NATO in Riga

Europe.view

A nervous night for NATO

Nov 30th 2006
From Economist.com

Vladimir Putin almost gatecrashes a summit

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THIS week’s NATO summit in Riga never looked like having much to grab the headlines. Enlargement was off the agenda. The best that NATOniks could hope for was the promise of a rapid reaction force, more troops for Afghanistan, and—perhaps most importantly—the symbolic gains from holding the event in the capital of a once-captive nation.

But for a perilous 24 hours disaster loomed. The whole summit looked in danger of being knocked off course, or at least upstaged. The Russian president, Vladimir Putin, had decided to come to Riga as well. Not technically for the summit, but at the invitation of Jacques Chirac, who proposed to celebrate his 74th birthday by having dinner with his Russian counterpart and with any other national leaders who might care to attend. Latvia’s president, the queenly Vaira Vike-Freiberga, had ignored her own diplomats and agreed to host the meeting.

It was hard to imagine a bigger show-stealer. There could be no clearer display of the Franco-Russian connection that has debilitated NATO’s decisionmaking. The dinner would be an advertisement for the number of NATO members that put their ties with France or Russia ahead of their solidarity with the alliance. It would be a triumph for Russia’s divide-and-rule policy towards the Baltics (punish one, ignore another, flatter the third).

AFP

Double entente

Rumours and explanations swirled amid the stale canapes and lukewarm wine. Version one (put around by the French) held that this was a Russian stunt: Putin had asked Chirac to arrange it, and so insistently that it would have been rude to decline. Version two: Chirac loathed NATO and wanted to undermine it. Version three: Chirac had nobody to celebrate his birthday with at home, and wanted to use the summit as a backdrop.

Normally staid diplomats were spitting tacks. Latvia’s foreign ministry was having institutional apoplexy. Suggestions that the president’s vanity was matched only by the weakness of her advisers were met with growled assent rather than the usual pained denials. One optimistic Latvian, in charge of his country’s image, jotted down a new marketing slogan: “Latvia: where presidents go to party”. More rumours sprouted: Putin’s delegation wanted to come without visas; Latvia had denied them visas; Latvia was holding out for a bilateral meeting before the birthday dinner and Russia was saying no.

Normally staid diplomats were spitting tacks. Latvia’s foreign ministry was having institutional apoplexy.

The last turned out to be true. A full formal meeting with the Latvian president was too much for the Kremlin. Blaming scheduling problems, it “regretfully” announced that the trip was off.

The next morning, over stale croissants and lukewarm coffee, NATOniks picked over the ruins. France probably came off worst, at least in its critics’ eyes: self-important, destructive, unreliable. The Americans were quietly pleased: “It’s the death rattle of the Chirac era” said one. The French talked airily as if, for a great power such as their own, the odd kerfuffle was part of life's rich tapestry.

It is easy to see why Mrs Vike-Freiberga was ready to share the risk of hosting Mr Putin. No Russian leader has paid a bilateral visit to a Baltic state since the three countries regained their independence from the Soviet Union. Sealing a rapprochement with Russia would be a fine way to round off her presidency, which ends next year.

But it is also easy to see why other Balts feel paranoid. It is not only the Russians who are showing disrespect. A German spy ship was found doing sonar research on the seabed recently in Estonia’s economic zone—apparently for a Russian-German gas pipeline that has been planned with an ostentatious disregard for the countries that it bypasses. Germany dismissed an Estonian diplomatic protest as “ridiculous”. Maybe: lots of things are ridiculous. Not least the sight of France, a founder-member of NATO, so readily cosying up to a Russia that holds the alliance’s new and future members in such blatant contempt.

rant from Saturday's TImes

The one way to fight Putin's menace Edward Lucas Russia’s strength rests on sand

How was Alexander Litvinenko murdered? We don’t know yet; we may never find out, but what is clear is his death marks the start of a new Cold War. The question is how to win it. Vladimir Putin’s thuggish and arrogant rhetoric; the routine use of murder in business and politics; the bullying of neighbours such as Georgia; energy blackmail; authoritarian behaviour by the Kremlin — all have crystallised a growing unease with the wishful thinking that has marked outsiders’ attitudes to Russia in the past 15 years. It is still possible — just — to argue that this is a messy but necessary transition period, and that stability will produce a middle class in Russia that will want liberal politics and friendly relations with Europe and the US. Those hopes hang on a thread: that the 2008 Russian presidential elections will bring a real contest, rather than a fixed coronation. But the overwhelming likelihood is that Russia will get worse not better. The Economist recently cautioned that Russia was heading towards fascism: blustery, bossy and brutal. It will have particular Russian features too, chiefly extraordinary corruption, waste and incompetence. So what do we do? Fighting the last Cold War was easy in comparison, particularly towards the end, when it was clear that communism meant not just dictatorship, but poverty, injustice and backwardness. Now Russia is rich and strong, while the West, and particularly the alliance between Europe and America, is demoralised and discredited. Russia no longer needs our money. Nor does it care much for our approval. The past few years have taught Mr Putin that when he needs something from the West, he gets it. Jacques Chirac, of France, is a Russian cheerleader, like Silvio Berlusconi and Gerhard Schröder before him. The first response must be not to panic. For all its bombast, Russia’s strength rests on sand. Its demographics are disastrous: in the minute you may have taken to read to this point, five Russians died, and only three were born. Its roads and railways are still rickety, its pipelines and powerstations clapped-out. The much touted gas weapon may not be loaded: decades of neglect and under-investment may mean that Russia is an energy beggar, not an energy bully. Then the West must stick together. Russia expertly plays off one country against another. British eurosceptics must drop their defeatist disdain for a common European foreign policy, especially in the field of energy security. Without it, we risk losing half the continent to the Kremlin’s new empire, one built on pipelines rather than tanks. Europe must dump its self-indulgent anti-Americanism and rebuild its alliance with an administration chastened and looking for friends. That alliance’s big task will not be military defence, but diversifying energy supplies. We need new pipelines in the Balkans and the Caucasus to bring the oil and gas riches of the Caspian basin and Central Asia to European markets, bypassing Russia’s capricious, greedy and monopolistic oil and gas companies. We must also build more liquefied natural gas terminals, and interconnecting pipelines to hook up national gas grids. It sounds just as boring as the jargon of the last Cold War but it is just as important. Similarly, we must give unflinching support to the countries in Russia’s viewfinder, such as Poland, Georgia and the Baltic states. They face hate campaigns in the Russian media, meddling in their energy supplies and arbitrary sanctions on their exports. All too often, the EU says that problems its new members have with Russia are “merely bilateral”. In future, the message must be: “If you mess with Estonia you mess with the whole of Europe.” These are brothers-in-arms and know a lot more about Russia than we do, and we have been slow to recognise it. We must continue to expand Nato and the EU. Enlargement of both bodies has been an unsung triumph, spreading peace and security. The next phase will be more difficult, because the countries concerned are weaker and poorer. But that makes it all the more necessary. If our doors are not open, then the only choice available is Russia. It is a tragedy that this week’s Nato summit in Riga is hamstrung by division and timidity on the question of enlargement. Thirdly, the West must recover the moral self-confidence that ultimately proved far more important than our guns and missiles. We believed in our system: it was not just richer and freer than theirs, but kinder, fairer, cleaner, healthier, more innovative, more tolerant and more truthful. It had flaws, certainly. But it also had the built-in capability to remedy them. In a market democracy, the crooked and cruel stand a better chance of being fired or jailed than they do in an authoritarian state-run economy. So the most powerful weapon we have now is to to make our own system truly worth admiring. Integrity in public life would not only contrast with the Kremlin’s sleaze, but also immunise us against its bribes. Speedy justice, efficient government and public-spiritedness are lacking in Russia — and just what we need to make our system envied at home and abroad. It will be a long slog: but so was the last one. Edward Lucas is Central and Eastern Europe correspondent for The Economist

This week's Economist

World Trade Organisation

The Georgian knot

Nov 23rd 2006 | TALLINN
From The Economist print edition

Russia's membership of the WTO is not quite a done deal

NOBODY can fault the Georgians' courage. Judgment is another matter. America has dropped its objections to Russia's membership of the World Trade Organisation—seemingly in return for support on Iran and North Korea. But Georgia, an ardently pro-Western ex-Soviet republic, has withdrawn its own agreement with Russia and is blocking the multilateral talks needed to conclude Russia's entry into the WTO. The trade body relies on unanimity, giving vetoes even to pipsqueaks—at least in theory.

