Category Archives: Report

Strategy or improvisation? Predictability or unpredictability?

If I had to recommend a single article for foreign policy decision makers to read, it would be Robert Jervis’s 1968 essay ‘Hypotheses on Misperception.’ As I’ve written before, many of the tensions between states derive from misperceptions. People misperceive others; misperceive themselves; and misperceive how they are seen by others. In his article, Jervis hypothesizes 14 misperceptions which are commonly encountered in international politics. Hypothesis number 9 is the following: ‘actors tend to see the behavior of others as more centralized, disciplined, and coordinated than it is.’ Jervis adds that, ‘Further, actors see others as more internally united than they in fact are and generally overestimate the degree to which others are following a coherent policy.’ In my opinion, this is absolutely correct, and we can see a lot of this going on in contemporary analyses of Russia.

Continue reading Strategy or improvisation? Predictability or unpredictability?

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Dirty money, dirty politics

A week ago, the British House of Commons Select Committee on Foreign Affairs issued a report entitled ‘Moscow’s Gold: Russian Corruption in the UK.’  Given the title, one might imagine that this was all about corruption and the role played by Russian ‘dirty money’ in the British economy. In reality, the report conflates legal and illegal activity, and contains one statement which, in my opinion, verges on the libellous and constitutes an attempt to intimidate British companies from engaging in legitimate business. In this way, it goes beyond the usual criticism of Russia and into altogether more dangerous territory.

The fact that Russians have invested billions of pounds in the British economy is well known. The probability that some of this money comes from corrupt activities within the Russian Federation is also widely accepted. To the extent that the latter is true, this is a matter of proper concern to the British authorities, and it is right that something be done to clamp down on money laundering. The report ‘Moscow’s Gold’ makes much broader claims, however. It says that ‘There is a direct relationship between the oligarchs’ wealth and the ability of President Putin to executive his aggressive foreign policy.’ Supposedly, the ‘dirty’ money invested by ‘oligarchs’ with ties to the Kremlin can be used to undermine British democracy and for other aggressive activities. The report claims that ‘These assets, on which the Kremlin can call at any time, both directly and indirectly support President Putin’s campaign to subvert the international rules-based system.’

The committee fails to support this claim with firm evidence. The best that it can come up with is a statement by Mark Galeotti about what Galeotti calls ‘small-scale stuff’ in the Balkans, such as funding for websites. No evidence of any ‘large-scale stuff’ is produced, and absolutely no evidence to suggest that the Kremlin is in fact using dirty money invested in the UK for the ends claimed by the report. In any case, even if Russian oligarchs are indeed using their money to such ends, no evidence is provided to show that it is actually dirty money rather than legally invested money. In other words, the issue of corruption is conflated with something entire distinct.

The report likewise conflates corruption with perfectly legal business and financial deals, such as the flotation of Russian companies on the London stock exchange (in particular the Russian company EN+ in 2017) and the selling of Russian sovereign bonds in the British financial market. It may be the case, as the report says, that it makes no sense for the UK to permit such actions at a time when it is simultaneously imposing sanctions on Russia, but that is an entirely separate matter from that of corruption and money laundering.

And that leads me onto the thing which really struck me about this document. This was a statement about the British law firm Linklaters, which managed the flotation of EN+. Shortly before this, the report says ‘Both the EN+ IPO [Initial Public Offering] and the sale of Russian debt in London appear to have been carried out in accordance with the relevant rules and regulatory systems, and there is no obvious evidence of impropriety in a legal sense.’ Yet, it then goes on to say the following:

We asked Linklaters to appear before the committee to explain their involvement in the flotation of EN+ … They refused. We regret their unwillingness to engage with our inquiry and must leave others to judge whether their work at ‘the forefront of financial, corporate and commercial developments in Russia’ has left them so entwined in the corruption of the Kremlin and its supporters that they are no longer able to meet the standards expected of a UK-regulated law firm.

This is quite outrageous, and also cowardly. The committee in effect accuses Linklaters of corruption, while avoiding complaints of libel by use of the weasel words ‘we leave to others to judge’ – a way of making an accusation while claiming that one hasn’t. What’s so outrageous about the statement is that comes straight after a confession that the EN+ flotation was completely above board. Linklaters didn’t do anything wrong, and the House of Commons committee knows it. Nevertheless, it sees fit to suggest that the company is ‘no longer able to meet the standards expected of a UK-regulated law firm.’

