To many countries, ties with Moscow are just a way to leverage stronger U.S. backing
“Nobody is pushing America out of the Middle East, it’s just pulling out by itself and leaving a vacuum behind,” said Alexey Khlebnikov, a fellow at the Russian International Affairs Council, a state-run think tank. “Russia has no real allies in the region, just partners with which it can do business despite political disagreements on many issues. Russia is not an alternative to them, it’s just a way to diversify their portfolio of relations.”
That diversification is made easier by the fact that President Donald Trump’s administration doesn’t seem to mind Russia’s new prominence in the Middle East.
.. unlike the Soviet Union, which inserted itself in Middle Eastern conflicts as a way to promote the Communist ideology during the Cold War confrontation, modern Russia has no alternative social and economic model to spread... Russia—unlike the U.S.—has proved that it backs its allies, no matter how unsavory they may be. By contrast, the U.S. under President Barack Obama embraced the 2011 protests that ousted such longstanding American allies (and autocrats) as President Hosni Mubarak of Egypt and President Zine el Abidine Ben Ali of Tunisia... Even many of those Arabs who hold little love for Syria’s Mr. Assad confess admiration for how Mr. Putin didn’t hesitate to use military force to prevent a similar downfall of the Syrian regime.“Egyptians see Putin as someone who’s a statesman that stands by his friends, someone who doesn’t let them down the way the Americans did with Mubarak,.. “Russia has nothing to deliver,” he said. “The Russians know that our strategic relationship with America is vital and will always be there. I don’t think there is a big future to Egyptian-Russian relations.”
.. countries such as Egypt and Turkey are using Russia—and actual or threatened purchases of Russian weapons—as leverage to improve their negotiating position where it still really matters: in Washington... “But Russia is an imaginary alternative. The optical effect here is much larger than the substance. All these countries understand perfectly well how limited Russia’s influence really is.”
The Millionaires Are Fleeing. Maybe You Should, Too.
In the worst cases, bouts of capital flight can gain momentum until the value of the currency collapses, plunging the nation into crisis.
.. Balance of payments records show that 10 of the last 12 major currency crises, dating back to the Mexican peso meltdown of 1994, began when residents started sending money abroad, which was typically two years before the currency collapsed. Often politicians blamed “evil” and “immoral” foreign speculators for these crises, but it was the locals who first saw trouble coming.
.. Right now, this forensic accounting offers clear evidence of looming financial difficulty in only one major country: Turkey.
.. Starting early last year, affluent Turks began effectively moving large sums of money out of the country by exchanging their lira bank deposits for dollars and euros, while foreigners continued to buy Turkish assets.
.. Turkey’s millionaires appear to be fleeing both deteriorating financial conditions marked by very high inflation, and President Recep Tayyip Erdogan’s crackdown on his critics, including those in business.
.. Owing largely to the stability and glitter of the most famous emirate, Dubai, the United Arab Emirates in 2017 had a net inflow of 5,000 millionaires, increasing the size of its affluent population by 6 percent, the largest gain in the world.
.. Britain was among the millionaire havens until 2016, but may continue losing ground until it can resolve the uncertainties raised by Brexit.
.. Savvy locals are also the first to return when a country’s fortunes begin to turn for the better.
.. More broadly, economists and politicians might rethink the blame they heap on “immoral” foreigners in periods of capital flight. They assume global money managers are more sophisticated than provincial locals
but those longtime residents are in fact quicker to spot and respond to trouble in their own backyards
Trump loves a strongman, so of course he fawns over Hungary’s Viktor Orban
How Washington pivoted from finger-wagging to appeasement.
