Tuesday, December 23, 2014

Well, it only took a few hours from my last comment about the blood in the Russian interbank market, before the first of the Russian banks needed rescuing.  An estimated $531 million to rescue National Bank Trust is just the first order of business for the CBR.  Clearly there is a huge level of work to do before the Russian financial sector can even begin to recover, even if-for the time being- the oil price seems to have stabilised at around $60/bbl. After the crash, investors are beginning to put prices on Russian risk- and these are hugely discounted.  For some Russian assets, there is simply no bid at all, so although a floor might be visible in some areas, it is still the case that international appetite for Russia is exceptionally low.  This is not just because of sanctions, it is also because there is the growing realisation that the economic impact of Putin's aggressive incompetence will be long lasting, and in some sectors the damage is permanent. Both policy makers and investors now live in a different world, and the transformation of the image of Vladimir Putin from strategic master to thuggish and incompetent bungler is almost complete. The Russian crisis will be exercising many minds over the coming months, and although the Kremlin is in real trouble, it could be some time before any kind of deal emerges.  Until then, the threat of the regime remains real and very dangerous. I will take a break from my renewed blogging activity over the Christmas season, but will return with some thoughts on both wider Europe, and the place of my own country- the UK- within it over the coming years. Merry Christmas. 

Sunday, December 21, 2014

In the early days after the Russian invasion of Ukraine in March, the German Chancellor, Angela Merkel made a widely reported comment that Vladimir Putin was "living in another world".  The point being that the statements that were being made by the Kremlin were so completely untrue that they had literally no basis in reality.  Over the past few months we have started to become used to Russian propaganda: astroturfing, Putintrolls, and all the rest of it, but nevertheless, no matter how vehemently propagated, the Kremlin position remains completely at odds with objective, evidence based truth.  The well funded Russian propaganda machine is slick, well presented and almost entirely half truths and whole lies. According to Peter Pomerantsev, in his book "Nothing is true and everything is permitted: the surreal heart of the new Russia", the kleptocratic cabal that now controls the Kremlin does not believe in truth even as a concept.  Instead they believe that anything and everything is merely a matter of presentation and PR.  This message ultimately becomes totally nihilist: the only reality is PR.  Those who control the PR machine, control the state.  The twisted version of the assassins creed becomes the ultimate reality. This corrosive cynicism quickly becomes irrational.  If nothing is true, then everything, no matter how far fetched, can be believed.  The result is that Russians- as in the last days of the Czars- are falling prey to all manner of quacks and charlatans, from soi-disantwizards to astrologers.  These people are not the harmless frauds of western newspaper columns, but actually have real influence and power!  This is a breakdown of all logic, the end of rational thought, and proof, if any further were really needed, just how sick a society Putin's Russia has become. Angela Merkel spoke no more than the truth: Vladimir Putin is probably seriously detached from reality, to a degree that in a rational society would probably be categorised as mental illness. Now, as the Russian economic crisis accelerates into breakdown, the decadent court of wizards and astrologers serving Vladimir Putin and his cronies are going to get a cold wet bucket of reality dropped all over them.  It remains to be seen how dangerous a process this may become.  One thing is sure: it is certainly a necessary one. 

Friday, December 19, 2014

Amid the occasionally rambling and bizarre comments from Vladimir Putin's annual press conference yesterday, a couple of critical points are rather obvious. 

Firstly, Putin accepts no responsibility for the crisis that has hit Russia, continuing to believe his own paranoid fantasy of Western economic destabilization.  Secondly, he intends to double down and continue his aggressive and disastrous policies. However, despite the current dead cat bounce in the Rouble, there are two things that could rapidly make the economic situation for Russia irretrievable.  The first is in the small print of the Rosneft placement that triggered the deep crash in the currency.  Essentially the Bank of Russia underwrote the placement of RUR 625 billion at 150 b.p.  below Russian sovereign risk price- and since Rosneft had $7 billion to pay on 21st December, the whole placement went into the forex market.  The implication is clear: The Russian central bank, in addition to being the lender of last resort to the banks- which are already under strain as a result of sanctions- is now being asked to take the burden of Rosneft debt too.  The combined outstanding debt is over $300 billion- which commits substantially all of the Russian reserves to rescuing Putin's cronies- especially Sechin at Rosneft.  That the Rouble crash has come despite the gigantic reserves nominally available to the Central Bank shows that the market totally understands the implications of the placement- the Rouble is not backed by anything like the reserves on paper.  I think that never in human history has the reserves of such a large state been captured to support such a small group of individuals- it is Kleptocracy on an undreamed of scale. The second problem is the banking sector.  The spike in inter-bank rates shows that the Russian banks already scent the blood in the water- one or more of them is facing terminal levels of losses as a result of the market turmoil, breakdown of the oil price, liquidity strike, sanctions or all of the above.  The Central Bank will be urgently trying to find the problem, but a systemic breakdown is now more than possible: the CBR is facing too many leaks in the dam and not enough fingers to plug them all.  The liquidity crunch is exacerbated by the fact that it is the end of the quarterly tax period- and the reduced liquidity of this short run credit crunch could quickly lead to a credit shut down.  The Russian banking system is now in a more dangerous state that it was in 2008-9.So the Russian financial system is coming under severe pressure- the external Rouble crisis is rapidly turning into a domestic banking crisis- and the central bank, by being forced to bail out Rosneft does not have the firepower to stabilize the crisis.  As the MICEX falls, and interbank rates rocket, the intervention to support the Rouble will peter out and the currency can only weaken again.  The current mild winter may yet leave the demand for oil and gas at 2013/4 levels over the coming winter, meaning that from the demand side, the situation remains lacklustre- so there is no reason for any sustained increase in energy prices, given current supply.  Therefore no help from the Rouble seems likely from that quarter, and if forecasts of $40/bbl for oil by the spring are born out, then the recession in Russia will be in double figures, not the c.5% fall currently forecast.  So Mr. Putin's blithe assurance that Russia will recover in two years is -as usual with his statements- not supported by the facts.  In fact for Russia, the economic crisis is set to take a step downwards within a pretty short order of time. For as long as Russia has a President that listens more to the voices in his head than to his economic advisers, the economic position will continue to get drastically worse.  The Russians are already voting with their feet or their pocket books and where they can they are getting themselves out of Russia and their money out of Roubles. Meanwhile, almost unnoticed, the United States has authorized military assistance to Ukraine.  Should the Ukrainians use this to begin to push back the Russian troops in Eastern Ukraine, then Putin will face a perfect storm of military defeat and economic collapse. In the press conference he suggested that the bear would not "sit quiet", but "chase wild piglets", but what he may now discover is that some of these piglets are in fact wild boar, with some very sharp tusks.  Now even Belarus is taking steps to protect itself from the Russian crisis.  Should the Belarusian election go peacefully and political prisoners be released, then Lukashenka will have played a very subtle game indeed- and will be far less dependent on Moscow.  In the summer, the cliche was that Putin was playing chess and the West was not responding.  Now it looks like Putin is being forced to play in the Hunger Games- with an increasingly high risk of defeat.  His performance yesterday gives no sign that he will back down, and his repeated references to nuclear weapons show how dangerous the situation is- and how detached from reality the Russian tyrant has become.  Nevertheless, Putin himself remains responsible for the crisis and unless he deescalates, the game will continue to its logical and potentially grim conclusion. 

