Showing posts with label Russia. Show all posts
Showing posts with label Russia. Show all posts

Sunday, March 17

What Happened to Cyprus's Deposit Insurance Scheme?

So much for all quiet on the Eurozone front, a quiet which barring election rumblings from Italy has largely been enjoyed since Drahgi's LTRO blitz.

While it's unclear whether this weekend's 'bailing in' of Cyrpiot depositors will prove the trigger point for the final Eurozone reckoning, what is clear is that all the 'crazies' who have been stashing their money under their mattresses perhaps weren't so crazy after all.

One thing I'm curious about, which I haven't seen discussed in any detail anywhere else, are the mechanics behind what happened to Cyprus's deposit insurance scheme.

For example, is the insurance scheme, like the entire Cypriot banking system, insolvent? If yes, by how much? Could it be recapitalized through a tax? Etc.

The high level details of Cyprus's deposit insurance program, which goes by the name Deposit Protection Scheme (DPS), are discussed on the Central Bank of Cyprus's webpage here. As has been widely reported, depositors in Cypriot banks are supposed to be fully insured for €100.000 "per depositor, per bank".

Some reports state that if Cyprus's banks were allowed to fail then the small, fully insured depositors would be made whole. So do depositors who have €100.000 or less of insurable deposits have recourse for legal action in Cyprus?

One thing is clear: if I were a Cypriot depositor I would much rather have cash right now than shares in an insolvent bank.

Friday, July 6

Book Review: Private Empire – ExxonMobil and American Power by Steve Coll


If you were expecting Private Empire, the latest book by two-time Pulitzer Prize winning author Steve Coll, to serve as a hit piece on ExxonMobil (and 'Big Oil' in general) you’ll be somewhat disappointed.

For anyone unfamiliar with his previous work, Steve Coll’s earlier books include the highly recommended Ghost Wars, arguably the definitive geopolitical account of the activities of the CIA and other national intelligence agencies in Afghanistan and Pakistan from the time of the Soviet invasion up to the eve of the 9-11. Ghost Wars won the Pulitzer Prize in 2004 for general non-fiction and was one of the books a newly elected President Barrack Obama was reported to be reading upon entering office.

Steve Coll describes in an interview with Charlie Rose what lead him to want to write Private Empire and how his original idea for the book was to tell a broader story about the oil industry in the style of Daniel Yergin’s The Prize. He soon realized, however, that he needed a central character and Exxon was for him the only logical choice.

Coll’s portrait of Exxon begins in March 1989 with the Exxon Valdez oil spill in Prince William Sound, Alaska, an event which made the company the most reviled in the United Sates. The book’s timeline spans the subsequent transformation of the company, which was led by CEO Lee “Iron Ass” Raymond, up through its present day stewardship by current CEO Rex Tillerson. Along the way we learn a great deal about Exxon, including its somewhat peculiar cult-like corporate culture, its blockbuster merger with Mobil, its controversial stance and efforts on global warning, the access it enjoyed to political leaders such as Vice President Dick Cheney, its somewhat misleading approach to reporting oil reserves, and the company’s record setting financial success. The book in fact makes for a compelling business case study and students of business history, strategy and management will find much of interest.

The most interesting sections of the book are the ones detailing ExxonMobil’s operations in some of the world’s most politically unstable regions. ExxonMobil’s bread and butter business is to invest billions of dollars drilling holes in the ground in countries like Equatorial Guinea and Chad and then spend the next 30-40 years working to make sure that nothing interrupts the company's return on investment. Coll’s account of the 2004 attempted coup in Equatorial Guinea by a group of British and South African mercenaries, who were supported from some elements within the Spanish government, is one of the most fascinating stories in the book.

Continue reading the full review here.

Saturday, August 13

Video: The Commanding Heights - the battle between government and the marketplace

No less relevant today than it was roughly ten years ago when it first premiered, below is Part 1 of the must watch video series The Commanding Heights. Globalization, Keynes vs. Hayek, the future capitalism -- it's all here. Especially recommended for those interested in intellectual history. You'll find the remainder of the episodes at PBS here.

Sunday, July 31

Evil on Display: Anders Brievik and Insane Acts Committed by Sane People

Perhaps it would be easier to understand the horrific Norwegian killings if they were committed by someone with a history of mental illness and/or violence.

