Endless Intervention?

National Review, November 17, 2008

It’s a measure of the predicament in which we find ourselves that merely keeping the banking system going now seems like something of a triumph. It’s even more of a measure that, despite the spending of once-unimaginable amounts of money (or the agreement to spend them), the outcome is still uncertain.

Nevertheless, there have been a few tentative signs that the system may be on the mend. LIBOR (the London Interbank Offered Rate, a key indicator of the interest rates at which banks lend to each other) has been edging down. The TED spread (the difference between three-month LIBOR and the yield on notionally risk-free three-month Treasury bills — a good basis for weighing nervousness in the interbank market) has narrowed. It appears that lending between banks is beginning to revive. It’s a start. Fingers crossed.

None of this is to suggest that a severe recession can be avoided. It cannot. The United States looks set to join many other nations in what may well be the most brutal economic downturn since the 1970s. Saving the banking system, however, will help keep the specter of Joad at bay (a depression, or anything approaching a depression, remains unlikely) and is, obviously, an essential precondition of an eventual recovery, a recovery that would be impossible if the credit markets were allowed to fail. That’s something that market fundamentalists fretting about the “nationalization” of America’s banks need to remember. Risking the ruin of this country’s financial system would have been an absurdly dangerous way to make an ideological point. Yes, part of the genius of capitalism is the “creative destruction” so famously described by Joseph Schumpeter, but sometimes destruction is just destruction.

Watching a Republican Treasury secretary orchestrate the government’s acquisition of significant shareholdings in America’s leading banks has been a disconcerting experience for many of us on the right. Secretary Paulson himself correctly described the whole notion of the government’s taking a stake in private companies as “objectionable.” No less correctly, if a touch belatedly, he recognized that he was left with little alternative. As originally formulated, his TARP (Troubled Asset Relief Program) was too complex and, in a sense, too indirect to provide the reassurance and support that were needed. Confidence in the banks was collapsing, and without confidence there are no banks, and without banks, well, you get the picture. Only a straightforward injection of new money — and with it, more crucially still, the suggestion that the banks were now effectively underwritten by Uncle Sam, the biggest ATM of them all — would have any chance of halting the slide.

The need to restore confidence lay, I suspect, at the heart of Paulson’s controversial decision not only to offer America’s nine largest banks an infusion totaling $125 billion in taxpayer cash, but also to “force” them to accept it. It’s certainly consistent with the usually reported justification for the Treasury’s bullying: Apparently, the feds didn’t want participation in the program (at least by a major bank) to be seen as a potentially lethal admission of weakness. Maybe, but that argument discounts the comfort that ought to come from government support, and it’s not entirely convincing. It’s more likely the Treasury took the view that in a credit market where pricing had broken down, no bank, however impressive its supposed strength, could be said to be completely safe. In the event of the potential fire sale that, in the days before the announcement of the Paulson purchase, lurked in the future of almost every bank, what would assets really be worth? To ask that question is to answer it. Under the circumstances, preemptively reinforcing the most important players was the right thing to do.

Injecting new capital into the banks is, of course, meant to do more than shore up confidence. By filling some of the craters left in their balance sheets in the wake of the subprime and other fiascos, it is also designed to bolster the banks’ ability to extend credit (put very crudely, banks can lend out only a given multiple of their capital). The Fed has been pumping extra liquidity into the broader system for a while now, but until now this has failed to do much to stimulate lending. The new money has, so to speak, been trapped under the debris of shattered confidence and crumbling financial institutions. The banks were too panicked and too capital-constrained to put this cash properly to work. Direct investment in them by the government is meant to deal with both concerns.

What the banks do with these fresh resources will be a critical test of how Paulson’s program is working. Equally, the response in Washington to the banks’ actions will be an excellent early signal of the extent to which this country’s politicians can be trusted with the power that the bailout has, potentially, now given them. In a way, America’s bankers find themselves in a position resembling that of Eastern Europeans “liberated” by the Red Army in 1944–45: grateful that one evil is being seen off but anxious about what their rescuers might want and, for that matter, how long they plan on staying.

In this respect, Paulson’s comments have been reassuring: “We don’t want to run banks.” And if he’s talking the talk, he’s walking the walk too. The government is buying preferred shares with (basically) no voting rights attached. There is no entitlement to board representation, and after three years the shares can be bought back by the banks that issued them. A dividend that increases sharply after five years gives the banks some (but possibly not enough) incentive to do just that, as do a number of restrictions on compensation, share buybacks, and common-stock dividends. It is true that the government also receives warrants to buy common stock, but giving the taxpayers the opportunity to profit from their investment seems only fair — and may also have been a political necessity. It’s to be hoped that the Treasury will not hang on to any such common stock for too long. Hoped? Yup, I’m afraid that’s the best we can expect.

The Treasury’s scheme thus envisages a relationship that is, as it should be, both at arm’s length and, for the most part, strictly temporary. That’s a far cry from what is popularly understood by “nationalization” and is, of itself, something to watch carefully (and skeptically) but not, necessarily, to dread. Unfortunately, this might not continue to be the case. With the economy tanking, any prudent bank should tighten lending standards; not to do so is asking for trouble. To do so, however, might enrage the politicians who have just approved giving these banks a great deal of public money. The French have already faced this issue head-on, and the banks blinked. Any French bank that accepted a recent infusion of subordinated debt from the French government had to agree to increase its total lending by 3 to 4 percent over a designated twelve-month period. The Brits are stumbling in the same direction. Gordon Brown’s government, which now finds itself owner or part-owner of a quite remarkable collection of banks, has promised to keep its distance from its new charges while simultaneously insisting (to borrow the words of Brown’s chancellor of the exchequer) that “the availability of lending to homeowners and small businesses will be maintained to at least 2007 levels.” Quite what “availability,” a word of vintage New Labour ambiguity, actually means is anyone’s guess.

Similar issues will arise over here. Sen. Chris Dodd, the Connecticut Democrat who is chairman of the Senate Banking Committee, has warned that if the banks are “hoarding [cash] . . . there will be hell to pay.” Meanwhile, New York’s Chuck Schumer and two other Democratic senators have been busy arguing that the Treasury ought to set lending goals based on “previous lending activity,” a recommendation (echoed, incidentally, by the committee’s highest-ranking Republican, Alabama’s Richard Shelby) that shows that they understand little about the economics of banking and even less about the undesirability of political meddling in this area. The lessons of Fannie Mae, Freddie Mac, and the Community Reinvestment Act have, it seems, yet to be learned.

With the economy facing an alarming deflationary threat, there is a good case to be made for another round of pump-priming by Washington, but any such moves should be arranged directly, openly, and accountably. Messing yet again with the way banks lend is an invitation to repeat the catastrophic errors of recent years, at a time when a fragile financial system has scant room for more disasters. America’s banks need a more unified, more realistic, and smarter regulatory regime, and that’s a proper area for government action, but the allocation of credit should be left to bankers and the market. Given some time, bank lending will again reach the levels that the business cycle dictates it should, and we will then be closer to a healthy, and lasting, recovery.

Whether a new administration is prepared to give banks that time is a completely different, and profoundly worrying, question.

Ride of the Regulators

National Review, November 3, 2008

Georgetown, November 2008 © Andrew Stuttaford

First fire, then brimstone, then collateralized debt obligations: Both Nicaragua’s Daniel Ortega and Iran’s Ayatollah Ahmad Jannati (a hardliner’s hardliner) are arguing that the 2008 crash is down to the Big Fellow upstairs. Ortega reportedly maintains that the Almighty is using the chaos on Wall Street as a scourge to punish America for imposing flawed economic policies on developing countries. The ayatollah, meanwhile, insists that it is Uncle Sam’s unspecified “ugly doings” that have brought down the wrath of Allah, and with it the housing market. I’m not entirely convinced either way.

I am, however, sure that the crash is a godsend for regulators, meddlers, and big-government types of every description, nationality, and hypocrisy. Speaking on behalf of his famously clean administration, Russia’s president, Dmitri Medvedev, has called for stricter regulation of financial markets, as has the EU’s top bureaucrat (the mean-spirited might interject that the EU is about to have its accounts rejected by its auditors for the 14th consecutive year). They are joined by the green-eyeshade types at the United Nations Conference on Trade and Development and the always-understated Nicolas Sarkozy, who pronounced: “Laissez-faire is finished.” Sacre bleu! 

