Chapter 8

According to Rosbalt, every drop of $1 in oil prices translates into annual losses to the Russian treasury of $2 billion. Aggregate corporate profits rose in January by one fifth year on year, mostly on the strength of surging crude quotes. The Economist Intelligence Unit expects this year's GDP to grow by 3.8 percent. Foreign exchange reserves are stable at $54 billion.

The threat to Russia's prominence and market share is not imminent. Iraqi oil is unlikely to hit world markets in the next few years, as Iraq's dilapidated and outdated infrastructure is rebuilt. Moreover, Russian oil is cheap compared to the North Sea or Alaskan varieties and thus constitutes an attractive investment opportunity as the recent takeover of Tyumen Oil by British Petroleum proves. Still, the long-term risk of being unseated by a reconstructed Iraq as the second largest oil producer in the world is tangible.

Russia has spent the last six months enhancing old alliances and constructing new bridges. According to Interfax, the Russian news agency, yesterday, Russia has made yet another payment of $27 million to the International Monetary Fund. The Russian and Romanian prime ministers met and signed bilateral agreements for the first time since 1989. This week, after 12 years of abortive contacts, the republics of the former Yugoslavia agreed with the Russian Federation on a framework for settling its $600 million in clearing debts.

Recent spats notwithstanding, the Anglo-Saxon alliance still regards Russia as a strategically crucial ally. Last week, British police, in a sudden display of unaccustomed efficacy, nabbed Russian oligarch and mortal Putin-foe, Boris Berezovsky, charged by the Kremlin with defrauding the Samara region of $13 million while he was director of LogoVaz in 1994-5.

The Russian foreign minister, Igor Ivanov, did not remain oblivious to these overtures. Russia and the USA remain partners, he asserted. RIA Novosti, the Russian news agency, quoted him as saying: "If we settle the Iraqi problem by political means and in an accord, the road will open to teamwork on other, no less involved problems."

As Robert Kagan correctly observes in his essay "Of Paradise and Power: America and Europe in the New World Order", the weaker a polity is militarily, the stricter its adherence to international law, the only protection, however feeble, from bullying. Putin, presiding over a decrepit and bloated army, naturally insists that the world must be governed by international regulation and not by the "rule of the fist".

But Kagan - and Putin - get it backwards as far as the European Union is concerned. Its members are not compelled to uphold international prescripts by their indisputable and overwhelming martial deficiency. Rather, after centuries of futile bloodletting, they choose not to resort to weapons and, instead, to settle their differences juridically.

Thus, Putin is not a European in the full sense of the word. He supports an international framework of dispute settlement because he has no armed choice, not because it tallies with his deeply held convictions and values. According to Kagan, Putin is, in essence, an American: he believes that the world order ultimately rests on military power and the ability to project it.

Russia aspires to be America, not France. Its business ethos, grasp of realpolitik, nuclear arsenal and evolving values place it firmly in the Anglo-Saxon camp. Its dalliance with France and Germany is hardly an elopement. Had Russia been courted more aggressively by Secretary of State, Colin Powell and its concerns shown more respect by the American administration, it would have tilted differently. It is a lesson to be memorized in Washington.

Russia's Second Empire

By: Dr. Sam Vaknin

Also published by United Press International (UPI)

History teaches us little except how little we can learn from it. Still, there is nothing new under the sun. Thus, drawing too many parallels between the environmentalist movements of the late 19th century and their counterparts in the second half of the twentieth century - would probably prove misleading. Similarly, every fin de siecle has its Fukuyama, proclaiming the end of history and the victory of liberalism and capitalism.

Liberal parliamentarianism (coupled with unbridled individualistic capitalism) seemed to irreversibly dominate the political landscape by 1890 - when it was suddenly and surprisingly toppled by the confluence of revolutionary authoritarian nationalism and revolutionary authoritarian socialism.

Yet, every ostensibly modern (or post-modern) phenomenon has roots and mirrors in history. The spreading of the occult, materialism, rationalism, positivism, ethnic cleansing, regionalism, municipal autonomy, environmentalism, alienation ("ennui"), information networking, globalization, anti-globalization, mass migration, capital and labour mobility, free trade - are all new mantras but very old phenomena.

Sometimes the parallels are both overwhelming and instructive.

Overview

Karl Marx regarded Louis-Napoleon's Second Empire as the first modern dictatorship - supported by the middle and upper classes but independent of their patronage and, thus, self-perpetuating. Others went as far as calling it proto-fascistic.

Yet, the Second Empire was insufficiently authoritarian or revolutionary to warrant this title. It did foster and encourage a personality cult, akin to the "Fuhrerprinzip" -but it derived its legitimacy, conservatively, from the Church and from the electorate. It was an odd mixture of Bonapartism, militarism, clericalism, conservatism and liberalism.