Or perhaps we could more quickly file away this tragedy into a tidy, little mental compartment if the killing was conducted by someone with far less skill and fewer economic advantages.

And perhaps over time more details will emerge to reveal a picture of someone with a history of hate or unsound mind.

But early portraits painted by people who knew him suggest a rather disturbing alternative, which is that Anders Brievik was a seemingly 'normal' Norwegian.

From one of his classmate friends of four years:
I do not know what drove Anders. But, unfortunately, I do not think he is crazy. It would have created a comfortable distance between us if I thought he was. Nothing I know about him from our school days or what I have read in his so-called manifesto suggests that. Rather, he is cold, intelligent and calculating. The Anders I knew was not a monster. 
And as the saying goes, he was not an island. He was product of our society. He was one of us.
Sadly, There is Nothing New Here

If in fact he is a sane, even likeable person as some suggest, who also can kill without concern for those he slaughters, what are we to make of Anders Brievik?

Any student of history is well aware of the unfortunate reality that people like Brievik are nothing new. Many, particularly here in Europe, had hoped the ideologies which fuel Brievik-like personalities, capable of inflicting immense harm to a great number of people not personally known, had been buried decades ago. But the carefully orchestrated supernova of violence conducted by Brievik reminds us that this flame has not in fact gone out yet.

In the wretched corner of history occupied by the Brieviks of the world resides Nazism, which, for better or for worse, has received the lion's share of attention. I say for better or worse because the Nazi-like crimes committed under Stalin, Mao, and others often do not receive the same level of emphasis as those committed under Hitler.

Some who studied the Nazi leadership on trial at Nuremberg stated that the single most important personal quality which contributed to the ability of these humans to try and exterminate Jews (and others) was a lack of empathy. In place of a sense of caring about individuals and collective humanity, which exists in varying degrees in the vast majority of us, instead resided a bottomless black hole devoid of the ability to feel what others feel.

Harm-justifying venom can be easily poured into such minds. Rather than rejecting ideas which you and I would find unconscionable, harming others can seem logical. Seemingly sophisticated moral philosophies, justifications, and ends-means rationalizations enable such people to shoot kids "not just once, but twice, to be sure".

The Anti-Change

Brievik's bomb and gun shots were basically an attack on change. Put simply, Brievik didn't like the way things were going in Norway and decided to effectively sacrifice his freedom of movement for at least 20+ years-to-life (Norway doesn't have the death penalty) to let the world know about it.

For those who don't have the time or inclination to read his 1,000+ page 'manifesto', the change he lashed out against goes by the name of globalization. Brievik would probably prefer that we refer to it as multiculturalism, but globalization and multiculturalism are inextricably linked. Reductionist arguments which try and isolate multiculturalism from globalization are idiosyncratic and counter-productive.

The purpose of this post is not to debate the merits of globalization, but it was interesting to note the stark contrast between Brievik's hate for Norway's immigrants with a recent talk on the contribution of immigrants to Britain's intellectual history. One quarter of Britain's Nobel prize winners were born abroad, as were a large number of America's. Is freedom of movement what the Brieviks of the world would have end, or are they ok with allowing just the Albert Einsteins in?

What is Evil?

Norwegians are hurting badly from this heinous crime and asking how one of their own could commit such an act. Some would like to see the whole episode go away and also deny Brievik the publicity and attention he seeks. From the lack of headlines of late on the BBC and other respectable news agencies it would seem that some clearly understand the essential role of the media to his carefully calculated plan. Hats off to media leaders who recognize this and have taken appropriate action. But what about those who are still trying to gain more information and understand why this happened?

Outside of the religious world people often scoff at whether the imprecise, black-and-white concept of 'evil' is useful. But what other word comes close to giving this its proper name?

Leave it to the shrinks to classify and rationalize empathy-devoid personality types. For the rest of us 'normal' people the word evil will suffice.

Wednesday, May 18

A Punctuation Mark in European History

By George Friedman, STRATFOR

With the Palestinians demonstrating and the International Monetary Fund in turmoil, it would seem odd to focus this week on something called the Visegrad Group. But this is not a frivolous choice. What the Visegrad Group decided to do last week will, I think, resonate for years, long after the alleged attempted rape by Dominique Strauss-Kahn is forgotten and long before the Israeli-Palestinian issue is resolved. The obscurity of the decision to most people outside the region should not be allowed to obscure its importance.