Georgia has plenty to complain about: Russia subjected it to trade sanctions and raised its gas prices in protest at the public humiliation of some Russian spies. But the real issue, according to the prime minister, Zurab Nogaideli, is another one: control of commerce into two separatist enclaves that border on Russia, South Ossetia and Abkhazia. Trade (legal and illegal) flows freely.

Georgia wants these borders either sealed or run by its own customs officials. That may be reasonable in theory but it sounds fanciful in practice. The two “frozen conflicts” have remained stubbornly unthawed for a decade, and Georgia's lack of Western support has already been bleakly exposed in recent months. Foreigners are wowed by Georgia's warp-speed economic reform—which has produced double-digit GDP growth—but dismayed by its erratic and hot-headed politics and diplomacy.

America laments Georgia's tactics. It wants Russia in the WTO, which will help speed Ukraine, a country that it is trying to coax back into a pro-Western stance, along the same path. “America and the EU will stamp Georgia into the ground on this,” says a government adviser. “They seem to think that they can provoke us into supporting them,” says a top EU official despairingly.

Mr Nogaideli claims that the Kremlin is backsliding. “If Russia doesn't want to honour this agreement, they shouldn't have signed it,” he says. Georgia hopes that the many loose ends in Russia's WTO application mean that other countries too will welcome a chance to apply a bit more pressure—on pricey rail freight costs, for example.

Perhaps. But the usual outcome in trade talks is that big countries' arm-twisting is effective—and painful.

europe.view column from Economist.com

Europe.view

Paying the piper

Nov 23rd 2006
From Economist.com

What if Russian gas runs low?

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EUROPE has accustomed itself to a version of Russia and of Russian policy which goes like this: post-Soviet Russia is not only awash with oil and gas, it is using that energy wealth to promote its great-power ambitions through bullying and bribery. But what happens to the calculation if Russia is not an energy bully, but an energy beggar?

Russia reckons it will be short of 4.2 billion cubic metres (bcm) of gas next year—enough to fuel a couple of small countries. Alan Riley, a competition lawyer, argues in a report for the Centre for European Policy Studies that Russia's gas shortfall will increase to 126 bcm a year by 2010, only slightly less than Russia's annual exports to the European Union. Vladimir Milov, a gutsy former energy minister who runs one of the few independent think-tanks in Moscow, agrees.

At first sight this sounds preposterous. Russia’s gas reserves amount to 47 trillion cubic metres, a colossal amount. But like so many things in Russia, the gas industry, which means mainly a state-run monopoly, Gazprom, is as wasteful as it is wealthy. And Gazprom is so secretive that outsiders find it hard to say whether the wealth or the waste is winning.

Russia has not developed a big new gas field since the Soviet Union collapsed, and those it inherited are depleting fast. The pipes are clapped out (just over half are more than 20 years old). The compressors are so inefficient that they waste 42 bcm a year. Yet, for political reasons, the government is pressing ahead with “gasification”—the extension of gas supplies to private households. That means more domestic demand, just as supply is falling.

Gazprom's finances are notoriously murky, but there is evidence enough that revenues have long been siphoned away by intermediary companies with anonymous beneficial owners. Costs are colossal by world standards. Much money goes on activities such as yachts, property and sporting events, which investment bankers primly describe as “non-core”. Gazprom owns, for example, a large chain of hotels (remarkable, when your correspondent stayed in one, for the richness of the fittings, the indolence of the large staff, and the absence of guests).

AFP

Gas supplies are under pressure

In theory Gazprom can develop new fields. In practice it needs foreign help, but it hates to see the foreigners sharing ownership, which bogs down negotiations. The rich Shtokman field beneath the Barents sea was discovered in 1988, but exploitation has been slowed by technical challenges formidable enough even before Russia’s capricious and xenophobic investment regime takes its toll. Foreign companies might risk a billion dollars here or there in Russia, but in the present climate of uncertain property rights they are not going to commit the tens of billions needed to develop a whole new gas field.

Gazprom’s main stopgap is to buy gas from Central Asia. Leaving aside the irony that a country as gas-rich as Russia should need to import gas at all, there are particular snags here. The implied quantities are huge. Purchases from Turkmenistan are supposed to rise more than tenfold, to 80 bcm a year, by 2009—and the Turkmen gas industry is even worse-run than Russia’s own. Independent producers inside Russia might offer some relief, save that Gazprom is twitchy about allowing independents to use its pipelines. Instead, it likes to buy them up, preserving its monopoly. When that happens they tend to fall to Gazprom’s own woeful standards of inefficiency.

Already Russia is cutting back gas supplies to soft targets such as Belarus, and trying to raise prices wherever it can. Things will get worse before they get better. A badly-needed new power plant in St Petersburg is not yet running because there is no gas arriving to fuel it. If Mr Riley is right, this will be a fascinating winter, and a most uncomfortable one for some households. Will Vladimir Putin decide to freeze his own voters, or those of neighbouring countries? One choice risks provoking a political explosion, the other a diplomatic one. If you live anywhere between Aachen and Amur, do check your stocks of candles and coal.

rant from Daily Mail

PUTIN'S AGENTS AND A LICENCE TO KILL

CHRIST, how I miss the Cold War, remarks 'M' in Casino Royale, as she and Bond wrestle with the complexities of terrorist finance. The way things are going, she ñ and her real life counterparts ñ might not have long to wait for its return.

The plight of Alexander Litvinenko is not a scene from a film or a story from the past. It is from London in 2006.

A city where foreign killers can stalk the streets and silence an enemy of the Kremlin as coldly and contemptuously as they killed Georgi Markov, the heroic anti-Communist Bulgarian broadcaster, in 1978.

It's not just that the KGB's old habits of disinformation and mischief-making are still with us, but that the organisation's tentacles reach as far and formidably as ever. And who better to supervise this than the taciturn, foul-mouthed KGB Lieutenant-General [actually Lt-Col--the Daily Mail promoted him] Vladimir Vladimirovich Putin (retd.)?

Litvinenko, a career security officer first in the KGB, then in its successor organisation the FSB, was a friend of dissident journalist Anna Politkovskaya who was shot dead in Moscow last month.

The two met regularly during her trips to London, sharing their concerns about the authoritarian tendencies of Putin's Russia.

But do those reach as far as murder? In the old days of the KGB, enemies of the Soviet Union were mercilessly hunted down and killed. Leon Trotsky in Mexico with an ice pick. Markov on Waterloo Bridge, with a poisoned umbrella.

Scores of others died from assassins' bullets, mysterious illnesses, convenient car crashes. But after the collapse of Communism, and the birth of a new Russia pledged to democratisation and a pro-Western stance, the grim years of the Cold War seemed consigned to history.

Now, like a zombie crawling out of the grave, the terrifying shadow of the Soviet past is again falling across Europe. Russia might have ditched Communism but the Kremlin has not lost its thirst for power, at home and abroad.

