Russia Needs Closer Ties to Europe

Since Vladimir Putin has held the reins of the Russian leadership, Russia has actively integrated into the global economy, making the era of his rule even more liberal in an economic respect than it was under former President Boris Yeltsin. Russia ranked seventh in the world for stock market capitalization at the time of the 2008 crisis, foreign assets in its banking system reached 26 percent, and foreign trade increased by almost five times from 2000 to 2008.

The number of Russians traveling abroad rose from 9.8 million in 2000 to 32.7 million in 2008, and Russia’s rate of development in modern communications and various segments of the Internet economy was one of the fastest in the world.

But the situation began to change in 2011 when two important circumstances became clear. On one hand, the relative success of the Russian economy gave rise to a call for political change, and many anticipated a “new perestroika” under the more progressive and tech-savvy President Dmitry Medvedev.

On the other hand, it became evident that Russia lacked the mobilization and technological capacity to achieve large-scale modernization and end the country’s reliance on natural resource exports in the near future.

That began Russia’s “reversal of 2012” — the point at which the political elite understood that a gas and oil economy worked best under a nondemocratic “power vertical” and that restructuring the country’s political foundations in hopes of achieving an uncertain result — and at a time when mass public protests were on the rise — was simply too risky.

Russia began turning away from Europe, and the West as a whole, not during the Ukrainian revolution in February, but when Putin began his third term as president in 2012. The fact that many Western leaders in recent years had what Polish President Bronislaw Komorowski called “hopes for Russia’s democratic modernization” only proves that they misunderstood the nature and outlook of the Russian elite and people.

By 2014, Russia had once again become a country whose leadership showed no intention of complying with the rules of foreign or domestic policy. In fact, those leaders would probably act even more decisively if economic considerations did not hold them back. But the truth is that Russia depends heavily on the world economy, even if its political elite believe otherwise.

Hardships will hit Russia’s private businesses hardest, even while the government continues pumping budgetary funds into bailouts for state-owned corporations headed by Putin’s close associates. Over the next few years, Russia will also fail to benefit in almost any way from its “turn toward the East.” The failure of that project will grow increasingly evident just as anti-Western sentiment in Russia declines, giving way once again to envy of Western prosperity and a desire for renewed friendship.

Russia cannot survive without the outside world. The external debts of its banks and corporations exceed the size of its foreign exchange reserves. Russia finances more than half of its budget with the export of raw materials and imports 100 percent of its computers, mobile communications devices, telecommunications technology and many types of equipment. Under such conditions, the economy itself will have an impact on the country’s political course.

Many people raise the objection that the process of globalization in the early 20th century did not prevent the outbreak of World War I. That is true, but 100 years ago European powers were constantly fighting either each other or in their colonies, human life meant less, and war seemed like a perfectly appropriate means for solving many problems.

Today nobody is prepared to give their life for the sake of Gazprom or Rosneft, and most citizens and politicians understand that it is no longer possible to solve serious problems through direct confrontation. Russia’s “foreign offensive” will fail not because of a defeat at the front, but for lack of support at the rear. And the more actively Russia isolates itself from the international system, the sooner that mutiny will occur.

No further sanctions are even necessary: Those already in effect are enough to prod Moscow leaders into taking retaliatory measures that will derail Russia’s economy.

And when that happens, Russia will turn once again to the West — as it has turned many times in the past — in search of investment, technology and innovation. At that point, both sides will need to build economic and political ties that are strong enough to resist the machinations and adventurism of a handful of oligarchs with close ties to the Kremlin.

Russia and Europe

Tusk Appointment in EU a Reason for Optimism?

Ian Hansen writes: The recent choice of Polish prime minister Donald Tusk as the next president of the European Council is an auspicious sign.

The selection process that brought him to power remains more about expedience than merit. Yet, replacing Herman Van Rompuy with Tusk as “president of the presidents” suggests the Council will have more determined leadership to enact Europe’s agenda. Tusk’s political style and already strong European connections can help drive the Council to more united policies on critical issues.

Just as Belgium has not solved its long-term problems, the eurozone and greater EU still face a grave economic future for failing to remedy structural problems. From the eurozone crisis to the crisis in Ukraine, examples abound of the EU not taking unified action until it is too late.