Tuesday, December 16, 2014

Yesterday the dam finally broke in the Russian markets: the Rouble had a heart attack and fell over 10%.  The continued erosion of the price of oil down to $61 is placing Russian government finances in considerable jeopardy at a time when even a relatively small deficit is unlikely to be financed by Western lenders, and the increasing refinance risk on the existing debts of Rossneft and the banking sector is creating still further demands on the Russian public purse. At 1 am the Russian central bank raised rates by 6.5% to 17%.Moscow has made a choice to attempt to defend the Rouble from collapse, but the price of that choice will be a deep recession as the economy digests the rate rise shock. In fact this could prove to be a catastrophic decision. Russia urgently needs investment capital in order to modernize and diversify its economy: this has been true for some time.  It is also recognized by the authorities as a strategic goal.  Indeed the decision to impose sanctions on foreign food imports was explicitly in order to promote import substitution.  Unfortunately, even in basic agriculture the historic lack of investment has created significant capacity problems, and so the result of these sanctions has been a sharp rise in inflation.  At every level, even agriculture, the Russian economy lacks capacity to fill the demand of their own internal market, still less to export. The economic illiterate in the Kremlin believes that by squeezing demand he can strengthen the domestic economy.  In fact this attempt at North Korean autarky is more likely to cause a final economic breakdown.  Failing to use the competitive advantage offered by imports will make the already inefficient Russian economy even more unable to deploy investments in a timely and efficient manner.  Inflation will take off and with it the final death of the hard earned credibility of the Rouble.  The return to dollarization is the only logical response - and the authorities are trying hard to stop this.  Yet without the effective safety valve of "equivalent units" it is quite likely that the Rouble will go into hyperinflation- again. The meltdown in the Rouble on Monday was matched by similar falls in the Russian markets.  Tim Ash called it "Red Monday", but despite the drastic falls in asset prices, there remain few buyers.  The buyers strike continues and from the market perspective only the end of Russian aggression and a complete U-turn in the Kremlin is likely to change things. The bond market may yet claim another political victim. However in this emerging economic death spiral, the Putinist lie machine is still searching for a way out that can allow Russia to make a judo throw.  We are entering even more dangerous ground. The next few days will see of economic stability can be recovered.  However as yet another civilian jet had a near miss with a Russian military plane with its transponder switched off over the Baltic sea, and as green men are rumoured to be gathering in Belarus, there is as yet no sign that Russia is changing its course of confrontation with the West. Putin seems determined to consign Russia to an economic and political Gotterdammerung. 

Wednesday, December 10, 2014

To say that Ed Miliband does not have a particularly compelling personality is a statement of the obvious.  His non-political hinterland is small and mostly pedestrian.  The only remotely interesting thing about him is the brutal ambition that led him to betray his brother David- until then widely seen as the more gifted of the two- and drive him out of politics. Nevertheless his clumsy geekiness could be sold as some kind of a positive- you may not have picked him for your playground football team, but maybe, at least, he has some kind of intelligence. Not any more. His latest declarations on the so-called "war on drugs" are not merely pathetically banal, they are almost entirely- indeed dangerously- wrong.  They fact that he has only "read about cannabis" marks him out from the large majority of his generation who certainly have inhaled: so indeed the playground geek does actually live up to his stereotype.  Despite this lack of knowledge, however, this has not prevented the Labour leader from suggesting that the failed war on drugs should nonetheless be continued, because to abandon it "sends the wrong signals to young people"As police forces across the country facepalm themselves in contemptuous amazement, it is worth taking a step back and thinking about, you know, actual evidence rather than "wrong signals". In report after report, from pressure groups, concerned worthies and the law enforcement officers themselves, it is crystal clear that the criminalisation and prohibition of many narcotics has not only become totally counter-productive, it has created even greater social ills than the simple use of the drugs themselves would have caused.  The costs rank in in the billions of dollars and have caused untold human misery. For Ed Miliband to dismiss the urgent need for wholesale reform of legislation as it concerns illegal drugs "because it sends the wrong signals" is the ultimate in contemptible gesture politics: to fail to do the right thing, because it might look bad. Ed: not only are you a shit, you are an incompetent and unworthy shit too.  For this alone you are not fit for public office. 

Friday, December 05, 2014

Yeah I know, I know, British right wing newspaper tries to stitch up Tony Blair saying he would be happy to work for Vladimir Putin.  He did not say that, but he hardly said that he would draw the line either. The idea that Blair had actually done a real job before entering politics is a bit of a rib-tickler too.  Being a Barristers Clerk is not exactly the kind of executive experience you really need when your next job is being an MP, then... Prime Minister. Blair is emerging as one of the most astonishingly un-self aware figures in British political history, the Mr. Pooter of politics. Tragic, what a missed opportunity.  We are still counting the cost today. 

Thursday, December 04, 2014

"What is the name of this place,I asked him. Valerik, he answered me. And translated into your language,That would be... River of Death." 