Whereas during the days of the Cold War the KGB was an arm of the Soviet state, with Putin's ascent to power the KGB effectively took over the state. The result is 'Kremlin, Inc', which combines the greed of business with the ruthlessness of espionage and the bluster of a superpower.

RUSSIA makes no secret of its willingness to use assassination against what it calls 'terrorists'. Russian agents killed Zelimkhan Yandarbiyev, president-in-exile of the breakaway republic of Chechnya, in a car bomb attack in Qatar in 2004. They were caught, convicted ñ and received a heroes' welcome when they were finally returned to Moscow.

The attempted murder of Litvinenko forms part of a grim pattern of intimidation. At home and abroad, enemies of the Kremlin tend to die in mysterious circumstances. In 2004 Viktor Yushchenko, then a candidate for the presidency of Ukraine, was poisoned, surviving with a hideously pockmarked face.

Miss Politkovskaya, a regular contributor to the foreign media, was shot dead, perhaps by those whose wrongdoing she exposed -- and perhaps also to silence those Russian journalists brave enough to criticise the Kremlin abroad. The attempted assassination of Litvinenko was a further warning to those outside Russia that criticism would not be tolerated.

That is what Boris Berezovsky, the billionaire businessman who dominated Russian political life in the 1990s -- and is now better guarded than most heads of state -- believes. Russia, he says, is practising 'state banditry'. Putin no longer cares 'in the slightest' for western disapproval. 'He thinks having oil he is free to do everything he wants. And he is correct.'

Other defectors and critics of Russia, in London and elsewhere, are nervously wondering who will be next. A past spent serving the Soviet state is no guarantee to a safe future: Putin was Litvinenko's immediate [well not really direct boss, maybe direct order on one or two occasions--EL] boss when both were in the FSB.

There are tantalising clues to the reach of the Kremlin's tentacles across the globe from mysterious, expertly-produced disinformation websites that subtly push the Kremlin line and cases such as that of the Venezuelan drug smugglers who were found to have Russian technicians building a submarine for them.

Ironically, just as the Kremlin's critics in London are being cowed, the Russian presence in Britain has never been stronger ñ with the relative safety of life here being a big reason. Up to 250,000 Russians live in Britain, ranging from illegal cleaners to plutocrats such as Roman Abramovich. The latter kind have London mansions and lavish country estates. They send their children to the best boarding schools.

Yet though they vote with their feet and their wallets for the security and freedom Britain offers, they have no desire to criticise the greed and brutality of the regime at home. 'The people who came as dissidents are the only ones to raise their voices,' says Natasha Chouvayeva, the veteran editor of Londonskiy Kurier, Britain's main Russian-language paper.

'The later ones don't really care what is happening so long as Russia is stable and good for business.'

Not that western censure presents any problem for Putin. The U.S. has humiliatingly abandoned any attempt to put Russia under pressure, in exchange for Kremlin help in influencing North Korea and Iran. France, Italy and Germany are worried only about gas, not freedom.

And that is the tragedy. The first Cold War presented a clear choice between right and wrong. In the new one, Russia is not handicapped by Communism, but fuelled by money, which trumps truth and decency every time.

Will the Kremlin ever come clean on both the crimes of the Soviet Union, and those of the regime now headed by Putin, who worked for the KGB when it unashamedly went round the world assassinating those who dared dissent?

That moment will come only when Russia is a democratic, and friendly, country, not the authoritarian kleptocratic regime of today. When that day finally comes, as Russia's friends still hope, then both 'M' and Bond can wallow in nostalgia to their hearts' content. And Litvinenko's family will know who tried to kill their beloved 'Sasha'.

Edward Lucas is Central and East European correspondent for The Economist

The World in 2007

Power politics

Edward Lucas

From The World in 2007 print edition

Russia will flex its energy muscles

A new power struggle between an increasingly assertive Russia (rich in oil and gas) and a weak-willed West will start in earnest in 2007. The big battleground will be energy.

Poland and its allies in the Baltic states will try to diversify their energy supplies, by agreeing to build a new nuclear power station at Ignalina in Lithuania, hooking up their electricity networks and accelerating their plans for a terminal on Poland’s northern coast to import liquefied natural gas. But Russia will find this little obstacle. Its cash-rich energy firms will step up their purchases of downstream firms in Europe.

Even ex-communist countries will be signing up for special deals with Russia. Hungary will increase its dependence on Russian gas; as an austerity programme bites into living standards and employment, cheap gas will be a useful lubricant. It will be a similar story with the leftist-nationalist government in Slovakia, which will face sharp disapproval from its west European neighbours because of its increasingly harsh treatment of minorities and its authoritarian ways. Friendly ties with Russia will be a welcome balance.

Farther east, Russian companies will continue to gobble up the energy infrastructure in chaotic Ukraine. In Belarus, rows with the Kremlin over energy are the most likely source of trouble for the regime of the eccentric autocrat Alyaksandr Lukashenka.

The Kremlin’s energy clout and cash pile spell doom in 2007 for plans to build new pipelines bringing non-Russian gas to Europe. Nabucco, a trans-Balkan pipeline which aims to bring Middle Eastern and Central Asian gas to Europe via Turkey’s excellent gas infrastructure, will be at the heart of the power struggle. The EU counts this as one of its top energy priorities. But without individual customers willing to sign up, and pay up, for its construction, buying more Russian gas through existing pipelines will seem an easier and cheaper option. In 2007 Nabucco will be forced to accept Russian involvement, including a hook-up to the underused Blue Stream pipeline that links Russia and Turkey.

Russia will develop its energy muscles in 2007. But it will flex them selectively. The Kremlin is keen to be seen as a reliable partner, playing by market rules. Those customers that pay on time will receive prompt deliveries. But countries and companies that challenge Russian energy hegemony will face short shrift.

Poland’s PKN Orlen, for example, which will complete its $3 billion acquisition of Lithuania’s clapped-out Mazeikiai refinery in 2007, will find itself facing a gale of financial and commercial pressure. Oil supplies from the Russian-controlled pipeline to the refinery will be erratic. The resulting fluctuations in its share price will be an excellent opportunity for Russian insider traders to make a killing—and build up their stake in the company. By the end of 2007, PKN Orlen will be trying to sell Mazeikiai, to Russian bidders. In next-door Latvia, Russia will continue to block oil transit to that country’s Ventspils terminal, again with the same end in view: acquisition of energy infrastructure at a bargain price.

Europe will also find that some of its alternative oil and gas suppliers will come into Russia’s orbit. A multi-billion-dollar arms deal with Algeria, and joint ventures in extraction and marketing, will underline Russia’s return as a major power.

That may dismay east Europeans, but Russia’s resurgence will bring juicy profits to financiers in London. Russian energy IPOs will be one of 2007’s most lively financial stories. Regulatory worries will be brushed aside. The profits will win Russia respectability—and influence. If a former German chancellor, Gerhard Schröder, can accept a well-paid directorship from a Russian-backed joint venture, why should other politicians and officials hold back?

America will worry more about Europe’s energy security in 2007. It successfully promoted the Baku-Ceyhan oil pipeline (which came onstream in the middle of 2006, connecting Azerbaijan and Turkey via Georgia); by early 2007 the gas pipeline from Baku to Erzurum in Turkey will be functioning too. But these will prove mere pinpricks in Russia’s advance.

The mood in the former satellite countries of eastern Europe is bleak. Where energy dominance is assured, political clout necessarily follows. Europe’s uneasy and reluctant adaptation to the new realities of energy politics will continue. Two decades after the Kremlin started beating the retreat from the Soviet empire, a new hegemony, based on pipelines rather than tanks, is advancing—and shows every sign of proving durable.

rant from today's Daily Telegraph

Sound the alarm – Nato is failing

By Edward Lucas

Nato's job, according to a classic cold war dictum, was to "keep the Americans in, the Germans down, and the Russians out". As the Atlantic Alliance prepares to gather in Riga for the most miserable summit meeting in its history, it is losing on all three fronts.