The press describes Tusk as a soft-spoken and humorous man with a shrewd ability to defeat rivals while achieving political success. He is the only founder of his ruling center-right Civic Platform (PO) party still in the party. With strong political acumen and experience leading a rising European power and strong relationships with key European leaders, one can envision Tusk developing the president’s role from Van Rompuy’s backdoor facilitator part into a more powerful agenda-setting role.

Unlike Federica Mogherini, Tusk was unanimously named to his position by his European counterparts. French concerns over Tusk coming from a non-euro country and British concerns over EU migration even faded away as a result of Tusk’s positive working relationships with Francois Hollande and David Cameron. Yet, the most vital relationship and Tusk’s closest is with Angela Merkel.

Extremely pragmatic, both leaders have been repeatedly described as allies and confidantes as their countries have grown stronger while becoming more interlinked in recent years. Merkel even urged Tusk to consider the office of president before he truly became a candidate. Thus, while Tusk’s appointment was a symbolic win for Poland and other new EU members, it was also a win for Germany.
From ‘Merkozy’ to ‘Tuskel’

This matters immensely because Tusk’s ability to coalesce a strong negotiated position with the support of the indispensable Merkel would quickly and forcefully cement EU policies. While “Merkozy” talk once dominated the EU, decreasing French influence and uncertainty over the British role means a theoretical “Tuskel” could move Europe forward with policies aligned around a central European view.

For instance, Merkel, Tusk, and the new President of the European Commission Jean-Claude Juncker have all acknowledged the importance of keeping the UK in the EU. Their appreciation of the UK’s role in Europe, which is not universally shared within Europe, greatly increases the likelihood of passing reforms amenable to British voters before a possible in/out referendum by 2017.

Donald Tusk

 

 

Economic Impact of Turkey’s Ambivalence on Middle East Wars

The Turkish government has not recognized the true nature of the Islamist group. It may already have been too late, however, with foreign policy tactics beginning to become contaminated with apprehension. Corruption, ineptitude and chaos within Turkey’s security apparatus no doubt also played a role, all of which made it more difficult to control the border.

Now, Ankara is facing an extremely difficult situation. Providing care to the masses of refugees costs billions of euros and weighs on the country’s already weak economy. Social tensions are on the rise with poor Turks in the region envious of the relatively good care received by the refugees and concerned about increased competition for jobs. Well-off Syrians have also driven up rents in the cities.

 The government’s biggest fear is of terror attacks. “Tourism is one of the most important economic sectors,” he says. “If a bomb goes off in a hotel and a couple of vacationers die, it’s over.” The fear is certainly well-founded. Several hundred Islamic State fighters come from Turkey and, in contrast to jhihadits from elsewhere,  they can move about freely in their home country.

Like Ahmet, a 21-year-old from Istanbul who fights for the Islamic State. “We are everywhere in Turkey, in Istanbul, in Ankara, in Gaziantep,” he says. It is impossible to confirm such claims, but Western intelligence agents believe that the Islamic State actively tries to recruit young men in Turkey. One intelligence agent who asked not to be identified says that warnings have been delivered to Turkey for years. “But the government always insists that it has the radicals under control.”

Ahmet was recruited two years ago in Istanbul by a precursor group to the Islamic State. Even then, he was full of admiration for the older boys at the Koran school who spoke about their dreams of joining the jihad. He says he has already been in Syria twice and is planning to return soon to fight “to the end.” His final battle, he says, is rapidly approaching.

Turkey and ISIS

 

 

 

 

 

 

 

 

 

Atlanta Prosecutes Teachers Who Helped Students Cheat

Prosecutors outlined the case against a dozen former principals, teachers, and administrators accused of orchestrating a massive cheating conspiracy in 2009 in Atlanta public schools, as the high-profile trial got under way.

Prosecutors had brought charges against 35 individuals in the case, one of the most sweeping and widespread cases of cheating to come to light in US public education. Most of those individuals have pleaded guilty and won’t go to trial. According to the charges, educators allegedly used a variety of schemes to inflate students’ test scores, including erasing incorrect answers, telling children to change their answers, and opening sealed exams ahead of time to coach students on the answers.

