out trade sanctions against Russia, a situation that makes them remark: “Neither Mr. Hollande [president of France] nor Mr. Cameron [PM of Britain] will be mistaken for another Winston Churchill.” But having said that, they suggest that France emulate something Churchill did by trying to sell those ships to Canada or someone else so as to deny them to Russia.

The editors see this as the best denouement for the unfolding drama; the French are saying: Mais non, c'est pas possible.

Stay tuned.