LermontovIn a short while Vladimir Putin will make his state of the nation speech in the St. George's Hall of the Kremlin. Perhaps in the chandeliered magnificence of this room, the Russian President may feel safe.  He may make a rousing and grandiloquent speech making the case for Russian greatness.  Perhaps he might offer an olive branch to the West that he has spent the past year excoriating, more likely he will add to the litany of grievance and envy he clearly feels. Perhaps in the end it might not matter. A few hours ago Chechen militants launched an attack against local police in Grozny.  This is the second attack in a couple of months, but it comes at a very significant time for the situation in Chechnya. Several of the most prominent figures in the ISIS rebellion in Iraq/Syria are of Chechen origin.  There are swirling rumours about flights from Russia that came to Arbil with several of these fighters on board- the implication being that they came with the tacit blessing either of the Kadyrov faction in Grozny or even with the approval of Moscow.  Certainly the seizure of the Bank of Iraq reserves from Mosul, which has largely financed the ISIS movement, was a very professional job. The Putin government regularly expresses a sense that whatever the United States may do, or be rumoured to do, then Russia has the right to match.  Thus when Kremlin supporting websites suggest that the US supported the Chechens in order to destabilise Russia, then Russia has the right to destabilise, for example, Iraq, in order to upset Western interests.  The fact that they may loudly deny this, should leave one counting the spoons, given the topsy-turvy nature of current Russian propaganda. Certainly there are wide rumours about what ISIS truly is, and who may be covertly backing them.  One thing is not in doubt, Chechens are heavily involved.  As ISIS comes under pressure from the US, and even from Iran, some pretty far-fetched alliances are clearly already in place. Any blowback from the ISIS war would place Ramzan Kadyrov in a very dangerous position, and severely raise the temperature in the North Caucasus.  Yet another headache for Putin to contemplate from his gilded podium in the Kremlin. 

Wednesday, December 03, 2014

I make little apology for returning to the subject of Russia.  The crisis in Ukraine is rapidly becoming a crisis in -and for- Russia. The third term of Vladimir Putin, began with a constitutional sleight-of-hand to allow the job swap between Dimitri Medvedev and Putin to take place- and we can date the breakdown of Russia quite precisely from the announcement of this cosy arrangement on 24th September 2011.Since that time the political atmosphere has darkened dramatically.  As I have noted several times, Russia has already fallen 61 places in Transparency International's Index of corruption perceptions since the beginning of Putin's first term, but the breakdown of all rule of law has been confirmed by a series of extra-legal decisions taken in the past few months.  The gap between rich and poor is now on most measures the widest in the world, and the ruling elite now comprises merely a few ten of individuals wielding astonishing power and wealth against an increasingly impoverished mass society. Earlier this year, as the Russian intervention in Ukraine began, I was interviewed on BBC Radio, and the presenter seemed surprised when I described Russia as a fundamentally very weak economy.  At that time the Russian economy was roughly the size of Italy.  Now it is the size of Spain.  The collapse of the Rouble is now well advanced, and the almost total buyers strike by potential investors in Russian bonds or equities is leading to astonishingly low valuations for the Moscow Stock exchange.  Yet even the current valuations may be too high: The Rouble collapse could quickly lead to hyperinflation, and the breakdown of the Russian banking system.  In short the crisis that might have come late next year if a bank had failed to roll over its debt is happening now, because oil continues to trade at levels which destroy the Russian state budget.  Meanwhile, the mass exit of all the most creative and innovative minds in Russia- the latest is Pavel Durov- is dismissed because moronic politicians, like Vitaly Milonov can say things like: "Russia won't lose anything if the entire so-called creative class leaves.  What's the creative class anyway?  For me a woman who gets up at 5AM to milk a cow is creative because she produces something.  Not some guy with a stupid haircut who sits in a cafe all day writing his blog".  Not surprisingly the Russian brain drain is now almost as astounding as its capital flight.  Thousands of the best educated are leaving, billions of dollars are leaving, and the trend has accelerated since the brutal annexation of Crimea. The absurd pit bulls of Putinism continue to bark at the wrong target: at the responsible, but increasingly desperate Central Bank of Russia, for example, which Evgeny Federov- almost the definition of of a political dinosaur- claimed was run by a "liberal-feminist cabal"- presumably because the intelligent governor of the bank, Ksenia Yudaeva, is a woman.  Now there seems little doubt that Putin will try to impose capital controls, and the consequences of this fatal misstep could lead to the total collapse of the currency and with it the banking system.  The fact is that there wasn't enough money in Russia to satisfy the investment needs of the economy before the crisis.  Now there is barely enough to satisfy the current spend requirements.  It is a meltdown on a truly spectacular scale. I had a few ideas about what I was going to write next year as the inevitable liquidity crunch began to cause real damage to the Russian economy.  Now the scale of the damage caused by the collapse in oil is an order of magnitude greater than I had forecast and the outlook which was one of stagnation is now one of breakdown. Although some- including John Kampfner- think Putin has several years before he faces his doom, I think it quite possible that the situation for the regime could become irretrievable surprisingly quickly. In the short term that might make Putin even more aggressive, yet every day that passes is draining a little more of the life-blood of his regime.  The West has begun to answer the Russian challenge, and the Kremlin may already be ruing the day that a relatively weak country decided that it still wished to act with the impunity of its former Imperial shell.  The Imperial Overstretch that has been created may not merely bring down the incompetent, corrupt and brutal Putin regime, but Russia itself. 

Tuesday, December 02, 2014

On September 19th 2014- a scant two months ago- we learned that Scottish voters had voted to reject the idea of Scotland as "an independent country" by a margin of well over 10%.Apart from Vladimir Putin who, to be fair knows a thing or two about ballot rigging, the vote was universally recognized as a free and fair expression of the will of the Scottish people. The result came after an extremely heated and divisive debate, with accusations of bias and corruption on both sides. To my mind the No vote came from the result of many factors, but the most important was that the economic argument made by the separatists was so weak. There might be a case for establishing Scotland, like Estonia, as an ultra-nimble free market economy; however the argument made was the exact opposite: that Scotland could only preserve its bloated and inefficient state sector through separation.  This argument was self-evidently untrue, and as it became clear that separation would indeed require major economic shifts- to a new currency not least, so the Nationalist protests that little would change were exposed as wishful thinking at best and at worst... deception. Bluster and Bullshit in the end did not cut it for the majority of the Scottish people. Now, according to the latest opinion polls, the hard core 30-40% Nationalist coalition has crystallized into support for a single nationalist party: the SNP.  The Nats, despite their defeat on the only issue that truly matters to them, may now end up gaining substantial support for the next Westminster elections.  Since the other parties all face their own troubles, it is even possible that the SNP will end up as the largest party elected from Scotland at Westminster. What bothers me now, though is the absurd, even dangerous attempt by the Nats to re-write history and put their referendum defeat down to bad faith and double dealing by those they deem to be their opponents, not least "the biased BBC".  The relative surge of SNP support at the polls is taken to be proof positive that the SNP "we wiz robbed" position is actually true. Although I have little doubt that some people may now feel able to vote SNP, since they may think that the party must now work solely within the UK system.  In fact I am now more convinced than ever that in the longer term the SNP will never gain majority support at an independence referendum and that even if the large gains the polls predict for the May 2015 election do in fact take place, then this will be the last hurrah for the nationalist cause. The fact is that within an astonishingly short period of time, the entire basis of the nationalist economic case has been blown away.  As Brent crude touches $65/bbl the idea of relying on oil to ease the transition into the cold reality of separation is revealed as so much nonsense.  The entire SNP white book is now revealed as a ground zero of economic failure and wishful thinking. 

