Brzezinski on Putin's legacy

Very interesting article by Zbigniew Brzezinski. He argues that Russia lacks natural allies and that it needs to have a positive message if it wants to increase its influence.

http://www.twq.com/08spring/index.cfm?id=294

The end of US global hegemony?

I am wondering whether the US global hegemony isn't just about to be lost, as its economy, and the financial sector in particular, will be incresingly taken over by foreign investors. At the current low prices, due to the self-inflicted losses, buying out most of the jewels of the US financial sector would now cost some $1 trillion, a trifle relative to growing assets of sovereign wealth and private funds... Could a bunch of financial wizards contribute to the shift in the global balance of power? How ironic..

From the FT..

An Ottoman warning for indebted America
By Niall FergusonPublished: January 1 2008 18:37

Last updated: January 2 2008 08:07Future historians will look back on the current decade as a turning point comparable with that of the Seventies. No, not the 1970s. This is not going to be another piece pointing out the coincidence of an unpopular Republican president, soaring oil prices, a sagging dollar and an unwinnable faraway war. I am talking about the 1870s.At first sight, the resemblances across 130 years may not seem obvious. The 1870s were a time when conservative leaders such as Benjamin Disraeli, British prime minister, were powerful and popular. It was a time of falling commodity prices, after the financial crash of 1873 and the opening up of the American plains to agriculture. And it was an era of currency stability, as one country after another followed the British lead by pegging to gold.Yet, on closer inspection, we are indeed living through a global shift in the balance of power very similar to that which occurred in the 1870s. This is the story of how an over-extended empire sought to cope with an external debt crisis by selling off revenue streams to foreign investors. The empire that suffered these setbacks in the 1870s was the Ottoman empire. Today it is the US.In the aftermath of the Crimean war, both the sultan in Constantinople and his Egyptian vassal, the khedive, had begun to accumulate huge domestic and foreign debts. Between 1855 and 1875, the Ottoman debt increased by a factor of 28. As a percentage of expenditure, interest payments and amortisation rose from 15 per cent in 1860 to 50 per cent in 1875. The Egyptian case was similar: between 1862 and 1876, the total public debt rose from E£3.3m to E£76m. The 1876 budget showed debt charges accounting for more than half of all expenditure.The loans had been made for both military and economic reasons: to support the Ottoman military position during and after the Crimean war and to finance railway and canal construction, including the building of the Suez canal, which had opened in 1869. But a dangerously high proportion of the proceeds had been squandered on conspicuous consumption, symbolised by Sultan Abdul Mejid’s luxurious Dolmabahçe palace and the spectacular world premiere of Aïda at the Cairo Opera House in 1871. In the wake of the financial crisis that struck the European and American stock markets in 1873, a Middle Eastern debt crisis was inevitable. In October 1875 the Ottoman government declared bankruptcy.The crisis had two distinct financial consequences: the sale of the khedive’s shares in the Suez canal to the British government (for £4m, famously advanced to Disraeli by the Rothschilds) and the hypothecation of certain Ottoman tax revenues for debt service under the auspices of an international Administration of the Ottoman Public Debt, on which European bondholders were represented. The critical point is that the debt crisis necessitated the sale or transfer of Middle Eastern revenue streams to Europeans.The US debt crisis has taken a different form, to be sure. External liabilities have been run up by a combination of government and household dis-saving. It is not the public sector that is defaulting but subprime mortgage borrowers.As in the 1870s, though, the upshot of this debt crisis is the sale of assets and revenue streams to foreign creditors. This time, however, creditors are buying bank shares not canal shares. And the resulting shift of power is from west to east.Since September, Middle Eastern and east Asian sovereign wealth funds have made a succession of investments in four US banks: Bear Stearns <http://markets.ft.com/tearsheets/performance.asp?s=us:BSC> , Citigroup <http://markets.ft.com/tearsheets/performance.asp?s=us:C> , Morgan Stanley <http://markets.ft.com/tearsheets/performance.asp?s=us:MS> and Merrill Lynch <http://markets.ft.com/tearsheets/performance.asp?s=us:MER> . Most commentators have been inclined to welcome this global bail-out <http://www.ft.com/cms/s/0/294ed78a-ae3a-11dc-97aa-0000779fd2ac.html> : better to bring in foreign capital than to shrink balance sheets by reducing lending. Yet we need to recognise that these “capital injections” represent a transfer of the revenues from the US financial services industry into the hands of foreign governments. This is happening at a time when the gap between eastern and western incomes is narrowing at an unprecedented pace.In other words, as in the 1870s the balance of financial power is shifting. Then, the move was from the ancient oriental empires (not only the Ottoman but also the Persian and Chinese) to western Europe. Today the shift is from the US – and other western financial centres – to the autocracies of the Middle East and east Asia.In Disraeli’s day, the debt crisis turned out to have political as well as financial implications, presaging a reduction not just in income but also in sovereignty.In the case of Egypt, what began with asset sales continued with the creation of a foreign commission to manage the public debt, the installation of an “international” government and finally, in 1882, to British military intervention and the country’s transformation into a de facto colony. In the case of Turkey, the debt crisis was followed by the sultan’s abdication and Russian military intervention, which dealt a lethal blow to the Ottoman position in the Balkans.It remains to be seen how quickly today’s financial shift will be followed by a comparable geopolitical shift in favour of the new export and energy empires of the east. Suffice to say that the historical analogy does not bode well for America’s quasi-imperial network of bases and allies across the Middle East and Asia. Debtor empires sooner or later have to do more than just sell shares to satisfy their creditors.