Ties between America and Europe have never been weaker. "Old Europe", as Donald Rumsfeld termed it, loathed the war in Iraq. The fiasco of the American-led occupation there vindicates those, such as President Jacques Chirac of France, who want no part in any geopolitical arrangement involving America.

Like Tony Blair's Government, the loyal ex-communist states of "New Europe" have been scalded by their pro-American stance. These new Nato members have bravely put troops into Iraq and Afghanistan – but received nothing in return. One senior politician from an east European country known for its Atlanticism says bluntly: "Until recently, this administration didn't want allies. It didn't help and it didn't listen."

America's hamfistedness and European diffidence create a vicious circle. The White House sees most Nato countries as puny and timid, spending too little on defence and unwilling to risk men and matériel where it matters. In Afghanistan, the large German contingent works as traffic wardens and social workers: their government forbids them to fight the Taliban; their attempts to train Afghan police have been disastrously ineffective. For their part, other Nato countries find America bossy and inconsiderate.

One result is that Nato struggles to operate outside Europe, in places such as Darfur, where muscular military intervention is urgently needed. Haggling has even derailed Nato's attempt to have its much-touted response force operational in time for the forthcoming summit.

Worse, the grand project of expanding Nato has stalled. This will be the first summit since the collapse of communism that will issue no new invitations to membership. That is a tragedy. Nato's enlargement has bolstered freedom and entrenched democracy across the continent. The summit in the Latvian capital is a powerful reminder: without the Nato membership they gained in 2004, the defenceless Baltic states would have been a dangerous security no-mans-land. Now they contribute to Nato – with symbolic troops, and vital electronic and human intelligence – and are anchored in the West.

The success of enlargement has proved Russia's doom-laden warnings wrong. But the Kremlin has now gained something that had eluded it since the end of the Cold War: a veto on Nato's expansion. In Ukraine, the pro-Russian ruling party that displaced the pro-Western (but deeply corrupt and incompetent) parties of the 2004 "Orange Revolution" has bluntly said that it has no interest in joining the alliance.

That, arguably, is Ukraine's own affair, though public opinion was poisoned against Nato by propaganda that portrayed it as a warmongers' cabal, rather than an alliance of successful and prosperous democracies.

Much worse is the case of Georgia, fast-reforming, ardently pro-Western, and crucially located at the crossroads of Europe and Asia. It is eager to join. But France, Greece and other pro-Russian countries say no. They swallow whole the Kremlin's bogus line that it feels its sphere of influence is being infringed. They never ask why the countries closest to Russia find its embrace so stifling.

Georgia has even been abandoned by its chief ally, America, which is desperate for Kremlin help against Iran and North Korea. It did not defend Georgia against a critical resolution at the United Nations and has dropped all objections to Russia's long-sought membership of the World Trade Organisation.

As America's power has receded, Russia's has grown. Russia does not just supply a quarter of Europe's gas. The Kremlin's monopoly of export pipelines has also created a stranglehold over supplies from Central Asia to eastern and central Europe. With oil, tanker deliveries can substitute for pipelines. With gas, a pipeline creates long-term dependency.

Russia's gas weapon is proving a far more potent means of subverting Europe than either communism or the Red Army. Murky intermediary companies spew out money for politicians, parties and officials that favour the Kremlin's line. Gerhard Schröder, who as German chancellor revelled in being Vladimir Putin's best friend in Europe, now heads – doubtless from the most honourable motives – the company building a pipeline on the Baltic seabed to link Germany and Russia.

Germany could try to get gas elsewhere – by building terminals for liquefied natural gas. Instead, it is deepening dependence on the authoritarian, kleptocratic regime in Russia. "We are the have-nots, and they are the haves," a defeatist top foreign-ministry official told bemused British visitors last week.

It is also making neighbouring countries like Poland even more vulnerable to Kremlin blackmail. When the Baltic pipeline is built, Russia will be able to supply its friends, while starving its foes. Poland, along with the Baltic states, is trying frantically to diversify sources of supply. But progress is painfully slow.

Poland's clumsy but sincere conservative rulers recently suggested an "Energy Nato" to counteract Russian power. They were laughed down. No plan with the word "Nato" in it will succeed in Europe now, they were told. Another crucial European plan, the Nabucco pipeline through the Balkans, is bogged down thanks to the passive resistance of pro-Russian governments in countries such as Hungary and Bulgaria.

Alarms should be blaring. Instead, they are tinkling. Nato advisers this week warned the alliance that Russia's next trick would be to form an Opec-style cartel with other gas suppliers, including Algeria, Libya and Iran. But that was downplayed in Brussels and Moscow.

So the Russians are coming, the Germans rising, and the Americans leaving. Each country seeks the best deal it can, to the detriment of its neighbours. Collective security is as badly needed as it was during the Cold War. But Nato can no longer provide it.

Edward Lucas is central and eastern Europe correspondent for 'The Economist'

Slovenia

Slovenia

Pocket president

Nov 16th 2006 | LJUBLJANA
From The Economist print edition

Slovenia eyes a rare moment of glory

RUNNING the European Union for six months is a big job, even for a large country. For a small one, it means a rare limelight—and a huge headache. In barely a year's time, and with fewer civil servants than in a big country's foreign ministry alone, Slovenia will be running the 4,000-odd meetings and eight ministerial get-togethers of the EU presidency. With a population of 2m it will be the smallest country (not counting Luxembourg, which in effect delegates its turn to France and Germany) to lead the EU, and the first ex-communist state to do so.

Alamy

Never mind the agenda—admire the scenery

The aim, says Janez Jansa, the prime minister, “is to run it smoothly”. An official is blunter: “Just not screw it up”. Luckily, Slovenian officialdom is unusually efficient for an ex-communist country and already planning hard. The incumbent, Finland (population 5.3m), is helping. So are Germany and Portugal, which hold office in 2007.

But Slovenia hands over to France, which has notoriously poor ties to the ex-communist world. Janez Lenarcic, the minister for the EU presidency, points out hopefully that Slovenia is the only European country with a statue honouring Napoleon's soldiers. They briefly liberated the country from Habsburg rule, and let schools teach in Slovenian.

That language has not so far featured much in European diplomacy; there is a scramble to find enough interpreters and translators. The real difficulty, though, is not organisation but politics. Slovenia hopes to push EU expansion to other bits of ex-Yugoslavia such as Macedonia and neighbouring Croatia. But it is unclear where it will stand in the other big debate, between market-minded liberalisers, mainly in northern and eastern Europe, and the more dirigiste economies of the centre and south. The evidence so far is that Slovenes talk like Estonians, but act like Austrians. Mr Jansa has notably failed to push through a promised flat tax, privatisation and other reforms—the people, he says, just don't want that kind of thing. Others think his government is hobbled by its cronies.

By the standards of post-communist politics, Mr Jansa, a sardonic former dissident, is something of a class act; it is easy to imagine him chairing an EU summit. But besides him and Mr Lenarcic, talent is thin. The foreign minister, Dimitrij Rupel, is oddly abrasive for someone with two decades' diplomatic experience. Asked how other ministers will guide 26 EU colleagues through intricate topics like farm-subsidy reform, diplomats in Ljubljana sigh and roll their eyes.

lead note from this week's Europe section

The euro

An uncommon current

Nov 16th 2006 | BUDAPEST AND PRAGUE
From The Economist print edition

East European countries are struggling to join the euro. What if they give up?