The region is Europe — more precisely, the states that had been dominated by the Soviet Union. The Visegrad Group, or V4, consists of four countries — Poland, Slovakia, the Czech Republic and Hungary — and is named after two 14th century meetings held in Visegrad Castle in present-day Hungary of leaders of the medieval kingdoms of Poland, Hungary and Bohemia. The group was reconstituted in 1991 in post-Cold War Europe as the Visegrad Three (at that time, Slovakia and the Czech Republic were one). The goal was to create a regional framework after the fall of Communism. This week the group took an interesting new turn.

Visegrad: A New European Military Force
(click here to enlarge image)


On May 12, the Visegrad Group announced the formation of a “battle group” under the command of Poland. The battle group would be in place by 2016 as an independent force and would not be part of NATO command. In addition, starting in 2013, the four countries would begin military exercises together under the auspices of the NATO Response Force.

Since the fall of the Soviet Union, the primary focus of all of the Visegrad nations had been membership in the European Union and NATO. Their evaluation of their strategic position was threefold. First, they felt that the Russian threat had declined if not dissipated following the fall of the Soviet Union. Second, they felt that their economic future was with the European Union. Third, they believed that membership in NATO, with strong U.S. involvement, would protect their strategic interests. Of late, their analysis has clearly been shifting.

First, Russia has changed dramatically since the Yeltsin years. It has increased its power in the former Soviet sphere of influence substantially, and in 2008 it carried out an effective campaign against Georgia. Since then it has also extended its influence in other former Soviet states. The Visegrad members’ underlying fear of Russia, built on powerful historical recollection, has become more intense. They are both the front line to the former Soviet Union and the countries that have the least confidence that the Cold War is simply an old memory.

Second, the infatuation with Europe, while not gone, has frayed. The ongoing economic crisis, now focused again on Greece, has raised two questions: whether Europe as an entity is viable and whether the reforms proposed to stabilize Europe represent a solution for them or primarily for the Germans. It is not, by any means, that they have given up the desire to be Europeans, nor that they have completely lost faith in the European Union as an institution and an idea. Nevertheless, it would be unreasonable to expect that these countries would not be uneasy about the direction that Europe was taking. If one wants evidence, look no further than the unease with which Warsaw and Prague are deflecting questions about the eventual date of their entry into the Eurozone. Both are the strongest economies in Central Europe, and neither is enthusiastic about the euro.

Finally, there are severe questions as to whether NATO provides a genuine umbrella of security to the region and its members. The NATO strategic concept, which was drawn up in November 2010, generated substantial concern on two scores. First, there was the question of the degree of American commitment to the region, considering that the document sought to expand the alliance’s role in non-European theaters of operation. For example, the Americans pledged a total of one brigade to the defense of Poland in the event of a conflict, far below what Poland thought necessary to protect the North European Plain. Second, the general weakness of European militaries meant that, willingness aside, the ability of the Europeans to participate in defending the region was questionable. Certainly, events in Libya, where NATO had neither a singular political will nor the military participation of most of its members, had to raise doubts. It was not so much the wisdom of going to war but the inability to create a coherent strategy and deploy adequate resources that raised questions of whether NATO would be any more effective in protecting the Visegrad nations.

There is another consideration. Germany’s commitment to both NATO and the EU has been fraying. The Germans and the French split on the Libya question, with Germany finally conceding politically but unwilling to send forces. Libya might well be remembered less for the fate of Moammar Gadhafi than for the fact that this was the first significant strategic break between Germany and France in decades. German national strategy has been to remain closely aligned with France in order to create European solidarity and to avoid Franco-German tensions that had roiled Europe since 1871. This had been a centerpiece of German foreign policy, and it was suspended, at least temporarily.

The Germans obviously are struggling to shore up the European Union and questioning precisely how far they are prepared to go in doing so. There are strong political forces in Germany questioning the value of the EU to Germany, and with every new wave of financial crises requiring German money, that sentiment becomes stronger. In the meantime, German relations with Russia have become more important to Germany. Apart from German dependence on Russian energy, Germany has investment opportunities in Russia. The relationship with Russia is becoming more attractive to Germany at the same time that the relationship to NATO and the EU has become more problematic.