Closer to depreciated home, Democratic congressman Barney Frank has blamed the crisis on a “lack of regulation,” a gap that he obviously plans to fill and more with the eager assistance of Nancy Pelosi. In the now-infamous speech she made ahead of the first, calamitous House vote on the bailout package, Pelosi claimed, ludicrously, that the source of our problems lay in the fact that there had been “no” regulation and “no” supervision. Even if we make necessary allowance for hyperbole, dishonesty, and ignorance, Speaker Pelosi’s revealing choice of adjective indicates that an extremely heavy-handed, destructive, and counter-productive regulatory regime lies ahead.

The ideological winds have shifted. With free markets generally, and Wall Street specifically, being blamed for an economic predicament that is grim and getting grimmer, it’s going to be a struggle for those of us on the right to convince the rest of the country that the solution is not a financial system micromanaged by the feds. Nevertheless, we must try.

It was too much to expect John McCain to contribute anything to this effort, and, with his diatribes against “greed and corruption” on Wall Street, he hasn’t. But if, to use a vintage insult, demonizing “banksters” is unhelpful (full disclosure: I work in the international equity markets, but I am writing here in a purely personal capacity), trying to pin the blame on the Democrats’ uncomfortably cozy relationship with Freddie Mac and Fannie Mae won’t do the trick either. It is true that this unlovely couple was running amok and that the Democrats helped them do so. But the conceit that the failure to regulate them appropriately is in itself an argument against wider financial regulation is absurd. Equally, to proclaim that free markets are always their own best regulator is not only to fly in the face of history and common sense but also to ensure that the debate will be lost.

As we survey an economic landscape littered with shattered 401(k)s, broken banks, and anxious businesses, the idea of leaving the free market to clean up after itself comes perilously close to the old notion that it was sometimes necessary to destroy a Vietnamese village in order to save it. The free market is a very powerful engine for economic growth, the best we have, but it is that power that makes it too dangerous to be left solely to its own devices. Adam Smith certainly understood as much. To face this reality is to recognize that the sensible debate is not whether financial markets should be regulated, but how much and in what manner.

As a starting point, we must accept (as if there could now be any reasonable doubt about it) that the interconnectedness and scale of today’s markets mean that far more institutions than had been previously thought are, as the cliche goes, “too big to fail.” (I’d add that this country’s fragmented regulatory structure has now clearly shown itself too small to succeed.) Market fundamentalists will hate it, but it’s time to be honest about this. Bear Stearns was too big to fail, but so, quite possibly, was Lehman Brothers. And if an institution is indeed too big to fail, that means it is effectively underwritten by the poor conscripted taxpayer. Under the circumstances, it’s neither unreasonable nor inconsistent with free-market principle to insist that the price of that privilege (which can bring with it a competitive advantage) be a more cautious approach to risk. Not to do so would, in fact, provide a perverse incentive to do the opposite, creating the notorious “moral hazard” about which we read so much these days.

Now that they have become conventional banking companies, this more closely supervised world is where Morgan Stanley and Goldman Sachs will, justifiably, find themselves. The question, then, is which other institutions should be brought within a tighter regulatory net. The answer is, I suspect, to be deduced from facts of size, function, and client base, but it is difficult to avoid the conclusion that the category of “too big to fail” will include at least some money-market funds and — remembering the Long-Term Capital Management fiasco — perhaps others on the buy side.

Getting this right is crucial because the corollary is that we will then know which firms are not too big to fail, and can ensure they are allowed to carry on business with minimal government interference. Traditionally, establishing a sleep-at-night risk profile has been a matter of closer regulatory scrutiny and ever-tougher capital requirements, but in the wake of this trauma we must ask whether certain instruments are simply too complex, too leveraged, and too thinly traded to be permitted anywhere near a “too big to fail” balance sheet. I may not share Warren Buffett’s politics, but it’s impossible to deny that his 2003 warning about the dangers of derivatives (“financial weapons of mass destruction”) was, to say the least, prescient.

Yes, the Chicago Mercantile Exchange is establishing a facility for the centralized trading and, critically, clearing of credit-default swaps (on some estimates a $58 trillion market, although that number may be swollen by double counting), something that, if successful, should enhance both liquidity and pricing transparency. Additionally, attempts are being made to come up with a mark-to-market rule that accurately reflects risk without triggering unnecessary disaster (although it is essential that any such change be accompanied by greater disclosure of “off balance sheet” exposure). The role of the ratings agencies is also being subjected to long-overdue reappraisal. These are all steps in the right direction, but they are no panacea. For a different approach, go to Spain. The Spanish central bank discouraged the banks it supervised from participating in the structured-credit markets. This had the virtue of simplicity and, it seems, some degree of success. It’s not a perfect precedent (some of these banks were playing around with structured-credit products), but it is a start.

Even though Spanish banks largely kept clear of America’s subprime swamp, they could not escape their own. Spain too had a real-estate bubble. Manias, like panics, are global. But we do learn from them. The Bank of Spain’s relatively tough line has its origin in a major Spanish banking crisis some three decades ago. America’s real-estate lenders are unlikely to repeat the mistakes they have made (at least on the same scale) for many years: burned fingers and all that. Lending standards have tightened and will probably stay tight for a long time. This is not to suggest that the regulation of housing finance should be left untouched. Writing in the Wall Street Journal, George Soros (I know, I know) has argued that we should look at the Danish mortgage-bond market for inspiration, and there’s something to that. There’s no space here to go into the details, but suffice it to say that the Danish system aligns, prices, and manages risk far more effectively than anything we have in the United States. It would be nice to report that, as a result, the descendants of Polonius (“Neither a borrower nor a lender be”) had avoided gambling on Danish real estate. Unfortunately, they didn’t. To speculate is human.

But the housing crisis is also a cautionary tale of political mismanagement (or it would be if anyone were paying attention). While promoting a home-ownership society is a legitimate function of government (thus the tax deductibility of mortgage interest should be retained), it must be exercised openly and honestly — and it must be properly costed. The misuse of the Community Reinvestment Act and, even more, the odd, anomalous, and unhealthy existence of Fannie Mae and Freddie Mac (they should be broken up and privatized as soon as possible, which in current conditions may be a while) played malign parts in this whole miserable saga. They are a reminder that excess, overreach, and worse can be as much a feature of the public sector as of the private. Preventing such abuses in the coming age of regulatory fervor will be the next challenge.

A Tool, Not a Fetish

National Review, October 20, 2008

In the wake of Sept. 29’s dramatic House vote, the prospects, nature, and chances for success of any revived Paulson plan were, to say the least, uncertain. What remained certain was that some sort of rescue, bailout, pick the euphemism or pejorative of your choice, was still needed, and needed quickly. That this could ever have been a matter of serious debate is remarkable. Even more remarkable is the fact that a good number of those seemingly opposed to the very idea of a plan have come from the GOP. Washington’s Republicans are supposedly the flag bearers, however tatty, torn, and stained their flag, of what little economic literacy there is within the nation’s capital. Witnessing some of their recent pronouncements, not to speak of their votes, has been a depressing exercise.

As a starting point, we need to discard the distinction so often and so misleadingly drawn between Main Street (good) and Wall Street (bad), and its close cousin, the Pollyanna chatter about the “real” economy (healthy) and the financial world (sick). In fact, Wall Street and Main Street are just different points along the same road. Those who operate within the financial markets do so in the pursuit of their own economic interests, and there are occasional, inevitable, and sometimes spectacular speculative excesses; however, those operations generally facilitate the (reasonably) efficient allocation of capital to the rest of America. It shouldn’t be necessary to remind Republican congressmen that capital is the lifeblood of any economy. It’s worth adding that if anyone really thinks the vital principle of moral hazard — the notion that rescuing failing financiers will encourage others to take excessive risks — has been junked, or that the Paulson plan would have meant that Wall Street had “gotten away” with this mess, I can probably find some Lehman stock to sell him.

And that’s why referring to that plan, an initiative designed to defend this system, as (to quote various House and Senate Republicans) “financial socialism,” “un-American,” and an example of the “Leviathan state” at work is absurd. A belief in the effectiveness of free markets is one thing. Market fundamentalism is another.