ON THE surface, the ex-communist countries' economic outlook looks bright. Growth is rapid, foreign investment strong, and their economies are becoming more sophisticated, swapping labour-intensive exports for services and higher value-added products. The European Bank for Reconstruction and Development, in its annual update published this week, said that growth this year in the 29 countries it covers would be 6.2%, compared with 5.7% in 2005.

But sunny weather is a bad test of rainwear. The real question is why the new democracies are not dealing with their fundamental problems now, while outsiders are so willing to lend and invest. Inflation is too high, public finances bloated and reform slow. And the next big goal of the new and future members of the European Union—adopting the euro—is receding into the distant future.

In a forthcoming study, Susan Schadler of the International Monetary Fund and a co-author estimate (see chart) that borrowing costs in central and eastern Europe are up to a percentage point less than you would expect, given the political, economic and financial risks these countries pose. The likely explanation, she argues, is a “halo effect” from the EU. Markets see membership as a big plus, especially with euro adoption in view. In theory, all EU countries (barring Britain and Denmark, which have an opt-out) are supposed to join the common currency. Yet in practice, those that want to join have found it unreasonably difficult. And others are not sure that they want it at all.

So far only Slovenia (see article) has managed to meet the criteria for membership, which set the ratios of government deficits and debts to GDP, exchange-rate fluctuations and inflation rates. Slovenia will adopt the euro on January 1st. Lithuania (which missed thanks to inflation just 0.1% above the limit) and Estonia (arguably the soundest and most dynamic economy in the whole region) are unlikely now to be able to join before 2010.

Yet both have a foot in the euro zone already, because their currencies are pegged to the euro and backed by currency boards. The price of having only one foot in is some residual exchange-rate risk (dismantling a currency board is much easier than leaving the euro) which may add ten basis points to bond yields; the cost (around 0.2% of GDP annually) of currency conversion; and the lack of a voice in the euro area's management.

Some of the ex-communist states' economic problems stem, excusably, from success. High rates of investment in poorish countries are unlikely to be met by domestic savings alone; the resulting inflows swell the current-account deficit. Estonia's economy is growing at 12% annually. Inflation was 4.3% in mid-2006. With a budget already in surplus, it was hard to see how the authorities could have cut inflation to the required 2.6%.

But other difficulties are more troubling. Joaquin Almunia, the EU's economic and monetary affairs commissioner, lambasted the Hungarian authorities this week for a budget deficit that will reach a whopping 10.1% of GDP this year. Progress towards meeting the membership conditions appeared “disheartening”, he said.

Though Hungarians now think they may adopt the single currency only in 2013, they are still keen to do so in principle, not least because so many firms and households have borrowed cheaply in foreign currency in the expectation that membership is inevitable.

In Poland, by contrast, reluctance to join the euro is growing. Many in the ruling conservative coalition see it as an unacceptable infringement of national sovereignty. Urszula Grzelonska, the favourite to become central-bank governor next year, said this week that she had “increasing doubts”. The government has already said it wants a referendum in 2010.

In theory, Poland does not have the right to question the principle of joining the euro: the EU's new members are supposed to join once they pass the membership tests. But it can hold a vote on the timing. Swedes voted against the common currency in a referendum in 2003, though the government portrays it as a postponement, not rejection. Brussels has huffed and puffed, but can do little.

Poland would in any case struggle to meet the 3% limit on budget deficits now set for joining the euro. The European Commission is already worried by Poland's public finances. When new rules on how to count pension costs bite in April, the budget deficit will jump, it predicts, by two percentage points to 4% in 2007. The next year it will be only a shade lower. The EU is also dissatisfied with the haplessly run finance ministry, which has seen six ministers since last year's elections.

The third big central European economy is the Czech Republic. Despite dire, deadlocked politics, it has the best macro-economic position, to the point that its interest rates are 75 basis points lower than those of the euro zone. Zdenek Tuma, the central-bank governor who, wags say, runs the country in the absence of a proper government, talks warmly of the benefits of an independent monetary policy, whereby his bank sets interest rates. That will be lost if his country joins the euro area. The single currency will also require stronger public finances and a more flexible labour market, he says; adopting the euro depends on political will both for reform and integration with the rest of Europe. “If there is a club, we want to be in it,” says a top Czech.

The case for small economies joining the euro is overwhelming, But for the (relatively) bigger ex-communist countries it is more complex. National currencies bring flexibility, but also vulnerability. Westerners are beginning to feel uncertain too. The euro zone may already have too many misfits (Italy, for example, or Greece). Even if prickly Poland and sleazy Hungary could eventually massage their statistics to meet the criteria, would bringing them into the inner sanctum really be advisable?

Markus Wolf

Markus Wolf

Nov 16th 2006
From The Economist print edition

Markus Wolf, East German spymaster, died on November 9th, aged 83

Getty Images

FASCINATING to his fans, odious to his enemies, Markus Wolf embodied the dilemmas and complexities of the cold war in Europe. Seen one way, he was something of a hero: not just a professional but also a patriot and an idealist. Even his ardent communism could be excused: had not his Jewish family found refuge from the Nazis in the Soviet Union? Revealed after the collapse of communism as cultivated, charming, an accomplished cook and, to some, a heart-throb, he was utterly unlike most Soviet-block spymasters—crumpled, podgy men with thick glasses and steel teeth.

There was a whiff of glamour in the way that Mr Wolf's spies outwitted their bumbling West German rivals. As head, for 34 years, of the foreign-intelligence arm of the Stasi, East Germany's Ministry of State Security, he planted agents and recruited informers all over West Germany. Some found their way into the very departments charged with defending democracy, others into the highest reaches of the state, even the chancellery. For those who believed the West to be shamefully materialist or unduly forgiving of the Nazi past, it was tempting to admire the guile of one who so often humiliated it.

“The man without a face”, he was called. His identity was so well concealed that his Western counterparts are supposed to have secured a photograph of him only in 1978. In fact, the CIA had identified him as early as 1959, from photographs taken when he had attended the Nuremberg war-crimes trials as a young radio reporter. Still, many thought he must be the model for the elusive Karla, the fictional Soviet spymaster who ran rings round his Western adversaries in the works of John le Carré, a British novelist steeped in the world of espionage. (Mr le Carré says he was not.)

Mr Wolf was, if anything, even more glamorous in defeat. Spurning American offers of a deal if he would tell all, he sought political asylum in Russia. When that was denied, he returned, and eloquently defended himself against charges of treason. “Victors' justice”, he called his trials; like Western spies, he was doing a dirty but necessary job, and his sins were “those of every other intelligence agency”.

The brutal reality

Yet there was nothing glamorous about the communist German state of 1949-89. Mr Wolf claimed that his subtle spycraft was a world away from the regrettable mistakes made by his Stasi colleagues in charge of internal repression and fostering terrorism abroad. After retiring—for mysterious reasons—from the Stasi in 1986, he published a book, “Troika”, which criticised Stalinism. Later he said he hoped that Mikhail Gorbachev's reforms would save a system nobly based on the “combination of socialism and freedom”.

He did admit that East Germany had proved a “sad reality”, but in truth it was far worse than that. The regime he served was a squalid dictatorship that jailed those who challenged it and shot those who tried to escape. Its secret police exploited the smallest weakness of anyone who might be useful or threatening. Husbands were coerced into spying on their wives, parents on their children. Mr Wolf's spies played a full part in a huge security system modelled closely on the Soviet Union's, and using identical tricks.

Though cleared, on appeal, of his 1993 conviction for treason, Mr Wolf was given a two-year suspended sentence in 1997 for his part in the abduction and torture of a German woman who had worked for the Americans in West Berlin. Those may be the methods of the war on terror now, but they were not part of the West's arsenal then, in a struggle won mainly by the potency of ideas, not by force or fear.