For all of the Visegrad countries, any sense of a growing German alienation from Europe and of a growing German-Russian economic relationship generates warning bells. Before the  Belarusian elections there was hope in Poland that pro-Western elements would defeat the least unreformed regime in the former Soviet Union. This didn’t happen. Moreover, pro-Western elements have done nothing to solidify in Moldova or break the now pro-Russian government in Ukraine. Uncertainty about European institutions and NATO, coupled with uncertainty about Germany’s attention, has caused a strategic reconsideration — not to abandon NATO or the EU, of course, nor to confront the Russians, but to prepare for all eventualities.

It is in this context that the decision to form a Visegradian battle group must be viewed. Such an independent force, a concept generated by the European Union as a European defense plan, has not generated much enthusiasm or been widely implemented. The only truly robust example of an effective battle group is the Nordic Battle Group, but then that is not surprising. The Nordic countries share the same concerns as the Visegrad countries — the future course of Russian power, the cohesiveness of Europe and the commitment of the United States.

In the past, the Visegrad countries would have been loath to undertake anything that felt like a unilateral defense policy. Therefore, the decision to do this is significant in and of itself. It represents a sense of how these countries evaluate the status of NATO, the U.S. attention span, European coherence and Russian power. It is not the battle group itself that is significant but the strategic decision of these powers to form a sub-alliance, if you will, and begin taking responsibility for their own national security. It is not what they expected or wanted to do, but it is significant that they felt compelled to begin moving in this direction.

Just as significant is the willingness of Poland to lead this military formation and to take the lead in the grouping as a whole. Poland is the largest of these countries by far and in the least advantageous geographical position. The Poles are trapped between the Germans and the Russians. Historically, when Germany gets close to Russia, Poland tends to suffer. It is not at that extreme point yet, but the Poles do understand the possibilities. In July, the Poles will be assuming the EU presidency in one of the union’s six-month rotations. The Poles have made clear that one of their main priorities will be Europe’s military power. Obviously, little can happen in Europe in six months, but this clearly indicates where Poland’s focus is.

The militarization of the V4 runs counter to its original intent but is in keeping with the geopolitical trends in the region. Some will say this is over-reading on my part or an overreaction on the part of the V4, but it is neither. For the V4, the battle group is a modest response to emerging patterns in the region, which STRATFOR had outlined in its 2011 Annual Forecast. As for my reading, I regard the new patterns not as a minor diversion from the main pattern but as a definitive break in the patterns of the post-Cold War world. In my view, the post-Cold War world ended in 2008, with the financial crisis and the Russo-Georgian war. We are in a new era, as yet unnamed, and we are seeing the first breaks in the post-Cold War pattern.

I have argued in previous articles and books that there is a divergent interest between the European countries on the periphery of Russia and those farther west, particularly Germany. For the countries on the periphery, there is a perpetual sense of insecurity, generated not only by Russian power compared to their own but also by uncertainty as to whether the rest of Europe would be prepared to defend them in the event of Russian actions. The V4 and the other countries south of them are not as sanguine about Russian intentions as others farther away are. Perhaps they should be, but geopolitical realities drive consciousness and insecurity and distrust defines this region.

I had also argued that an alliance only of the four northernmost countries is insufficient. I used the concept “Intermarium,” which had first been raised after World War I by a Polish leader, Joseph Pilsudski, who understood that Germany and the Soviet Union would not be permanently weak and that Poland and the countries liberated from the Hapsburg Empire would have to be able to defend themselves and not have to rely on France or Britain.

Pilsudski proposed an alliance stretching from the Baltic Sea to the Black Sea and encompassing the countries to the west of the Carpathians — Czechoslovakia, Hungary, Romania and Bulgaria. In some formulations, this would include Yugoslavia, Finland and the Baltics. The point was that Poland had to have allies, that no one could predict German and Soviet strength and intentions, and that the French and English were too far away to help. The only help Poland could have would be an alliance of geography — countries with no choice.

It follows from this that the logical evolution here is the extension of the Visegrad coalition. At the May 12 defense ministers’ meeting, there was discussion of inviting Ukraine to join in. Twenty or even 10 years ago, that would have been a viable option. Ukraine had room to maneuver. But the very thing that makes the V4 battle group necessary — Russian power — limits what Ukraine can do. The Russians are prepared to give Ukraine substantial freedom to maneuver, but that does not include a military alliance with the Visegrad countries.

