Ukraine’s political and economic conundrum. Informal musings on becoming a nation in an era of globalization

The last benchmark era of globalization for current analysts of the process were the decades preceding the First World War. This era of globalization coincided with the height of imperialism and the rise of strong nations and even stronger nationalisms in the West. Competing imperialisms and nationalisms run wild brought the whole process to a bloody end in 1914. After 1918, we saw the end of Empires – the Austrian, the Ottoman. The Tsarist Empire transformed itself into a Soviet Empire after a civil war, policies of conquest, and Stalinist madness – which included various bloody events and even a famine in Ukraine. In Europe, new problematic nation-states were born out of the dismantling of the Austro-Hungarian Empire, and the redefinition of German borders in the East. The Western Allied powers strengthened their Empires – by sharing the spoils of the fallen Turkish and German ones in the Middle East and in Africa. The period in between the two World Wars was an era of de-globalization, and also an era of shrinking prosperity and general economic crisis.

Current globalization critics right and left say that globalization undermines state sovereignty, either by undermining policy space, in particular as regards to social spending or democratic decisions, or by destroying national identity. What wars have not done, Coca Cola and Global Capital manage to do. In fact, what are we having today? Globalization, but no Empires (more or less benign global and regional Powers, of course, but not proper empires with all their administrative and coercive machinery), and continued proliferation of generally democratic/-izing nation-states. In Europe, if there is loss of sovereignty it is because of a fifty-year old process of willingly surrendering sovereignty to a supra-national entity. Today, you need a “strong” (well-functioning) state to be able to make the best out of globalization for your country. And today, when you want to build a properly functioning country, well, you need to play the global game.

Ukraine (where I am right now) is an ideal case study in all these complicated and interrelated issues. Ukraine has only existed for 15 years. It is a former Soviet republic having made itself independent during the collapse of the Soviet Empire. Ukraine has never been independent, discounting its Cossack past when in fact is was a no-man’s land between East and West and a medieval Kievan Rus kingdom.

I read somewhere that US foreign policy theorist Zbigniew Brzezinski said that without Ukraine Russia ceases to be an empire. That’s what happened. But, alone without Russia, Ukraine is learning the hard lesson of becoming a nation.

Globalizing the Eurasian Way. More on Globalizing Russia.

I am just back from a professional trip to Moscow.

Despite all the negative news we are served in the West on Russia’s energy policies, big stick politics in Georgia, oil-related power neighbourhood policies, and other political murders and restrictions on political freedoms – I insist: Russia is one of the “good news” stories of the moment.

With caveats of course. But these caveats are not worse than, say, in a country like China your average economist and investor is enthusiastic about, when it comes for example to corruption, restriction to political freedoms, worrying expressions of virulent nationalism, regional divergence and growing income inequality. What makes perceptions of Russia often be more negative than China or India? The cold?

Russia is, along with China and India, one of the culprits of the current destabilization of the global labour markets hotly debated at the moment following Richard Freeman’s recent study which finds that the doubling of the world’s labour force following these countries’ entry into the global market has considerably shifted the balance of power from labour to capital. Yet Russia’s contribution to this problem is marginal – its population is “only” 142 million, tendency declining, in a country spanning over 11 time zones… And given that foreign direct investment, though soaring, is only about 3% of the country’s GDP, Russia is not the problem in that sense. Also, Russia, in contrast to China and India, has no comparative advantage in cheap labour. It is land and natural resource abundant and will have to develop its human capital to build a services and knowledge-based society. Its development path will have to rather resemble Chile’s than China’s.

Russia is also one of the world’s most quickly globalizing countries, believe it or not. In the recently published 2006 Globalization Index published by Foreign Policy, Russia has climbed 5 “notches” compared to last year (the greatest leap, along with Romania) - to rank 47th. China ranks 51st, and has only risen 3 notches. India is somewhere on rank 61, same as last year…

So, where is Russia heading?

On Russia’s contradictory globalization path

On Friday Russia and the Unites States cleared the way for Russia’s accession to the World Trade Organization (more here). Accession negotiations started 13 years ago and have lasted almost as long as China’s (14 years). There have been delays in reaching a final agreement due to issues related to financial services liberalization and the enforcement of intellectual property rights. More generally, energy politics and other highly sensitive international issues involving Russia and the US have made talks very difficult. It seems that the last big hurdle will be approval of Russia’s entry by Georgia which has the legal right to veto Russia’s accession, and might want to use this leverage to shake off Russia’s fierce political claws.

Russia’s economic recovery since the 1998 default and economic-financial crisis has been impressive. Yet there are two views on Russia, a pessimistic and a cautiously optimistic one.

The state of play in the current process of globalization – to start with

How to start a brand new blog on globalization and the current triumph of capitalism?

First, I invite you to read the About the author and What this blog is about pages, of course. This is in order to get a better idea of what this blog is meant to be about.

Second, why not start off with an overview of the current state of play in the global economy?