Mr Wolf said his most successful tactic was the use of sex: his “Romeo” agents seduced and suborned the lonely spinster secretaries of West German officialdom. The practice worked brilliantly, if you were prepared to overlook the attendant tragedies, such as the death of the hapless Leonore Heinz, who killed herself when she found that her husband had married her not for love but to steal secrets from the foreign ministry, where she worked.

It was all clever stuff, but Mr Wolf's chief target was an easy one. Every East German had the right to West German citizenship. That made it simple to plant sleepers, such as Günter Guillaume, an agent sent to West Germany in 1956, who ended up as a senior aide to the chancellor, Willy Brandt. He produced startling news—not just of Brandt's womanising, but also, paradoxically, that the Social Democratic chancellor genuinely accepted the post-war division of Europe, including the sovereignty of East Germany.

That may have usefully calmed Soviet nerves. But the East Germans' carelessness was their star's downfall: they sent him a coded message congratulating him on the birth of his son. When that was cracked, he was caught. Brandt resigned, and his policy of detente with the East—Ostpolitik—stalled. Mr Wolf admitted that this had been a blunder. Like other people, he said, he sometimes felt remorse.

Maybe he did. Other communists, though, were much quicker to see not just the practical failures but the bankruptcy of the entire creed. Mr Wolf's mild penitence fell far short of convincing contrition.

economist.com column "Europe View"

The sorrows of Belarus

Nov 16th 2006
From Economist.com

A government in exile, a country in a mess

THE Belarusian National Rada, or council, seems preposterously peripheral. Via a tenuous chain of succession and inheritance it represents a Belarusian state that was founded in 1918 and existed for barely a year. It has had no surviving counterparts since similar émigré outfits, such as the Ukrainian and Polish governments-in-exile, packed up in triumph at the end of the cold war. Its self-perpetuating 80-strong assembly meets every second year. Its five “secretariats” (ministries) have neither officials to command nor taxpayers’ money to spend. Its worldly goods amount to little more than a shabby letterhead, a shambolic website, and a devoted if somewhat secretive circle of adherents made up both of diehard old émigrés, and keen youngsters from the new diaspora.

The Rada's main achievement is to have survived at all through the decades during which Belarus was part of the Soviet Union; and it was wise enough to keep its distance from the post-Soviet regime in Minsk after 1991. Its ambition still is to wind itself up, but only when Belarus has a democratically elected and truly independent government.

That is a brave hope. Russia casts a long, dark shadow. Belarus relies heavily on Russia for trade and investment, for energy, and for security. A “union state” with a common currency, passport and constitution has been a declared aim of the two countries, at least until recently.

Democracy is even more endangered than statehood. The Belarusian president, Alyaksandr Lukashenka, dominates the media, courts, economy and officialdom. His opponents often end up in jail, and sometimes disappear entirely. A professor who opposed him in a rigged presidential election in March this year, Alyaksandr Kazulin, was arrested, imprisoned, and is now on hunger strike. From his prison cell, he appealed to the BNR for help.

Alyaksandr the not-so-great

At a meeting last year in Washington, DC, the Rada struck up friendly ties with leaders of the often quarrelsome Belarusian opposition. They share the hope that Russia and Belarus will fall out. It may happen.

Russia has helped Mr Lukashenka in the past with cheap gas, flattery, and strong diplomatic protection against Western criticism. In return, Mr Lukashenka's Belarus has sold Russian arms to dodgy customers, and has provided almost the sole living example of that rare breed, a happy and grateful Russian ally.

But now the deal is fraying. Plans for the two-country “union state” are on hold, for which each side blames the other. Russia wants to raise fourfold the price of the gas it sells to Belarus; it also wants to claw back the profits Belarus makes by refining cheap Russian crude oil and selling it on. That squeeze is partly a Russian tactic aimed at grabbing control of Belarus's energy industries. But it is also a slap at the irascible Mr Lukashenka, for being unwisely critical of his counterpart in the Kremlin, Vladimir Putin.

A Belarusian parliamentarian, Mikalay Charhinets, has accused Russia of waging an “economic war on Belarus”, and told Russia that it is putting at risk its military bases in the country. These are, chiefly, a vital naval radio station and an anti-missile radar. At a recent energy conference in Prague a Belarusian diplomat gave a remarkable speech in which he castigated Russia for unreliability and greed in its energy politics. Mr Lukashenka says he may impose customs barriers on Russian goods.

If Russia and Belarus do truly fall out, the future will be full of interesting possibilities. The Kremlin could topple Mr Lukashenka and seek the incorporation of Belarus into Russia. That would give the Belarusian National Rada a new if unwanted lease of life as the sole representative of an independent Belarus.

More trickily, Mr Lukashenka, until now an arch-pariah, might try to cosy up to the West. He is already putting out discreet feelers, saying that Belarus is “building a new foreign policy”. Given the opportunity, it may be difficult for the West to agree on whether to shun him or embrace him.

Whatever comes next, the veterans of the exiled Rada risk disappointment. But they do not risk boredom.

norman davies review

Rewriting history

The madness of myths

Nov 9th 2006
From The Economist print edition

Europe at War 1939-1945: No Simple Victory By Norman Davies Macmillan; 544 pages; £25 Buy it at Amazon.co.uk

WHATEVER you think about the second world war is wrong, and this book will prove it. That, at least, is the contention of Norman Davies, a trenchant British-born historian whose scope, ambition and knowledge about Europe are unmatched. His aim in this new history of the war is to puncture the comfortable myths created by the combination of popular culture (especially in films) plus the self-centred history taught in schools.

Decades of junk history have given most if not all citizens of the countries that participated in it a picture of the war that is distorted, incomplete, or sometimes downright wrong. Britain's much-praised Dunkirk spirit and suffering during the Blitz is a sideshow compared with the gore and grit of occupied Poland. Most countries define second world war “war crimes” as something committed only by Germany and her allies; difficult subjects, such as Allied atrocities or Jewish collaboration with the Nazis, get short shrift.

Mr Davies's biggest demolition job is of the factual errors and ignorance that support the complacent national versions of wartime history. One notable example is the British myth that says that the island fortress stood “alone” against Hitler in 1940, which rudely neglects the efforts made by the Poles, Greeks and others.

But these pale beside the monstrous failure of the Western powers to appreciate, then or later, the nature of their Soviet ally. The biggest and bloodiest struggle by far of the European war was between two gangster regimes whose awful treatment of their own people and neighbours is unmatched before or since. That, argues Mr Davies, makes it hard if not impossible to say that the war was any kind of struggle between a good and evil side.

The Western alliance with Stalin and its consequences is the central theme of this book. But along the way the author pokes mercilessly at misapprehensions large and small. The war was not fought to stop the Holocaust. British and American readers may be surprised to learn (though they shouldn't be) that their countries' role in land warfare was so feeble. El Alamein, the much-praised British victory in north Africa, was a mere pub brawl compared with the battles of Midway and Stalingrad.

Mr Davies's two main weapons are the devastating statistic and the unexpected comparison. Stalin's death camps killed more people than Hitler's. America's army in 1939 was smaller than Poland's. The casualties of the 1944 Warsaw uprising were the equivalent of the September 11th, 2001 attack on the World Trade Centre, every day for two months.

The effect is powerful and, for the most part, convincing. The war was an appalling and complicated mess, in which heroism, individual and collective, was balanced and often outweighed by cowardice, cruelty and incompetence, and—worse—dreadful compromises and surrenders dictated by realpolitik and dressed up in the language of patriotism and morality. After reading this book, not every reader will rethink his or her view of the war altogether, but most will find their thinking enriched and stimulated by new facts and viewpoints. The muscular prose and spiky jokes are treats too.