Free markets are, to steal Winston Churchill’s famous comment about democracy, the worst way of running an economy “except for all those other forms that have been tried from time to time.” Free markets work better than the alternatives because no one person, organization, or government has the smarts to allocate resources more efficiently than can the collective wisdom of the crowd. But the free market should be a tool, not a fetish, and as with all tools, there are instructions for its use. To think that it can operate in Galt’s Gulch isolation is to ignore history and psychology, and to confuse the economics of Hayek with those of Mad Max.

Free markets need a financial, legal, and regulatory structure to provide the element of trust — without which they cannot work very well, as we saw in Boris Yeltsin’s chaotic Russia. And that basic structure, experience shows us, has to come from the state. The only real question is how extensive it should be. As the failures of socialism demonstrate, too much state intervention is counterproductive. But too little can also be disastrous, especially when it comes to preserving the trust that (for example) enables banks to borrow short and lend long, thereby ensuring the free flow of funds on which the economy relies.

A breakdown in trust has been all too evident in recent months, both to those of us in the financial markets (I work in international equities, but should stress that I am writing in a purely personal capacity) and, increasingly, to those working outside them. In the more insular political arena, there seems to have been rather less understanding. When, on Sept. 23, Sen. Richard Shelby (R., Ala.) suggested that the U.S. should make sure it has “exhausted all reasonable alternatives” before proceeding with the Paulson plan, it was impossible to avoid wondering what, at that late stage, he had in mind. And then there was the first House vote.

Whether it’s the slowdown in interbank lending, the drastic contraction in the commercial-paper market, or even the fact that in late September the U.S. Mint ran out of its one-ounce “American Buffalo” gold coins owing to a surge in investor demand, the signs of collapsing trust and mounting panic in the credit markets (gyrations in the stock market matter much less) are unmistakable — and profoundly disturbing.

And when panic takes over, it is indiscriminate. Sound institutions can fail along with those that deserve to. It’s not only exuberance that’s irrational; free markets may rely on the collective wisdom of crowds, but as Charles Mackay (the 19th-century author of Extraordinary Popular Delusions and the Madness of Crowds) reminds us, crowds can go crazy. That’s why on some occasions the Fed has to take away the punchbowl, and on others come to the rescue.

Unfortunately, the problems this time are so great that the Fed’s interventions have not so far done the trick. At this point, government, the only institution with possibly enough resources (financial and otherwise) to halt this particular panic, has to step in with something very drastic indeed. It’s not pretty, or particularly ideologically comfortable for those of us on the right, but, like the free-market system, it’s pragmatic and, as such, thoroughly American. The Japanese delayed doing what they needed to do for years; the consequences are too well-known to need reciting here.

None of this is to claim that the original Paulson plan was perfect. It was very far from that (I’d have preferred a scheme with more direct equity investment in the troubled institutions). Equally, it must be acknowledged that the congressional Republicans’ criticisms improved the package’s terms prior to the first vote, if insufficiently to convince enough of them to vote yes. The problem is that, in the course of a panic on this scale, time is of the essence (this is not some bogus emergency on the usual Washington model). There is limited room for fine-tuning, with the markets waiting for a move.

As Rep. Henry Steagall (yes, that Steagall, and yes, he was a Democrat) wrote in 1932 about a fix proposed for an economic crisis:

Of course, it involves a departure from established policies and ideals, but we cannot stand by when a house is on fire to engage in lengthy debates over the methods to be employed in extinguishing the fire. In such a situation we instinctively seize upon and utilize whatever method is most available and offers assurance of speediest success.

No bailout, however deftly structured, offers any “assurance” of success. The situation is too treacherous for that. A bailout is a gamble, but not a stupid or extravagant one (banking crises never come cheap), and the stakes are too high to avoid it. To do little or nothing, or to rely on the free market alone, would be to display reckless optimism of the type that got us into this trouble in the first place.

The free market simply cannot do its job in a climate of rising and highly infectious financial panic, hysteria, and risk aversion. A bailout offers a chance of restoring the confidence needed for its normal operation, and with this the semblance of a normal economic cycle.

The alternative could well be systemic collapse, and it is that, not Hank Paulson, that will pave the way for Leviathan.

Angela’s Ashes?

National Review Online,  June 16, 2008

LisbonNO1

If there were any last, few, pitiful remaining scraps of doubt about the depth of the disdain felt by the European Union’s leaders for the people of their wretched union, they ought, surely, to have been dispelled by the miserable saga of the Treaty of Lisbon, the sly, squalid, and cynical pact that has just been rejected by Irish voters, the only mass electorate given the chance to do so.

From its very beginnings, the Treaty of Lisbon was an exercise in deception, deliberately designed to deny the EU’s voters any more chances to slow down the construction of a European superstate that relatively few, outside an elite chasing power, privilege, and the chance to say “boo” to America, actually appear to want. Its origins can be found in the 2005 decision by some of those voters, the ones in France and Holland, to take the opportunity presented by two referenda to say non and nee respectively to the draft EU constitution that had been prepared so meticulously, so proudly, and so expensively on their behalf. Lesson learned: The voters were never again to be trusted. In future they would have to be bypassed.

Nevertheless, in a pantomime of responsiveness to that non and that nee, the constitution’s ratification process was suspended in the late spring of 2005. What ensued was officially described as a “period of reflection,” but was, for the most part, a period of frantic scheming. Its aim: To investigate how the draft constitution could be revived and, this time, be ratified. Sure enough, just about a year later German chancellor Angela Merkel announced that one of the objectives of her country’s upcoming EU presidency (the presidency currently rotates between different member states every six months) would be to “review” the constitution’s status. The message was clear: The people had spoken, and they were to be ignored. Chancellor Merkel was brought up in East Germany — and sometimes it shows.

Within two weeks of Germany assuming the presidency on January 1, 2007, Merkel declared the period of reflection to be over. She wanted, she said, a “road map” for the adoption of the constitution to be completed by the conclusion of the German presidency. And so it was, but with a clever twist. By the end of June, the EU’s governments had agreed to hold a conference to amend the union’s existing treaties in ways that mimicked much of the rejected constitution but without the bother of reintroducing the constitution itself, a bother that might run the risk of an extra referendum or two.

In essence, a number of largely cosmetic alterations were made (thus the proposed EU foreign minister was now re-dubbed a “High Representative”), and the new document generally avoided repeating those provisions of the old draft constitution already enshrined within EU law (why remind voters of what they had already given up?). Most of the changes were meaningless, flimflam designed to minimize the risk that ratification might be subject to the whims of a popular vote. Meanwhile, the “substance” of the rejected constitution had, boasted Merkel, been “preserved.” Indeed it had. The constitution was dead, long live the “Reform Treaty.” Six months and a few concessions later, the treaty was signed in Lisbon at a ceremony notable mainly for the absence of British prime minister Gordon Brown. He signed the paperwork a discreet few hours later.

For a while it looked as if Merkel’s coup would proceed without too much democratic interruption. This time around the French and Dutch governments were able to avoid consulting the electorates they supposedly represented. Holland’s Council of State, its government’s highest advisory body, helpfully decided that a referendum was not legally required. The Reform Treaty did not, apparently, contain sufficient “constitutional” elements, a ruling that undoubtedly pleased a large majority of Holland’s establishment politicians on both left and right: Off the hook! The lower house of parliament approved the Treaty of Lisbon earlier this month. The senate was expected to follow suit later in the year. In France, President Sarkozy made it quite clear that, whatever French voters might want (opinion polls suggested that a majority favored a referendum), he had no intention of consulting them. Last November he warned that a referendum “would bring Europe into danger. There [would] be no treaty if we had a referendum in France.” There was no referendum. Both national assembly and senate approved the treaty in February.

As for Britain, that perennial member of the EU’s awkward squad, departing Prime Minister Tony Blair was unable to resist giving one more kick to the country he had already done so much to trash. He announced that there would be no referendum, and so did his successor, Gordon Brown. Sure, a referendum had been promised in Labour’s 2005 manifesto, but only in the event of a revived constitution. The new treaty didn’t count. The argument was, typically for both men, absurd, dishonest, and insulting, something later highlighted by two parliamentary committees, not that it made any real difference.