The implication here is that any company which has extensive dealings with Russian enterprises is ‘entwined in the corruption of the Kremlin’ and so unfit to do business. I cannot interpret this as anything other than an attempt by the committee to threaten British companies and intimidate them into dropping their lawful activities. I consider this disgraceful.

The committee’s attitude can be seen again towards the end of the report, when it writes that ‘instead of participating in the rules-based system, President Putin’s regime uses asymmetric methods to achieve its goals, and others – so-called useful idiots – magnify that effect by supporting its propaganda. So, there you have it. People who do with business with Russia are to be publicly shamed as unworthy of the standards expected of the British people, while those who would dare to point this sort of thing out are to be denounced as ‘useful idiots’. Having any dealings with Russia makes one a Kremlin stooge.

What the British House of Commons ignores is that lots of British citizens have perfectly legitimate reasons to do business with Russia, and do so in an entire legal and proper way. And others also have very good reasons to question public policy regarding Russia. None of them deserved to be insulted in this way by their elected representatives. The authors of this report should be ashamed of themselves.

Well, duh!

There are times when you read something so obvious that all you can say in response is ‘Well, duh!’ The sad thing, however, is that the blindingly obvious often isn’t so blindingly obvious to those who dispense our hard earned tax dollars. We need somebody to gather the evidence and prove the point so that people can’t ignore what they really ought to know anyway. So, thank goodness for John Sopko, the US Special Inspector General for Afghanistan Reconstruction (SIGAR), whose reports I have often featured on this blog. SIGAR’s latest report, entitled ‘Private Sector Development and Economic Growth: Lessons from the U.S. experience in Afghanistan’,  is now out, and below are some of the highlights:

— U.S. financial aid practices, at times, encouraged corruption, complicated the challenges of coordination within and between U.S. agencies, and kept non-viable Afghan enterprises afloat.

— The U.S. government and stakeholders failed to understand the relationships between corrupt strongmen and powerholders, and the speed at which Afghanistan could transition to a Western-style market economy.

— Senior technical experts often lack expertise in Afghanistan or even in post-conflict or developing economies, and were unable to provide effective guidance and support.

— The simple existence of laws and regulations is insufficient; it is how they are implemented by courts, government officials, and police that matters. Many laws introduced to promote economic activity were not accompanied by plans to build or modify the institutions needed to apply them, and Afghanistan’s weak judicial system left even the best-crafted laws vulnerable to manipulation.

— The U.S. government’s provision of direct financial support to enterprises sometimes created dependent, commercially nonviable entities, as well as disincentives for businesses to use local financial and technical services.

— Assistance provided to Afghan institutions and firms relied mainly on Western technocratic models that often failed to consider how powerful Afghan social groups and institutions influenced public policy and the functioning of markets.

— Due to a lack of understanding and uneven enforcement of market principles, the market economy was conflated with unfair competition, monopolization of markets by politically well-connected firms, unfair trade practices by regional neighbors, and administrative corruption.

— Rapid opening up to trade allowed Afghan consumers access to cheaper imported goods, but the opening of the country’s borders before Afghan goods were competitive with imports hurt domestic producers.

— Fear of government regulatory and tax-collecting institutions reinforced Afghan firms’ historical inclination to stay informal and small rather than risk expanding, hampering both government revenues and private investment.

Well, duh!  What amazes me is that anybody thought it might turn out any differently. Stripped down to its essence, the lessons here are:

  • Massive foreign aid produces corruption in the recipient country.
  • Aid encourages inefficient economic practices.
  • Formal institutions, such as laws, depend upon informal institutions, such as local customs and social structures.
  • Informal institutions in foreign countries like Afghanistan aren’t the same as in the West
  • Foreign advisors don’t understand these specificities.
  • Consequently, trying to turn those countries into copies of the West by slapping down Western institutions there and flooding them with Western advisors and money doesn’t work.

Well, duh!

None of this is particularly novel. SIGAR is to be thanked for drawing it once again to our attention. Sadly, I don’t get the impression that anybody in power is listening.