What is sometimes missing—oddly, in a book that aims chiefly to supply the missing context—is a sense of fairness and proportion. Mr Davies is sometimes so keen to puncture myths that he sounds almost vindictive. It is true that the British population suffered very little compared with the Poles. But that does not make what he calls Churchill's “gamble” to fight on in 1940 any less splendid. The sardonic iconoclastic tone that distinguishes the rest of the book seems to disappear when his beloved Poland is concerned. Most importantly of all: what was the West supposed to do when Hitler attacked the Soviet Union? Cheer him on? Stand back? Or reluctantly assume that one's biggest enemy's biggest enemy is to some extent one's friend.

Mr Davies's book also contains a number of irritating, trivial errors. U nas mnogo, a Russian phrase, for example, does not mean “we are many” but “we've got lots”. Readers' confidence in Mr Davies's judgment might be even greater if he got the small things right too.

corruption

Corruption

Strains of sleaze

Nov 9th 2006
From The Economist print edition

How trustworthy is the experts' verdict on governments' honesty?

WHO judges the judges? Transparency International's annual corruption index (see chart) ranks governments around the world for their honesty or lack of it. But how much weight does the survey, based on the views of businessmen and other country experts, deserve?

Few would quibble with the outlines. The most corrupt countries are the poorest, and the cleanest are the richest. Those who know Haiti do not doubt that it deserves to be somewhere near the bottom; Finland, Iceland and New Zealand are plausible candidates for the top (though both Singapore and Denmark are in effect there too).

For countries like Italy, ranked 45th, the index provides an annual rebuke, and confirmation that corruption can thrive even without the alibi of poverty. For America, which is now no cleaner than Chile, this year's ranking was a fresh embarrassment.

But for poorer countries that jockey for position nearer the foot of the table, money as well as pride is at stake. Donors, fed up with corruption, use these rankings as a guide. Seven of the nine sources that Transparency International (TI) relies on for its raw data also guide the American government's Millennium Challenge Corporation. This week it announced which countries may pitch for its aid money, likely to be $2 billion this year.

So are the expert perceptions worthy of the weight now being put on them? TI itself “does not encourage” the use of its corruption indicators as a condition for aid. This is not because it doubts the veracity of its scorecard, but because it insists that corrupt countries should not automatically be denied aid.

There is growing rivalry between those who measure corruption by looking at bureaucracy, and those who prefer the more impressionist indicator of perceptions. The World Bank, for example, publishes a “Doing Business” survey that plots where the dead hand of the state falls most heavily: how many days it takes to clear customs, or to set up a business, for example. This week it released a new report on the administrative burdens of the tax code. Admittedly, these are not measures of corruption per se, but the more licences and signatures a business has to collect, the more bribes it is likely to pay.

Supporters of this approach question TI's methodology. The sample of experts is not consistent over time. As with all rankings, adding new countries can change the standings, without reflecting absolute change. Relying mainly on foreigners' perception of corruption may overstate it. More detailed World Bank studies show respondents in some countries saying that corruption is prevalent but not a menace to business. Such countries may prosper despite corruption—at least for a time.

TI points out that some of its informants live locally; others were born there. Foreigners' views tally well with those of residents. A defence of subjective measures of corruption comes from Daniel Kaufmann, Aart Kraay and Massimo Mastruzzi of the World Bank Institute, who compile their own indicators, drawing on many of the same sources as TI. They find that expert opinions are more tightly correlated with the impressions of businessmen than they are with each other. “Halo effects”, as they are called, may be more of a problem. Perceptions of corruption in countries like South Korea and Thailand deteriorated along with their currencies in the wake of the financial crisis of 1997-98.

Corruption has many different strains: sometimes politicians are bent and judges are straight; civil servants may be honest executors of a corrupt politician's will; or the minister may be honest, but officialdom crooked. So two countries with similar rankings may suffer from rather different problems. TI's rankings show the analysts' disapproval, but not what governments must do to impress them.

The Organisation for Economic Co-operation and Development (OECD) is trying to highlight this. Its “Investment Compact” assesses poor countries—initially in south-eastern Europe, and in future elsewhere—for good government in both theory and practice. The seven categories it studies include tax policy and administration, tariff and other barriers to trade, regulatory reform and education. The methodology is solid and the results revealing—but there's a catch. Only backward countries get the treatment. Putting rich countries under that kind of spotlight, explains an OECD official ruefully, would be “politically unacceptable”.

more on borat and branding

National branding

A new sort of beauty contest

Nov 9th 2006
From The Economist print edition

Polishing your nation's brand is an expensive and often futile endeavour. Just ask the wretched Kazakhs

FOR 15 years you have tried to make the world aware of your newly born country. It is huge—the size of western Europe—rich in natural resources, modernising fast. But progress is frustratingly slow. Then a pestilential foreign comedian makes you (in)famous overnight, for grotesque but fictional squalor, cruelty and vulgarity. Should you be pleased, cross or both?

That is the puzzle facing Kazakhstan, thanks to “Borat!: Cultural Learnings of America for Make Benefit Glorious Nation of Kazakhstan”, a new film that has proved a surprise box-office hit in America. A mock documentary, it portrays Borat, a lecherous, racist Kazakh (but actually a British comedian) visiting America, with assorted misapprehensions on both sides that are comical or tasteless depending on your viewpoint. Kazakh officials are now grimly trying to show they share the joke; Russia says it will ban the “humiliating” film.

Wally Olins, who advises countries on how to market themselves, says Borat is a “disaster” and the Kazakhs should “shut up and wait until it dies down”. Simon Anholt, a specialist in the same field and author of “Competitive Identity”, a book published this week, is more sanguine. The film has brought “raw awareness that they would never have managed otherwise,” he says. But what to do with it?

People with the answer to that kind of question—or those able to pretend that they know—find business is booming. Mr Anholt says that in recent months “a country a week” has been asking for his help. Big public-relations companies say it is one of their most lucrative new lines. Most countries think that the outside world sees them wrongly. It is tempting to spend taxpayers' money on trying to put that right.

But how? The commonest form is advertising: statistics-laden special supplements, where leaden prose is coupled with cheesy new logos and lame slogans. Mr Anholt notes wryly that almost every country claims to be a crossroads or a gateway (or both) and presents itself as a “land of contrasts”.

But money spent this way can easily be wasted. Mr Olins notes that countries, unlike companies wanting to build brands, find it hard to stick to a strategy, project a clear message, or measure success. Furthermore, most people's views of foreign countries are deeply rooted and cherished. Unfavourable and comical stereotypes outweigh positive news.

Messages to different audiences may overlap, or conflict. José Torres of Bloom Consulting, which advises Portugal, says that the country's reputation as a laid-back holiday destination muffles its desired image as a good place for high-tech investment. He speaks lyrically about the process of determining the country's desired persona. “What clothes would it wear, what car would it drive, what mobile phone would it use?”

If that works at all, it is a long slog. There are two ways a country's image can change quickly for the better. One is good luck. “Crocodile Dundee”, a witty, virile Australian backwoodsman—an attractive version of Borat—transformed American perceptions of Australia. But such effects are usually partial. “Lord of the Rings”, a fantasy trilogy, showed the spectacular unspoilt scenery of New Zealand, where it was filmed, but has yet to help the food industry there much (see article).

The other is innovation. New products and brands, arts and music, attractive politicians, even better public administration all change people's perceptions. In business, at least, image-polishing cannot substitute for regular rebukes and bouquets from bodies that systematically scrutinise countries' reputations, such as Transparency International (see article).