In October 2007, the (cross-party) European Scrutiny Committee concluded that the Reform Treaty was “substantially equivalent” to the original constitution, a statement of the obvious – but one, under the circumstances, well worth making. Additionally, the committee had a few tart observations about the way that Merkel’s team had handled the crucial June negotiations. It highlighted their secrecy and timing: “texts [were] produced at the last moment before pressing for an agreement.” Meanwhile the compressed timetable then being arranged for the discussions in Portugal “could not have been better designed to marginalize” national parliaments. In January 2008, the Labour-dominated foreign-affairs committee concluded “that there is no material difference between the provisions on foreign affairs in the Constitutional Treaty, which the government made subject to approval in a referendum, and those in the Lisbon Treaty, on which a referendum is being denied.” Not to worry, soothed Britain’s glib young foreign minister, the Reform Treaty would “giv[e] Britain a bigger voice in Europe and enshrin[e] children’s rights for the first time.”

Ireland’s leading politicians behaved better. Under Irish law, significant changes to EU treaties require an amendment to the Irish constitution and all amendments to the Irish constitution have to be approved by referendum. No serious attempts were made to argue that the changes encompassed within the Treaty of Lisbon were too trivial to warrant a referendum. The “substance” of the rejected EU constitution had, admitted Prime Minister Bertie Ahern, survived. He added later that it was “a bit upsetting . . . to see so many countries running away from giving their people an opportunity [to vote]. . . . If you believe in something . . . why not let your people have a say in it?” That’s easy to answer. Those who now direct the EU project believe in it too much to accept placing the union’s future in the hands of its voters.

Mind you, when Ahern made those comments, he was probably confident that his electorate would approve the treaty. Despite a bout of recalcitrance a few years back (Irish voters had rejected an earlier EU treaty in 2001 before being bullied into changing their minds the following year), his countrymen were, and are, reasonably enthusiastic supporters of the EU. The EU has been good for – and to – Ireland, and the Irish know it. But gratitude is not a blank check and that, increasingly, is what the electorate came to believe that it was being asked to sign. In many respects, such as its notorious passerelle clauses (it’s a long story), that’s what the treaty is, but growing suspicions that the whole thing was nothing more than an elaborate con were also sharpened (sometimes unfairly) by the complexity of the treaty’s language.

Ironically, the treaty’s supporters had once regarded that complexity as an asset. As one of them, former Irish Prime Minister Garret FitzGerald, put it in June 2007:

The most striking change [between the failed EU constitution and the Reform Treaty] is perhaps that in order to enable some governments to reassure their electorates that the changes will have no constitutional implications, the idea of a new and simpler treaty containing all the provisions governing the Union has now been dropped in favor of a huge series of individual amendments to two existing treaties. Virtual incomprehensibility has . . . replaced simplicity as the key approach to EU reform.

At a meeting in, tactlessly, London the following month, another former premier, Italy’s Giuliano Amato reiterated the advantages of incomprehensibility: “If it is unreadable, it is not constitutional, that was the sort of perception. Where they got this perception from is a mystery to me. . . .  But, there is some truth [in it]. . . . the U.K. prime minister can go to the Commons and say “Look, you see, it’s absolutely unreadable, it’s the typical Brussels treaty, nothing new, no need for a referendum.” Amato may have been speaking fairly light-heartedly, but he was also quite right. Legislators everywhere are accustomed to approving laws they don’t understand. The man in the street is not. The opaque language of Merkel’s deceptively crafted treaty was a brilliant device to help those politicians looking to dodge a referendum, but a disaster for those who had no choice but to win one.

But last Thursday’s Irish “no” was a rejection of more than elaborately misleading drafting. As the EU’s bureaucracy has extended its reach deeper and deeper into territory once reserved to the nation state, it is bound to provoke opposition, even among many of those who broadly support European integration. Much of that opposition is reasonable, but much of it is not, and who is to blame for that? The EU’s political class has made a mockery of truth for so long that we should not be surprised that some Irish “no” voters preferred to believe (as, reportedly, some did) that the Treaty of Lisbon would pave the way for a pan-European draft.

The “no” coalition was wide, messy, crazy, sane, pragmatic, romantic, all-embracing, and self-contradictory, sometimes well-informed, sometimes not, sometimes paranoid, sometimes prescient, sometimes socialist, sometimes free market, sometimes high tax, sometimes low tax, sometimes honest, sometimes not, sometimes more than a little alarming (Sinn Fein was the only official party of any size to lend their support) and sometimes more than a little inspiring. Marvelously, miraculously, they won, and they won well, 53.4 percent to 46.6 percent (on a respectable turnout of 53.1 percent). If you think that sounds like democracy, you’d be right. And if you think that sounds like a nation, you’d be right too.

But if you think that it’s too soon to declare victory, you’d also be right. Early indications are that the ratification process will continue. As Jose Barroso, the EU’s chief bureaucrat, announced within minutes of the Irish result, “the treaty is not dead.”

And that tells you much of what you need to know about the EU.

Rebranding America?

National Review Online, January 10, 2008

New Hampshire has gone and done what New Hampshire has gone and done, but it won’t be long before Obamania picks up speed again. As it does, so will the idea, compelling, thrilling, and thoroughly misleading, that an election victory by the junior senator from Illinois will win over that large portion of the world that has, so runs the story, been alienated by the wicked George W. Bush, but which still, even now, wants to love America.

Writing over at “The First Post,” just before the Iowa vote, the distinguished British journalist, Sir Peregrine Worsthorne, a conservative of sorts, had this to say:

In many parts of the world, the United States is now regarded as “the evil empire”. This is entirely President Bush’s fault. Both his actions and his rhetoric have given the impression of a superpower bent on world dominion. If this had happened in any other country it would require decades, if not centuries, to undo this damage. In the case of America, however, it can be put to rights almost at one, or at most two, strokes. Stroke number one would be for the Democrats, starting this week in Iowa, to nominate Barack Obama as their presidential candidate, and stroke number two, for the electors to put him into the White House with a landslide majority. By these two actions America would be rebranded. That the world’s shield and conscience should have a young and handsome black senator, touched with nobility, waiting in the wings at this particular juncture is little short of a miracle. It is exactly what the doctor ordered.

Obama fan Andrew Sullivan, another conservative of sorts, made a similar point last year, arguing as follows:

What does [Obama] offer? First and foremost: his face. It could be an effective potential rebranding of the United States. Such a rebranding is not trivial – it’s central to an effective war strategy. The war on Islamist terror, after all, is two-pronged: a function of both hard power and soft power. We have seen the potential of hard power in removing the Taliban and Saddam Hussein. We have also seen its inherent weaknesses in Iraq, and its profound limitations in winning a long war against radical Islam. The next president has to create a sophisticated and supple blend of soft and hard power to isolate the enemy, to fight where necessary, but also to create an ideological template that works to the West’s advantage over the long haul. There is simply no other candidate with the potential of Obama to do this. Consider this hypothetical scenario. It’s November 2008. A young Pakistani Muslim is watching television and sees that this man – Barack Hussein Obama – is the new face of America. In one simple image America’s soft power has been ratcheted up exponentially. A brown-skinned man whose father was an African, who grew up in Indonesia and Hawaii, who attended a majority-Muslim school as a boy, is now the alleged enemy. If you wanted the crudest but most effective weapon against the demonisation of America that fuels Islamist ideology, Obama’s face gets close. It proves them wrong about America in ways no words can.

Sullivan, understandably enough, began pushing this theme with renewed vigor after Obama’s Iowa win, blogging last week that “the international response to Obama will shock many Americans, because it will be so massive” (and by implication) positive. To underline the point, he excerpted this passage from a piece by a South African journalist: “Damn, I love Americans. Just when you’ve written them off as hopeless, as a nation in decline, they turn around and do something extraordinary, which tells you why the United States of America is still the greatest nation on earth.”