The poisonous and divisive atmosphere that has grown in Scottish politics of late is entirely down to the misguided, indeed wholly wrong, ideas of old fashioned nationalism and misguided populism that the SNP as espoused. " UKIP in a Kilt" is not a face of modern Scotland that any of us should support.  The cybernat trolls, notably the foul mouthed rants of "Wings over Scotland", remain unassuaged.  The deeply nasty, visceral hatred present in the SNP seems still undaunted by the implosion of their constitutional dream. The time has come to ask the SNP what their vision is within the UK, which is the road that the majority of the Scottish voters have endorsed.  Otherwise a vote for the SNP at Westminster is simply a vote for backward looking failure built on very dodgy sums and fairy dust. The SNP, like the reactionary Bourbons of the 19th century, have forgotten nothing in their bile and resentment and learnt nothing from the defeat they deserved at the time and now in retrospect deserve even more. Now, and perhaps more to the point, given that the Kremlin has now been proven to have been financing various political parties across the EU, can the SNP give the Scottish people assurances that the close relationship between the Russian-born former owner of Hearts football club, Vladimir Romanov, and the former first minister, Alex Salmond, did not include financial support or assistance of any kind. For it would be something of an irony if we found that such links were deliberately left unchecked by the BBC in order to avoid yet further allegations of bias. 

Monday, December 01, 2014

As George Osborne rises to speak in the House of Commons this afternoon, I am sure that he will be feeling a little rueful.  The Conservatives have talked tough on the deficit, but the reality is that many of the cuts they proposed were quietly rescinded when it became clear that they were often counter-productive.  The crisis in British government finances can not be easily tackled by the piecemeal approach that both the Tories and Labour have set out.  The problem lies in the the deep structure of the British tax code, which is unwieldy and expensive to administer and deeply unfair in its application.  Without a wholesale -even revolutionary- change in the tax code, the nibbles here and there that he will set out today will not change the direction of travel for the UK.Despite much positive news- and the resilience of the UK economy is the object of some envy internationally- the fact is that the structural deficit can not be eliminated without drastic tax simplification and large scale deregulation.  The costs of administrative compliance in the UK are crushing small business and have a major negative effect across the whole of the UK economy.  The Conservatives- and even more the Labour Party- can not accept that major administrative reform comprises far more than the transfer of powers to Holyrood under the Smith Commission proposals- but requires a radical change in the seat of decision making across the country. As the oil price falls still further (and with it the Russian Rouble, taking that country to brink of financial meltdown), it is pretty clear that yet another global crisis is upon us- the oil price reflects a global slow down.  In that context Mr. Osborne's prescriptions announced today are far too modest to address the long term structural issues embedded deep in the regressive, expensive and absurd UK tax code. 

Tuesday, November 25, 2014

One of the reasons why I adopted the nom-de-blog "Cicero" was because I saw- indeed still see- parallels between the fall of the Roman Republic and our own times.  Although, after the accession of Octavian, Rome remained nominally a Republic with the Emperor initially simply "first citizen", in reality the political system based on Roman Liberty was overthrown.  I strongly fear that although the nominal forms of Parliamentary Democracy may survive, the principles, indeed the guiding spirit, of Liberal Democracy are being eroded to the point where our freedoms are being taken away. I see the challenges not being so much the direct threat of dictatorship, although in truth the nascent Russian democracy has indeed been overthrown by a dictator, but from a more corrosive and collective mixture of ignorance, hypocrisy and greed. The fundamental problem is that many political platforms are not created based on evidence, but on prejudice.  A good example has been the policies that have been adopted by successive governments towards the use of social drugs.  Since the end of the "permissive" 1960s, it has been the collective wisdom that their are great social ills that result from the use of psychoactive drugs.  Certainly many of these drugs are both highly addictive and can be often fatal, either through overdose or the physiological damage that long term repeated use may cause.  The problem is that the policy that has been prescribed- prohibition- has not merely failed, it has arguably created more pernicious social ills- through placing the trade in the hands of criminal gangs and undermining the politics of smaller countries, from Afghanistan to Peru.  The cure seems worse than the disease.  Sure enough the political weather is being made by vested interests and not by, for example, healthcare professionals.  The Liberal Democrats have championed evidence based drugs policy- and been abused by the twisted journalism of both left and right for being "soft on drugs".  The drugs crisis is not made one ounce easier by the failed policy of prohibition, but it does appeal to the prejudices of the ignorant. Politicians, by definition, are not experts- they are lay supervisors- yet in order to understand the pros and cons in modern policy, our political leaders need to have a skill set of knowledge that few actually possess.  This has led many to conclude that society has become too complicated for democratic government to offer effective leadership.  The example of China or Singapore is offered- technocratic elites who can take decisions based on detailed or arcane knowledge.  This, for me, is a temptation that must be resisted at all costs not least because it is the end of democratic government as we have known it, but it also removes leaders from having to account for their decisions, because by definition they have arcane knowledge- and the result would be corruption and waste- as it already is even in the only three decades since the emergence of a more open China since 1975.For the fact is that political leaders in a democratic state depend on the knowledge of their electorate.  An ignorant electorate creates ignorant politics.  An electorate that is not prepared to hold their leaders to high standards also creates a compromised political system.  The current fashion to hold all politicians in contempt is equally dangerous, for few will want to serve if their every move is regarded with suspicion.  The fact is that our political system requires accountability, but it also requires an element of trust- if the trust fails, the system falls.  Yet that trust must rest on the electorate themselves understanding, openly or at least tacitly, the compromises that are required in order to take policy decisions.  On the one hand the system should respond to political will, on the other hand the political will needs to be based upon more than mere populism- it must rest on serious and informed debate. This is where I am so concerned.  I have heard supposedly educated and informed voters express deeply ignorant and indeed wholly mistaken opinions and yet express them as unvarnished truth.  They may be encouraged in this by a bigoted and prejudiced press, but in the age of the Internet, there is little excuse to be as ignorant as so many people can be. In the end the morality of the politicians is our own morality, and their collective wisdom is our own wisdom.  Unless the voters themselves take responsibility, then they will have their rights eroded by propaganda and vested interests. That is exactly what I see happening now.  The fault lies in ourselves. 