Two important American visitors showed up in Budapest on Wednesday. One was Stephen K. Bannon, the former White House adviser who is an admirer of Hungary’s strongman, Viktor Orban; he addressed a conference on “Europe’s Future ” organized by Mária Schmidt, an Orban counselor with Bannon-esque ideas about maintaining a Christian culture in Europe. Bannon had called Orban “a man of principles” as well as “a real patriot and a real hero” earlier this year... Assistant Secretary of State for European and Eurasian Affairs A. Wess Mitchell, the highest-ranking American official responsible for U.S. relations with Hungary. Mitchell came to usher in a new era of accommodation between the Trump administration and the Orban government... this administration believes that offering high-level contacts and withholding criticism will improve an authoritarian regime’s behavior. For those who know Hungary’s politics, this is appeasement — the victory of hope over centuries of experience... Orban’s odyssey began in 1998 when, during his first term as prime minister, he started to flirt with nationalistic, anti-American and anti-Semitic sentiments to try to win reelection in 2002... When Istvan Csurka, the head of an anti-Semitic party, blamed the United States for the 9/11 attacks (it got what it deserved, he said), the premier declined to dissociate himself from Csurka, despite a White House request to do so... He has since managed to change the Hungarian constitution five times to reduce judicial independence, restrict press freedoms and modify the electoral system to ensure that no viable opposition could ever form against him and his coalition... he still embraces anti-Semitism as a political tool, praising a Nazi-allied wartime leader of Hungary and using stereotypes to cast Jewish emigre George Soros as an outside puppeteer... the pro-government weekly Figyelo recently issued an enemies list of about 200 prominent opposition individuals. Most were local civil society advocates.. Two Hungarian newspapers, Magyar Nemzet and Budapest Beacon , shut down this spring as advertisers vanished because of their opposition to the Hungarian government, leaving only one print opposition daily.
.. on May 15, when John Bolton, Trump’s national security adviser, received Jeno Megyesy, Orban’s chief adviser on the United States. (Megyesy was also the official point of contact for then-Trump aide Carter Page’s meetings in Budapest during the campaign.
.. Foreign Minister Peter Szijjarto is scheduled to meet Secretary of State Mike Pompeo; although Szijjarto has visited Washington an eye-popping seven times in the past 18 months
.. What, if anything, is the United States getting from Hungary for this appeasement? The $12 billion Russian-financed and secretly signed Russian Paks II nuclear plant in southern Hungary is one reflection of Orban’s Russian orientation.
.. Hungary spends only 1 percent of its gross domestic product on defense, among the lowest levels for NATO members, despite Trump’s insistence that nations step up their payments.
.. the policy of appeasement signifies abandonment
.. But the hour is late. Orban’s vision has gained considerable appeal throughout Europe.
.. In 2014, when he declared the end of the age of liberalism, he was seen as a pariah; today he is the leader of a xenophobic, authoritarian and often anti-American trend that haunts Poland, Austria and Turkey.
.. His hostility to migration, particularly what he calls the “Islamic multitude” that “leads to the disintegration of nations,” is widely shared.
.. He is admired for having built the first wall in Europe — on the Hungarian-Serbian border — to stem the flow of migrants in 2015. (Paradoxically, Hungary used to be admired for tearing down the barrier between itself and Austria, precipitating the fall of the Berlin Wall.)
Turmoil for Turkey’s Trump
Recep Tayyip Erdogan, president of Turkey, whose success in getting away with obvious corruption by politicizing law offers a disturbing preview of how Trump may become the authoritarian ruler he clearly wants to be. Not surprisingly, Trump, who basically seems to like dictators in general, has expressed admiration for Erdogan and his regime.
.. Both also have contempt for expertise... Erdogan has presided over an actual economic boom. Investors and markets don’t seem to mind the craziness at the top... The fact that economic policymakers have no idea what they’re talking about doesn’t seem to make any difference... run-of-the-mill policies like changes in tax law, even if they’re pretty big and clearly irresponsible, rarely have dramatic effects.
.. aside from fueling an unprecedented wave of stock buybacks, the tax cut is having little discernible effect, good or bad. There’s no sign of the investment boom advocates promised, but there’s also no sign that investors are losing faith in U.S. solvency.
.. Someone looking at U.S. growth in G.D.P. or employment over the past few years who didn’t know we’d had an election in 2016 would have no reason to suspect that anything important had changed.
.. Even if the quality of economic leadership matters a lot only during crises, you might expect markets to think ahead and incorporate the risk of badly handled future crises into stock and bond prices. Somehow, though, that almost never happens.
.. What we get instead are long stretches of complacency followed by sudden panic.
.. Rudiger Dornbusch): “Crises take longer to arrive than you can possibly imagine, but when they do come, they happen faster than you can possibly imagine.”
.. Although America borrows a lot abroad, it borrows in its own currency, which means that it isn’t vulnerable to a classic emerging-markets crisis.