By Charles Simon-Aaron.
When questioning the unethical conduct of politicians in suspicious circumstances, Americans use a vulgar truism of financial accounting: follow the money. It assumes the money trail reveals the true motives of the political players and sets the context for their actions.
Global concern over Russia’s recent take-over of Crimea from the neighbouring and sovereign state of Ukraine has been the subject of much media commentary and speculation. Most of it condemn Russia’s actions whilst seeking a political formula for peace between the two parties. What goes unmentioned is talk of the economics involved.
For Ukrainian nationalists and anti-Russian commentators, Russia’s actions are that of a corrupt, anti-democratic, neo-colonial, tyrannical state, and living on past glories of absolute power over weaker and smaller neighbours. A backward step, some suggest, in a new age of globalization where colonial occupation is seen an inefficient way to get rich. The proposed solution to such Russian overreach is an aggressive demonstration of American military and political power.
However, the hoped-for-mighty-American-response has not at the time of writing, been forthcoming.
Why? Money and markets.
In demonstrating disapproval of Russia’s actions in the Ukraine, American President, Barack Obama, and Secretary of State, John Kerry, have kept rhetoric and symbolism to a minimum; not wanting to jeopardize American corporations’ access to the markets of both countries. The American dilemma is that it cannot afford to risk future commercial relations with Russian elites by using strident rhetoric, but if it does not act decisively and aggressively, it may harm future relations with the Ukrainian elites.
In today’s globalized world, the substitute for the colonialism of the past is negotiated trade agreements between sovereign states, where each nation seeks to promote its comparative advantage by accepting the comparative advantage of its fellow trader. The name of the game, at least in theory, is an agreement where both sides win.
This world is hyper-competitive and every country, its government and corporations, best survive economically by guaranteeing markets to each other.
According to the CIA World Factbook (2012-2013 figures), America is one of several major economic players exporting to the Russian market. America accounts for 4.9% of all Russian imports, while China stands at 16.6%, Germany 12.2%, Ukraine 5.7%, Japan 5%, France 4.4%, Italy 4.3%. The playing field is highly competitive.
For business elites, it borders on the irrational to alienate a Russian market with annual purchasing power of $2.553 trillion, total imports of $341 billion, a labour force of 75.29 million, and a population of 142,500,482. This is why the Americans are fostering face-to-face negotiations with Russia in pursuit of a peaceful resolution to the Crimean crisis; and also why the European Union will not engage in any action that might jeopardize current and future economic arrangements/agreements with Russia. To be locked out of the Russian high value market for goods and services is too heavy a price to pay; occupying the moral high ground yields every time to the hunger for profit.
Now compare the above figures for Russia with those for Ukraine, which has a population of 44,573,205; labour force: 22.17 million; total imports: $87.21 billion; import partners: China 16.6%, Germany 12.2%, Ukraine 5.7%, Japan 5%, United States 4.9%, France 4.4%, Italy 4.3% (2012 est.); total purchasing power: $2.553 trillion. Many truths are revealed when the money is followed.
Sentiment is certainly on Ukraine’s side in its dispute with Russia over Crimea; but, unfortunately, global money and global power trumps all.
The battle for markets is the source of much competitive frenzy between governments and between governments and their local interests globally. It is becoming the foundation stone of international behaviour between nation-states.
No one nation-state can rule the world on its own and in its own interests anymore. Globalization forces all elites to think about the competitive advantage of competing nation states as they seek to promote their own. In this scenario there is little room for war as a solution to domestic, regional or international problems.
This all makes bleak reading for supporters of Ukraine, which is almost certainly facing a future without Crimea.
Many truths are revealed when the money is followed. Crimea: follow the money.