An example the world can understand

Here's something good that has come out of the Bush administration.

Nicolas Sarkozy saved the President of Georgia from being hanged “by the balls” — a threat made last summer by Vladimir Putin, according to an account that emerged yesterday from the Élysée Palace.[Snip]

With Russian tanks only 30 miles from Tbilisi on August 12, Mr Sarkozy told Mr Putin that the world would not accept the overthrow of Georgia’s Government. According to Mr Levitte, the Russian seemed unconcerned by international reaction. “I am going to hang Saakashvili by the balls,” Mr Putin declared.

Mr Sarkozy thought he had misheard. “Hang him?” — he asked. “Why not?” Mr Putin replied. “The Americans hanged Saddam Hussein.”

Mr Sarkozy, using the familiar tu, tried to reason with him: “Yes but do you want to end up like [President] Bush?” Mr Putin was briefly lost for words, then said: “Ah — you have scored a point there.”

Not, I am sure, the kind of thing George Bush would have liked for Russian Prime Minister Vladimir Putin to learn from his behavior, but Bush should have thought of that in advance. Assuming that Bush can think of things like that in advance, of course.

[ h/t to Glenn Greenwald ]

Putin accuses US of fomenting crisis in Georgia to get one Presidential candidate elected.

From CNN Europe:

From CNN's Matthew Chance

SOCHI, Russia (CNN) -- Russian Prime Minister Vladimir Putin has accused the United States of orchestrating the conflict in Georgia to benefit one of its presidential election candidates.
Russian PM Vladimir Putin has accused the U.S. of orchestrating the conflict in Georgia.

In an exclusive interview with CNN's Matthew Chance in the Black Sea city of Sochi on Thursday, Putin said the U.S. had encouraged Georgia to attack the autonomous region of South Ossetia.

Putin said his defense officials had told him it was done to benefit a presidential candidate -- Republican John McCain and Democrat Barack Obama are competing to succeed George W. Bush -- although he presented no evidence to back it up.

"U.S. citizens were indeed in the area in conflict," Putin said. "They were acting in implementing those orders doing as they were ordered, and the only one who can give such orders is their leader."

Gee. Why he would think that? And which candidate do you think he is talking about, the one that belongs to the party in the White House or the one who belongs to the party outside the White House without the power to induce Saakishvili to attack South Ossetia?

Considering the history of the Bush/Cheney administration there is no accusation that can be made that is too extreme to be considered within the realm of reasonable possibility, is there?

What is Russia's reasion for continuing to attack into Georgia?

In spite of an apparent ceasefire, Russian troops continue to engage with Georgian military. Why? Tom Lasseter and Jonathan S. Landay of McClatchy Newspapers provides the answer.

GORI, Georgia — Russian troops, in seeming violation of a cease-fire agreement set only on Tuesday, embarked Wednesday on what Georgian officials called a deliberate and systematic attempt to demolish what remains of the Georgian military. [Snip]

The state news service Interfax quoted an analyst saying that, "Moscow will now be listened to and treated seriously. The West has … not listened to Russia over the past 15 years."

The Russians have been working hard to induce the Georgians to attack South Ossetia so that they could justify counterattacking the Georgians. The Russians also know there will be a lot of international repercussions, so once committed, they want the greatest possible benefit.

The essential purpose of this effort is for Russia to show those countries next to them, the "Near Abroad," that Russia is back with a vengeance. The talk among those "Near Abroad" countries that they were going to join NATO to protect themselves from "The Bear" angered "The Bear" and so the nearby countries that thought they could act without considering what Russian wants/demands had better think twice.

The purpose of the attack into Georgia was to greatly damage and embarrass Georgia, and to the extent possible, to eliminate the Georgian military as a credible force. The Russian military will stop attacking the Georgian military when there is no significant Georgian military left to attack.

The rest of the near abroad nations, particularly Ukraine, will be carefully absorbing this lesson, as well at the helplessness of the US and the passivity of European nations. The Bear is back, and the western nations that were talking such a great fight have faded when a real fight was necessary. Talk is cheap, and the Russians are not.

That's the lesson. And unlike the US in Iraq, the Russians have sent enough troops to make sure the lesson is learned.

Why did the Soviet Union fall?

I stumbled [H/T to Kevin Drum.] across this article at Marginal Revolution and found it remarkably informative. True? Let's say that I suspect there is a lot of truth in it.

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In a simplified way, the story of the collapse of the Soviet Union could be told as a story about grain and oil.