Garbage in, garbage out

Every now and again the Canadian Security Intelligence Service (CSIS) holds a seminar to which it invites outside ‘experts’. It then publishes a report on what was said, minus any names so you don’t know who was involved. I never get invited to these (I’m either insufficiently expert or prone to saying the wrong things), but I do get sent the reports. The latest volume arrived in the mail a couple of weeks ago, and I have finally gotten around to reading it. Its title is ‘Who Said What? The Security Challenges of Modern Disinformation’, and it summarizes the results of a seminar held in Ottawa last November.

Those of you who have been following discussions of this subject over the past few years will probably need to read no further than the title. You’ll already know what’s in the report: Western democracy is under threat from ‘Russian disinformation’, as the Russian Federation uses RT, internet trolls, Facebook, Twitter, and the like to subvert our populations’ faith in their own media and governments and to support Russia’s nefarious international policies. ‘Who Said What?’ does spend a little bit of time talking about other countries, specifically China and the Philippines, but the majority of the report is clearly focused on Russia since, as the Executive Summary claims, ‘The most skilled national purveyor of falsehoods is Russia.’ According to the report, Russia:

directs an extensive network of Internet trolls and bot networks which generate and spread material across the web. Their activities are intensified by the support of diplomats, state-controlled media outlets such as RT and Sputnik … Working together, these agents of the Russian state can create a false story and ensure it reaches the segment population most likely to be influenced by it through Facebook, Twitter, and other channels. They also appear to corroborate the story through news agency interviews featuring phoney experts, forged documents, and doctored photos and videos. … Russia stands out for its highly organised strategy of using disinformation to interfere with the political systems of other countries. … Operations against Western populations aim to weaken resistance to Russian state objectives. In supporting Syria, Russia has used disinformation to cover the brutality of its attacks on civilian populations. … Russian disinformation machinery is explicitly weaponised as a resource for future wars, weakening a target country’s sense of danger and diminishing the will to resist.

This is all fairly boilerplate stuff which has been said many times. What marks this report out, though, is some of the more extreme statements which accompany it, which give an indication of the type of experts CSIS has seen fit to invite. Take, for instance, the following paragraph:

No good interest is served by representing the Kremlin’s activities as Russia versus the West. In fact, the Kremlin’s main adversary has always been, and still is, Russia itself. Virtually every type of action it has undertaken against the West was first implemented in Russia, against the Russian people, and against Russia’s many ethnic, national, and religious minorities.

Hmm. I’d be interested to see the evidence backing this claim, particularly the idea that the Kremlin views Russia’s minorities as ‘adversaries’. Certainly, one doesn’t get the impression that this particular ‘expert’ is a neutral academic researcher. The same could be said of the author of the next set of comments who remarks first that ‘Russia’s current disinformation campaign against the West is more dangerous and sophisticated than ever before’, and second that ‘Every Russian citizen … is now part of a centralized vertical responsible for the state’s information security.’ The second statement is a particularly bold claim, conjuring up a picture of Russia as a totalitarian state in which every citizen is participating as a robotic arm of the Kremlin’s information machine, a quite bizarre image for which no evidence is produced.

Other extreme claims include one that, ‘Coupled with breath-taking militarism … Russia’s measures in the domain of information security have transformed Kaliningrad into a laboratory for testing future warfare’. Another states that it is a ‘myth’ that Russia is fighting terrorism (including ISIS) in Syria, and also says that Russia’s military campaign in Syria was carried out with ‘great brutality and immense suffering. Far from shortening the war, it exacerbated it’. The report then goes on to say that ‘the verified proof … suggests that the Assad government and its allies, including Russia, did indeed have a policy of targeting Syria’s hospitals’. And so on.

Of course, one may wonder how it can be that ‘the verified proof … suggests’. Proof proves. It doesn’t ‘suggest’. And one may wonder also who is doing the disinformation here. Is it the Russians, or is it CSIS’s experts?

At the end of the chapter about Russia and Syria, the report says that ‘What is required is an approach that empowers individuals not only to discover information about Putin’s war in Syria, but also to verify the information themselves.’ I’m all for allowing people to verify information. But that requires them to have access to a large variety of different sources, including those which challenge one another. Yet in a later chapter about Ukraine, somebody who is clearly a member of the Ukrainian organization Stop Fake relates with some satisfaction that, ‘An important step in disconnecting Ukrainians from Russia’s propaganda pipeline was the removal from air of 75 Russian TV channels’ as well as ‘a decree blocking Russian social networks from operating in Ukraine.’ It appears that allowing people ‘to verify the information themselves’ does not include allowing them to verify the claims of those who are hostile to Russia; in fact people must be prevented from doing so.

