The Chicken or the Egg - A Free Market System or Democracy?

As I am writing, the Western media is focused on the Russian elections. In the U.S. in particular, the coverage is spun to show that the elections are proof Putin is dominating all aspects of Russian life and stifling what was left of a once emerging democracy. What is often not mentioned is that the opposition movement to Putin or "Other Russia" relies on the outlawed "National Bolshevik Party" movement for its boots on the streets in anti-government demonstrations and rallies. A prominent component of the "Other Russia," the National Bolsheviks share more in common with the radical leftist organizations that often battle with riot police in the capitals of numerous Western countries than any peaceful democratic movement. Interestingly, statements from the U.S. State Department constantly scold Russia for rolling back democracy. No wonder why the average westerner already is convinced that Putin is restoring the Soviet Union!

Despite all the alarm over democracy in Russia, the fact remains that capitalism is alive and well according to all the economic data which strongly contradicts suggestions of a return to Soviet style socialism. Is the widespread popularity for Putin in today's Russia a result of everyday Russians being nostalgic for a return of the Soviet Union? The answer is no. Anyone who has been in the Soviet Union or the "democratic" Russia under the chaotic 1990's knows that Russians do not wish to turn the clocks back to either period. Today, even in smaller cities, one can see for themselves an emerging middle class that spends their leisure time in newly built shopping malls while the number of automobile owners is rising. Evidence of this fact is by the sheer number of retailers opening up businesses throughout Russia (including Siberia) and the arrival of Western auto manufacturers who are setting up plants in Russia in order to keep up with the demands of the Russian consumer. Even Ford has entered the Russian automobile market while its factories in Detroit are on the brink of bankruptcy.

In summary, there are many factors that demonstrates that the Russia of today is quite different from the previous Soviet one. Among these factors are private ownership, freedom to practice religion, and other freedoms that were previously banned but encouraged in today's Russia. And thanks to Putin's reforms, Russia has begun to reduce its size of government and implement a 13% flat tax to the envy of many pro-business economists in the United States! Although one can argue on how democratic Putin's Russia is or isn't, one thing is for sure, Russia is embracing free market policies that are certainly more liberal than currently in the United States.

By no means is Russia yet an ideal place of opportunity as compared to the United States, it is however on the right path. Let us not forget that before there was a United States, colonists lived under the authoritarian rule of the English King. Thanks to the ingenious American Founding Fathers, the United States was ushered into history on the foundations of free market principles. Today the Founding Fathers would gasp at the size of the current U.S. government and how intrusive Washington has become.

During the Cold War period, Ronald Reagan often cited that economic prosperity taking place outside the walls around the Soviet Union would eventually help defeat Communism. He argued that the Soviet government had an ineffective economic system that was doomed to fail and of course he was right. Eventually Moscow could not control the millions of people trapped behind the "Iron Curtain" when they realized that on the other side was a better life awaiting. By the end of the Cold War however, the West and in particular the U.S., squandered the opportunity to help lead these peoples to real prosperity. Rather than allow the newly freed peoples of former Soviet republics, and other former communist countries the opportunity to pull themselves up by the boot straps, the Euro-Atlantic alliance decided instead to divide and conquer them. Firstly this was tested when a newly united Germany took center stage in the international arena leading a united Europe to recognize the independence movements in Slovenia and Croatia thus breaking up Yugoslavia - the most multi-ethnic country in Europe, and certainly the least autocratic of their communist neighbors. Next, was to foment revolutions in governments that may lean towards Moscow. As some of these former communist countries embraced Europe and the United States, they received the coveted title of being "pro-Western, regardless if they are genuinely democratic or try to implement real capitalism. In other cases, the pro-Western politicians came from the same government that was previously subsidized from a bankrupt Moscow. These pro-Western countries simply swapped their allegiances and began taking handouts from Brussels and Washington. The irony however, was that instead of embracing the free market reforms that Reagan advocated for the peoples within the Iron Curtain, a new European Union emerged that absorbed some of these former communist regimes morphing into a new super state. Today, the EU micromanages the European economy while its ineffective beau racy will soon rival the managed economy of the Soviet Union!

By the time Vladimir Vladirmirovich Putin became the president of the Russian Federation, the Russian economy was in a shambles while its former communists neighbors where enjoying growing prosperity after their governments sold off state assets. This initial period of privatization allowed a quick influx of hard currencies to enter their economies as Europeans and other foreign investors began to snap up state run enterprises. However, as these countries become integrated into the European bureaucratic apparatus, Brussels can now dictate how these countries must run themselves rather than allowing the market to drive the economy. For example, the EU can tell the Poles how they should label and define vodka rather than allowing the Poles themselves. There is no question that much of the former communist bloc has benefited by the technical know how and investments from Europe after the USSR collapsed. Even the intent and idea of uniting the European markets is novel at least in theory. But in any case, EU expansion is running out of steam as is evident of the status and performance of newly admitted EU members Rumania and Bulgaria, more evidence that it is not EU membership alone the magic wand that can bring about economic prosperity but rather real free market implementation.