In a way, the Second Republic did amount to a secular religion, replete with martyrs and apostles. It made use of the nascent mass media to manipulate public opinion. It pursued industrialization and administrative modernization. But these features characterized all the political movements of the late 19th century, including socialism, and other empires, such as the Habsburg Austro-Hungary.

The Second Empire was, above all, inertial. It sought to preserve the bureaucratic, regulatory, and economic frameworks of the First Empire.

It was a rationalist, positivist, and materialist movement - despite the deliberate irrationalism of the young Louis-Napoleon. It was not affiliated to a revolutionary party, nor to popular militias. It was not collectivist. And its demise was the outcome of military defeat.

The Second Empire is very reminiscent of Vladimir Putin's reign in post-Yeltsin Russia.

Like the French Second Empire, it follows a period of revolutions and counter-revolutions. It is not identified with any one class but does rely on the support of the middle class, the intelligentsia, the managers and industrialists, the security services, and the military.

Putin is authoritarian, but not revolutionary. His regime derives its legitimacy from parliamentary and presidential elections based on a neo-liberal model of government. It is socially conservative but seeks to modernize Russia's administration and economy. Yet, it manipulates the mass media and encourages a personality cult.

Disparate Youths

Like Napoleon III, Putin started off as president (he was shortly as prime minister under Yeltsin). Like him, he may be undone by a military defeat, probably in the Caucasus or Central Asia.

The formative years of Putin and Louis-Napoleon have little in common, though.

The former was a cosseted member of the establishment and witnessed, first hand, the disintegration of his country. Putin was a KGB apparatchik. The KGB may have inspired, conspired in, or even instigated the transformation in Russian domestic affairs since the early 1980's - but to call it "revolutionary" would be to stretch the term.

Louis-Napoleon, on the other hand, was a true revolutionary. He narrowly escaped death at the hands of Austrian troops in a rebellion in Italy in 1831. His brother was not as lucky. Louis-Napoleon's claim to the throne of France (1832) was based on a half-baked ideology of imperial glory, concocted, disseminated and promoted by him. In 1836 and 1840 he even initiated (failed) coups d'etat. He was expelled even from neutral Switzerland and exiled to the USA. He spent six years in prison.

An Eerie Verisimilitude

Still, like Putin, Napoleon III was elected president. Like him, he was regarded by his political sponsors as merely a useful and disposable instrument. Like Putin, he had no parliamentary or political experience. Both of them won elections by promising "order" and "prosperity" coupled with "social compassion". And, like Putin, Louis-Napoleon, to the great chagrin of his backers, proved to be his own man - independent-minded, determined, and tough.

Putin, like Louis-Napoleon before him, proceeded to expand his powers and installed loyalists in every corner of the administration and the army. Like Louis-Napoleon, Putin is a populist, traveling throughout the country, posing for photo opportunities, responding to citizens' queries in Q-and-A radio shows, siding with the "average bloke" on every occasion, taking advantage of Russia's previous economic and social disintegration to project an image of a "strong man".

Putin is as little dependent on the Duma as Napoleon III was on his parliament. But Putin reaped what Boris Yeltsin, his predecessor, has sown when he established an imperial presidency after what amounted to a coup d'etat in 1993 (the bombing of the Duma). Napoleon had to organize his own coup d'etat all by himself in 1852.

The Balancing Act

Napoleon III - as does Putin now - faced a delicate balancing act between the legitimacy conferred by parliamentary liberalism and the need to maintain a police state. When he sought to strengthen the enfeebled legislature he reaped only growing opposition within it to his domestic and foreign policies alike.

He liberalized the media and enshrined in France's legal code various civil freedoms. But he also set in motion and sanctioned a penumbral, all-pervasive and clandestine security apparatus which regularly gathered information on millions of Frenchmen and foreigners.

Modernization and Reform

Putin is considerably less of an economic modernizer than was Napoleon III. Putin also seems to be less interested in the social implications of his policies, in poverty alleviation and in growing economic inequalities and social tensions. Napoleon III was a man for all seasons - a buffer against socialism as well as a utopian social and administrative reformer.

Business flourished under Napoleon III - as it does under Putin. The 1850's witnessed rapid technological change - even more rapid than today's. France became a popular destination for foreign investors. Napoleon III was the natural ally of domestic businessmen until he embarked on an unprecedented trade liberalization campaign in 1860. Similarly, Putin is nudging Russia towards WTO membership and enhanced foreign competition - alienating in the process the tycoon-oligarchs, the industrial complex, and the energy behemoths.

Foreign Policy

Napoleon III was a free trader - as is Putin. He believed in the beneficial economic effects of free markets and in the free exchange of goods, capital, and labour. So does Putin. But economic liberalism does not always translate to a pacific foreign policy.