Wednesday, November 19, 2014

There are several ways you can take a front row view of the daily battles in Cyber space. The Norse Platform displays about 1% of the attacks that go on across the Internet every day. It should be a firm resolve of all Internet users to disinfect their system as often as practical.  It also speaks volumes about the current state of global politics. Mind you watching the attacks- mostly from China against the USA- is strangely compelling, as you can see here.  Those are real attacks and real damage is cause each time. 

Tuesday, November 18, 2014

The political world rarely rewards actual achievement.  Instead it tends to reward those who claim achievement, whether or not they have a right to that claim or not.  Hard graft often seems to count for less than effective spin.  However it is worth noting that the Liberal Democrats in government have a very real heavy weight.  A Cabinet Minister who has pushed through a radical agenda, despite major opposition from the Conservatives- especially the now former Cabinet Minister, Owen Patterson.  A Cabinet Minister who has the respect of his international peers, and who has rightly persuaded some of our partners, such as Poland, to put the long term interests of the planet ahead of short run economic concerns.  In the face of opposition that sometimes verges on the hysterical, Ed Davey has crafted a coherent, competent energy strategy and a credible and effective green strategy. He has not been afraid to make some enemies on the way, but at every point he has been the rational, intelligent voice for the Lib Dem's green agenda.  He also identified the "Putin problem" well ahead of his ministerial peers- and his decision to examine in detail the Alfa bank bid for the RWE North Sea gas assets is the first practical show that the British government really "gets it" about what the tyrannical Mr. Putin is trying to do.  All of this comes from a man who has not had it easy.  He lost his parents while still a child, but went on to be the scholarship kid, who then got an Oxford First.  His son, John copes with severe disability and he and his wife Emily have always tried to put John's needs first- not easy when you have a job with the demands that his does.  They have now added to their family, with the birth this year of daughter, Ellie, but Ed has always been clear that he has a hinterland well beyond politics. Indeed he is actually a genuine hero- he once rescued a woman from an oncoming train at Clapham junction station- and was given a bravery award from the Royal Humane Society, not that he particularly talks about it. This secretary of state is a grafter, but a grafter with a particular intelligence and vision.  He represents the best of our party, and indeed our political leaders.  As he achieves another success in his battle against climate change, I hope that our party can shout more loudly about one of its strongest assets, and one of its most effective leaders: Ed Davey. 

In short the Russian military is already on a war footing. The contempt for any kind of justice has been seen in every aspect of the conduct of the Putin government: The rape of Ukraine, the crushing of all freedom inside Russia, the thuggish threats to world peace. It is time to accept that Russia is and intends to be a hostile power and to seek the downfall of the democratic world by all means necessary.  In cyberspace, the war is already raging- it is Russia that is attacking the global financial system.  The West must understand that Putin is not a man we can do business with- he is a threat that must be answered with determination, and by military means if necessary.  We should be giving hard military assistance to Ukraine now and reinforcing NATO borders in the expectation of a Russian military assault, by unconventional or indeed conventional means if necessary. Western leaders keep saying that they do not wish to fight a second cold war.  Unfortunately that is not their choice. The fact is that unless we seal our perimeter and defend ourselves aggressively now, we could be looking not at a Second Cold War, but a Third World War. Criminals control the Kremlin.  The West is already under attack.  If we too are not to be subverted by the evil in Moscow we must be clear eyed, realistic and determined. This conflict is not our choice nor, despite Russian propaganda, is the West responsible for the moral disaster of Putinism. Open War is upon us.  We must not appease the criminal thugs already feasting on the dead of Ukraine.  We must fight them and we must defeat them -by all means necessary. 

Thursday, October 16, 2014

In the few days, the discussion of Russia has acquired a new
dimension.  The announced withdrawal of Russian forces placed close to the
Ukrainian border and a slight but significant easing on the previously
blood-curdling rhetoric coming from Moscow has made some people think that the
crisis, fomented and largely organised by the Kremlin, may now be beginning to
ease. 

Certainly the imposition of sanctions although it has had
relatively little direct effect, has indirectly caused the government of Vladimir
Putin some real problems.  Western companies involved in the Russian market have
radically reconsidered the risks of doing business in Russia and almost all
have curtailed their investment plans.  Some such as Blackstone and Adobe have
announced plans to leave the Russian market altogether.  The market
capitalisation of the Moscow stock exchange has plunged.  Inflation, at 8%, is
already climbing further.  Russia has faced investment shortfalls for some time,
but is now facing huge capital flight- estimated at over £120 billion this year
alone.  Emergency interest rate rises have failed to defend the Rouble, which
has fallen over 20% since the crisis began. 

The core of the Russian economy remains energy.  The World
Bank estimates that 16% of Russian GDP, 52% of its government revenues and 70%
of its export revenues come from oil and gas.  The weakness of the global oil
price (Brent is trading at $85/bbl.  as I write) is probably the major cause for
concern in the Kremlin right now, and as the markets price in a possible global
slowdown and both Saudi Arabia and the United States pumping at high levels,
together with the return of Libya and Iraqi oil to the global market, there is
little that seems able to support a sustained recovery in the oil price in the
coming months.  Thus we are seeing open debate within the Putin administration
as to how to cut expenditure to fit these reduced circumstances. 

Nevertheless, we should remain deeply concerned over the potential
use by Russia of its control of European gas supplies to threaten the stability
of the entire European gas market in order to support its continuing attacks
against Ukraine and to weaken support inside the European Union for the
democratic course that the Ukrainian people have chosen. 

Since the bloodshed on the Maidan began in January, Russia
has illegally seized Crimea- although President Vladimir Putin assured the
world he would not- and been directly implicated in military operations in
Eastern Ukraine.  The unconvincing denials and outright falsehoods put out by Mr
Putin and echoed by Kremlin funded propaganda outlets have undermined any trust
that we might have placed in the word of the Russian government.  Shockingly
Russian military forces also appear to be ultimately responsible for the deaths
caused by the downing of Malaysian flight MH17.  To add insult to injury, we should note the callous disregard that has been shown for the victims and their
families, with the despicable theft of victim’s valuables and their appearance
for sale on Russian websites. 

Nor is it simply insult and rhetoric that Russia continues
to direct at Britain and its NATO allies. 

Beyond the continuing Russian intervention in Eastern
Ukraine, Russian military activity continues at a high level.  Large scale
“exercises” and regular incursions by Russian military aircraft into or close
to the airspace of Finland and Sweden as well as NATO states seems designed to
test NATO readiness, and maintain a high level of tension.  The kidnapping of an
Estonian security officer on September 5th and the seizure of a Lithuanian
fishing boat in international waters on September 18th reminds us of
the continued pressure our Baltic allies have had to endure.  Other activity in
cyberspace also suggests no let-up in the pattern of hostility towards NATO and
the EU. 