The writer is a professor at Harvard University and Harvard Business School and a senior fellow of the Hoover Institution, Stanford

European history has a habit of forgetting Poland.

How true... Below an interesting review of Adam Zamoyski's book. Can't wait to see a major movie about it, something akin to "Saving Private Ryan". It would make a lot of sense, given that, unbeknowst to many, "the Vistula Miracle" had a much stronger impact on the history of the world than that of, for instance, D-Day invasion (which Norman Davies in "No Simple Victory" appropriately cuts to size)

http://entertainment.timesonline.co.uk/tol/arts_and_entertainment/books/history/article3592459.ece

Warsaw 1920: Lenin's Failed Conquest of Europe by Adam Zamoyski

European history has a habit of forgetting Poland. This is unfortunate, because the Poles have more than once played a crucial role in shaping Europe's fortunes. In 1683, the Polish king Jan III Sobieski checked the Ottoman armies before the gates of Vienna, earning among the Turks the sobriquet “Lion of Lechistan”. And in 1920, as Adam Zamoyski relates in this elegant and fascinating book, it was Poland that checked the westward expansion of Bolshevik Russia.
The two sides were in many respects ill-matched: the Red Army was a determined and experienced fighting force, hardened by a cruel civil war against anti-Bolshevik forces. Russia's manpower reserves dwarfed those of an exhausted post-war Poland ravaged by warfare, malnutrition and epidemic. The Polish army scarcely amounted to a cohesive force, consisting as it did of variously armed contingents that had served with the Germans, the Austrians and the Russians during the first world war, along with a colourful assembly of Lithuanian, Tatar, Cossack, German, Hungarian and Russian auxiliaries, not to mention a squadron of US volunteer pilots led by Major Cedric E Fauntleroy and Captain Merian C Cooper - later famous for co-directing King Kong and flying one of the planes that harass the ape on the Empire State Building.
The bulk of the book is given over to a deft and gripping battle narrative. Initially it was the Poles who had the upper hand, turning the spearheads of the Bolshevik advance, breaking their lines and pushing hundreds of miles eastwards into the Ukraine. But within two weeks, the Russians had mounted a successful counteroffensive, rolling the Poles back until they stood before Warsaw on the River Vistula. It was here, in August 1920, that Polish forces under the command of Jozef Pilsudski counterattacked from the south, checking and turning the offensive and driving the Russians back to the River Niemen.
Warsaw 1920 is battle history of the best kind. The international setting and the political context are gracefully sketched in, and Zamoyski integrates the voices of contemporaries to create a symphonic, three- dimensional chronicle. He conveys with consummate skill the movement of men across terrain, showing how the balance of forces shifted from one week to the next. His account of the two armies is highly textured and enlivened by evocative portraits of the most important personalities, from the Polish supreme commander Pilsudski, who possessed, in the words of one British diplomat, “none of the amenities of civilised intercourse, but all the apparatus of sombre genius”, to the Soviet commander, the melancholic, nihilist and anti-semitic former nobleman Mikhail Nikolayevich Tukhachevsky.
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This was a war between the ages: massed cavalry played a crucial role in a flat, open land where men on horses with revolvers and raised sabres could still deliver pulverising blows against advancing infantry. Some engagements were preceded by formalised duels, in which individual cavalrymen issued formulaic challenges and hacked at each other in the no-man's-land between two armies. The most effective Russian weapon was the tachanka, a machinegun mounted onto a light carriage that could be galloped into battle, turned and deployed against the enemy. Much of the manoeuvring consisted of old-fashioned wheeling movements designed to cut the enemy's supply lines.
And yet, as Zamoyski shows, the Soviet-Polish war of 1920 also carried the seeds of a terrible future. There was an escalation of atrocities on both sides. Captured officers were routinely tortured to death, and Jews were singled out for reprisals by Russians and Poles alike. Stalin never forgave the Poles for the bitter resistance of 1920, a fact that may help to account for the brutality of the Soviet occupation of eastern Poland in 1940, when army officers, priests, land- owners, doctors, veterinary surgeons and other members of the national intelligentsia were subjected to a campaign of extermination. Few of the commanders, Russian or Polish, who played a role in 1920 died peacefully in their beds - most were caught up in the machinery of terror. And even as they recalled the cavalry movements of the 17th century, the engagements of 1920 also anticipated a new world of mobile warfare, in which battles would be won by deep thrusts and pincer movements - not by horsemen, of course, but by a new generation of mobile armour.
Warsaw 1920: Lenin's Failed Conquest of Europe by Adam Zamoyski HarperCollins £14.99 pp160