FOG HORN

We wrote a piece, “Why We Should Extricate Ourselves From The Ukraine As Soon And As Quietly As Possible.” In it, we laid out some facts that don’t get discussed in the mainstream media but are relevant, once you know of them, to forming an informed opinion on the events unfolding in the Ukraine. We also said that on Friday we would give you our analysis of the situation, and why we think stepping back from that situation is the appropriate decision to make. So, we begin…

The Ukraine and the United States have one very noteworthy feature in common and that is a Constitution upon which a set a laws are erected. Those Constitutions prescribe what a lawful means of changing governments is. The Kiev riots of 19 January 2014, instigated by anti-protest laws announced 16 January 2014, led to a confrontation with police resulting in violence and death, ultimately leading to overthrowing Viktor Yanukovych and ushering in an interim government. That interim government emerges from the ashes of a coup not an election.

It is easy to be sympathetic with that event given characters like Yanukovych[i] but the cold hard reality is that protestors were acting outside the law. Kiev on January 2014 is reminiscent of our own Kent State riots and Lincoln Park riots in Chicago. Step back for a moment and imagine that an ultra-conservative group marches on the nation’s capital and through a prolonged protest gets into a violent confrontation with Capitol Police and subsequently deposing a sitting president and parts of Congress. Here’s precisely what that would mean. Every treaty, covenant, agreement, discussion or negotiation past present and future is null and void because there is no legitimacy to our government. This is precisely what happened in the Ukraine. You can color it any way you’d like but it remains a fact and we make decisions on facts.

As I mentioned in my earlier piece, the Russian Federation has vital economic interests in the Ukraine that account for well over $288 billion dollars of gas and oil exports traveling to EU markets via pipelines in the Ukraine, and through the sea port at Sebastopol in the Crimea. Furthermore, Sebastopol is home to the Russia Black Sea Fleet. It hosts a large Russian military installation, which more than likely houses Russian nuclear weapons. So, without a constitutional government in power in the Ukraine, all treaties or agreements existing between Russia and the Ukraine are null and void, and not worth the paper they are written on. This has the effect of placing not only pipelines and the Russian economy in jeopardy but Sebastopol and its Russian military bases as well. So, what does the Russian government, and more specifically Vladimir Putin do? As we see it, they and he have three options…

1. Do nothing. Sit back and watch it all happen.

2. Begin a dialogue through the U.N.’s Security Council, of which Russia is a member.

3. Intervene militarily to protect vital national interests and take the heat for that decision.

Of course, the risk of doing nothing is completely unacceptable and carries the greatest risk to the Russian Federation. The interim government could renege on pipeline leases or any deal in place with the Russian Federation. To the Russian Federation this means placing in jeopardy roughly 20% – 30% of the Russian economy. It also threatens the EU’s economic stability as 30% of their energy consumption is supplied by the Russian Federation by pipelines traveling through the Ukraine.

Option 2, opening a dialogue through the U.N.’s Security Council, is almost certain to be a futile exercise as anything proposed by the Russian Federation is guaranteed to be opposed by the U.S. and its allies and vice versa. Here’s what leads us to that opinion.

In the less than graceful taped conversation of Victoria Nuland, several things bubble to the surface. The principal stakeholders in this entire situation, the member states of the EU, are disregarded. Saying “Fuck the EU” is not only embarrassing but it signals a disregard for the EU’s positions, policies and processes, when in fact they have everything at stake. Clearly not a good image to paint. It is also clear from transcripts of that conversation that the United States was willing to assist the “right” guy with money, advertising and promotion, which clearly suggests the United States wishes to influence, or attempt to influence, the political makeup in the Ukraine. Lastly and I think more damaging, in the long term, is the not so subtle implication that as a country we do not respect the Ukrainian Constitutional processes for changing governments. Given these facts and positions, any attempt on the part of the Russian Federation to negotiate a solution would certainly have been diplomatically elegant but still leaving the Russian Federation with the same set of problems. So, there was momentum making option 3 a fait accompli for Vladimir Putin and the Russian Federation.

We’ve written a total of three articles on the Ukrainian “Crisis”. In the first, “Our Read On The Ukrainian Crisis,” we state that the Russian Federation would not occupy Eastern Ukraine, or any other part of the country other than the Crimea. We’re not clairvoyant and we don’t make predictions we simply analyze and assess based on facts. We based our opinion on two points. First, the Crimea is primarily Russian, and they also have a legal right to be autonomous and to request annexation by Russia, which occurred 21 March 2014. Secondly, the Crimea, especially Sebastopol, is a hub of Ukrainian commerce and technology. On the other hand, annexing or occupying Eastern Ukraine  would be a drag on Russia not a plus. They would be placing themselves in very clear violation of international laws and covenants. Doing so would validate renewed fears of an expansionist Russia.  So, there’s no reason for the Russian Federation to deploy troops and occupy Eastern Ukraine in absence of a humanitarian disaster.

The west’s response has been the application and expansion of sanctions against the Russian Federation which in our view is counter productive – we have already seen an impact of the Ukrainian challenge, manifested as a $0.30 to $0.40 jump in gas prices at the pump and we’re just entering the summer travel season. So, sanctions and prolonged uncertainty come at a high price especially in our less than robust domestic economy – as is failure to recognize that a sovereign nation has vital interests it must consider, and that they drive how it responds to neighboring climates and its risk mitigation strategy. Furthermore, the EU is eminently qualified to pressure, and/or collaborate with, the Russian Federation to stabilize and bring about a political climate in the Ukraine that leads to a legal government. To that end, the 25 May elections must move forward and separatists must have a role in that process, if a civil war is to be avoided.

The greatest threat facing our country, and indeed the world, is the growing danger of international terrorism. It inhibits the free flow of capital to underdeveloped regions thus destroying the mechanisms needed immunize developing nations against terror. The Russian Federation can play a vital role in meeting that threat. So, we see inclusion, with the requisite amount of verbal lambasting, and not isolation as being essential going forward.

As to Vladimir Putin, the man has been called a Hitler, tyrant, despot, bully and homophobic. Here’s our read on the man. Note: we do not know him!

Mr. Putin is a judoka (judo player) and in my years of experience with judo, bullies don’t exist, or at least not for very long. The very essence of the sport dating all the way back to Jigoro Kano, is inconsistent with a bully’s mentality. Mr. Putin was raised in the influence of the Church of Constantinople (what we call the Orthodox Church) who views homosexuality as a mortal sin. It is quite possible that his upbringing would account for his views on homosexuality. Vladimir Putin is most likely a moral man but tempered by his year in the KGB and Russian politics. Of course, we have our concerns about members of the press disappearing or being imprisoned but we remain open to the idea that some of that may have been outside of Putin’s control. At least he’s not out executing old babushkas!

In dealing with modern day Russia we need to keep several things in mind. We’ve have had 200+ years to define and perfect democracy, yet as we write, we are still resolving issues of gay marriage and a number of other human rights abuses. The Russian Federation has had less than 50 and Ukrainians a little less, so it will take time for them to evolve. However, a positive evolution will only come from inclusion and not isolation.

So, what will future historians say about Putin, the Russian Federation and the Crimea…?

IPON!

[i] Putin tolerated Yanukovych, but on a number of occasions he expressed his displeasure with him. I would be willing to say that they are not taking long hot showers together and shampooing each other’s head