There is, of course, no doubt that the symbolism of an Obama victory this November would resonate. Even the U.K.’s Guardian, not normally a hotbed of support for Uncle Sam,was enchanted by the “remarkable” prospect that “there there could be a black man in the White House, not serving the drinks, but sitting in the Oval Office itself.” It would, naturally, have been too much for someone writing for the Guardian to concede that, to take just one obvious example, Colin Powell did rather more than serve drinks in the course of his visits to the Oval Office. Nevertheless the broader sense of what that editorialist is talking about is clear, and it seems to support the case being made by Andrew Sullivan and Sir Peregrine.

The problem is that, while (rightly or wrongly, for good reasons and bad) there will be genuine relief worldwide at the departure of George W. Bush from that office where Condoleezza Rice was so often to be seen pouring martinis, Miller Lites, and alcohol-free beer, it will be rapidly eclipsed by the return of politics-as-usual. An Obama election victory would certainly give the celebrations an additional boost, as may some of the policies he might choose to take up, but the belief that it would pave the way (at least beyond these shores) for a lasting re-branding of America, is mistaken. There may be many reasons to vote for Obama (most of which, I admit, escape me), but this ought not to be one of them.

To grasp why, it’s necessary to understand that anti-Americanism is something that long predates George W. Bush and it will long outlast him. Yes, Dubya’s foreign policy, his domestic agenda, his environmental stance, even his very demeanor, may have riled up America’s critics abroad and antagonized many of its former friends, but the underlying problem, as a President Obama would be forced to recognize, lies elsewhere. The new president might pull the troops out of Iraq, he might sign the U.S. up for some carbon voodoo, he might prove to be more congenial company at a Turtle Bay cocktail party, but, in the wider scheme of things, none of this will make a great deal of difference, none of it will be enough.

Anti-Americanism is rancid, perennial, barely rational (and sometimes not even that), rooted in mankind’s ancestral primate psychology, in jealousy and in fear, and made all the more potent by the cold calculations of global politics, as well, it must be said, as this nation’s own faults, faults made painfully visible by its position, its power, and its promise. Critiques of America have varied at different times, and in different places, and they have frequently been mutually contradictory, but what, all too often, they share at their core is a resentment at the success of a country that has the ability to make everybody else feel, well, just a little bit threatened, sometimes deservedly so, sometimes not. The result has led to absurdities too numerous to list here, although the grotesque spectacle presented by those millions across the globe who claimed, decade after decade, after decade, to find “moral equivalence” between the Soviet Union and the United States is not a bad place to start.

To suggest that a phenomenon on this scale will simply evaporate when confronted with a black president is to ignore the lessons of history, and recent history at that. Just ask the NAACP, an organization legitimately appalled by some of the commentary and cartoons that appeared in the Arab media at the time of a visit by another powerful, successful and charismatic African-American, Secretary Rice, to the Middle East.

Symbolism alone will not, therefore, do the trick, a point that was taken up by Iranian-born Reza Aslan in the Washington Post.

As someone who once was that young Muslim boy everyone seems to be imagining (albeit in Iran rather than Egypt), I’ll let you in on a secret: He could not care less who the president of the United States is. He is totally unconcerned with whatever barriers a black (or female, for that matter) president would be breaking. He couldn’t name three U.S. presidents if he tried. He cares only about one thing: what the United States will do. That boy is angry at the United States not because its presidents have all been white. He is angry because of Washington’s unconditional support for Israel; because the United States has more than 150,000 troops in Iraq; because the United States gives the dictator of his country some $2 billion a year in aid, the vast majority of which goes toward supporting a police state. He is angry at the United States because he thinks it has hegemony over almost every aspect of his world.

Andrew Sullivan is too shrewd not to realize this, and, in his earlier piece (perhaps significantly it was written before the euphoria of the Iowa victory), he was careful to highlight the potential importance of what Obama might do in Iraq as a key element in any re-branding of America:

The other obvious advantage that Obama has is his record on the Iraq war. He is the only significant candidate to have opposed it from the start. Whoever is in office in January 2009 will be tasked with redeploying forces in and out of Iraq, engaging America’s estranged allies and damping down regional violence. Obama’s interlocutors in Iraq and the Middle East would know that he never had suspicious motives towards Iraq, has no interest in occupying it indefinitely, and foresaw more clearly than most Americans the baleful consequences of long-term occupation.

Reza Aslan went further:

The next president will have to try to build a successful, economically viable Palestinian state while protecting the safety and sovereignty of Israel. He or she will have to slowly and responsibly withdraw forces from Iraq without allowing the country to implode. He or she will have to bring Iraq’s neighbors, Syria and Iran, to the negotiating table while simultaneously reining in Iran’s nuclear ambitions, keeping Syria out of Lebanon, reassuring Washington’s Sunni Arab allies that they have not been abandoned, coaxing Russia into becoming part of the solution (rather than part of the problem) in the region, saving an independent and democratic Afghanistan from the resurgent Taliban, preparing for an inevitable succession of leadership in Saudi Arabia, persuading China to play a more constructive role in the Middle East and keeping a nuclear-armed Pakistan from self-destructing in the wake of Benazir Bhutto’s assassination. That is how the post-Bush “war on terror” must be handled. Not by “re-branding” the mess George W. Bush has made, but by actually fixing it.

You can agree or disagree with the particulars of these prescriptions and diagnoses, but it’s difficult to deny that they do much to rebut suggestions that the symbolism of an Obama victory will in itself be enough to make a significant difference. But if symbolism is not enough, what will be?

Let’s just say the list is a long one. That’s not to argue that the United States cannot, and should not, take steps to put in place a smarter foreign policy designed to win it more friends abroad, while at the same time pursuing a robust defense of the national interest. It can, and it should. I find myself these days, I guess, in a small minority to think so, but I’d argue that a Republican president is best placed to do it. The trouble is that such changes would, I reckon, only alter perceptions of America at the margins. Yes, it’s probably true that, reflecting the different priorities of his or her party, a future Democratic president could do more to ingratiate this country with what is laughably known as the international community, but that can likely only go so far. The pathologies of anti-Americanism run too deep.

To even have a chance of curing them, a President Obama would have to transform America so profoundly that it would no longer be the America in which he had succeeded so gloriously. And which Americans other than the self-hating, the masochistic, or the clinically disturbed, would want to vote for that?

Not Obama, I suspect. I hope.

Conspiracies So Immense . . .

National Review, December 3, 2007

To talk to Yuri Felshtinsky is to revisit an era meant to have ended when Boris Yeltsin leapt onto a tank in Moscow. But when Dr. Felshtinsky examines photographs of that heroic August day, he sees something else. Visible just behind the Russian leader is Alexander Korzhakov (he’s the balding man in a gray suit), the bodyguard who later became chief of Yeltsin’s Presidential Security Service. “KGB,” notes Felshtinsky. So he had been.

Something similar could have been observed in St. Petersburg. The city’s mayor was a prominent opponent of the hardliners’ coup — but take a closer look at shots of his entourage, and whom do you see? Vladimir Putin, that’s who. “KGB,” says Felshtinsky. And then he smiles.

Felshtinsky is an historian, Russian-born (but now an American citizen), a graduate of Brandeis, a Ph.D. from Rutgers, and connecting the dots is what historians do. But the animated, intense, and likeable Dr. Felshtinsky doesn’t just enjoy his connections and his dots, he treasures them, and when they begin to reveal the outline of something hidden, something mysterious, something denied, ah well . . .

He is quick to regale me with fascinating tales of murder, attempted murder, and conspiracy from the Soviet epoch, tales that have, shall we say, passed most history books by. But before dismissing them all as fantasy, bear in mind that konspiratsia has been a malign feature of Russian politics since the czar’s Okhrana began its elaborate games of deception with the revolutionaries over a century ago. These were games that, in essence, continued, unchanged but for the players, into Soviet times, and if Yuri Felshtinsky is to be believed, they still do. And maybe he should be. In Russia it’s only cranks that have faith in lone gunmen. In a nation with no agreed narrative of past or present, who is to judge where paranoia ends and history begins?

This place of shadows, contradiction, and lies is where Felshtinsky and a former intelligence officer named Alexander Litvinenko researched their book, Blowing Up Russia. Since it was first published in 2002, Litvinenko has been murdered — poisoned in London last year with radioactive polonium-210 — and the book itself has been banned in Russia. The latter can’t have been a shock: Blowing Up Russia may resemble a somewhat discursive academic treatise, but it is as disturbing as it is dry. It is either a monstrous libel or a horrifying revelation. Neither would be acceptable to the Kremlin.