It’s a case that has received widespread attention both because of the nature of the charges and the fact that it seemed to have emanated from the very top – former Atlanta superintendent Beverly Hall is one of the defendants, though her trial has been delayed while she deals with a health issue  – as well as the questions it raises about the possible negative incentives from the culture of high-stakes standardized testing.Prosecutors on Monday outlined the case against a dozen former principals, teachers, and administrators accused of orchestrating a massive cheating conspiracy in 2009 in Atlanta public schools, as the high-profile trial got under way.

Test Cheating

Australians Arrest ISIS Financier

Melbourne raids follow a heightened terror alert earlier in September and the tabling of new security laws in Australia’s parliament.

Security forces in Australia carried out a new round of anti-terror raids, resulting in the arrest of a 23-year-old man in Melbourne on suspicion of funding a US citizen to fight for Islamic State.

Hassan El Sabsabi, is accused of sending about $12,000 to a US citizen he met on social media, in order to help fund his travel to Syria, where IS and other jihadist groups are active. Mr. El Sabsabi was arrested today after an eight-month investigation by Australian police, which were tipped off by the FBI.Security forces in Australia carried out a new round of anti-terror raids today, resulting in the arrest of a 23-year-old man in Melbourne on suspicion of funding a US citizen to fight for Islamic State.

Arrests in Australia

Standard & Poors Enters Inequality Debate in US

A Pew poll found that 56% of Americans said that their income was falling behind the cost of living.  At higher income levels, people said they were staying even and getting ahead, their incomes moving faster than inflation.

Standard & Poors reports that state income coffers have been effected by the decine in middle class wages.  In most states, tax revenue growth has not kept pace with the growth of the economy and S&P says inequaity is the cause.

Inequality in the US

Singapore Gives Up Online Sports Betting. New Jersey Takes it On

Singapore proposed a law that is ust short of outlawing online gambling. They were tired of betting and related crime syndicates that fix sports matches worldwide.

Governor Christie of New Jersey in the US made a surprise move, offering to Atlantic City”s ailing casinos.  In defiance of federal law, he decided to let casinos accept remote wages on most sports events.

Singapore is now doing its part, but New Jersey is going in the opposite direction.

Gambling on Sports

Safra Catz, Co-Head of Oracle as Women Enter High Hi-Tech

Safra Catz, who was co-president and CFO of Oracle until Thursday, has just been promoted to co-CEO — alongside Mark Hurd — after its founder and longtime CEO Larry Ellison announced he’s stepping down to the Executive Chairman position.

Oracle said in a statement that Catz will be responsible for all manufacturing, finance, and legal decisions, while Hurd will be in charge of sales, service, and global business units. Ellison will continue to oversee all software and hardware engineering functions.

The move might come as a bit of a surprise, but Catz’s track record tells she was a natural choice for Oracle’s board.

Catz first joined Oracle in 1999 as senior VP. But she quickly rose through the ranks, becoming executive VP within seven months, and president of Oracle Corporation by 2004, a position she had kept for over a decade. She served as Oracle’s interim CFO from November 2005 to September 2008, only to return to the same role in 2011 as full-time CFO. She’s also been an Oracle board member since 2001.

A former banker at Donaldson, Lufkin & Jenrette, an investment bank that was later acquired by Credit Suisse, Catz has played a major role in Oracle’s M&A department, overseeing nearly 100 M&A deals worth billions of dollars for the company. Some of the biggest deals she’s led include the $10.3 billion acquisition of PeopleSoft and the $7.4 billion deal for Sun Microsystems. She’s a graduate of the Wharton School, but also holds a law degree from UPenn, which made her Ellison’s consigliere as well.

As remarkable as her resume is, Catz is perhaps better-known for regularly being named the highest-paid woman executive in the world. Last year, she made $44.3 million in total compensation, easily becoming the world’s top paid female exec and CFO. In 2013, she became the first female to hold the highest-paid CFO position, when she made approximately $43.6 million. That amount, in fact, was a drop from her 2012 compensation of $51.7 million.

“Safra and Mark are exceptional executives who have repeatedly demonstrated their ability to lead, manage and grow the company. The Directors are thrilled that the best senior executive team in the industry will continue to move the company forward into a bright future,” Oracle Board’s Presiding Director Michael Boskin said in a statement.

Safra Catz, Co-CEO, Oracle