Nor can money spent on glitz and schmooze easily make up for dire political realities, such as a bad record on free speech, or an amnesiac approach to history. But that doesn't stop governments from trying. Russia is spending lavishly in the hope of boosting its international profile. Projects include trips for foreign journalists and politicians (one particularly cushy one was dubbed the “plane of shame”); another is an English-language television channel that aims to counteract the increasingly critical portrayal of the country abroad. A more successful initiative is an annual winter cultural festival in London's Trafalgar Square. That has cleverly combined two of the commonest popular perceptions of Russia: harsh winters and historic strength in art and music.

The American administration is also spending heavily on public diplomacy. But apparently to less effect. Polls show unparalleled hostility around the world not just to the administration but to the country itself. “America spent 300 years building a powerful, rich, globally adored brand,” says Mr Anholt. “It is leaking away very quickly.”

Economist.com column

Europe.view

Cultural learnings of Kazakhstan

Nov 9th 2006
From Economist.com

If you can't beat Borat, then borrow his brand

Get article background

WHY should anyone care about the Kazaks? Or should that be Kazakhs? It is hard to get excited about a country that can’t decide even how to spell its own name. So please greet Borat, the latest fictional creation of a British comic impersonator, Sacha Baron Cohen. Borat is the lecherous, clownish envoy of a culture steeped in racism, sexism, poverty and brutality. The film of his visit to America is extremely funny. So hearty applause all round. And tell those Kazzies not to be so prickly.

That, broadly, is the Western reaction to Kazak protests about Borat. The film may be a ludicrous and offensive caricature. But so what? Nobody’s heard of you anyway. So stop complaining.

But it is not quite so simple. Kazakhstan is the size of western Europe. The country matters hugely for the energy security of the continent. It is doing rather well economically, rather less well politically (though nowhere near as badly as dictatorial Uzbekistan and lunatic Turkmenistan). Given Kazakhstan's importance, Western ignorance of it is striking. Ten years ago your correspondent was talking to an academic, now a high-ranking official in the Bush administration, who was under the confident but mistaken impression that Kazakhstan was not a Muslim country, because, as its name indicated, it was “where the Cossacks lived”. Not much has changed.

It is a fair bet that Mr Baron Cohen would not have chosen as Borat’s homeland a country that featured more prominently in the Western worldview—such as Turkey, for example. Most people would know that Turks did not hunt Gypsies or drink fermented horse urine, some of the pastimes which Mr Baron Cohen attributes to Kazakhstan. Countries such as Turkey are, moreover, good at defending themselves vehemently when criticised.

Reuters

A very rough guide to Kazakhstan

Foreign satire used to be so much better. The superb “USSR: From an Original Idea by Karl Marx”, by Marc Polonsky and Russell Taylor, was a cult classic of the cold war; so was Malcolm Bradbury’s spoof guidebook, “Why Come to Slaka?”. It seems a bit odd that the best creative minds of the West are still flogging the tired old gag that the ex-captive nations are amusingly obscure and backward. The slick, self-satisfied Anglo-American creative elite is so devastatingly witty at other people’s expense, but ultra-prickly when it comes to its own dignity.

It would be nice to have some comedy dealing with real themes from the post-communist world: Could not a latter-day Charlie Chaplin satirise the pomposity and vulgarity of Putin’s Kremlin? There is plenty for thriller-writers to chew on, too: the combination of cynicism, sleaze and geopolitical arm-wrestling across the ex-communist world cries out for a return there by Le Carré.

Kazakhstan is an easy target for lazy wit. There is no powerful Kazak diaspora to threaten a boycott. Official Kazak efforts to defend the country have been ludicrously counterproductive: the dodgy deletion of borat.kz; an expensive special advertising supplement in the New York Times; part-plaintive, part-pompous letters from ambassadors; empty threats of legal action (to which Mr Baron Cohen has responded by issuing a statement from Borat praising the Kazak decision to “sue the Jew Cohen”).

The only constructive response is to say that all publicity is good publicity. Millions of filmgoers around the world will now have a rough idea that Kazakhstan exists, and they will probably reckon that it cannot really be as benighted as Borat makes out. The Kazak government—remembering that the real victim of Mr Baron Cohen’s parody is not their country, but America—should have the nerve to make Borat the centrepiece of the next national branding campaign, under the slogan “Kazakhstan: less funny than the film—but a lot more fun.”

New weekly economist.com column--first edition

Europe.view

The language of Šekspīrs

Nov 2nd 2006
From The Economist Global Agenda

Europe is full of distinctive characters

IT was a simple but difficult request. “Please find a thumbnail-sized symbol for eastern Europe.” But what encapsulates the former captive nations? A broken hammer and sickle? That is not only passé, but inaccurate too: the region includes ex-Yugoslavia and Albania, which were only briefly in the Soviet camp. Candles and flags are the symbols of the collapse of communism. But they seem dated as well. Churches with onion domes? Not eastern enough, and what about countries with lots of protestants, like Hungary or Estonia? A map would be hopelessly cramped in the format. Perhaps shooting stars, to illustrate economic growth. Or frayed, tatty stars, to show messy politics. Or both.

Another e-mail stymied that: “By the way: no stars please”. The European Union’s flag, it seemed, was needed by the Charlemagne column.

Thoughts ranged in wilder and more fanciful directions. The potato, perhaps: the symbol of the hearty peasant cuisine that stretches from the Baltic to the Black Sea. That is hard on the Hungarians, the unrivalled gourmets of the region. And it would be a bit hypocritical coming from a paper published in a country where people eat fried-potato sandwiches.

Then a colleague hit on the perfect idea to mark this column’s arrival on Economist.com, from its birthplace at our sister paper, European Voice. What really unites all the post-communist countries is their distinctive character sets. Every alphabet is different. Every one has letters that look intimidating and unfamiliar to the western eye. Estonia has the õ, Latvian the ķ, Lithuanian the ų, Polish the infernally similar ż and ź, not to mention the ł; the Czechs have the ů, the Slovaks the ŕ and the Hungarians the ő. There are dozens of other examples, but you get the point.

And you say pöťâŧỡ

There is a political dimension to this. Westerners who pride themselves on the pedantically correct use of the German umlaut, or the French cedilla, and who always put the accent on Chávez and Guantánamo, blithely ignore the crucial diacritical marks in the languages of the new Europe. They are too complicated; too difficult, too unfamiliar.

But they do matter. Estonia’s national anthem, for example, starts: “Mu isamaa, mu õnn ja rõõm” (My fatherland, my happiness and joy). Leave out the vital diacritical marks and the last words become, comically, “onn ja room” (roughly: small hut and crawl).

Imagine if the Anglophone world was told that the letter “w” would henceforth be substituted by the easy-to-understand “v”, and that “th” would in future be a simpler “t”. Ve vould not tink tat vas vorkable.

Admittedly, it cuts both ways. There is still a tendency in the post-communist world to “localise” spellings. Lithuanians refer to the president of the United States as Džordžas Volkeris Bušas. There is a partial excuse for that—Lithuanian needs an ending with “s” in order to decline male names correctly.

But such funny spellings are mostly a legacy of past provincialism, which finds foreign names too difficult unless transcribed phonetically into the local language. This is hard to justify. The really tricky names are hard to get right, such as the notorious English surnames Cholmondeley (pronounced “chumley”) or Featherstonehaugh (“fanshaw”). And the well known ones are obvious anyway. How many students of “Makbet” in Poland will be in any doubt that the author’s surname is not, in fact, Szekspir? (in Latvia the camouflage is even more intense: the bard changes his Christian name too, and the author of “Makbets” is Viljams Šekspīrs).

Such oddities are increasingly confined to the schoolroom and journalese. The easterners have learnt, mostly, to spell western names properly. But not vice versa. East Europeans feel with some justice that they will have regained their real place in the world only when their names are spelled properly, not mutilated by an inadequate foreign character set.