An alliance with Ukraine would provide significant strategic depth. It is unlikely to happen. That means that the alliance must stretch south, to include Romania and Bulgaria. The low-level tension between Hungary and Romania over the status of Hungarians in Romania makes that difficult, but if the Hungarians can live with the Slovaks, they can live with the Romanians. Ultimately, the interesting question is whether Turkey can be persuaded to participate in this, but that is a question far removed from Turkish thinking now. History will have to evolve quite a bit for this to take place. For now, the question is Romania and Bulgaria.

But the decision of the V4 to even propose a battle group commanded by Poles is one of those small events that I think will be regarded as a significant turning point. However we might try to trivialize it and place it in a familiar context, it doesn’t fit. It represents a new level of concern over an evolving reality — the power of Russia, the weakness of Europe and the fragmentation of NATO. This is the last thing the Visegrad countries wanted to do, but they have now done the last thing they wanted to do. That is what is significant.

Events in the Middle East and Europe’s economy are significant and of immediate importance. However, sometimes it is necessary to recognize things that are not significant yet but will be in 10 years. I believe this is one of those events. It is a punctuation mark in European history.

Visegrad: A New European Military Force is republished with permission of STRATFOR.

Saturday, April 30

Video: Niall Ferguson on Nuclear Weapons and Human Rights

1 March 2011 (Part 4 in the lecture series)



Speaker: Professor Niall Ferguson
Chair: Professor Michael Cox

This event was recorded on 1 March 2011 in Old Theatre, Old Building

The decisive breakthroughs in the Cold War occurred in seemingly unrelated fields -- nuclear arms control and human rights. But was the collapse of communism a reflection of imperial overstretch or the result of liberal aspirations for freedom? This event celebrates the publication of Professor Ferguson's new book Civilization: The West and the Rest. Niall Ferguson is Philippe Roman Chair in History and International Affairs at LSE IDEAS for 2010-11.

Monday, February 28

Chimerica or Chindia: Who Will Dominate the 21st Century?

A good read from Evans-Pritchard which covers several of the main issues which will determine which nation(s) will prosper the most in the 21st century.

Some of the key pieces of data highlighted in the article:
  • Demographic trends (e.g., China's 1.2 males/female ratio suggest social instability)
  • China’s workforce peaks in absolute terms in four years
  • Birth rates: Beijing and Shanghai are 1.0, Korea is 1.1, Singapore 1.2, Germany 1.3, Poland 1.3, Italy 1.4, Russia 1.4 with the U.S. coming in around the population replenishment rate of 2.1
  • Environmental catastrophe: China's growth rate of 10% is outstripped by 13.5% in GDP equivalent eco-damage)

Tuesday, February 22

Revolutionary Tipping Points: Is This 1989, 1968, 1848 or NOTA?

Revolution and the Muslim World
By George Friedman, STRATFOR

The Muslim world, from North Africa to Iran, has experienced a wave of instability in the last few weeks. No regimes have been overthrown yet, although as of this writing, Libya was teetering on the brink.

1848 Europe
There have been moments in history where revolution spread in a region or around the world as if it were a wildfire. These moments do not come often. Those that come to mind include 1848, where a rising in France engulfed Europe. There was also 1968, where the demonstrations of what we might call the New Left swept the world: Mexico City, Paris, New York and hundreds of other towns saw anti-war revolutions staged by Marxists and other radicals. Prague saw the Soviets smash a New Leftist government. Even China’s Great Proletarian Cultural Revolution could, by a stretch, be included. In 1989, a wave of unrest, triggered by East Germans wanting to get to the West, generated an uprising in Eastern Europe that overthrew Soviet rule.

Each had a basic theme. The 1848 uprisings attempted to establish liberal democracies in nations that had been submerged in the reaction to Napoleon. 1968 was about radical reform in capitalist society. 1989 was about the overthrow of communism. They were all more complex than that, varying from country to country. But in the end, the reasons behind them could reasonably be condensed into a sentence or two.

Some of these revolutions had great impact. 1989 changed the global balance of power. 1848 ended in failure at the time — France reverted to a monarchy within four years — but set the stage for later political changes. 1968 produced little that was lasting. The key is that in each country where they took place, there were significant differences in the details — but they shared core principles at a time when other countries were open to those principles, at least to some extent.