That is from Yegor Gaidar. In the 1980s it was necessary to import more and more grain, and Saudi Arabia was no longer supporting oil prices. It worked like this:

The timeline of the collapse of the Soviet Union can be traced to September 13, 1985. On this date, Sheikh Ahmed Zaki Yamani, the minister of oil of Saudi Arabia, declared that the monarchy had decided to alter its oil policy radically. The Saudis stopped protecting oil prices, and Saudi Arabia quickly regained its share in the world market. During the next six months, oil production in Saudi Arabia increased fourfold, while oil prices collapsed by approximately the same amount in real terms.

As a result, the Soviet Union lost approximately $20 billion per year, money without which the country simply could not survive. The Soviet leadership was confronted with a difficult decision on how to adjust. There were three options--or a combination of three options--available to the Soviet leadership.

First, dissolve the Eastern European empire and effectively stop barter trade in oil and gas with the Socialist bloc countries, and start charging hard currency for the hydrocarbons. This choice, however, involved convincing the Soviet leadership in 1985 to negate completely the results of World War II. In reality, the leader who proposed this idea at the CPSU Central Committee meeting at that time risked losing his position as general secretary.

Second, drastically reduce Soviet food imports by $20 billion, the amount the Soviet Union lost when oil prices collapsed. But in practical terms, this option meant the introduction of food rationing at rates similar to those used during World War II. The Soviet leadership understood the consequences: the Soviet system would not survive for even one month. This idea was never seriously discussed.

Third, implement radical cuts in the military-industrial complex. With this option, however, the Soviet leadership risked serious conflict with regional and industrial elites, since a large number of Soviet cities depended solely on the military-industrial complex. This choice was also never seriously considered.

Unable to realize any of the above solutions, the Soviet leadership decided to adopt a policy of effectively disregarding the problem in hopes that it would somehow wither away. Instead of implementing actual reforms, the Soviet Union started to borrow money from abroad while its international credit rating was still strong. It borrowed heavily from 1985 to 1988, but in 1989 the Soviet economy stalled completely...

The money was suddenly gone. The Soviet Union tried to create a consortium of 300 banks to provide a large loan for the Soviet Union in 1989, but was informed that only five of them would participate and, as a result, the loan would be twenty times smaller than needed. The Soviet Union then received a final warning from the Deutsche Bank and from its international partners that the funds would never come from commercial sources. Instead, if the Soviet Union urgently needed the money, it would have to start negotiations directly with Western governments about so-called politically motivated credits.

In 1985 the idea that the Soviet Union would begin bargaining for money in exchange for political concessions would have sounded absolutely preposterous to the Soviet leadership. In 1989 it became a reality, and Gorbachev understood the need for at least $100 billion from the West to prop up the oil-dependent Soviet economy.

Here is the full article.

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Here's why I suspect there is a lot of truth in this.

An interesting tale told me by one of those great fiction artists, an academic Economist, shed some light on the collapse of the economy of the USSR.

It was a planned economy, one in which markets did not provide price the signals an individual business needed in order to plan and function over a period of time. The end of the planned economy was brought about using what was called "Shock therapy" by Economists like Jeffery Sax. Suddenly, bad as it had frequently been under central planning, individual businesses had no idea where to get their raw materials nor did that know what they would be likely to cost. Most of the businesses that did survive this period were large, raw material-based industries run as monopolies. They were large enough to internalize the central planning process that was abandoned by Moscow. Most of the rest of the economy simply didn't survive the change-over.

In the meantime, government was getting out of the business of providing housing, health care and such basic amenities to the population.

For a little over half a decade, the manufactured output of the entire economy of the USSR had a market value that was significantly less than what could have been obtained simply by selling the raw materials used by the economy on the world market. This is fascinating. The entire economy of the USSR actually created a net reduction of the value of the raw materials it had to work with. If this has ever happened over a lengthy period of time to any other economy in the world I certainly have not learned of it.

Given that amazing ~negative~ economic output, the Russian government had to borrow money internationally just to allow a larger percentage of the population to survive. As it is, the reduction in life spans clearly shows what a strain the entire economy was under. A reduction in military spending or in corruption (alternative proposed reasons for the economic problems of the USSR) would have only the effect of limiting distribution of income.

Given these economic circumstances, this story makes a lot of sense. Victor Putin's recent international aggressiveness towards the U.S. rather suggests that the Russian economy has recovered a great deal from the late 80's and early 90's. Putin's nasty tone towards Bush is probably more of a distraction for his population than a real threat towards the U.S., since life spans and general quality of life are recovering slowly.

Any agreements or disagreements?