Feb 27 • 19M

#160 Through The Looking Glass

Ukraine and its implications. Billboard bans.

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This podcast is about frameworks, mental models, and key ideas that will hopefully help you think about any public policy problem in imaginative ways.
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Global Policy Watch: What Ukraine Tells Us

Indian perspectives on global events

— RSJ

Among the rare joys of writing a weekly newsletter is the ability to pretend you’re an expert on everything under the sun. That way the last 2 years has been a gift that has kept on giving. Science of epidemiology, methods of lockdown, the efficacy of vaccines, how fiscal stimulus should be structured, what to do about China, the transitory nature of inflation or the long-term impact of working from home - there’s a wide swathe of subjects that I have claimed expertise on. The only thing missing was war.

This week God, Putin heard me.

And there was war.

Now we do talk about matsyanyaaya a lot around here. That is all international relations can be reduced to the maxim of ‘big fish eating small fish’. To many, it seems like a simplistic formulation. Surely it cannot be just about power, they say. What about things like global order, liberal values and democracy that we hear nations claim that govern their outlook? Didn’t we do just that during the cold war? Fought on principles and brought down an evil empire? I can sympathize with them. There’s so much talk about higher-order morals in international relations that you can easily be taken in by it. Well, my view is that most of that stuff is garbage. The naked truth about international relations is grotesque. It needs the garb of pious intentions. And this becomes clear as daylight when you have a war. As much as it is a humanitarian crisis that saddens you, war is also a moment when all pretenses fall away. And you see the truth.

So, what are the truths that emerge from the Russian invasion of Ukraine? The usual response to that question is about Putin, his ego and his frailties, his hegemonic ambitions and his desire for leaving behind a legacy that might appear dubious to us but important to him. Here’s a cross-section of views from experts in Brookings. Just to pick one of them (Pavel Baev, non-resident senior fellow):

“Now we know that Putin’s obsession with Ukraine — which constitutes a threat to his regime not because of hypothetical NATO missiles, but because of its choice for democracy and closer ties with Europe — prevailed over common political sense and strategic risk assessments. Wars rarely go according to plans, and this one is set to turn bad for Russia because it is based on serious miscalculations about Ukraine’s capacity to defend its statehood, the strength of NATO resolve, and quite possibly the readiness of Russians to partake in this aggression. Every setback will prompt Putin to raise the stakes yet further.”

In summary, Putin doesn’t like democracy in his neighbourhood, especially in countries with large Russian speaking populations. He fears any success there will have a risk of such ideas being transplanted and taking roots in Russia. So, he has to act. He will win the initial rounds but lose eventually though no one knows when. There are other views too but mostly in the same vein. I don’t have much to quarrel with these but I think there are other truths to consider in this clear moment of war. 

Firstly, there was a view gaining strength in the past decade that the interconnected nature of global trade and funds flow allows those who orchestrate them to wield tremendous power. An example of this was the way Iran was brought to the negotiating table by the US by freezing them out of SWIFT, a global financial messaging system that’s the spine that supports the money flow across the world. The term that’s often used to explain this ‘weaponized interdependence’. As Daniel Drezner of Tufts University in his introduction to the anthology, The Uses and Abuses of Weaponized Interdependence, puts it:

“Weaponized interdependence (WI) is defined as a condition under which an actor can exploit its position in an embedded network to gain a bargaining advantage over others in a contained system…

WI challenges long-standing ways that international relations experts think about globalization. States with political authority over central economic nodes can weaponize the networks to gather information or choke off economic and information flows, discover and exploit vulnerabilities, compel policy change, and deter unwanted actions.”

In the abstract of their original paper, Weaponized Interdependence: How Global Economic Networks Shape State Coercion, Farell and Newman, also explain this:

“Liberals claim that globalization has led to fragmentation and decentralized networks of power relations. This does not explain how states increasingly “weaponize interdependence” by leveraging global networks of informational and financial exchange for strategic advantage. The theoretical literature on network topography shows how standard models predict that many networks grow asymmetrically so that some nodes are far more connected than others. 

This model nicely describes several key global economic networks, centering on the United States and a few other states. Highly asymmetric networks allow states with (1) effective jurisdiction over the central economic nodes and (2) appropriate domestic institutions and norms to weaponize these structural advantages for coercive ends. 

In particular, two mechanisms can be identified. First, states can employ the “panopticon effect” to gather strategically valuable information. Second, they can employ the “chokepoint effect” to deny network access to adversaries. Tests of the plausibility of these arguments across two extended case studies that provide variation both in the extent of U.S. jurisdiction and in the presence of domestic institutions—the SWIFT financial messaging system and the internet—confirm the framework's expectations. A better understanding of the policy implications of the use and potential overuse of these tools, as well as the response strategies of targeted states, will recast scholarly debates on the relationship between economic globalization and state coercion.”

