Ukraine: Where Politics and Economics Again Part Ways


One of the top cliches of all time has to be the definition of insanity. Okay, okay, for the sake of clarity, let’s say it one more time: to repeat the same mistake over and over expecting a different result is insane. The only other cliche that comes close is a line from the Chinese Proverb: “He who knows not and knows not he knows not is a fool; avoid him.”

Guard at Kiev Parliament building, March 17.

So now with the events in Ukraine and Crimea, where in these two cliches does American foreign policy fit? Over the past 65 years, we have done the same dumb things repeatedly expecting freedom, democracy and respect for America to miraculously blossom like crocuses in the springtime. Since this has not happened, and none of our leaders appear to recognize this fact, are we insane or just silly fools?

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If America is going to extend its imperialistic ways into yet another region, why not pick some place worth the trouble, like Tahiti for example. Now that’s a place to die for. Beautiful beaches, warm friendly natives, absolutely first-class hotels, snorkeling at its best; you’ll never get that in Kiev or Sevastopol.

For the past decade since September 11, 2001, America’s greatest policy challenge has been the threat of terrorism. By any measure, our guys have done an incredible job. However, it is doubtful how much the invasion of Iraq and Afghanistan helped these efforts. Now in Ukraine, we are facing an old threat, Russia. When it comes to Crimea, we call it aggression whereas Putin calls it protection of strategic interests.

Global Trade: The Holly Grail

For years now economists have championed global trade as a tool for peace. However, globalization of trade is complicating the equation. For example, if Russia was not a huge supplier of natural gas to Ukraine and many other European neighbors, things might be easier. By the same measure, if Ukraine were a rich repository of natural resources (or even a nice warm climate like Tahiti) there would be real value to negotiate over. But the reverse is true. Ukraine is teetering on worthlessness.

There are about 45 million people in Ukraine. There are about 47 million of our American citizens on food stamps. The farm bill signed earlier this year on January 31 cuts $800,000 a year from the United States Food Stamps program. On March 6 a bipartisan Congress passed a $1,000,000,000 aid package for Ukraine. What is wrong with this picture?

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What Are The Lessons We Missed?

It’s hard to imagine it has been barely 60 years since then-Vice-President Richard Nixon and his wife were spat on and attacked by a pipe-wielding mob in Caracas, Venezuela. Oh how those South Americans loved our democracy!

It is obvious there have been at least three major themes to our foreign policy since the Marshall Plan was implemented after WWII:

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• Eliminate the bad guys that oppose democracy.
• Gain the respect and hopefully the admiration of our liberated friends.
• Protect our own territory from invasion.

These are noble goals, but they have not worked. The essential weakness starts with the notion that not only is democracy good, but that it is good for everyone. Therefore, anyone that opposes democracy is our enemy and must be eliminated.

US in vietnam
U.S. forces in Vietnam in 1960s.

From the early 1960s until 1975 we pushed democracy onto Southeast Asia from Cambodia to Vietnam. Over 50,000 United States military lost. Lesson learned? Not for long. But try to explain that to then-President Lyndon Johnson.

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In 1973 we liberated Chile by orchestrating a coup d’etat of communist dictator Salvador Allende. The liberation didn’t produce democracy but was followed by 27 years of another dictator, Augusto Pinochet. Liberation and freedom don’t lead to democracy. More often they lead to chaos and violence. But try to explain that to then-President Richard Nixon.

In the post-Soviet era, the scent of democracy opened the door to massive corruption and gangster violence. Under the old system of Soviet repression, radical republics like Chechnya were unknown. In Iraq, the United States liberated 36 million people who had never known democracy in their 6000-year history. We soon learned that not all Muslims like each other. The idea of Sunnis and Shias living together as democracy-like neighbors on Wisteria Lane never got very far off the ground. But try to explain that to then-President George Bush.

It remains to be seen what happens when we leave Afghanistan.

After each of these lessons, where has our thinking and strategy evolved? We have certainly not gained the respect which all our efforts should have produced. Is America’s image in the world better than it was four years or 40 years ago? Not according to any of the experts on this issue. The world may wear Levi’s jeans, drink Coke and occasionally gulp down a hamburger, but there are few fans of American politics.

I got an interesting first-hand perspective into this question recently after speaking to an US Army chaplin two weeks after returning from his third tour of duty in Kosovo. He related how the Muslim population of Kosovo loved America, especially former President Bill Clinton. This came as a surprise since America is despised by so many, especially in the Muslim world. The chaplin told how Kosovo Muslims pray five times a day, 365 days a year for the United States and especially Bill Clinton. Why? The answer is because Clinton bombed and killed many Yugoslavs under Milosevic. So the next time you are looking for a good Albanian restaurant in Prishtina, feel free to pull out your American Express card. It is one of the few places in the world where Americans are welcome with open arms. One time, at least, America managed to succeed as the good guys going after the bad guys.

Map of Ukraine, Crimea in south.

If it were only this simple: We still see ourselves in the same liberator’s role we played in World War II. But these days there is a very different dynamic at work. Kosovo was a good example and Ukraine/Crimea is no different. Even as Crimea votes on whether to secede from Ukraine and join Russia, the prospect of a renewed Russian presence in Crimea evokes for native Tatars raw memories of Communist-era ethnic cleansings that are believed to have resulted in over 100,000 Muslim deaths. History leaves a deep scar that not even centuries tend to erase. This is not a time of world wars; it is a time of worldwide civil war.

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What lessons are there to be learned from this? Both Presidents Bush I (Desert Storm) and Clinton understood the mistakes of imperialism. Somehow by design or accident, they got the message that America should neither be the police force of the world nor do we receive any benefit when we assume that role.

Why Global Caretakers?

When last I checked, the United States spent something like 14.3% of its annual budget on defense. But if Price Waterhouse were applying GAAP accounting, this total would likely be quite a bit higher. For the past 60 years, the United States has invested more money in its global neighbors than in its own people. That may sound absurd, but it is true

The difference between politics and economics is that politics has no discernible bottom line. In business, companies have things like accounting and annual financial reports that measure progress and thus define success or failure. There are outside accountants that audit these reports to protect investors. As a means of allocating resources, this has proven to be a workable system; except, of course, in the case of Bernie Madoff and a few other chaps like him. But all in all, it is a system that continuously holds ones feet to the fire.

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Perhaps it is naive to think that politics could be governed by the same system. Yes, it probably is for as anyone who ever tried to read the federal budget would attest, the government makes our most notorious Ponzi schemer look like a choirboy. There are thousands of tricks that our elected officials use: hiding spending in secret places like defense or the CIA, transferring spending under the ruse of a department reorganization or just using an off budget trick. But the rule is simple: once spending begins, it almost never stops.

The dangers facing the US and Europe in the Ukraine are different than the Middle East or elsewhere. With Ukraine we appear to be dealing with a Russian ego that Germany’s Chancellor Merkel described as “in another world”. But in the end, we must learn from Bush I and Clinton. If America must get involved as a global policeman, get in and most importantly get out quickly. Don’t try foolishly to export democracy to a bankrupt and corrupt nation. Tahiti may be just as corrupt, but the beaches are to die for.