Napoleon III sought to annul the decisions of the Congress of Vienna (1815) and reverse the trend of post-Napoleonic French humiliation. He wanted to resurrect "Great France" pretty much as Putin wants to restore Russia to its "rightful" place as a superpower.

But both pragmatic leaders realized that this rehabilitation cannot be achieved by force of arms and with a dilapidated economy. Napoleon III tried to co-opt the tidal wave of modern, revolutionary, nationalism to achieve the revitalization of France and the concomitant restoration of its glory. Putin strives to exploit the West's aversion to conflict and addiction to wealth. Napoleon III struggled to establish a new, inclusive European order - as does Putin with NATO and, to a lesser degree, with the European Union today.

Putin artfully manipulated Europe in the wake of the September 11 terrorist attacks on the USA, his new found ally. He may yet find himself in the enviable position of Europe's arbitrator, NATO's most weighty member, a bridge between Central Asia, the Caucasus, North Korea and China - and the USA. The longer his tenure, the more likely he is to become Europe's elder statesman. This is a maneuver reminiscent of Louis-Napoleon's following the Crimean War, when he teamed up with Great Britain against Russia.

Like Putin, Napoleon III modernized and professionalized his army. But, unlike Putin hitherto, he actually went to war (against Austria), moved by his (oft-thwarted) colonial and mercantilist aspirations. Putin is likely to follow the same path (probably in Central Asia, but, possibly, in the Baltic and east Europe as well). Reinvigorated armies (and industrialists) often force expansionary wars upon their reluctant ostensible political masters.

Should Putin fail in his military adventures as Napoleon III did in his and be deposed as he was - these eerie similarities will have come to their natural conclusion.

T H E A U T H O R

SHMUEL (SAM) VAKNIN

Curriculum Vitae

Born in 1961 in Qiryat-Yam, Israel.

Served in the Israeli Defence Force (1979-1982) in training and education units.

Education

Graduated a few semesters in the Technion - Israel Institute of Technology, Haifa.

Ph.D. in Philosophy (major : Philosophy of Physics) - Pacific Western University, California. My doctoral thesis is available through the Library of Congress.

Graduate of numerous courses in Finance Theory and International Trading.

Certified E-Commerce Concepts Analyst.

Certified in Psychological Counselling Techniques.

Full proficiency in Hebrew and in English.

Business Experience

1980 to 1983

Founder and co-owner of a chain of computerized information kiosks in Tel-Aviv, Israel.

1982 to 1985

Senior positions with the Nessim D. Gaon Group of Companies in Geneva, Paris and New-York (NOGA and APROFIM SA):

- Chief Analyst of Edible Commodities in the Group's Headquarters in Switzerland.

- Manager of the Research and Analysis Division

- Manager of the Data Processing Division

- Project Manager of The Nigerian Computerized Census

- Vice President in charge of RND and Advanced Technologies

- Vice President in charge of Sovereign Debt Financing

1985 to 1986

Represented Canadian Venture Capital Funds in Israel.

1986 to 1987

General Manager of IPE Ltd. in London. The firm financed international multi-lateral countertrade and leasing transactions.

1988 to 1990

Co-founder and Director of "Mikbats - Tesuah", a portfolio management firm based in Tel-Aviv.

Activities included large-scale portfolio management, underwriting, forex trading and general financial advisory services.

1990 to Present

Free-lance consultant to many of Israel's Blue-Chip firms, mainly on issues related to the capital markets in Israel, Canada, the UK and the USA.

Consultant to foreign RND ventures and to Governments on macro-economic matters.

President of the Israel chapter of the Professors World Peace Academy (PWPA) and (briefly) Israel representative of the "Washington Times".

1993 to 1994

Co-owner and Director of many business enterprises:

- The Omega and Energy Air-Conditioning Concern

- AVP Financial Consultants

- Handiman Legal Services

Total annual turnover of the group: 10 million USD.

Co-owner, Director and Finance Manager of COSTI Ltd. - Israel's largest computerized information vendor and developer. Raised funds through a series of private placements locally, in the USA, Canada and London.

1993 to 1996

Publisher and Editor of a Capital Markets Newsletter distributed by subscription only to dozens of subscribers countrywide.

In a legal precedent in 1995 - studied in business schools and law faculties across Israel - was tried for his role in an attempted takeover of Israel's Agriculture Bank.

Was interned in the State School of Prison Wardens.

Managed the Central School Library, wrote, published and lectured on various occasions.

Managed the Internet and International News Department of an Israeli mass media group, "Ha-Tikshoret and Namer".

Assistant in the Law Faculty in Tel-Aviv University (to Prof. S.G. Shoham).

1996 to 1999

Financial consultant to leading businesses in Macedonia, Russia and the Czech Republic.

Collaborated with the Agency of Transformation of Business with Social Capital.