As we have seen in the past few days, this all-seeing, all-knowing panopticon (like the SWIFT) hasn’t worked as a deterrent against Russia. The Biden administration sanction order sounded like we will see a complete freeze on SWIFT for the biggest Russian banks and energy companies. But tucked under a subclause in that order was an exemption for energy companies. Hah. I mean what are you left with on sanctions if you exempt the Russian energy sector. So, the question is why was this carved out? There is only one answer.

All the networked interdependence by itself doesn’t create real, hard assets on the ground. It only facilitates their trade in a manner that reduces friction. Real world operates a step removed from this. Russia has cheap energy and the EU needs it. And the EU doesn’t love Ukraine more than the cheap, assured heating in their homes. That’s the reality. The other thing that we learned is any kind of freezing out of a node in a global interconnected network doesn’t put that node away for good. The network is so vast with so many strands crisscrossing them that quite soon a new equilibrium is reached. Order is restored and the freeze circumvented. The simple lesson here is that cyber warfare, paralyzing a network or cutting someone lose from the interdependence are legitimate and novel weapons in international conflicts. But when it comes down to the crunch, real assets trump everything. 

The other truth to appreciate is the hollowness of nuclear power as a deterrence to any potential escalation of conflict. The idea was somewhat simplistic. This is captured in the definition of the non-proliferation treaty (NPT):

“…the NPT non-nuclear-weapon states agree never to acquire nuclear weapons and the NPT nuclear-weapon states in exchange agree to share the benefits of peaceful nuclear technology and to pursue nuclear disarmament aimed at the ultimate elimination of their nuclear arsenals.”

Viewed from a perspective of deterrence, what was unwritten was the non-nuclear-weapon state would do good to ally with one or more nuclear-weapon states who would, in turn, help them in case they have to face off a nuclear state. I mean that’s the kind of thing Taiwan depends on. That the US will defend it in case China threatens to send over a few nuclear warheads their way. What’s the basis of this touching confidence in another nation? This is where things get nebulous. It is some kind of a commitment to values of friendship, liberty, human rights and, perhaps fresh air. Maybe this was true for a while in the post WW2 kind of polarised world. It is possible those who fought those wars and saw the iron curtain descend over eastern Europe believed in an exalted value that went beyond self-interest. Though it is difficult to believe how the crimes of Stalin in the 30s, especially in Ukraine, were too different from that of Hitler. Anyway, maybe WW2 was that moment of truth. And that generation realised some things were just too precious. That era and that generation have long gone. Those whom the Ukrainians trusted to come to their aid aren’t raring to get into their battle fatigues. There’s no urgency there while the Ukrainians huddle in their bomb shelters. It is an object lesson for the other smaller nations who are watching this.

Lastly, a global order needs a superpower that has the legitimacy that it will back its promises. The ability to do so is linked to multiple factors including the strength that superpower projects, its willingness to forge partnerships and lead them and its actions in following through on its words. For these to happen, the superpower needs a domestic polity that’s united on how they see their role as the enforcer of global order. If it is fractured on this point and on many others like the US domestic politics is now, it won’t be able to play its role. A default on that means loss of legitimacy. 

What’s happening in Ukraine is the crystallisation of the truths that were evident to all post 9/11 but difficult to prove. That truth is in front of us. You can talk forever about common interests and shared values. It means zilch.

A generation lived under the myth that the free world will take care of its members. That spell is broken.  

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Matsyanyaaya: Where do we go Now?

Big fish eating small fish = Foreign Policy in action

— Pranay Kotasthane

As someone who didn’t know that Ukraine was the largest European country west of the Volga river, I don’t have anything to say on the specifics of the Ukraine-Russia conflict. Instead of looking up the operational and tactical aspects of the ongoing war, I’ll zoom out and try to ask: what do these events mean for the global order?

Over the last few days, there have been several articles attempting to answer this question. I have found them to be unhelpful because they focus excessively on the West-Russia divide in geopolitical terms.

What’s missing in these conversations is that the global order is a function of both geopolitics and geoeconomics. That’s why in our book India’s Marathon, we imagined 20 new world order scenarios, at the intersection of key geopolitical and geoeconomic trends. This framework serves as a useful anchor. Its intent is not to predict the future but to imagine the various possibilities.

Source: Anirudh Kanisetti, Pranay Kotasthane, Anupam Manur, Deriving India’s Strategies for a New World Order, Takshashila Discussion Document, July, 2018-02

Using this framework, what we can say is that the sharpening Russia-West conflict does not per se alter the world order situation on the map. We are still in the “Great Walls” scenario at the intersection of a stagnated global economy and an intensifying US-China conflict. If anything, the current war brings out more clearly where each state falls.