That’s because the book revolves around the allegation that the devastating bombings in Moscow, Buinaksk, and Volgodonsk in September 1999 were the work not, as is usually assumed, of Chechen terrorists, but of elements within the FSB, the principal successor organization to the KGB. The bombings were, it is claimed, what the Soviets would once have called a “provocation” — a provocation of which, Felshtinsky tells me, choosing his words delicately, Putin was “aware.” According to this thesis, they were designed to provide a justification for a fresh attack on Chechnya and, with that renewed war, a political climate that would favor the election to the presidency of Putin, who had recently quit his job as head of the FSB to become prime minister and Yeltsin’s latest presumed successor. If that was indeed the plan, it worked. Russian troops reentered Chechnya in force, Yeltsin resigned in December, and in March 2000 Putin swept into the presidency.

Putin has described such allegations as “madness.” Even to consider them is “immoral,” an argument with some resonance, especially after the emergence of “Truthers” and other conspiracy theorists intent on proving what “really” happened on 9/11. Making matters muddier still, Litvinenko subsequently ruined his own credibility with a series of increasingly far-fetched tales of Putin’s wrongdoing. Felshtinsky explains this by describing his co-author as an “extremist,” a man on a mission, more interested in discrediting Putin than in the truth of the stories he was peddling.

Felshtinsky had doubts about Litvinenko from early on. For all the cooperation between the two men (including Felshtinsky’s role in Litvinenko’s escape from Russia), he leaves the clear impression that they were never particularly close: “We were not friends.” Litvinenko was former KGB/FSB: Such people, asserts Felshtinsky, can never be trusted. Felshtinsky was, he says, insistent that Litvinenko’s contributions to Blowing Up Russia were carefully checked and, where possible, backed up by documentation. He was “professionally tough” with Litvinenko: “I am a historian.”

But he’s been more than that. In 1998, he recounts, he returned to his native country to “somehow move . . . myself from history to politics.” That led him to Boris Berezovsky (then the leading oligarch, then still in Russia, and then thought by many to be the power in the land), and, through him, to Litvinenko. Felshtinsky now reckons that Berezovsky’s power was, in no small part, illusion (“a legend”), that it was really only effective when exercised on behalf of those in charge of the state. That argument may well be an exaggeration, and its logic is more than a touch circular, but it is true that it didn’t take too long before Berezovsky, an early supporter of Putin (Felshtinsky questions how important that support really was), was forced to flee. This left him as one of Putin’s fiercest — and with his billions, most formidable — opponents. Spreading the word that Putin, or his allies, had something to do with the 1999 bombings was obviously in his interest, and so, therefore, was backing the project that became Blowing Up Russia. And that is what he has done.

Litvinenko was financially supported by Berezovsky for a number of years, something that, Felshtinsky says, ended only shortly before his murder. As for his own past and present arrangements with Berezovsky, Felshtinsky is reluctant to discuss them in much detail. There is, however, a vague, and vaguely patronizing, description included by Alex Goldfarb, another Berezovsky acolyte, in his account (co-written with Litvinenko’s widow) of this saga: “In the late 1990s [Felshtinsky] became a peripheral planet in Boris’ solar system, orbiting once every few months, advising him on various matters.”

The Berezovsky camp may have been busy throwing mud at the Kremlin, but the Russian authorities have hit back hard. They have accused the oligarch, a man with a record murky even by the standards of the Yeltsin years, of involvement with Chechen terrorism (he denies the charge), and many other crimes. Allegations have also surfaced that it was Berezovsky who was responsible for arranging Litvinenko’s death in order to embarrass Putin. If there ever has been an example of konspiratsia too baroque to be believed, this is it. That doesn’t alter the awkward fact, a gift to the obsessive, that Andrei Lugovoy, the former KGB/FSB operative now charged by the British with Litvinenko’s murder, once worked in a senior role for Berezovsky and continued to have some degree of access to him even into 2006.

None of these issues, however, nor the questions they raise, is enough in itself to discredit Blowing Up Russia. Its authors make a strong case (albeit one for the prosecution) and they were (and are) not alone in their suspicions. The fates of three prominent individuals who had come to very similar conclusions are, to say the least, suggestive. There was Sergei Yushenkov, an MP for the Berezovsky-backed Liberal Russia party. He called for an investigation into what happened in that summer of 1999. He was gunned down in 2003. Not long afterward, the journalist and opposition MP Yuri Shchekochikhin, who had arranged for extracts from Blowing Up Russia to be published in Novaya Gazeta, one of Russia’s last remaining independent newspapers, died of an “allergic reaction.” In early 2004, presidential candidate Ivan Rybkin described the bombings as a “crime committed by the security agencies.” He later withdrew from the race after having been poisoned (it appears) by psychotropic drugs.

Felshtinsky regards both the Litvinenko murder and the September bombings as evidence of a wider trend: What counts in Russia now is what the FSB wants. In Soviet times, the security services were powerful, but those who ran them were creatures of the state they policed. Everything they had (in reality rarely that much) could be taken from them on a bureaucratic whim. By contrast, the new Russia offers them the chance of becoming, and staying, rich. It’s a chance they have taken. In Felshtinsky’s opinion, Russia has been reduced to little more than a corporate asset, and the shareholders in the corporation that controls it are, primarily, past and present members of the security services.

It’s a corporation where the shareholders will, Felshtinsky believes, feel (and be) threatened if any one of their number becomes too powerful. Thus, he thinks that Putin will soon be made to give up much of his authority. That’s an assumption that is likely to be severely battered in the next month or so. Felshtinsky is, I suspect, on more secure ground in claiming that this is a corporation with a very low degree of tolerance for any disloyalty. Alexander Litvinenko, former KGB, former FSB, not only quit the team (basically, argues Felshtinsky, as a result of a power play that backfired), but also joined up with the other side. According to Felshtinsky the consequences were inevitable. Only the polonium was a surprise.

If Felshtinsky is right, Russia’s democracy is dying. That he even could be shows how sick it already is.

++++

Courtesy of C-Span, more Yuri (and me) here. 

Dark Comedy

National Review Online, July 31, 2006

Sometimes there can be nothing more telling than contrast. The boat sailing in the sunshine of a July 4th weekend was filled with anticipation, exhilaration, tourists, New Yorkers, the yellow t-shirts of the Jones family reunion, and the pointing and squinting of countless digital Kodak moments. Ahead lay Ellis Island, its museum of immigration, and, tucked away in a corner of that museum’s third floor, an exhibition (Gulag: Soviet Forced Labor Camps and the Struggle for Freedom) dedicated to a monstrosity that had its origins on some very different islands, islands scattered in the White Sea, islands that became (in Alexander Solzhenitsyn’s words) the “mother tumor” of a cancer that eventually metastasized into an archipelago of terror, slavery and murder all across the Soviets’ gargoyle “union.”

It stretched so far, in fact, that to reach some of its most dismal, desolate, and destructive outposts, the camps at Kolyma, took a boat trip too. There was no exhilaration on these ferries to an underworld darker than Hades, just death, hunger, squalor, rape and disease. The only anticipation was of worse to come.

Evfrosiniia Kersnovskaia .

Annotated illustrations by one former prisoner, Evfrosiniia Kersnovskaia, displayed in this exhibition showed what awaited the guests of her particular corner of the Gulag. They were glimpses of a drained, pitiless world, populated by predators and their hopeless, helpless victims, illuminated only by the surviving shreds of Kersnovskaia’s humanity and the bleak poetry of her furious prose. Here she recalls her own arrival at a “corrective labor camp”:

“First we were made to strip naked and were shoved into some roofless enclosures made out of planks. Above our heads the stars twinkled; below our bare feet lay frozen excrement. An enclosure measured 3 square feet. Each held three to four naked, shivering, and frightened men and women. Then these ‘kennel cages’ were opened one after the other and the naked people were led across a courtyard …into a special building where our documents were ‘formulated’ and our things were ‘searched.’ The goal of the search was to leave us with rags, and to take the good things, sweaters, mittens, socks, scarves, vests, and good shoes, for themselves. Ten thieves shamelessly fleeced these destitute and barely alive people. ‘Corrective’ is something that should make you better, and ‘labor’ ennobles you. But ‘camp’? A camp wasn’t a jail. So then what on earth was going on? ”

This exhibition never quite told us. What it did do was give a sense of what life, death, and the condition somewhere in between (they even had a word for that) in the Gulag was like. Sometimes this was achieved by the display of a few simple objects, such as a crude handmade spoon; a luxury in the camps (prisoners were expected to eat with their hands). Sometimes it was just the stories of the victims themselves.