The Current Rising in Context

In looking at the current rising, the geographic area is clear: The Muslim countries of North Africa and the Arabian Peninsula have been the prime focus of these risings, and in particular North Africa where Egypt, Tunisia and now Libya have had profound crises. Of course, many other Muslim countries also had revolutionary events that have not, at least until now, escalated into events that threaten regimes or even ruling personalities. There have been hints of such events elsewhere. There were small demonstrations in China, and of course Wisconsin is in turmoil over budget cuts. But these don’t really connect to what is happening in the Middle East. The first was small and the second is not taking inspiration from Cairo. So what we have is a rising in the Arab world that has not spread beyond there for the time being.

The key principle that appears to be driving the risings is a feeling that the regimes, or a group of individuals within the regimes, has deprived the public of political and, more important, economic rights — in short, that they enriched themselves beyond what good taste permitted. This has expressed itself in different ways. In Bahrain, for example, the rising was of the primarily Shiite population against a predominantly Sunni royal family. In Egypt, it was against the person of Hosni Mubarak. In Libya, it is against the regime and person of Moammar Gadhafi and his family, and is driven by tribal hostility.

Why has it come together now? One reason is that there was a tremendous amount of regime change in the region from the 1950s through the early 1970s, as the Muslim countries created regimes to replace foreign imperial powers and were buffeted by the Cold War. Since the early 1970s, the region has, with the exception of Iran in 1979, been fairly stable in the sense that the regimes — and even the personalities who rose up in the unstable phase — stabilized their countries and imposed regimes that could not easily be moved. Gadhafi, for example, overthrew the Libyan monarchy in 1969 and has governed continually for 42 years since then.

Any regime dominated by a small group of people over time will see that group use their position to enrich themselves. There are few who can resist for 40 years. It is important to recognize that Gadhafi, for example, was once a genuine, pro-Soviet revolutionary. But over time, revolutionary zeal declines and avarice emerges along with the arrogance of extended power. And in the areas of the region where there had not been regime changes since after World War I, this principle stays true as well, although interestingly, over time, the regimes seem to learn to spread the wealth a bit.

Thus, what emerged throughout the region were regimes and individuals who were classic kleptocrats. More than anything, if we want to define this wave of unrest, particularly in North Africa, it is a rising against regimes — and particularly individuals — who have been in place for extraordinarily long periods of time. And we can add to this that they are people who were planning to maintain family power and money by installing sons as their political heirs. The same process, with variations, is under way in the Arabian Peninsula. This is a rising against the revolutionaries of previous generations.

The revolutions have been coming for a long time. The rising in Tunisia, particularly when it proved successful, caused it to spread. As in 1848, 1968 and 1989, similar social and cultural conditions generate similar events and are triggered by the example of one country and then spread more broadly. That has happened in 2011 and is continuing.

A Uniquely Sensitive Region

It is, however, happening in a region that is uniquely sensitive at the moment. The U.S.-jihadist war means that, as with previous revolutionary waves, there are broader potential geopolitical implications. 1989 meant the end of the Soviet empire, for example. In this case, the question of greatest importance is not why these revolutions are taking place, but who will take advantage of them. We do not see these revolutions as a vast conspiracy by radical Islamists to take control of the region. A conspiracy that vast is easily detected, and the security forces of the individual countries would have destroyed the conspiracies quickly. No one organized the previous waves, although there have been conspiracy theories about them as well. They arose from certain conditions, following the example of one incident. But particular groups certainly tried, with greater and lesser success, to take advantage of them.

In this case, whatever the cause of the risings, there is no question that radical Islamists will attempt to take advantage and control of them. Why wouldn’t they? It is a rational and logical course for them. Whether they will be able to do so is a more complex and important question, but that they would want to and are trying to do so is obvious. They are a broad, transnational and disparate group brought up in conspiratorial methods. This is their opportunity to create a broad international coalition. Thus, as with traditional communists and the New Left in the 1960s, they did not create the rising but they would be fools not to try to take advantage of it. I would add that there is little question but that the United States and other Western countries are trying to influence the direction of the uprisings. For both sides, this is a difficult game to play, but it is particularly difficult for the United States as outsiders to play this game compared to native Islamists who know their country.