Whether Russia installs a puppet regime in Ukraine or not, the incoming sanctions of a united West are going to make it even more dependent on China. China for its own sake is hasn’t been overly appreciative of Russia’s warmongering, but the two states still remain close. China has much to gain from Russia’s presence in the Arctic, its energy supplies, and military equipment. Some scholars have suggested that the West’s refocus on Russia might allow China to achieve a modus vivendi with the US and settle on a “Co-opetitive G2” power distribution. However, it seems unlikely to me given how China has stood by Russia, and how it rebuffed US overtures to prevent Russia from attacking Ukraine.

What might the Great Walls scenario look like? Here’s what we wrote earlier:

US and China relations would break down, leading to a side-lining of global institutions and the world separating into alliances dominated by either power.

The superpowers would compete to expand their blocs while attempting to revive their economies and those of their allies, likely with investment packages or trade barriers as opposed to military intervention.

Both sides would see excessive tech disruption - such as automation - as a threat to stability, but military and software research would continue. Conventional conflict (between the US and China) would mostly be a last resort, and be low-intensity clashes over resources.

The relative lack of coordinated international effort would allow a very high degree of asymmetric warfare, both between states and between states and non-state actors. Owing to the increasing friction between the major powers, agreements on climate change are unlikely to bear fruit.

Updating this assessment after the pandemic hit, we had written that Great Walls will be characterised by three factors:

Stable geopolitics, dynamic geoeconomics
In the post COVID-19 world, the US will likely see countering China as an overriding national priority. Reorienting supply chains to reduce dependence on China will be an important priority. As a result, the post COVID-19 global recession won’t be easily solved as global trade and investment flows are reoriented, leading to a period of secular stagnation for quite some time.

From One to Many Economic Webs
In the post COVID-19 world, many ‘Great Walls of China’ may come up — a new version of the Iron Curtain, where the world is split into three economic webs - one dominated by US markets and investments, one by Chinese markets and investments, and a more diffused collection of middle powers who independently strike bargains with the US and China-led economic webs, and form their own networks of trade with friendly countries.

A New Age of Multilateralism
Every facet of policy will be affected by the New Cold War. Like the global economy, the Internet may splinter into multiple interacting webs with unprecedented State oversight, especially outside the old Western liberal democracies. Global bodies would become far less important, and multilateral institutions organised around powerful nation-states become far more important for transnational cooperation.

As the west unites against Russia and China, these trends seem to be getting sharper.

Where does this leave India?

India’s task has gotten a lot tougher than before the war began. As long as the primary focus of the west remains countering China, India gains. As soon as the primary focus becomes Russia, India is on a weak footing.

India would come under significant pressure from both the US and Russia to show support for either side. Given its military overdependence on Russia (something we wrote about in the previous edition) on one hand and the overwhelming agreement with the west on countering China on the other, India’s choices have become more constrained. It will be a serious test of India’s diplomacy to keep both sides happy. It seems to be pushed to strategic autonomy by compulsion, not by choice.

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PolicyWTF: Billboard Bans

This section looks at egregious public policies. Policies that make you go: WTF, Did that really happen?

 - Pranay Kotasthane

As we like to say, public policy is all around us— the failures, the successes, the whole package. This week I came across an educational PolicyWTF courtesy that evergreen fount of knowledge: Bengaluru’s roads.

See this image below and identify the PolicyWTF.

My photography skills suck so I’ll try to explain in words. The yellow circles mark legal yet empty advertisement holdings. The red circles mark the illegal, haphazard but thriving advertisement hoardings. What gives?

Three years ago, the city government banned advertisement hoardings outright. The reasons: hoardings spoil the city’s aesthetics, cause visual pollution, and are a threat to drivers’ safety. After a number of contortions, this ban still stands.

And what does this ban do? First, it has pushed all advertisement hoardings just beyond the city government limits. Second, it has allowed illegal and more unsafe hoardings to come up. As you can see in the image, a legal, small ad-space high above the eye level of the driver of any vehicle is now replaced by ad boards of all shapes, sizes, and colours blocking a vehicle user’s eyesight. In pursuit of better aesthetics, we have made the roads more unsafe. Instead of using advertisement space fees to supplement the anaemic city finances, the city government now has to spend resources on policing illegal hoardings.

As for aesthetics and visual pollution? Seems like ‘isomorphic mimicry’ to me. With the GST taking away taxation powers of city governments, non-tax revenue through leasing land and advertisement space has become even more important. As long as the city government has to beg the state for half of its revenues, we can forget about improving aesthetics in any meaningful sense.

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HomeWork

Reading and listening recommendations on public policy matters
  1. [Article] Ace international relations historian Lawrence Freedman’s take on Putin’s gamble is a must-read.

  2. [Report] The India Justice Report is a valuable input for the law & order, justice policy pipeline. This data collection exercise can spark off conversations on improving access to justice.