Opinion

Chrystia Freeland

The perils of authoritarian overreach

Chrystia Freeland
Jun 7, 2013 15:16 UTC

The past week has been a lesson in the perils and the apparent inevitability of overreach. The most eye-catching example has been in Turkey, where what began as a few people protesting a planned shopping mall has burst into a mass revolt against the governing of Prime Minister Recep Tayyip Erdogan.

A second case, in Russia, has been on a much smaller scale but in some ways is even more menacing: Sergei Guriev, one of the country’s most respected economists and university leaders, has left the country, fearing arrest if he stayed.

What is striking about both episodes is how costly they are proving to be for the dominating leaders who have provoked them, and how easily it seems they might have been avoided.

Start with Turkey. All other things being equal, the government would prefer to build a luxury shopping mall in Taksim Square. But that objective obviously pales in comparison with the political damage being done to Erdogan by the escalating protests and the police crackdown.

Likewise in Russia, where President Vladimir V. Putin would prefer to discourage academics – and everyone else – from speaking in support of declared enemies of the state, like Mikhail Khodorkovsky, formerly Russia’s richest man, who is now serving time in prison. But it is clear that the criticism provoked by Guriev’s self-exile has far outweighed any benefit Putin might derive from silencing a critic.

When capital flies, but corruption stays behind

Chrystia Freeland
Mar 28, 2013 20:12 UTC

One of the most important political and economic facts of this young century is that capital has been slipping the traces of the nation-state. Business is global; government is national. That mismatch is one of the big sources of tension in the world today: Whether it comes to taxes, bank regulation or immigration, the fact that money and politics no longer live in the same neighborhood makes consensus harder to achieve.

For Exhibit A, you could point to the flood of Russian rubles into Cypriot banks- and the dramatic consequences.

Global businesses have profited handsomely. Multinationals have legally lowered their tax bills by shifting their profits to low-tax countries: As a scandalized British public recently learned, for example, Starbucks paid 8.6 million pounds, or $13 million, in corporate taxes in Britain over the past 14 years.

Prosperity, autocracy and democracy

Chrystia Freeland
Mar 2, 2012 00:00 UTC

To understand the significance of the presidential election this weekend in Russia, read a book by two U.S.-based academics that is being published this month. Why Nations Fail by Daron Acemoglu and James Robinson, of the Massachusetts Institute of Technology and Harvard University, respectively, is a wildly ambitious work that hopscotches through history and around the world to answer the very big question of why some countries get rich and others don’t.

Their one-word answer, as Acemoglu summed it up for me, is ‘‘politics.’’ Acemoglu and Robinson divide the world into countries governed by ‘‘inclusive’’ institutions and those ruled by ‘‘extractive’’ ones. Inclusive societies, with England and its Glorious Revolution of 1688 in the vanguard, deliver sustainable growth and technological innovation. Extractive ones can have spurts of prosperity, but because they are ruled by a narrow elite guided by its own self-interest, their economic vigor eventually fades.

‘‘It is really about societies that have a more equitable distribution of political power versus those that don’t,’’ Acemoglu told me. ‘‘It is about societies where the elite, the rich, can do what they want and those where they cannot.’’

Arab Spring, Russian Winter

Chrystia Freeland
Dec 16, 2011 14:35 UTC

This has been a bad year for dictators, starting with the Arab Spring and ending now with the Russian Winter. If you are one of the autocrats who survived the annus horribilis of 2011, here are three lessons, drawn from some smart Russians and Russia-watchers, of what the unexpected Slavic protests this month could mean.

The first is that authoritarian regimes don’t run on autopilot. To survive, particularly in the age of the Internet, jet travel and global capital flows, dictatorships need to be savvy and effective. We often attribute the success of democratic revolutions to their brave leaders or the spirit of the times, but, as Lucan Way, a professor of political science at the University of Toronto, argues, “authoritarian incompetence” can be an equally powerful driver.

That is certainly the case in Russia, where one reason United Russia, the party of power led by Vladimir V. Putin, did so poorly in elections this month is the simple fact that the regime made a lot of political mistakes.

Putin’s authoritarianism has a sad logic

Chrystia Freeland
Jan 7, 2011 14:00 UTC

For anyone who ever hoped Russia could become a liberal, free-market democracy, the grim trial last month of Mikhail Khodorkovsky, the former oil tycoon who was once his country’s richest man, offered a slender solace—it was widely and loudly condemned.

David Remnick, editor of The New Yorker, compared the prosecution to that of the late poet and Nobel laureate Joseph Brodsky. Joe Nocera, writing about the business and economic consequences in The New York Times (whose global edition is the International Herald Tribune), described the Kremlin’s tactics as “boneheaded.” Secretary of State Hillary Clinton warned that the case would “have a negative impact on Russia’s reputation,” and particularly on its “investment climate.” What was notable about this chorus of foreign criticism was the implication that, even judged by the Kremlin’s own standards of realpolitik, the treatment of Mr. Khodorkovsky was a mistake. Moscow’s leaders want to restore Russia’s wealth and greatness: Western assertions that the Khodorkovsky trial had hurt Russia’s reputation and would discourage foreign investment suggested that the Kremlin was harming its own cause.

But some investors, economists and political analysts are drawing a different, and much starker, conclusion: The Khodorkovsky verdict was an inevitable and logical act of self-preservation by a regime that is fully and lucratively in control of Russia.

Rise of the rest

Chrystia Freeland
Sep 30, 2010 21:01 UTC

Get ready for the next wave of globalization. The emergence of the emerging markets is old news, of course: after all, Tom Friedman discovered that the world was flat back in 2005. But even as much of the developed world is struggling with weak consumer demand and stubbornly high levels of unemployment, the emerging market countries are writing a new chapter in the story of the global economy.

We are accustomed to thinking of our economic relationship with the countries Fareed Zakaria describes as “the rest” as a two-way exchange between west and east or north and south: western companies setting up call centers in India or manufacturing their goods in China, for instance; and, more recently, savings-rich emerging market economies, especially China, investing in US treasuries, or Russian oligarchs buying London mansions.

That was Globalisation 1.0. In the next stage, some of the biggest deals and some of the most important capital flows will be between emerging markets, with no need to stop-over at Heathrow or JFK. Forget the last decade’s race-to-the-bottom rivalry between Wall Street and the City of London to be the world’s financial capital; the new motto of the moneymen, as one Manhattan banker put it to me this week, is “Mumbai, Dubai, Shanghai or goodbye.”

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