Interestingly, the only attempt to define disinformation in this report is a sentence which says, ‘Disinformation … is aggressive marketing of information in support of political objectives.’ This is a very odd definition. ‘Marketing of information in support of political objectives’ is what all politicians and political actors do all the time. By this definition, all politics, all diplomacy, everything, is disinformation. It doesn’t even matter if what the Russians are saying is true. They are marketing information for political purposes, and that cannot be tolerated.

The reason it can’t be tolerated is because the West is good and Russia is bad. This is an objective truth which cannot be contested. The report notes that, ‘Certain truths need to be inculcated in each generation, first among them that there is such a thing as truth – that there is an objective reality that cannot be wished away.’ I agree that there is an objective reality. The Syrian Arab Army dropped a barrel bomb full of chlorine on Douma. Or it didn’t. Both statements can’t be true. But it’s a bit like Schrodinger’s cat. We don’t know the truth until we observe it. And in a lot of cases, especially those concerning international politics, we don’t ever get to observe it, or at least any more than a small part of it, and we have to draw conclusions based on limited, often unreliable, information. And then, we have to decide which information is important, and which isn’t, and decide how to fit it all together into a coherent narrative. At that point biases inevitably come into play and ‘truth’ starts becoming a lot more subjective. In such circumstances, what’s dangerous is not a multiplicity of competing narratives, but rather people who set themselves up as holders of the absolute truth and seek to control information in order to stop others getting hold of ‘untruth’. That is the path to totalitarianism.

Alas, there’s more than a whiff of that in this report. About the only restrained element in the document is a chapter on Brexit which concludes that, ‘Analyses of the Brexit botnet did not find strong evidence of widespread “fake news” dispersion.’ Otherwise, the experts consulted by CSIS adopt extreme positions and are so certain of the truth of their own narratives, despite (or perhaps because of) their extreme nature, that they are intolerant of alternatives.

For sure, there’s an awful lot of garbage on the internet, as well as on television, and in our newspapers. But I’m not inclined to trust those who would appoint themselves guardians of what I should and should not read, especially since my own research indicates to me that a lot of what they say is garbage too.

Undermining democracy

Knowing what somebody else has done, is doing, or is capable of doing can be hard enough. Knowing why they are doing it, or what they intend to do in the future is an even more difficult task. Understanding intentions requires a deep and sympathetic knowledge of other actors’ motivations, interests, and mentality, of the constraints under which they operate, and of the manner in which they view the world. That requires one to drop all one’s own preconceptions and adopt fully those of another, which can only be done by studying them, their surroundings, and their history intimately. And even then one can never truly ‘know’ somebody else, as it is impossible to get inside their head. All statements about intentions are at best assessments. They can never be considered fact.

None of this, of course, stops people from proclaiming confidently that ‘Putin wants this’ or ‘Russia wants that’ as if their claims were proven. Rarely are these assertions backed by solid evidence; hardly ever do they refer to what Putin or other Russian officials have actually said that they want; they are simply guesses disguised as facts.

An example is a new report issued by the Center for Strategic and International Studies (CSIS), entitled Countering Adversary Threats to Democratic Institutions. This is the product of two meetings of an ‘expert group’ organized by CSIS. The report makes bold claims about Russian intentions. But going through the list of ‘experts’, I could find only one with any expertise specifically on Russia rather than security and intelligence more broadly. How the experts came to their judgements on Russian intentions is never made clear.

The report begins with a foreword which states in startling terms that:

American democracy is under attack from Russia. … Putin’s objective is to weaken us by sowing chaos and discord, and to undermine the appeal of democracy itself. If he can show that American-style democracy … is incompetent, illegitimate, and hypocritical, he can use that to undermine its potential appeal among Russia’s population and in other countries around the world where we compete for influence.

This is an assertion concerning Vladimir Putin’s intentions, not his actions. Nevertheless, underpinning it is an assumption about actions – namely that Russia has indeed been waging some sort of ‘information war’ against the United States. It is indicative of the current state of affairs that this assumption is simply taken for granted, even though some people might consider it unproven (and if it is indeed unproven then everything else which follows falls apart). However, let us put that aside for the moment, and return to the issue of intentions. If it is true that Russia has done any, or all, of things of which it is accused, what does it have in mind?