But while there is no question that Islamists would like to take control of the revolution, that does not mean that they will, nor does it mean that these revolutions will be successful. Recall that 1848 and 1968 were failures and those who tried to take advantage of them had no vehicle to ride. Also recall that taking control of a revolution is no easy thing. But as we saw in Russia in 1917, it is not necessarily the more popular group that wins, but the best organized. And you frequently don’t find out who is best organized until afterwards.

Democratic revolutions have two phases. The first is the establishment of democracy. The second is the election of governments. The example of Hitler is useful as a caution on what kind of governments a young democracy can produce, since he came to power through democratic and constitutional means — and then abolished democracy to cheering crowds. So there are three crosscurrents here. The first is the reaction against corrupt regimes. The second is the election itself. And the third? The United States needs to remember, as it applauds the rise of democracy, that the elected government may not be what one expected.

In any event, the real issue is whether these revolutions will succeed in replacing existing regimes. Let’s consider the process of revolution for the moment, beginning by distinguishing a demonstration from an uprising. A demonstration is merely the massing of people making speeches. This can unsettle the regime and set the stage for more serious events, but by itself, it is not significant. Unless the demonstrations are large enough to paralyze a city, they are symbolic events. There have been many demonstrations in the Muslim world that have led nowhere; consider Iran.

It is interesting here to note that the young frequently dominate revolutions like 1848, 1969 and 1989 at first. This is normal. Adults with families and maturity rarely go out on the streets to face guns and tanks. It takes young people to have the courage or lack of judgment to risk their lives in what might be a hopeless cause. However, to succeed, it is vital that at some point other classes of society join them. In Iran, one of the key moments of the 1979 revolution was when the shopkeepers joined young people in the street. A revolution only of the young, as we saw in 1968 for example, rarely succeeds. A revolution requires a broader base than that, and it must go beyond demonstrations. The moment it goes beyond the demonstration is when it confronts troops and police. If the demonstrators disperse, there is no revolution. If they confront the troops and police, and if they carry on even after they are fired on, then you are in a revolutionary phase. Thus, pictures of peaceful demonstrators are not nearly as significant as the media will have you believe, but pictures of demonstrators continuing to hold their ground after being fired on is very significant.

A Revolution’s Key Event

This leads to the key event in the revolution. The revolutionaries cannot defeat armed men. But if those armed men, in whole or part, come over to the revolutionary side, victory is possible. And this is the key event. In Bahrain, the troops fired on demonstrators and killed some. The demonstrators dispersed and then were allowed to demonstrate — with memories of the gunfire fresh. This was a revolution contained. In Egypt, the military and police opposed each other and the military sided with the demonstrators, for complex reasons obviously. Personnel change, if not regime change, was inevitable. In Libya, the military has split wide open.

When that happens, you have reached a branch in the road. If the split in the military is roughly equal and deep, this could lead to civil war. Indeed, one way for a revolution to succeed is to proceed to civil war, turning the demonstrators into an army, so to speak. That’s what Mao did in China. Far more common is for the military to split. If the split creates an overwhelming anti-regime force, this leads to the revolution’s success. Always, the point to look for is thus the police joining with the demonstrators. This happened widely in 1989 but hardly at all in 1968. It happened occasionally in 1848, but the balance was always on the side of the state. Hence, that revolution failed.

It is this act, the military and police coming over to the side of the demonstrators, that makes or breaks a revolution. Therefore, to return to the earlier theme, the most important question on the role of radical Islamists is not their presence in the crowd, but their penetration of the military and police. If there were a conspiracy, it would focus on joining the military, waiting for demonstrations and then striking.

Those who argue that these risings have nothing to do with radical Islam may be correct in the sense that the demonstrators in the streets may well be students enamored with democracy. But they miss the point that the students, by themselves, can’t win. They can only win if the regime wants them to, as in Egypt, or if other classes and at least some of the police or military — people armed with guns who know how to use them — join them. Therefore, looking at the students on TV tells you little. Watching the soldiers tells you much more.

The problem with revolutions is that the people who start them rarely finish them. The idealist democrats around Alexander Kerensky in Russia were not the ones who finished the revolution. The thuggish Bolsheviks did. In these Muslim countries, the focus on the young demonstrators misses the point just as it did in Tiananmen Square. It wasn’t the demonstrators that mattered, but the soldiers. If they carried out orders, there would be no revolution.