Under these circumstances it is pretty hard for us to take
Russian assurances about their being a reliable partner in the European gas
market at face value.  The Russian government has been prepared to use their
control over gas as a political weapon in the past, and there is a real chance
that they may do so in the coming winter. 

Yet the strategic position of Russia is weakening.  Greater
energy efficiency and new sources of power, such as renewables and shale gas is
already causing a structural shift in the global energy market.  European demand
for Russian gas is also set to fall, as customers seek to diversify their
sources of supply- not least because Russia is now perceived as a threat, instead
of a partner.  Mr Putin, not for the first time, has chosen a path of
confrontation that will ultimately cause major damage to Russia.  Indeed, the
country may already be facing a period of considerable instability, and Mr
Putin’s popularity- currently said to be stratospheric- may prove to be very
shallow, as his problems mount. 

Nevertheless, unless and until Russia gives up its reckless
adventure in Ukraine and respects international law, it is critical that we
keep up the pressure on the Putin regime.  A further frozen conflict- as in
Georgia and Moldova- is unacceptable. 

Russia has chosen a dishonest, dishonourable and dangerous path,
and Britain and its NATO and EU partners must maintain the current regime of
sanctions- and even add to them if necessary.  There can be no return to
business as usual while Russia remains a real threat to European peace. 

It is a threat that must be answered with a clear-eyed and
disciplined assessment of the long term costs of dealing with a rogue regime in
Moscow versus any possible short term benefits of a relaxation of the sanctions
regime. 

Wednesday, October 15, 2014

Britain is in a fractious, ill tempered mood. Discontent with the political class festers, and every mountebank, from Alex Salmond to Nigel Farage is being seized on as someone who can break the perceived corruption in Whitehall and Westminster. Politicians are held- especially in the media- in widespread contempt. That, of course is the problem.  It is not that politics is necessarily more negative or even more corrupt than it used to be, but rather that we have grown used to a mocking chorus from journalists who are guilty of even more egregious corruption than the politicians they condemn so loudly. MPs are paid a fraction of the sums given over to the self important blow-hards whose oleaginous faces adorn the top of their columns of angry and often surprisingly badly informed copy.  Those who happily take their living from such dubious newspaper owners as the sinister and bullying Barclay brothers, the tax-avoiding Rothermere family, a Russian oligarch, a pornographer and of course Rupert Murdoch still presume to make moral judgements over those who have often made substantial sacrifices in order to serve their country. So as I read yet another load of twaddle from these people, I find it hard to suppress a very hollow laugh.  The scandal that haunts Britain is not in politics, but rather in the media, which picks and chooses its stories to fit a biased and immoral agenda. So as a further storm of hypocrisy echoes across the op-ed pages of the British press, I find myself wordlessly turning the page and passing by such drivel.  Across all political parties are people of genuine integrity and honesty, working to improve the country according to their lights.  I may not agree with them, but I respect them.  It is time for the media to accept that politicians are not all rogues or fools and to engage with the political process with a skeptical, rather than a contemptuous, eye. 

Monday, September 15, 2014

There has been a lot of criticism of the Better Together campaign.  Some suggest it has failed to engage the emotions, some that it was too negative (it is quite hard to campaign positively for a No vote, which is why the SNP chose the question that they did).  Some, who expect No to win, have said that such a victory would be "winning ugly". 

There has been little criticism on the Yes campaign- they are believed to have "won the campaign". 

I, for my part, beg to disagree.  Yes Scotland have comprehensively lost the intellectual argument.  They have been totally destroyed.  From currency, to healthcare, to pensions every argument that they have put forward has been eviscerated.  It is not that Yes Scotland has more emotion that bothers me- it is that they only have emotion.  All rational considerations have been ditched and those who raise the perfectly valid questions of how- practically- Scotland can avoid serious problems, are dismissed without any attempt to answer the questions. 

The Yes Scotland prospectus for independence is the ultimate dodgy dossier- it is complete bullshit.  A valid proposal for government can not simply rest on blind assertion and bluster.  Salmond appeals constantly to the emotions, but this schtick is an insult to the intelligence. 

Then there is the way that the Yes campaign has conducted itself.  Vandalism of posters often happens in elections, sometimes speakers are heckled, it is part of the democratic process.  What is not democratic is the wholesale use of intimidation, and threats.  At times, especially in the West of Scotland there has been an atmosphere of mob rule.  The hectoring of Nick Robinson of the BBC is frankly disgraceful- and he is not the only one who has received threats.  The way Jim Murphy and many other politicians have been drowned out by chants, been attacked with eggs and been denounced as traitors has made me wonder what kind of Scotland is being created here.  The problem is that it is pretty difficult to have a reasoned debate when one side has lost its reason.  The rage of Yes supporters is brutal and scary to watch- and some of things that are being said would not be out of place in a fascist rally. 

The referendum is not likely to give Yes the kind of support that would enable them to claim national unity- and their attempts to suggest that if Yes wins then No voters should celebrate is an insulting and casual dismissal of strongly felt opinions.  Likewise their outrageous comments that those who oppose the massive economic and political dislocation that a Yes vote would bring are not part of "Team Scotland".  It is not patriotic to propose huge and wrenching political and economic change and then attempt to dismiss those who oppose this as "traitors".  To my mind the "traitors" are those who are seeking to mislead the Scottish people about just how long and difficult a process the creation of a separate Scottish state would be.  This referendum has been divisive and dangerous, and no matter who wins, it will be difficult to heal the wounds that have been created.  Now, the process of healing must begin, but the Yes campaign should understand there has been emotion- and increasingly that emotion is abiding anger at the way that they have dismissed so lightly all the serious concerns that any rational observer would have at making such a big step.  There are many who are no longer sure that they would have a place in a separate Scotland, those who feel genuine fear at the hatred that the Yes campaign has unleashed. 

In the end I believe that my concerns are held by the majority of the Scottish people and that the case for separatism has not been made.  Once I might have said that Nationalists and Liberals shared many of the same values, but now I reject the SNP utterly and would actively campaign to defeat them above all else.  I reject their irrational and dangerous politics.  I reject their divisive tactics and their threatening and intemperate language.  I now not only hope for the defeat of their attempt to break Britain, but for their removal from power at Holyrood.  I would even welcome the return of more Conservative MPs and MSPs if it means the defeat of the SNP. 

A narrow and nasty sect has offered nothing but bluster and bullshit.  I hope and pray that they are comprehensively defeated this Thursday, and that then we can get on with the wholesale reform of the UK that has been delayed and distracted by this referendum campaign. 