The CSIS experts are confident that they know the answer: the aim is to ‘sow chaos and undermine trust in the liberal democratic order,’ ‘to erode trust in Western governments and sow confusion and discord,’ and ‘to exacerbate existing divisions in society … to weaken democracy.’ The report concludes that:

The Russian government is engaged in a covert and overt campaign to weaken Western democracies, with the express intent of promoting an illiberal order dominated by Moscow and like-minded states.

I have to wonder where this idea of an ‘express intent’ comes from, because I have never read anything by any Russian official expressing such an intent – never. Take, for instance, Vladimir Putin, whose speeches I have read in detail and on which I have published a couple of academic articles. You will read his speeches in vain for any criticisms of democracy as a form of government, any expressions of a desire to weaken democracy in the West (or in Russia for that matter), or any desire to ‘sow chaos’ around the world. On the contrary, you will find multiple expressions of support for democracy, of support of order and stability, and of support for better relations with the West. Of course, you could argue that his actions tell you something different, but the fact remains that he and other Russian officials have never stated the intention being assigned to them.

The CSIS report doesn’t say how it came to the conclusion that Putin wants to undermine democracy. It doesn’t produce any actual evidence to support its claim. It just asserts it. Moreover, it asserts it as a proven fact, failing to make clear that this is just what a bunch of security experts who don’t know too much about Russia happen to think is the case. Any suggestion of uncertainty is entirely absent. That does not necessarily mean that the claim is false, but it does mean that the confidence with which it is asserted is entirely unjustified and that the report therefore misleads by failing to make the degree of uncertainty clear.

Furthermore, there are points in the report where the ‘expert group’s’ lack of  knowledge of Russia becomes clear and makes one seriously doubt their right to be able to claim to understand what’s in Vladimir Putin’s head. In particular, the report says:

The Experts Group discussed the perception of Russia as the ‘3rd Rome’ among an increasingly broad constellation of groups and individuals. Russian nationalists, with the encouragement of the Russian government, have promoted the idea of Russia as the heir to the Byzantine and Roman empires. … Russia is the sole protector of ‘legitimate’ conservative values: homophobia, xenophobia, and anti-Semitism.

But what is the evidence that the Russian government encourages ‘3rd Rome-ism’ and Russian nationalists, let alone ‘homophobia, xenophobia, and anti-Semitism’? In reality, nationalists and the government don’t get on very well, and most of the former regard the latter with undisguised hostility. The issue of homophobia is somewhat contentious, but on the other matters I am completely unaware of any actions or statements by the Russian government promoting xenophobia and anti-Semitism. Indeed, if you read Putin’s speeches, you will find numerous condemnations of such things along with a repeated emphasis on the multi-ethnic nature of the Russian nation (which is one of the reasons Russian nationalists don’t like him).

Underlying all this is a rather odd idea that Putin is bent on spreading an illiberal authoritarian model of government around the world, rather like the Soviet Union tried to spread communism. But this is an idea which is entirely unsubstantiated, and in my view entirely fictitious. Likewise, the claim that he wishes to spread chaos rather ignores the damage that such chaos would do to Russian interests, which rest largely on having a stable international order. It seems to me that the CSIS ‘experts’ are locked into a Cold War mode of thinking which they have failed to adapt to contemporary realities.

There’s another segment in the report which also struck me as very odd. This says the following:

The Russian government has advanced its strategic influence in Eastern and Central European countries by gaining influence, and in some instance, control over specific sectors: energy, banking and finance, real estate, transportation infrastructure, and media … First, Russia state-owned enterprises purchase assets … The purchased entity then gains influence with local officials … Simultaneously, the Russian government creates or sponsors local nongovernmental organizations … Finally, supportive local officials are placed in national governments … Collectively, these activities in some countries result in state capture.

It strikes me that there is a certain amount of projection going on here, as what is described could very easily be said, with rather more justification I suspect, about the United States. But in any case, what is the evidence for this claim? What country in Eastern and Central Europe has Russia ‘captured’? Which one? I can’t think of a single example. The claim concerning ‘state capture’ is is pure fiction.

