The G-8, which just suspended Russia, was intended to be a forum for the world’s leading industrialized nations. Its origins were in the turbulent 1970s, the decade of oil shocks and stagflagion. The United States teamed up with Britain, Germany and France, then added Japan, Italy and Canada. In 1998, Russia formally joined and the Group of 8, or G-8, was born.
Besides the no-doubt fine dining and booze selections at the group’s annual summits, I can’t think of a thing it accomplished. Such crises as the Asian currency meltdown were managed by Washington, the Federal Reserve and the International Monetary Fund. Action on climate change, resource depletion or preventing the hustles that led to the Great Recession? Nope.
As Churchill said, “to jaw-jaw is always better than to war-war.” But this is a superfluous organization, mostly U.S. allies. And with the rise of China as the world’s second-largest economy, along with the increased importance of India and Brazil, the G-20 became a more useful forum.
On the G-8 suspension, Putin is probably channeling Marx (Groucho, not Karl): “I don’t want to belong to any club that will have me as a member.”
The Russian Federation is America’s 28th largest export destination (No. 14 for Washington state, at $1.5 billion in 2013). As a trade partner for America, it is not that important. The situation is different in Europe, which is heavily dependent on Russian energy, especially natural gas. Germany has especially close economic ties with Russia. So it would be premature to say, as a eurocrat recently proclaimed, that the Crimean dustup would have little effect on the continent’s economy.
Earlier this week, the New York Times ran a fascinating story about how three U.S. presidents tried to bring Vladimir Putin into the orbit of advanced democracies, “only to misjudge him time and again.”
He has defied their assumptions and rebuffed their efforts at friendship. He has argued with them, lectured them, misled them, accused them, kept them waiting, kept them guessing, betrayed them and felt betrayed by them.
About the only senior official who proved shrewd was former Defense Secretary Robert Gates. George W. Bush famously spoke of looking into Putin’s soul and, initially at least, being hopeful. Gates, a former CIA director, met the retired KGB colonel and immediately saw a “stone cold killer.”
That said, and as disappointing as it may be to the defense industries, this is no new Cold War. It is not 1914 all over again. If Russia dumped dollars and Treasury bonds, Moscow would be hurt worse than Wall Street.
It is a nationalistic Russia unhappy with the settlement of the real Cold War, especially Bill Clinton’s expansion of NATO. Putin wants to be a tsar, not a commie, and use Russia’s abundant natural resources to play in the capitalist world when it pleases him.
But as Zachary Keck wrote perceptively on The Diplomat site, Russia faces almost insurmountable problems. (Unfortunately, it also has a huge nuclear arsenal — and since President Obama foolishly killed the space shuttles without a replacement, we are dependent on Russia to get astronauts into orbit).
Putin is a reminder of the limitations of Pax Americana, that great power chess never ends, that nations act in their interest. And that doesn’t always fit the logic of American economics. Nor will economic “isolation” necessarily be an effective weapon.
Mr. Obama wasn’t even willing to deal with our oligarchs. Why should the Russian toffs worry?
And Don’t Miss: Data the buzzword, vs. data the real thing | Noahpinion
Today’s Econ Haiku:
Facebook spends billions
We skimp on real life