Thursday, August 28, 2014

With three weeks to go, the Scottish referendum debate has been worse than disappointing: it has been dishonest.  The fact is that neither side has got to the crux of the argument.  Although some have suggested that the Better Together campaign has looked to the head, while the Yes Scotland looked to the heart, in fact both have ignored the fundamental question of identity and the depth of the crisis that Scotland faces. The Better Together crew have failed to provide an effective emotional defence of the common state.  The have mostly focused on the issue of what currency a separate Scotland would use.  because they are a more heterogeneous group, they have failed to articulate a vision for the future, and to be honest just talking about the economy, while unquestionably winning the intellectual argument, does not inspire passion. By contrast Yes Scotland has all the passion, but their positions, from currency to Europe, from pensions to health care have been more or less complete bullshit.  Salmond's bluster is provably false, and his shtick that Scotland would repudiate its debts if a currency deal is not reached, is way beyond irresponsible- it is economic suicide. Yet at this point, the battle is still not yet lost and won, and the reality is that the politicians on both sides have not levelled with the Scottish people.  The crisis of Scotland is not- or at least not merely- a crisis of governance.  Scotland has horrendous problems: an unhealthy, ageing population with epidemics of heart disease, diabetes, cancer and all the other problems of bad diet and no exercise.  Hundreds of thousands do not make any economic contribution, but rely on a variety of welfare payments- the state sector is the majority of economic activity and the result is a requirement to maintain constant deficits and increased debt.  All of this comes on top of an over reliance on the financial sector for both jobs and tax revenues.  Scotland needs not merely investment, but a whole change of attitude.  Yes Scotland thinks they have a moral argument, that self reliance will come from political separatism, but this kind of social masochism shows a pretty dubious sense of human nature. An independent Scotland- particularly if it intends to be a member of the European Union- must cut its deficits and reduce its debt burden.  This must take place at a time when the banking sector, and its tax payments will be moving South.  The entire shape of the Scottish economy will have to change, and- as when such wrenching changes took place in Eastern Europe- it will be whole generations that will get hurt.  The pensions system is unsustainable, for example, as is the NHS without significant overhaul.  The long term might show that these sacrifices would be worth it, but no one has had the courage to tell Scotland that the price of independence will cost a whole generation. Of course continuing in the UK has a price too- there will need to be similar changes no matter which constitutional future is chosen.  Yet, as part of a bigger state there would be more resources to deal with the crisis, which is why I have supported the Better Together campaign from the get-go.  However it is not just about the money, it is not just about the need for radical change, it is about who we are.  The break up of the UK ends my country.  My loyalty is with a multi-national, European state with a rich culture, a proud history and the best flag in the world.  If the break up happens, I will be stateless. Worse, the debate until now has been civilized- if shallow, dishonest and misguided.  Divorces usually only get nasty when the lawyers are called in.  If we call in the lawyers on September 19th, you can bet that there will be a backlash- much that we have taken for granted will be lost and bitterness and rancour will inevitably emerge- even in the most civilized divorces much is regretted. So I plead with my fellow countrymen and countrywomen- for the sake of the children, of whom I am one, keep the common state and work to solve our problems within it.  Independence carries a huge cost, which Salmond has refused to talk about- he offers roses all the way, without saying that it is a road of blood, sweat, tears and toil to build a new state: that dishonesty alone is appalling, but the economic, political, social and emotional cost of the end of the UK is a price that will take a century to recover. 

Tuesday, July 22, 2014

I make no apology for maintaining a string of posts on the subject of Russia.  The fact is that Putin's mafia state, nuclear armed as it is, poses an existential threat to the freedom and prosperity of the West and to the peace of the whole world.  Russian-sponsored brutality in Ukraine, now thrown into sharp relief by the appalling mass killing of flight MH17, should disgust all civilised human beings. The initial shock of that act of barbarism may be wearing off somewhat, but its place is emerging a whole variety of questions.  From "how could they do this?"  has emerged another question: "What does Russia want?",  yet as it becomes clear how disconnected and incompetent the Putin regime has become, and even bigger question is emerging: "Can Russia survive?"At first glance, such a question may seem to be simply absurd, or to play into the hands of the most paranoid Putinista.  Yet, the scale of the human rights breakdown under Putin is now so complete, it is legitimate to ask, in the twenty-first century, "if Russia has such a warped structure that it simply can not be a free society, should the country even continue to exist?"For there is little doubt, that even without the 14 other Soviet Republics, Post Soviet Russia remains an Empire both in fact and in spirit.  For example, there are over 185 different national groups, speaking over 100 native languages in the Russian Federation, of which 27 have some official status, although only Russian is designated as the state language.  Although Russification, official and unofficial, has continued, the percentage of the population that is ethnically Russian is in steady decline- Russia is growing more diverse and not less.  That goes for the economy too.  Many people, used to the glitz and obvious wealth of Moscow and St. Petersburg can be totally shocked by the contrast, not merely with the seedy and run down state of most other cities, but the dire poverty that exists even in the rural areas close to the capital.  Russia has one of the largest wealth gaps ever seen in human history, with brutal poverty literally within sight of the richest individuals on the planet.  But such astonishing inequality is the result, not of entrepreneurial graft, but of the capture of the natural resources of the country by a self-selected criminal class.  Rent seeking and exploitation are the watch words of this mafia, and it has crushed the vast bulk of the population.  The creative and intelligent class are driven to the margin or seek better lives outside the stultifying control of the Kremlin propaganda machine. The last imperial state, stretching over huge tracts of land, Russia has not been able to deliver its people the prosperity that possession of more land, more gold, more energy, more agricultural land would seem to imply.  In fact, it is the reverse, Russian leaders have found it impossible to create a coherent political entity without recourse to a brutal level of violence. The result of such oppression is a nation of slaves.  In short, as Max Skibinsky- himself a leading light in one of the most creative places on the planet, Silicon Valley- says in a somber and thoughtful blog, it may well be that Russia as a meaningful social concept has going beyond the event horizon.  That in the world that is opening up through technological exchange, Russia in its current form simply has no place.  Even if states survive the impact of anarcho-technology, then Russian political primitivism means it can not be one of those states. I am slightly less pessimistic than that: after all in 1946, German militarism was deemed to be so ingrained into the character of the German state that the Morgenthau plan proposed not merely the dismantling of the political state, but the dismantling of all industrial capacity, so that Germans could only be ostensibly peaceful Yeoman farmers.  In fact Germany has emerged as a powerful industrial economy and an admirable democracy. Yet Germany, of course, has had little choice but to address the horrors of the Hitler years directly.  The second defeat gave Germany no option but to change, and change radically.  In a way, one might argue that Russia, has been defeated in the Cold War, but not defeated enough.  Putin, as Hitler, has been able to claim that Russia was not defeated in the Cold War, but was betrayed.  This "Stab in the back" thesis has allowed Russia to evade the moral responsibility for the hideous crimes of Stalin- and it is surely a moral crisis that has allowed the pillage of Russia by the mafia around Putin to continue unchecked.  The logic of this argument would be that the West should restore the Cold War policies of containment and slowly strangle the Russian state until they too have no choice but to come to terms. The problem with this argument is that fighting the previous war may not allow us to recognise the still greater challenges in Asia until it is too late.  Although Putin crows about his relationship with China, it is a huge blunder for him to imagine that a resurgent China is anything but a powerful threat to Russia in northern Asia.  Yet he is a mediocre mind, and as the disaster in Ukraine now shows, a deeply irresponsible one too. Living in Estonia, I am surrounded by many of what Max Skibinsky, in a happy phrase, calls Euro-Slavs.  These Evro-Russky with their acculturation to democratic and free market norms may yet prove to be a vital resource in the resurrection of the democratic and open minded Russian traditions that have stayed dormant since the burning of Novgorod in 1570.  Maybe, one day, it is not too fanciful to think of a new Russia, perhaps with its capital in Ancient Novgorod, rather than Czarist St Petersburg or Stalinist Moscow, emerging, like the Bonn Republic of Germany and finally seeking to heal the moral wounds that beset Russia like a cloud of mosquitoes. 