The CSIS report ends with a series of proposals for what the United States should do to protect itself against the Russian threat. Some of these are uncontroversial. The report, for instance, calls for better cybersecurity measures. One can hardly argue with that. But Russia doesn’t have much to do with it. Better cybersecurity is required regardless of whether Russia is waging some sort of information war. Other proposals, though, are more problematic. For instance, we are told that:

Internet platforms and democratic governments must work together on technological and policy measures to increase barriers to entry for disinformation campaigns and make it easier for citizens to differentiate between legitimate and false information.

‘Legitimate’ information? What is that? And who is to determine what it is, and tell us that we shouldn’t have it? I find this sort of thing a little creepy, and don’t really think that it is for the state or private corporations to tell us what we should be allowed to read or what we should think.

At the end of the report, the authors note that ‘increasing public resilience against the kind of techniques used by Russia may ultimately be the most effective countermeasure.’ In particular, ‘participants emphasized that a sense of shared narrative is perhaps the strongest defence against Russian threats to our democratic institutions.’ This is possibly the most sensible thing that the report says. Russian ‘propaganda’, if there is such a thing, can only succeed in dividing people who are already prone to being divided. If the divisions in American society were reduced, then it would be harder for outside actors to ‘sow chaos’. If American government, state institutions, and the media were more trustworthy, Americans might be less inclined to turn to alternatives for information and political analysis. In such an event, Russian ‘disinformation’ would have no effect whatsoever.

In other words, the real threat to American democracy lies within America, not without.

UPDATE:

The latest indictments in the ‘Russiagate’ affair certainly lend credence to the claim that some Russians went to some considerable effort to set up social media accounts that would look like they were genuine American ones, but their intentions in so doing remain a matter of speculation. It is probably the rather haphazard internet trolling allegedly carried out by ‘Russia-linked accounts’ that induces people to conclude that it was a matter of ‘causing chaos’, but it can’t be stated as fact. In any case, there is a difference between haphazard trolling and a deliberate effort to ‘undermine democracy’ in order to create an ‘illiberal international order’, which is a far more dramatic claim. I have yet to see any evidence supporting this.

sanctions: the evidence

In my recent post about the Canadian House of Commons defence committee’s report on Ukraine, I complained that the committee had recommended strengthening sanctions against Russia without producing any evidence that sanctions were an effective tool in changing Russian behaviour. As luck would have it, I have acquired a copy of a recent report which analyzes the effect of sanctions on the Russian economy. I thought, therefore, that I should share the report’s conclusions with you.

Before doing so, it’s first necessary to point out that damaging the Russian economy isn’t the ultimate point of sanctions. If sanctions are to have any meaningful purpose, then that purpose has to be to change Russian behaviour, specifically vis-à-vis Ukraine, given that Ukraine was the pretext for the sanctions. That said, sanctions aren’t going to make Russia change its behaviour if they don’t damage the Russian economy. Coercion has to hurt if it is to coerce. No pain, no gain, as it were. So are they hurting?

The report I have in hand is entitled ‘What difference have sanctions made and is that about to change?’ It was published in September by Macro Advisory Eurasia-Russia Consulting which describes itself as ‘the leading independent macroeconomic and political strategy firm specialising in the Eurasia region, including Russia and the CIS states.’ The report concludes that, ‘it is impossible to say categorically that sanctions have either significantly contributed to the economic decline [in Russia since 2014] or that they have helped the economy survive what would otherwise have been a more severe recession.’ However, the report’s authors tend more towards the latter option, saying that ‘sanctions helped in many respects.’

According to the report, the Russian economy was slowing down even before 2014. The major cause of the subsequent recession was the collapse in the oil price. The impact of sanctions was very small. However, sanctions did affect the way that the Russian government responded to the oil-price-driven recession. Following the global financial crisis of 2008, the government reacted by spending large amounts of its reserves on propping up the ruble, and also by increasing government spending more generally in a type of Keynseian counter-cyclical strategy. In 2014, it abandoned this policy. Instead it allowed the ruble to become a free-floating currency, while it also exercised a tight monetary policy designed to drive down inflation.

The report’s authors credit this latter strategy with preventing the post-2014 recession from becoming as deep as many feared it would be. They write:

Sanctions removed, or made more difficult, the soft options of borrowing and spending … The combination forced the state to be much more fiscally disciplined and more flexible with monetary policy. The ruble free float would not have happened without sanctions. … the decision to stop supporting the currency was the single most important action taken by the government and one of the key reasons why sectors, such as agriculture, have become more competitive and started to grow. … [Therefore] it can be argued that the 2014 sanctions actually helped Russia avoid a steeper recession and a more severe financial crisis.

