What future Russia do we want?

It is not possible to see the pictures of dead bodies (320 and counting) and to hear the reports of the barbaric massacre of citizens of Bucha or the recent rocket attack on a train station in Kramatorsk that killed 50 and injured 98 civilians without feeling outrage towards the Russians and sorrow for the people of Ukraine. Understandable though such feels are, it is not a good state of mind in which to plan for a better future.

In a face-to-face interview with the Editor in Chief of The Economist in Kyiv on March 25, President Volodymyr Zelenskyin defined victory as: “being able to save as many lives as possible…because without this nothing would make sense.”  “The Russian war in Ukraine”  In this spirit, compromises will be made by both sides and a peace deal will be signed. It is for Ukraine to decide what is acceptable to them. But what should we wish for and— via various sanctions around the globe against Russia—what should we press for?

Our hearts cry out for revenge and punishment for Russia’s aggression and inhumane and barbaric behavior. But we would be much wiser to rely more on our minds than our hearts in fashioning the future. Existing and potentially strengthened sanctions will flatten the Russian economy if not lifted. Reallocating confiscated Russian property (e.g., the Central Bank of Russia’s foreign exchange reserves) for the reconstruction of Ukraine may seem justifiable but is surely illegal and no one should forget the role played by the Treaty of Versailles (providing for German reparations for WWI) in bringing about WWII. “How to stop a new cold war”

Ukraine President Zelensky has already indicated Ukraine’s potential willingness to become politically neutral ala Austria and give up seeking NATO membership. While taking territory by force violates international law, the formal return of Crimea to Russia, which is supported by over 80% of its residents, may well be part of a peace agreement. Should the U.S. and EU oppose such provisions? Should?

There are some, not just the defense industry, which profits from war, who believe that Putin is determined to reestablish the Imperial Russian Empire and must be resisted at all costs. We should fight Russia “to the last Ukrainian.” “How to stop a new cold war”  See the following interesting interview of Noam Chomsky: “Chomsky-US policy toward Putin assures no path to de-escalation in Ukraine”

Others, myself included, take seriously Putin’s (and Boris Yeltsin before him) pleas for a European security architecture in which Russia feels comfortable. We believe that America’s Monroe Doctrine is applicable to all major powers. Our true interest is in a peaceful Russia that is a comfortable member of the European continent ten or more years into the future. We should encourage Ukraine’s peace negotiations and our own sanctions and defense policies in that direction. Our defense industries have profited enough from our never-ending wars. Enough is enough. “Economic sanctions”

And we must never forget that our own flourishing rests, in part, on our reliable commitment to the rule of law. Why are we sanctioning Russians living outside of Russia and confiscating their yachts when they have not been convicted of any crimes? “The American Civil Liberties Union helped scuttle a bill this week that would have enabled the Biden administration to liquidate Russian oligarchs’ assets and turn the proceeds over to Ukraine.” “ACLU Ukraine-Russia-Oligarchs”

Our news media are confronting us daily with Russia’s atrocities (facts Russians are unable to see in their own country). It is hard not to want to strike out against Russia in kind. Such short-sighted reactions are not in Ukraine’s, nor the world’s, long run interest. We are, and should behave, better than that. “Ukraine itself is proposing terms that, if backed by a combination of U.S. and European sticks and carrots, stand some prospect of success.” “What can the US really do to protect civilians in Ukraine”  We should not let our short sighted, emotional, anger towards Russia and our military industry get in the way.