Take Maria Tchebotareva, for example. The regime did. Her photograph was on display. She was sad-eyed, broad-faced, head-scarfed, an icon of the Slavic heartlands. In happier times she might have been imagined as backdrop to some Tolstoyan pastoral idyll, but she found herself trapped instead inside a real, far darker script. Her ‘crime’ was to steal three pounds of rye from the field the state had stolen from her. She had four hungry children to feed, and in the famine years of 1932-33 (oddly no mention was made of the fact that that famine, known to Ukrainians as the holodomor, was man-made, and left millions of deaths in its wake) and nothing to feed them with. She served twelve years in the Gulag for those three pounds, followed by another eleven in Arctic exile. She never saw her children again. For the Tchebotarevs there was to be no family reunion.

In 1949 they took Ivan Burylov too, a middle-aged beekeeper stung beyond endurance by the hypocrisy of it all. His offense? To write the word “comedy” on his supposedly secret ballot paper (there was, naturally, only one candidate). They tracked him down. Of course they did. They gave him eight years. Of course they did. We’re never told whether he survived, but his ballot endured (it was included in the display), and in its acerbic, laconic way, it was as effective a monument to the USSR as any I’ve seen.

Another such monument, but this time specifically to the cruelty and futility of Soviet rule is the “Belomor” canal. Carved through the roughly 140 miles of granite that divide the White and Baltic seas, it was a typically pharaonic scheme of the early Stalin era involving well over 100,000 prisoners with primitive tools (pickaxes, shovels and makeshift wheelbarrows) and a lack of precision that would have shocked the ancient Egyptians: it proved too shallow and too narrow to ever be of much use.

As a killing machine, however, the Belomor project worked very well. In her history of the Gulag, Anne Applebaum cites an estimate of 25,000 dead (there are others, far higher), but no number was given in this exhibition, just the bland adjective “many.” That was fairly typical of an exhibition that too often shied away from specifics. That was a mistake: the statistics and the details count, if only as a warning for the future, a warning that, judging by one statistic that was included, has yet to be properly heeded. Polls in Russia show that “approval” (whatever that might mean) of Stalin’s leadership has risen from 7 percent to 53 percent over the last ten years.

That’s not to say an attempt was made to minimize the horror that was the Belomor. Far from it. Most striking was a continuous loop of old propaganda newsreel purporting to show the enthusiasm of the prisoners, drones of the anthill state, as they clawed, dug, and hacked their way to reform, rehabilitation, and socialist reconstruction through the rock, swamp, and snow; and, yes, just like in Hitler’s camps, there was an orchestra.

A few feet further down the corridor (somehow the immigration museum’s still visibly institutional character added to the force of an exhibit dedicated to a state run amok) was yet more footage: those familiar parades of the weapons of Armageddon, syncopated gymnasts and marching ranks of regimented enthusiasm, but also, more revealingly, film of a young factory worker shouting her praises of great Comrade Stalin, the edge to her voice betraying the collective hysteria that always lurks somewhere within the order, discipline and control of a totalitarian system.

Much of the rest of the exhibition was dedicated to Perm 36, a logging camp set up in the wake of World War Two, that, after the end of Khrushchev’s brief “thaw,” was used to imprison, torment and sometimes kill the Kremlin’s most determined opponents, the bravest of the brave, who persisted in their political work even after serving earlier sentences, men like the Lithuanian Balis Gayauskas. Undaunted by two years in Nazi custody, 35 years in the Gulag, and a further three years in exile, this extraordinary individual had the last laugh — he was elected to the parliament of a Lithuania that had itself won back its freedom.

That happy ending is a satisfying reminder of the USSR’s ignominious collapse, but before reaching the inevitable pictures of a tumbling Berlin Wall, the exhibit took time to pay tribute to the tiny band of dissidents, who for long, lonely years did what they could to preserve the idea of freedom in lands that had known too little of liberty. Naturally, the giants were featured, Solzhenitsyn, the great chronicler, Old Testament in his wrath and grandeur, the gentle-souled, iron-willed Sakharov and, of course, Sakharov’s wife, the spiky, indomitable Bonner, but so were others too, lesser-known, but no less courageous: Sergei Kovalev, Ivan Kovalev (father and son), Tatiana Khodorovich, Tatiana Veilikanova, Grigorii Pod’iapolskii, Anatolii Krasnov-Levitin, Valerij Senderov, Tatiana Osipova (Ivan Kovalev’s wife), Levko Lukjanenko, Leonid Borodin, and Vasyl Stus. Remember their names. Remember their sacrifices.

It would have been unreasonable to think that this relatively small exhibition could ever have illustrated the full scope of decades of Soviet tyranny, but it was disappointing that it never really managed to answer Evfrosiniia Kersnovskaia’s haunting question: “What on earth was going on?” It wasn’t just a question of the exhibition’s missing statistics. The bigger problem was the failure to put the Gulag into its wider context. The impression was somehow left that the camps were primarily a means (albeit brutal) of providing the manpower for “Stalin’s campaign to turn the Soviet Union into a modern industrial power,” something that sounds if not exactly benign then at least more reasonable than the description that this murderous system actually deserved. Certainly, forced industrialization was part of the story, but it’s an explanation that obscures the camps’ significance within a far more ambitious plan.

Why Soviet Communism, a poisonous blend of millennial fantasy, imperial dream, paranoia, and psychosis, to name but a few of its sources and symptoms, evolved in the way it did is the subject of potentially endless debate, but in understanding the way that the dictatorship managed to maintain its grip for so long, it’s necessary to realize that the Gulag was just one part of a network of terror, mass murder, and oppression intended, by eliminating all inconvenient traces of the past, to remake man into a cog in the new, perfect and all-encompassing Soviet machine. That is what was going on, something that this exhibition never truly managed to convey.

Despite this, its joint organizers, Perm’s Gulag Museum and the National Park Service, should be congratulated for doing something to bring the often overlooked horrors (and lessons) of the Gulag to wider attention over here (after closing at Ellis Island on July 4th, the exhibition travels to Boston, Atlanta, Washington, D.C., and Independence, California). The fact, controversial to some, that space was found to note that many other countries (including the United States) have, like today’s Russia, found it difficult to come to terms with brutal systems that have defaced their histories, should be seen as a statement of the obvious, not some underhand attempt to play down the extraordinary evils of the Soviet past.

But if you want to consider how much more remains to be done in this respect in Russia itself, remember the disturbing poll I mentioned earlier, and, while you are at it, reflect on the fact that according to Memorial (an organization dedicated to keeping alive the history of Soviet repression) between 2002 and 2005 30 monuments to Stalin were erected in the territories of the former USSR, There are, reportedly, plans for another 20 more.

Now ask yourself what the reaction would be if Germans began putting up new statues to Adolf Hitler.

The Great Danes

National Review Online, February 14, 2006

It's been a rough, tough, dismaying week for those Europeans who like to believe that the pen is mightier than the scimitar. Yes, an additional number of publications reprinted those pesky cartoons, one selling out its print run when it did so, but these were brave, temporary gestures, as evanescent as the paper on which they were printed, as futile as fists waved in the face of a storm.

While the Danish prime minister was stubbornly sticking to the principles of free speech and a free press, principles which he had, perhaps naively, and certainly optimistically, thought would find support from governments across Europe, his words were nearly drowned out by hints, murmurings, and shouts of appeasement from the gray, shrunken statesmen of Brussels, Paris, London, Stockholm, and many other capitals—take your pick—of a continent that once saw itself as the home of Enlightenment.