The report says also that the sanctions forced the oil and gas sector to become more efficient, resulting in an increase, not a decrease, in production after 2014. In general, says the report,

Russia is in good financial shape. … Russia is the sixth-lowest indebted nation and has the sixth-largest financial reserves. … As a result of the sanctions, Russia was forced to repay $250 bn of external debt between 2014 and 2016. That represented 12.5% of pre-devaluation GDP and 25% of post-devaluation GDP. Not many countries in the world could have done that and still avoid a catastrophic crisis. It shows the resilience in the macro-economic and social-political system.

What then of the future?

On this Macro Advisory is a little more cautious. It claims that a lot depends upon the effects of the latest sanctions legislation passed by the US Congress. With this legislation, Congress has effectively seized control of sanctions from the president. Given past experience (e.g. with Cuba, Iran, and the Jackson-Vanik amendment which imposed sanctions against the USSR), the likelihood is that the existing sanctions against Russia will remain for a very long time, regardless of what happens with US-Russia relations more broadly. The new legislation is disturbing, moreover, because it contains stipulations which could be used to dramatically increase sanctions against Russia in the future. This possibility creates a degree of uncertainty which deters foreign direct investment (FDI) in Russia. Currently FDI in Russia is rising again, but that could easily change. A much harsher sanctions regime is possible, and that, says the report, could have a negative effect on the Russian economy.

The report lays out three possibilities. The first involves a relaxation of sanctions by European powers. The second sees sanctions remaining as they are. The third envisages much tighter US sanctions. The report assesses that in the first scenario, growth in Russian GDP will pick up to 3.0% by 2020, accelerating to 4.5% by the end of Putin’s final term in office in 2024. In the second scenario, growth will gradually rise to 3.0% by 2022 and remain roughly constant at that level thereafter. In the third scenario, growth will drop to 0.8% by 2020 before increasing to 2.3% by 2024.

Personally, I suspect that scenario two is the most likely – things will continue on much as they are. If the authors are correct, therefore, we should expect that, barring some external shock such as another global recession, during Putin’s final term in office the Russian economy will experience steady if not extremely rapid growth, ending up with three years of 3.0% growth per annum. That’s not enough to catch up with the West, but it’s not bad either, and certainly sufficient to put a noticeable amount of extra money in Russians’ pockets. If that’s really true, then economically speaking Putin’s last years will be a moderate success from an economic point of view.

Of course, these are all just projections and, as we know, economists often get their projections wrong. Nevertheless, none of this is good news for those who think that sanctions are an effective tool against ‘Russian aggression’ or who imagine that the collapse of the ‘Putin regime’ is just around the corner.

What’s the objective, and how does this help achieve it?

Today the Canadian government announced that it had added Ukraine to the Automatic Firearms Country Control List, which is a list of countries deemed to be permitted destinations for the export of firearms. This does not necessarily mean that Canadian companies will immediately start exporting weapons to Ukraine, but it does mean that they are now allowed to do so.

Ukraine, of course, is hardly short of firearms. It’s hard to see what difference a few from Canada will make. Nevertheless, one can see this as another victory for Canada’s Ukrainian lobby, coming just a day after the House of Commons Standing Committee on National Defence issued a report on Ukraine which included a recommendation to add Ukraine to this list. The report drew heavily on statements by Ukrainian officials, the president of the Ukrainian Canadian Congress, Paul Grod, and some other Canadian-Ukrainian activitists such as Taras Kuzio and Lubomyr Luciuk. The fact that the government acted on one of its recommendations within a day must be something of a record for speed.

There’s a lot wrong with the standing committee’s report, which you can read here. I won’t bother listing all its problems, but they include a poor understanding of the origins and nature of the war in Donbass, and an extremely one-sided perspective on all issues relating to Ukraine and Russia. But that’s not what I want to talk about here. What concerns me is the detachment of the policy recommendations from any clear objective, and the lack of evidence to support the recommendations.