Author: Warren Coats

I specialize in advising central banks on monetary policy and the development of the capacity to formulate and implement monetary policy.  I joined the International Monetary Fund in 1975 from which I retired in 2003 as Assistant Director of the Monetary and Financial Systems Department. While at the IMF I led or participated in missions to the central banks of over twenty countries (including Afghanistan, Bosnia, Croatia, Egypt, Iraq, Israel, Kazakhstan, Kenya, Kosovo, Kyrgystan, Moldova, Serbia, Turkey, West Bank and Gaza Strip, and Zimbabwe) and was seconded as a visiting economist to the Board of Governors of the Federal Reserve System (1979-80), and to the World Bank's World Development Report team in 1989.  After retirement from the IMF I was a member of the Board of the Cayman Islands Monetary Authority from 2003-10 and of the editorial board of the Cayman Financial Review from 2010-2017.  Prior to joining the IMF I was Assistant Prof of Economics at UVa from 1970-75.  I am currently a fellow of Johns Hopkins Krieger School of Arts and Sciences, Institute for Applied Economics, Global Health, and the Study of Business Enterprise.  In March 2019 Central Banking Journal awarded me for my “Outstanding Contribution for Capacity Building.”  My recent books are One Currency for Bosnia: Creating the Central Bank of Bosnia and Herzegovina; My Travels in the Former Soviet Union; My Travels to Afghanistan; My Travels to Jerusalem; and My Travels to Baghdad. I have a BA in Economics from the UC Berkeley and a PhD in Economics from the University of Chicago. My dissertation committee was chaired by Milton Friedman and included Robert J. Gordon.

7 thoughts on “What future Russia do we want?”

  1. Yes, Warren, I agree with you. It is very insulting and shameful to watch how the players of the big game cross all the boundaries of what is allowed only for their political and economic benefit. Today, the winner is the one who has more money and more influence on the media. Double standards have long been normal and no one raises the topic of why the United States easily sends its mercenaries or army to “special military operations” in countries such as Panama, Iraq, etc., and at the same time the world is silent about the atrocities, victims and chaos that they brought there. I always wonder how the United States would react to a situation when some “non-democratic” country would try to strengthen its influence in countries such as Mexico or Canada. Although this is a rhetorical question. America has not fought on its territory for hundreds of years, and veterans and victims of concentration camps from the Second World War still live in unhappy Russia… I haven’t lived in Russia for last 25 years, it’s more than half of my life. My children were born in the Czech Republic and speak five languages. I have been working all my life in Czech companies. I understand the whole situation, with which I completely disagree, and I am against it with all my heart (and in general I am against Russia’s domestic and foreign policies), but I am faced with a big problem – I have lost faith in the basic principles of democracy: freedom of speech and belief, and inviolability of private property. Now, because of my nationality, me and my family members are thrown out of taxis and stores, banks request income history, bank accounts are blocked, children are afraid to walk the streets of Prague, partners break contracts, neighbors look askance. I’m not talking about the fact that I don’t know when I’ll be able to see my relatives in Russia and how I can continue to help my handicapped twin sister… and this is just the beginning! Do you have any advice on how to continue living?

  2. In addition, the most important thing I’m afraid of is that the Western world does not quite understand Russia’s current view of this situation. The problem is that Russia perceives this whole conflict (World situation) as a struggle for the survival of its nation, or better to say, a struggle for the existence of its nation.

    1. I must say that at 80 (next month) I am relieved that I won’t have to struggle with the ugliness we are descending into. You are still relatively young and have already struggled through much. I am confident that you will keep up the good fight. But the long suffering Russian people must break away from Putin and his type if their country is the flourish.

      1. I understand it all. But I (and many millions of Russian people) have nothing to do with Putin, but we will continue to suffer for several more decades to come. The question is – for what?

  3. Most, if not all, of this disaster might have been avoided if the Ukrainian and Russian governments had been able to agree to municipal, town, and regional plebiscites in Crimea and the Donbas areas in which the residents of these parts of Ukraine would have been able to express their own preferences: to remain part of Ukraine, become part of the Russian Federation, or an independent political unit.

    Such voting — supervised by a truly independent and responsible international plebiscite commission — would have enabled this crisis to be defused. Any new boundary lines could have reflected, as best as possible, the voting patterns.

    (This approach to matters of political “self-determination” was spelled out in some detail by Ludwig von Mises in his book, “Liberalism” [1927]. And I have more recently tried to articulate it in a 2019 article in the “Review of Austrian Economics” in the context of Crimea and Brexit.)

    Alas, it is a peaceful approach that is acceptable to neither the Ukrainian nor the Russian governments.

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