Of course, there were exceptions to the dismal, despairing rule, and, naturally, one of them was the Somali-born Dutch MP, Ayaan Hirsi Ali, fearless and furious, one of the few politicians in Europe who still says how things really are:

"Shame on those papers and TV channels who lacked the courage to show their readers the caricatures in the cartoon affair. These intellectuals live off free speech but they accept censorship. They hide their mediocrity of mind behind noble-sounding terms such as "responsibility" and " sensitivity. " Shame on those politicians who stated that publishing and re-publishing the drawings was " unnecessary, "" insensitive, "" disrespectful" and " wrong." I am of the opinion that Prime Minister Anders Fogh Rasmussen of Denmark acted correctly when he refused to meet with representatives of tyrannical regimes who demanded from him that he limit the powers of the press. Today we should stand by him morally and materially. He is an example to all other European leaders. I wish my prime minister had Rasmussen's guts... I do not seek to offend religious sentiment, but I will not submit to tyranny. Demanding that people who do not accept Mohammed's teachings should refrain from drawing him is not a request for respect but a demand for submission."

 

Indeed it is, and judging by the reaction of Dutch prime minister Balkenende, he's ready to grovel. He didn't, he sniffed, have "much use" for Hirsi Ali's contribution, a view that would not have been shared by Theo van Gogh, the director with whom she worked on the movie, Submission. Of course, van Gogh is dead now, butchered by a Muslim extremist offended (ah, that word again) by his film. Interestingly, if one recent poll on a related matter is any indication, the Dutch people themselves are likely to take a very different line from their prime minister. Eighty-four percent, apparently, believe that Hirsi Ali should make a sequel to Submission, even if many of them were far from being fans of the original movie. They are smart enough to understand that, if it is to mean anything, free speech must include freedom of speech about those with whom you disagree.

It was this freedom that van Gogh was testing, it was this freedom that Jyllands-Posten is testing, and it is this freedom that the Dutch foreign minister will be compromising when he travels this week to the Middle East alongside Javier Solana, the EU's foreign policy chief, for talks aimed at reducing the tension over the cartoons, a pointless and humiliating exercise that can only reinforce the dangerous impression held by many of the region's Muslims that Europe's governments somehow control Europe's newspapers and can thus be blamed for their contents.

The fact that such a mission is unlikely to take much account of the opinions of Dutch voters should surprise nobody. Europe's leaders have long tended to prefer the top-down and the technocratic to the views of electorates they see as atavistic, irrational, and prone to disturbing nationalist enthusiasms. This is why they had the arrogance to prescribe multiculturalism as an appropriate response to mass immigration, an idea of remarkable stupidity that goes a long way toward explaining the predicament in which Europe now finds itself.

Of course, we don't yet know what this delegation to the Middle East will be saying, but comments made in an interview with the London Daily Telegraph by the EU's sinisterly named Commissioner for Freedom, Security and Justice reveal some clues. Saying that millions of Muslims felt "humiliated" by the cartoons, and referring to a supposed "real problem" faced by the EU in reconciling freedom of expression with freedom of religion (actually, there's no "problem" at all, unless fanatics choose to make one), he suggested that the press should adopt a voluntary code of conduct. By agreeing to this "the press will give the Muslim world the message: we are aware of the consequences of exercising the right of free expression, we can and we are ready to self-regulate that right." Why the "Muslim world" outside Europe, much of which is represented by dictatorships, mullah-states and kleptocracies, should have any say in the contents of the continent's supposedly free press was not discussed.

In fairness it should be mentioned that the commissioner, Franco Frattini, subsequently put out a vague, ambiguous, and confusing press release purportedly intended to clarify his remarks, but once you have cut through the waffle, checked out the full text of the original interview, and grasped the fact that he was already talking about some sort of code before the current crisis, the commissioner's intentions become all too clear. One way or another, he wants the press muzzled.

And Frattini is not alone. The president of the EU's "parliament," and thus a man supposedly dedicated to the freedom of debate, could bring himself to defend free expression only "within the boundaries of respect for the religious beliefs and cultural sensitivities of others." Javier Solana meanwhile, paved the way for his trip by telling Al-Arabiya television that "respect does not stop at countries' borders and it includes all religions and specifically what concerns us here, our respect for the Islamic religion." As so often in the last week, the idea that "respect," if it is to mean anything other than capitulation, has to flow both ways, seems not to have merited a mention.

Of course, there is something more than a little disingenuous about the manner in which European politicians like to portray themselves as defenders of the right of free speech even as they reduce it to rubble. The Swedish government, at least, was being more straightforward when, just before the weekend, it arranged to shut down a website that had run one rather innocuous cartoon of the Prophet Mohammed. Tellingly, the website belonged to the newspaper of a political party of the hard right, yet another sign of how the establishment's refusal to enter into any serious debate over multiculturalism has handed the issue over to Europe's rougher fringe, who can only gain as a result. It's telling too to read how the Swedish foreign minister reportedly excused her government's actions: "We are already seeing reactions in certain countries who have responded to the Swedish Democrats [the political party in question] having these pictures on their website, and this could naturally have grave consequences for Swedish people and Swedish interests." What, I wonder, is the Swedish for "submission"?

The Swedish authorities are unusual only in the directness of the measures that they have taken, and in the frankness with which they have explained the motives behind them. Other, more discreet, governments are probably content to let their laws take their course, something that will come as cold comfort to anyone who still believes in controversy, debate, and the free exchange of ideas. The development of Europe's state-sponsored multiculturalism has gone hand-in-hand, as it had to, with the enactment of laws that chip away at free speech (and have gone further, far further, than understandable restrictions on direct incitements to violence), but which have, ironically, encouraged and inflamed those that they were meant to appease.

Jacques Chirac was quick to condemn the republication of the Danish cartoons in Charlie Hebdo, an iconoclastic French weekly, as an "overt provocation", but was able to leave the dirty work to others. The French Council of Muslims, a body set up with official support, is reported to be organizing the prosecution of poor Charlie, quite for what remains unclear, but doubtless the Council's lawyers will be able to find something useful in France's laws against "hate speech" or any number of other offenses dreamt up by the enforcers of multiculturalism. The prosecution, like that of the author Michel Houellebecq may well end in failure, but any prosecution, successful or otherwise, comes with a cost in time, worry, and lawyers' fees, a cost that will make other authors, editors, and publishers think twice before publishing anything that might irritate the imams. And France is by no means alone in this respect. Many European countries can boast, if that's the word, similar laws on their own statute books, and even in Britain, traditionally a defender of free speech, the House of Commons recently came within one vote of passing a law that would almost certainly have made publishing the cartoons a criminal offense.

If the law doesn't do the trick, perhaps intimidation will. The threat of violence, and sometimes more than the threat, has run through the hysteria and bombast of recent days, and it has involved far more than the torching of a few embassies, appalling though that was. Sometimes the threats, usually of trouble from Europe's Muslim minorities, were explicit, and sometimes they were more subtle, a hint here, a comment there, that "provocations" such as the cartoons could further radicalize Islamic populations worldwide, further complicating the war on terror, and bringing the prospect of a terrifying "clash of civilizations" ever closer. If European governments are incapable of resisting such pressure, and, after the last week, it seems clear that they are, how many writers and artists can be expected to run the risk of Muslim wrath? Underlining that point, The Liberal, a small British political periodical, withdrew one of the Danish cartoons from its website after being warned by the police that they could not guarantee the safety of the magazine's staff.

At least the magazine was able to acknowledge what had happened by leaving a blank space marked "censored" on its website. After the events of these last days, we can be sure that other acts of censorship or self-censorship will pass insidiously and in silence, unnoticed, un-mourned, or, at best, explained away as a gesture of that "respect" that Europe's elites are now so eager to proclaim.

And as for the Danes, they must be feeling very, very alone. The notion of European solidarity has been revealed as the myth it always was. Denmark, and its tradition of free speech, has been left to twist in the wind, trashed, abused, and betrayed. An article published in Jyllands-Posten (yes, them again) on Friday revealed clear frustration over the way that the country is being treated. It's in Danish only, but one phrase ("Ytringsfrihed er ytringsfrihed er ytringsfrihed. Der er intet men.") stands out, and it deserves to be translated and repeated again, and again, and again: "Free speech is free speech is free speech. There is no but."

Fine words. Is anyone listening?