Sunday, July 20, 2014

For the last few months the government of the Russian Federation has been on the offensive on multiple fronts.  In cyberspace, in Syria and Iraq, Russian government agents have been active against Western interests.  Internationally, through RT and other mouthpieces, official or not, Moscow has created a slick propaganda machine to set out a case against Western policies.  Domestically in Russia, of course the free media has finally ceased to exist.  Increasingly, Human Rights have been crushed and what passes for Russian political culture is wrapped in a brutal authoritarianism whose strident nationalism strongly resembles those of the Fascist dictatorships of the 1930s. As this blog has warned repeatedly, Russia has become an enemy power.  The image of Vladimir Putin has hitherto been one of an ice cold, intelligent, strategist seeking to probe and develop weaknesses in the Western system- a system that he has maintained an unrelenting hatred for.  Yet as the Ukrainian crisis has unfolded, many individuals, including- most famously- Angela Merkel, have remarked that Putin seems to believe in a vision of reality that is increasingly disconnected from the truth.  His increasingly rambling statements might still be said to show a calculating chess-playing mind, for how else could we explain the simple, bare faced lies that he casually drops into his comments on the world scene, especially concerning the Ukrainian crisis?Yet if we step back a little, what shocks us now is not the intelligence or calculation that Putin demonstrates, but his banal mediocrity.  His vision of the world is still rooted in a backward looking nostalgia for the failed Soviet state.  He offers only an updated version of the old brutality.  A chess player might adopt a strategy that could create feints, offer sacrifices for bigger gains, but Putin does not do that- he simply uses the old uncompromising Soviet steam roller.  As a result, even in countries such as Ukraine, where the image of Russia, even post the overthrow of Yanukovych, was still positive, Russia's image has collapsed.  Indeed, across the planet, Russian influence is in meltdown. All that was before, of course, the horrific events concerning the downing of flight MH17.Now Russia stands accused of complicity in a truly vile crime.  The immediate evidence is quite clear- the attack was recorded by a variety of different sources, and all of those sources point unrelentingly to one weapons system, one launch point, one crew.  A crew ostensibly fighting to separate the Donbass from the rest of Ukraine, but in fact comprising Russian army and special forces working to the command of the Kremlin.  The phone calls from the local commanders to their Russian commanders inside Russia itself, and the boastful tweets-subsequently deleted- that they put out, show without question who fired the missile that killed nearly three hundred innocent people. I have little doubt that those who launched the missile probably did not intend to down a civilian airliner, but that is not really the point.  Moscow gave these weapons to the frankly low grade forces they have created in the Donbas without thought for the consequences.  That those consequences have proven to be so dreadful simply underlines the brutal and arrogant stupidity that has become the hallmark of Putin's policy.  This is not merely a crime, it is a blunder. Meanwhile on the ground these same Russian forces have disrupted the gathering of evidence and restricted access to the crash site, while all the time attempting to steal or destroy evidence.  This botched cover-up can achieve very little, except increase the agony of those left bereaved.  However it also multiplies the global anger at the initial crime.  If it is true that such theft has included the looting of the bodies, as has been alleged, then revulsion will turn to something much, much harder.  As it is the conversations between Putin and the Dutch Prime Minister, for example, far from calming the situation, have left the West even more furious.  Dumb insolence is a pretty stupid tactic in the playground, but on the global stage and in such crisis, it is close to political and economic suicide. Vladimir Putin is a disastrous leader.  He is leading Russia straight off a cliff.  Unless he can make an intelligent play in the course of the next week or so, then the scale of punishment that will be exacted Russia will include total isolation and drastic sanctions which will be designed to remove Russian influence as quickly and completely as possible.  David Cameron has already indicated that the MH17 catastrophe will lead to a discontinuity in Russian relations with the wider world- and as the EU considers its next moves, even those countries with most to lose- France- or who are most penetrated by Russia- Italy, some parts of Germany- are being dragged along by the determination that unless Russia changes course, then a second cold war is already upon us. That new cold war is already being fought in cyberspace and by proxy in Iraq and Syria as well as, of course, in Ukraine.  The West should recognize this and offer sufficient military assistance to allow Ukraine to first to defeat the so-called separatists and then aid the rebuilding of an open and prosperous Ukraine.  We will not get back the lives of the passengers and crew of MH17, or indeed those killed in Ukraine as the result of Vladimir Putin's brutality, but we can make sure that justice is done.  The leaders of the so-called separatists must receive indictments and face trial, either in Ukraine or in the Hague.  As for Russia, Putin has chosen a brutal and incompetent path.  His personal image is trashed beyond repair.  Putin is a tyrant, and such men eventually receive judgement too.  His despicable lies and brutality have brought dishonour and shame to his nation.  Although in such an oppressed environment it is difficult to truly know if he is popular or not, but the West should spare no effort on relaying the truth to the Russian people and encouraging a new civil society to grow, even while the neo-fascist Putinist chrysalis still encases the country.  One day Russia might be free.  but Russian freedom is a subject for another, different blog.