Economic commentator in "Nova Makedonija", "Dnevnik", "Izvestia", "Argumenti i Fakti", "The Middle East Times", "Makedonija Denes", "The New Presence", "Central Europe Review" , and other periodicals and in the economic programs on various channels of Macedonian Television.

Chief Lecturer in courses organized by the Agency of Transformation, by the Macedonian Stock Exchange and by the Ministry of Trade.

1999 to 2002

Economic Advisor to the Government of the Republic of Macedonia and to the Ministry of Finance.

2001 to present

Senior Business Correspondent for United Press International (UPI)

Web and Journalistic Activities

Author of extensive Websites in Psychology ("Malignant Self Love") - An Open Directory Cool Site

Philosophy ("Philosophical Musings")

Economics and Geopolitics ("World in Conflict and Transition")

Owner of the Narcissistic Abuse Announcement and Study List and the Narcissism Revisited mailing list (more than 3900 members)

Owner of the Economies in Conflict and Transition Study list.

Editor of mental health disorders and Central and Eastern Europe categories in web directories (Open Directory, Suite 101, Search Europe).

Columnist and commentator in "The New Presence", United Press International (UPI), InternetContent, eBookWeb and "Central Europe Review".

Publications and Awards

"Managing Investment Portfolios in states of Uncertainty", Limon Publishers, Tel-Aviv, 1988

"The Gambling Industry", Limon Publishers., Tel-Aviv, 1990

"Requesting my Loved One - Short Stories", Yedioth Aharonot, Tel-Aviv, 1997

"The Macedonian Economy at a Crossroads - On the way to a Healthier Economy" (with Nikola Gruevski), Skopje, 1998

"Malignant Self Love - Narcissism Revisited", Narcissus Publications, Prague and Skopje, 1999, 2001, 2002

The Narcissism Series - e-books regarding relationships with abusive narcissists (Skopje, 1999-2002)

"The Exporters' Pocketbook", Ministry of Trade, Republic of Macedonia, Skopje, 1999

"The Suffering of Being Kafka" (electronic book of Hebrew Short Fiction, Prague, 1998)

"After the Rain - How the West Lost the East", Narcissus Publications in association with Central Europe Review/CEENMI, Prague and Skopje, 2000

Winner of numerous awards, among them the Israeli Education Ministry Prize (Literature) 1997, The Rotary Club Award for Social Studies (1976) and the Bilateral Relations Studies Award of the American Embassy in Israel (1978).

Hundreds of professional articles in all fields of finances and the economy and numerous articles dealing with geopolitical and political economic issues published in both print and web periodicals in many countries.

Many appearances in the electronic media on subjects in philosophy and the Sciences and concerning economic matters.

Contact Details:

[email protected]

[email protected]

My Web Sites:

Economy / Politics:

http://ceeandbalkan.tripod.com/

Psychology:

http://samvak.tripod.com/index.html

Philosophy:

http://philosophos.tripod.com/

Poetry:

http://samvak.tripod.com/contents.html

After the Rain

How the West

Lost the East

The Book

This is a series of articles written and published in 1996-2000 in Macedonia, in Russia, in Egypt and in the Czech Republic.

How the West lost the East. The economics, the politics, the geopolitics, the conspiracies, the corruption, the old and the new, the plough and the internet - it is all here, in colourful and provocative prose.

From "The Mind of Darkness":

"'The Balkans' - I say - 'is the unconscious of the world'. People stop to digest this metaphor and then they nod enthusiastically. It is here that the repressed memories of history, its traumas and fears and images reside. It is here that the psychodynamics of humanity - the tectonic clash between Rome and Byzantium, West and East, Judeo-Christianity and Islam - is still easily discernible. We are seated at a New Year's dining table, loaded with a roasted pig and exotic salads. I, the Jew, only half foreign to this cradle of Slavonics. Four Serbs, five Macedonians. It is in the Balkans that all ethnic distinctions fail and it is here that they prevail anachronistically and atavistically. Contradiction and change the only two fixtures of this tormented region. The women of the Balkan - buried under provocative mask-like make up, retro hairstyles and too narrow dresses. The men, clad in sepia colours, old fashioned suits and turn of the century moustaches. In the background there is the crying game that is Balkanian music: liturgy and folk and elegy combined. The smells are heavy with muskular perfumes. It is like time travel. It is like revisiting one's childhood."

The Author

Sam Vaknin is the author of Malignant Self Love - Narcissism Revisited and After the Rain - How the West Lost the East. He is a columnist for Central Europe Review, PopMatters, and eBookWeb , a United Press International (UPI) Senior Business Correspondent, and the editor of mental health and Central East Europe categories in The Open Directory and Suite101 .

Until recently, he served as the Economic Advisor to the Government of Macedonia.

Visit Sam's Web site at http://samvak.tripod.com