Case in point is the once former Soviet republic Moldova. Moldova is officially an independent country no longer under Moscow's rule. However, the Transdniester region of Moldova (predominately Russian speaking area) separated itself from the central rule of Chisinau, the capital of Moldova. Moldova receives backing and support from the United States, NATO and the EU. Moldova also has started the path to the necessary reforms for EU accession. Why that Moldova is then is one of the poorest countries in Southeastern Europe? Across the Dniester River, one can look at a contrasting picture when you consider the breakaway Transdniester Region. This area which is de facto independent of the "pro-Western" government in Chisinau is experiencing high economic growth while attracting outside investment. Today rosy economic reports are coming from Tiraspol, the capital of Transdniester. Since they have also adapted an even smaller flat tax than Russia, reduced government bureaucracy, and created a more business friendly environment than is the case outside of Transdniester, this region will ironically be better off without EU's intrusion. Could this serve as a new model for other former communist countries who may grow tired of a stagnant EU?

Always follow the money. Signs already may suggest that "pro-Western" countries may again swap allegiances as Moscow grows prosperous. The vehemently pro-Western government of Georgia is facing stiff opposition and growing street protests. In Serbia, where the U.S. is the largest single investor in that country, may soon see Russian capital flowing in. Especially with the fate of Kosovo-Metohija and the U.S. attempts to centralize Bosnia, Serbia may soon realize it could benefit from a closer relationship with Moscow. Next door to Serbia, the Serb Republic within Bosnia Herzegovina is also enjoying support from Moscow to counter attempts by the U.S. to integrate the Serb entity into a Muslim dominated centralized state. If this trend continues, the Serb Republic could also follow the "Transdniester Model" to build a more prosperous free market outside of Sarajevo and U.S. control. Even the new pro-business government of Poland is pledging to strengthen Moscow - Warsaw ties, and I predict that if Russia continues its economic success, more of her neighbors will try to get into the action.

Throughout the world one can find examples of how the free market can win. While the U.S. wastes its time on trying to build democratic institutions in Iraq, it should instead focus on building a free market there first. While factions butcher each other in that country, Iraq's other oil rich neighbors Saudi Arabia, Kuwait, United Arab Emirates, etc., enjoy unprecedented prosperity and relative stability while being ruled by undemocratic monarchs. Even U.S. ally Egypt is faced with a similar situation of trying to build a free market system before it can democratize. Although some of Egypt's opposition faces a similar fate to Russia's opposition, Cairo has enacted reforms to cut taxes and encourage a free market. Should Egypt's President Mubarak lose his grip on power, the Muslim Brotherhood will surely win elections and establish an Islamic regime in Cairo creating more instability in that already volatile region.

Time will tell which side will win as the war between socialism under the guise of democracy, versus free market capitalism continues to wage for hearts and minds throughout emerging markets. If the West, i.e. European Union continues to embrace "socialist democratic" policies, it will too implode like the USSR. Will the peoples of Europe and especially former communist countries benefit from a chaotic but democratic Russia or a stable free market one?

Is Russia good for Serbia?

Is Russia good for Serbia? I have heard numerous Serbs ask this question often. Throughout history, Serbs have looked on "Mother Russia" as a glimmer of hope during the numerous occasions when the smaller Serb nation was up against seemingly impossible odds. In those times, Serbs would say: "Nas i Rusa trista miliona," or translating to: "We and the Russians are three hundred million." Following some disappointment with a Russia during the 1990's which was overwhelmed with her own problems, some Serbs would add to the saying with some cynicism: "…if only Mother Russia realized that her child was Serbia." Even recently, when it seemed Serbia would for sure lose its province Kosovo-Metohija, Russia has managed to delay the independence process for the province offering at least some hope. Now Serbs are again asking: "Is Russia good for Serbia?

Before I answer this question I wish to point out that Russian and Serb relations have existed for centuries. How much this relationship has benefited the Serb people in my view, has varied throughout history due to various circumstances connected to the geopolitical situation of the moment. Therefore I wish to focus for the time being on more recent events.

Most people who follow recent Balkan history will not argue that the Russian Federation during the 1990's under President Yeltsin was capable of standing up to the Trans-atlantic forces that were reshaping Europe after the collapse of the Soviet Union. However, most people may not be aware of the important role the Russian military played in stopping the complete destruction of Serbia after the Dayton Peace accords that allowed NATO's occupation of Bosnia Herzegovina which includes the Serb Republic (Republika Srpska).

