Wednesday, March 12, 2014

Economic Lessons

In the 1930's with the sign of war looming on the horizon in Europe an economic geographer proposed the notion that countries who traded with each other, meaning had strong economic financial ties and trade for both goods, services and materials, won't go to war with each other.

Well, it didn't quite prove the case as nationalistic politics overwhelmed any economic ties the countries in Europe  had during the 1930's, but many took note of it after the war to improve the ties between the major European countries.

And despite all the up's and down's of the European countries' economies, they've avoided conflicts for the very reason the geographer proposed. The issue was the divide between Eastern Europe, then dominated by the then Soviet Union, and Western Europe.

The divide fell by the wayside with the change of the eastern European countries to separate themselves from the Soviet Union which became Russia and now the Russian Federation with some of the former Soviet Republics.

This indepedence from Russia was emphasized with the predecesor to and the current European Union where many of the new nations from the former Republics are in or wanting to get into the European Union.

And this is where the old idea still holds until nationalistic politics overwhelms the economic realities of countries, and in this case, the Russian President wanting to reestablish the old Soviet Union into his view of the Russian Federation.

Except the countries don't want it, which is where we're at now as President Obama has to decide the severity of economic and financial sanctions against Russia either under the threat of Russia annexing Crimea and worse invading the southern or eastern regions of Ukraine.

He also has to weigh the impact on the US government and corporations of any sanctions when we would lose economic gains many US corporations have made even in the light of current government and leadership of Russia.

It's the lesson of what happens when the KGB becomes the leaders and government of Russia. It never became a democracy and only a republic in name and is now an autocratic, corrupt, oligarchy for a government, almost the same as it was before it all fell apart.

And this is where we're at, in ways similar to the 1930's with some crazy government leaders putting nationalism ahead of economic realities. Do you think if Russia had been a more open government and country with strong economic and financial ties to the world Putin would be allowed to act as he has?

Or would the opposition leaders would raise their voice, and the people with the business leaders express their views against him and his actions which threaten their nation, their economy and their lives?

You can argue all the hindsight you want about the situation in the Ukraine and the circumstances they face against Russia, where the US and EU failed to help the country build a strong economy where the Ukrainian people were united despite their heritage as a nation.

That's all in the past and we have to find a solution with the situation which exists now and prevent one of the most powerful nations in the world from repeating history which lead to a war in Europe. We can hope it won't happen but we know Putin has different ideas and plans and doesn't care about the consequences.

One thing you can bet on is that the Joint Chiefs of our military has submitted all the scenarios and plans to President Obama and has put all the appropriate forces in Europe and in the Mediterrean Sea on alert. And you can bet NATO is similarly prepared for all scenarios.

Let's hope President Obama chooses his actions wisely and President Putin sees and understands the reality. And yes, it made be a trade, giving Putin Crimea in return for recognizing the sovereign borders of the Ukraine, minus Crimea.

And then let's help the Ukainian government and people build a strong economy, and yes a military too, to ensure its future and right to be respected by Russia, including stronger balanced economic and financial ties.

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