I don’t know the degree of Islamist penetration of the military in Libya, to pick one example of the unrest. I suspect that tribalism is far more important than theology. In Egypt, I suspect the regime has saved itself by buying time. Bahrain was more about Iranian influence on the Shiite population than Sunni jihadists at work. But just as the Iranians are trying to latch on to the process, so will the Sunni jihadists.

The Danger of Chaos

I suspect some regimes will fall, mostly reducing the country in question to chaos. The problem, as we are seeing in Tunisia, is that frequently there is no one on the revolutionaries’ side equipped to take power. The Bolsheviks had an organized party. In these revolutions, the parties are trying to organize themselves during the revolution, which is another way to say that the revolutionaries are in no position to govern. The danger is not radical Islam, but chaos, followed either by civil war, the military taking control simply to stabilize the situation or the emergence of a radical Islamic party to take control — simply because they are the only ones in the crowd with a plan and an organization. That’s how minorities take control of revolutions.

All of this is speculation. What we do know is that this is not the first wave of revolution in the world, and most waves fail, with their effects seen decades later in new regimes and political cultures. Only in the case of Eastern Europe do we see broad revolutionary success, but that was against an empire in collapse, so few lessons can be drawn from that for the Muslim world.

In the meantime, as you watch the region, remember not to watch the demonstrators. Watch the men with the guns. If they stand their ground for the state, the demonstrators have failed. If some come over, there is some chance of victory. And if victory comes, and democracy is declared, do not assume that what follows will in any way please the West — democracy and pro-Western political culture do not mean the same thing.

The situation remains fluid, and there are no broad certainties. It is a country-by-country matter now, with most regimes managing to stay in power to this point. There are three possibilities. One is that this is like 1848, a broad rising that will fail for lack of organization and coherence, but that will resonate for decades. The second is 1968, a revolution that overthrew no regime even temporarily and left some cultural remnants of minimal historical importance. The third is 1989, a revolution that overthrew the political order in an entire region, and created a new order in its place.

If I were to guess at this point, I would guess that we are facing 1848. The Muslim world will not experience massive regime change as in 1989, but neither will the effects be as ephemeral as 1968. Like 1848, this revolution will fail to transform the Muslim world or even just the Arab world. But it will plant seeds that will germinate in the coming decades. I think those seeds will be democratic, but not necessarily liberal. In other words, the democracies that eventually arise will produce regimes that will take their bearings from their own culture, which means Islam.

The West celebrates democracy. It should be careful what it hopes for: It might get it.


Revolution and the Muslim World is republished with permission of STRATFOR

Monday, February 14

Video: Niall Ferguson on The Political Economy of the Cold War

18 October 2010 (Part 1 in the lecture series)

At its heart the Cold War was a competition between two economic systems. Despite having in common a "military-industrial complex", they were profoundly different in the degree of freedom they offered their citizens, the living standards they were able to achieve and the pace of technological innovation they could sustain. In this first lecture, Niall Ferguson compares and contrasts the United States and the Soviet Union in the Cold War and asks how far the outcome of the Cold War was economically determined from the outset. In particular, what role did commercial and financial globalization play in enhancing U.S. power in the world? And how serious a threat did inflation pose to the United States in the 1970s?

Video: Niall Ferguson on The Third World's War

24 November 2010 (Part 2 in the lecture series)

Although never a "hot" war between the superpowers, the Cold War was waged partly through a series of proxy wars in Third World countries from Guatemala to Korea to Vietnam. Although a great deal of attention has been devoted to a select number of U.S. Interventions in the Third World, there is an urgent need to see the "Third World's War" in perspective, showing how successful the Soviet Union was in pursuing a strategy of fomenting revolution and how consistently successive U.S. administrations behaved in response.

Sunday, February 13

Video: Niall Ferguson on The Grand Strategy of Détente

18 January 2011 (Part 3 in the lecture series)

'Nixon goes to China' shattered the façade of Communist unity and dug the United States out of the hole it found itself in at the end of the 1960s. Critics have seen Nixon and Kissinger's policy as morally compromised, but was it actually the key to America's victory in the Cold War?