After Dayton, NATO divided Bosnia Herzegovina into three sectors: British, French, and U.S. Divisions. Each sector included both NATO and non-NATO members as "multinational divisions" which comprised the "Implementation Force" (IFOR), and later the "Stabilization Force (SFOR). The U.S. sector set up its head quarters in Tuzla, which is located on the Muslim dominated "Federation" territory. Within the U.S. sector, various countries occupied specific areas based on negotiations that led up to the Dayton Peace Accords. For example, it was no coincidence, that the bulk of the U.S. forces operated in and around Tuzla, were put there because the local population there had welcomed the U.S. forces. While based among Muslims that were thought to be more moderate, U.S. forces could safely stage patrols from this area into Republika Srpska to directly provide security for the International Criminal Tribunal for Yugoslavia (ICTY) and for other missions. Elsewhere, a Turkish Brigade was assigned to the Zenica area of the Federation territory. Also a Muslim area, Zenica was home to foreign Islamic extremists including Al-Qaida and militant paramilitary units that are still operating there often in plain view. This arrangement may have reduced the risk of exposure to Islamic militants which could target U.S. troops. Furthermore, the Muslim population around Zenica most likely realized that a secular Muslim Turkish military presence would deal with any radical elements with brutality if provoked.

What was also significant to this arrangement was the location of the area of responsibility for the "Separate Russian Brigade." Composed of elite volunteers from Russian Airborne Assault units, these units occupied the main avenues of approach leading to Serbia Proper's underbelly from the U.S. Sector. Russian units likewise were mostly garrisoned in Serb areas reducing the possibility of their soldiers being exposed to hostile Muslim forces. For the most part, the member nations involved during the enforcement of the Dayton Agreement cooperated under their U.S. command within the U.S. Sector. It was not unusual for Russian and U.S. soldiers to be seen on joint patrols and other military operations. On one occasion, the U.S. Division even put a U.S. Battalion Task Force under the Russian Brigade Command temporarily after the Russians requested additional troops for a particular mission. Whereas the Russian and other International forces in the U.S. Sector operated under U.S. command during conventional operations, Russians were required to follow their own Rules of Engagement (ROE) when dealing with the warring factions. This meant that Moscow would not allow them to fire on Serb units unless they were attacked. The Russians also differed on enforcement of the Dayton Accord, and on numerous occasions refused to act against the Serbs.

By 1998, the U.S. Command was already planning possible contingencies for a possible NATO attack on Yugoslavia as fighting escalated between Albanian insurgents and the Serbian government forces. This development initiated military planners in Tuzla to draw up contingencies plans. Possible scenarios could be Yugoslav or Serb forces deciding to attack the U.S. command base in Tuzla or other NATO base camps, and/or should NATO decision makers decide to include NATO forces already forward deployed in Bosnia to launch a ground war invasion to seize Belgrade.

Launching a ground invasion into Yugoslavia through mountainous terrain from neighboring Former Yugoslav Republic of Macedonia (FYROM) or Albanian territory would pose a challenge. Ideally, the heavily armed mechanized combat teams comprised of U.S. Abrams Main Battle Tanks and Bradley Infantry Fighting Vehicles could easily take off from bases around Tuzla towards Belgrade. The main road to Belgrade from Tuzla is only 200 km passing through Bijeljina. This avenue of approach would offer NATO an unhindered movement of vehicles as an advantage over Serb forces defending Belgrade. From Tuzla, these mechanized units could theoretically arrive in Belgrade within a matter of hours under the cover of NATO air suppression. But in reality, the planners were frustrated because the Russian Airborne units occupied all the avenues approach and the they were not going to allow U.S. or NATO forces through its territory to attack Serbia.

On March 24, 1999, NATO began its air attack on Yugoslavia after Belgrade refused to sign the Rambolleit Agreement. This agreement proposed by the U.S. contained text which would allow NATO forces unhindered access to occupy all of the Federal Republic of Yugoslavia which included Serbia. Despite predictions that Belgrade would capitulate after a few days of bombing, Serbian forces stubbornly resisted the NATO air strikes with tenacity. Speculations of a NATO or U.S. led ground invasion also evaporated since the 50,000 force of U.S. light airborne troops based in nearby FYROM would have to slug onward through mountainous terrain against 40,000 dug in Yugoslav Army troops and possibly tens of thousands of additional Serbian paramilitary forces providing guerilla resistance. When a cease fire was agreed upon after 78 days of bombing, a small contingent of Russian armored BTR vehicles drove from their base in Ugljevik, Bosnia (Republika Srpska) via Belgrade to Pristina provoking NATO forces before they could enter the Kosovo province nearly risking war between Russia and NATO.

It is no secret Milosevic caved in to NATO demands during the bombing from diplomatic pressure from Moscow, but other reports suggest that in addition to weapons and technical know how, the Russians provided intelligence to the Military of Yugoslavia throughout the war. Despite the weakness of the Kremlin to confront NATO directly, it is in my view that it was the maneuvering and negotiations of the Russian military forces that enabled the Serbs to deny NATO a quick victory in Yugoslavia and thus providing Belgrade the leverage to force NATO to compromise on its demand to occupy the entire territory of Yugoslavia. Likewise, NATO could not count on full victory either without risking a wider and unwanted war with a nuclear armed Russia over the Russian military's strategic positions in Bosnia and their race to enter Kosovo first. Thus the Russian contingent within the NATO occupation successfully denied U.S. and NATO planners the opportunity to move in on Belgrade with force and inevitably to occupy Serbia as according to their original demands at Rambolleit. - TRP