When presenting any policy proposals, what one needs to do is first explain one’s objective, and second explain how the recommended policies will help one to achieve the objective. If the objective isn’t credible, and if the policies won’t help one achieve it, then the recommendations are worthless. In this case, the defence committee report recommends, among other things, that:

  • Canada expand its training and support of the Ukrainian army.
  • Increase its commitment to the OCSE monitoring mission in Donbass.
  • Advocate for a ‘peacekeeping mission in Ukraine that respects its territorial integrity’.
  • ‘Provide lethal weapons to Ukraine … provided that Ukraine demonstrate that it is actively working to eliminate corruption.’
  • Add Ukraine to the Automatic Firearms Country Control List.
  • Encourage cooperation between Ukrainian and Canadian defence industries.
  • Assign members of the Canadian Armed Forces to Ukraine’s cyber-security operations.
  • Expand sanctions against Russia.

My question to the committee is this: ‘What is this all meant to achieve?’ The report doesn’t actually lay out any objectives, so we can’t tell whether these recommendations are relevant or how one could measure their success. This is a pretty serious failing.

About the only place where there is a hint of the committee’s idea of what it hopes for is a section entitled ‘Conflict Resolution and Prevention in Ukraine’. In that section, we are told that , ‘Canada and the international community are trying to find peaceful solutions to the conflict in Ukraine’ So, the committee wants to promote peace in Ukraine. But what does the committee think a peaceful solution would look like? That’s not clear, as the report doesn’t say. But it does cite Paul Grod as follows:

Mr. Grod noted that, as long as Russia is not prepared to ‘have a resolution and stop the ongoing conflict and military aggression,’ Minsk II will never be implemented. In his opinion, Minsk II is ‘stale-dated’ and the ‘simple way’ to ‘bring peace and stability’ to Ukraine is ‘to force Russia’s hand to remove their military, their equipment, and their financing of the separatists’ in the Donbas region; Russia must agree ‘to stop the war in Ukraine.’

In other words, the objective is the total surrender of rebel Donbass, and the chosen means of achieving this end is ‘to force Russia’s hand’ – i.e. coercion.

This is dumb. It’s dumb because it is totally unachievable. The rebels in Donbass aren’t just going to give up. The report says that the rebels have 35,000 men under arms. I have never heard of an undefeated army of that size simply deciding one day that they’ve had enough and will lay down their arms to their enemies and put themselves at their mercy. It won’t happen. The report seems to think that everything depends on Russia, and that if Russia can simply be coerced sufficiently it will abandon Donbass. It won’t. Russia won’t stop supporting the rebels without receiving something extremely tangible in return. Complete Ukrainian victory of the sort apparently favoured by the defence committee is a fantasy.

The report says that, ‘Witnesses told the Committee that Canada and the international community must stand together in trying to find a peaceful solution to the armed conflict in Ukraine.’ So, if a peaceful solution can’t take the form of the total surrender of Donbass, what could it take the form of? The only two alternatives are: a) a negotiated peace settlement, and b) a complete ceasefire, perhaps enforced by peacekeepers, dividing the sides and in effect freezing the conflict. Will the report’s recommendations help achieve either of those?

The answer is no. A negotiated settlement would have to take the form of something like Minsk II, but unconditional support of Ukraine of the sort proposed by the committee doesn’t provide any incentives to Kiev to change its current policy of refusing to enact the Minsk provisions. The report’s recommendations merely encourage Kiev to carry on its current course. The recommendations therefore undermine peace, not promote it.

As for the frozen conflict option, the Canadian recommendations are equally irrelevant. The report spends a lot of time talking about a potential peacekeeping operation. This is absurd. There is currently no peace to keep. In any event, the committee totally supports the Kiev government’s line on what a peacekeeping operation should consist of – forces deployed throughout the rebel republics, including on the border with Russia. Neither the rebels nor Russia will ever agree to this. It’s pointless proposing it. Insisting on this formula serves only to rule out the possibility of an alternative which could actually stop the killing – a peacekeeping force along the front lines. By rejecting this latter formula, the Canadian committee is once again working against peace, not in favour of it.

What we see here, therefore, is a stubborn refusal to choose achievable objectives combined with recommendations which are in any case detached from any objective, and without the provision of any evidence that the recommendations can help produce successful results. The committee, for instance, favours increased sanctions versus Russia without providing any data which shows that sanctions have in any way altered Russian behaviour in a desired way, justifying the decision solely on the basis of unbacked assertions by certain interested parties. This is not ‘evidence-based policy.’

There was a time when Canada was seen as a peacekeeper and an ‘honest broker’ in international relations. Alas, those days are in the past.