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George Bush, Stalin, Mao and history reading leaders · 24 November 2010

According to a recent article by Ben MacIntyre in The Times, George Bush’s memoir indicates that in the course of a single year, 2006, in competition with his adviser Karl Rove, he read 95 books, totalling 37,343 pages. That is more than one book every four days, and more than 100 pages every day. Bush liked to get eight hours’ sleep a night. So if he reads at the average rate of 60 pages an hour, we arrive at a startling conclusion: roughly one-tenth of the time Bush spent awake as president he was buried in a book. Most of the president’s books were about history, predominantly historical biography.

The Times article continued: During that single year he read biographies of Abraham Lincoln (two of the 14 he read in office), Mark Twain, Babe Ruth, King Leopold, William Jennings Bryan, Genghis Khan, Lyndon Johnson, Andrew Carnegie and Huey Long. He read Andrew Roberts’ 800-page History of the English-Speaking Peoples and histories of the Mayflower voyage and the Lincoln assassination. … References to history pepper the memoir.

Now, I seriously doubt that Bush read every word or was buried in all 37,343 pages as most history books contain large amounts of facts that are not essential to the core message (this will especially be the case if the reader is on the second or third, or 14th , biography). Nevertheless, the pace at which Bush claims to have read suggests as absence of pauses to significantly reflect on the relationship between what he had just read and what he had read in other books and the relationship to then current events. And, in my view, this absence of pause negates much of the purpose and value of reading history.

The Times quotes Bush (who majored at history at university), as saying that he drew strength from my faith, and from history. According to the article: Bush clearly sees the past in didactic terms, as a series of salutary examples, inspirations, turning points and touchstones: I know a lot of history. I know how lessons work. I hope people come to understand how history works. This is the view encapsulated by the philosopher-poet George Santayana: those who cannot remember history are condemned to repeat it. It assumes that the past offers a moral map, if only we can read it correctly.”

Bush is not the first leader to attempt to read history correctly in search of a moral map. In 1946 Josef Stalin criticized a new movie, Ivan the Terrible, Part Two, telling the director that changes must be made: Ivan the Terrible was very cruel. You can show he was cruel. But you must show why he needed to be cruel. The Yugoslavian politician, Milovan Djilas, who had close dealings with Stalin and his lieutenants from 1944, noted that in Stalin, certain great and final ideals lay hidden his ideals, which he could approach by molding and twisting the reality and the living men who comprised it.

So, Stalin had his own version of understand how history works and reading it correctly; and his own version of a moral map it was alright to be cruel if the end-result was good in the way that he understood such ideals!

Zhisui Li, Mao Zedong’s doctor, wrote that Mao turned to the past for instruction on how to rule. He identified with China’s emperors and his greatest admiration was reserved for the most ruthless and cruel. While Li wrote that morality had no place in Mao’s politics, he was talking about Mao’s means to an end. Mao like Stalin had his own sense of understand how history works and his own ideals. According to Li, Mao insisted on policies that no one else had ever imagined, dangerous, risky policies like the Great Leap Forward, the people’s communes, and the Cultural Revolution, all of which were designed to transform China presumably to an ideal end!

The Times article continued: There is a tendency, particularly in American political life, to seize on the past as if it offered clear and unequivocal guidance, simple instructions on ethics, leadership and personal behaviour.

But, this is how Stalin and Mao also viewed history. Stalin wrote in the margin of a biography of Ivan the Terrible: teacher teacher. Like Bush, Stalin and Mao chose to read history that tended to reinforce their existing views and predilections. They rarely read history that bolstered their understanding of other view-points.

The Times article continued: This (American) approach (to the past) tends to ignore the complexity and messiness of history and the intricate individuals that people the past in favour of heroes and villains, right and wrong, black and white. When asked to cite his historical influences, Bush cites Lincoln or Jesus Christ. … These are not so much historical references as badges of goodness. History is seldom neat and never simple. Its moral lessons are often obscure and even its most lauded figures flawed and contradictory. … If history teaches anything, it is that the past and the affairs of man are complex, uncertain and unpredictable.

Stalin and Mao also fell for the trap if glossing over the complexity of the past at the cost of not fully understanding the present. As Dr. Li wrote: Immersed as he was in Chinese history, and thus in the power struggles and political intrigues that were part of every court, Mao expected political intrigue within his own imperial court, and he played the same games himself. Even if aspirants to power told Mao the objective truth, he could not accept it because he saw conspiracies everywhere.

I once tried to interest an Australian political analyst in my book, Dictatorial CEOs & their Lieutenants: Inside the Executive Suites of Napoleon, Stalin, Ataturk, Mussolini, Hitler and Mao. His response was, Hitler was bad man, and that is all I need to know. It was the end of the discussion! Hitler indeed turned out to be bad, but this does not explain why millions followed him. They followed him because they thought he was good. The reality is that Hitler was more than simply a bad man, and to view him in this way almost guarantees the present being condemned to repeat the past.

The Times article continued: In the history that Bush tells, his story is clear-cut: a Manichean battle between good and evil, fought with history on his side. I admired Lincoln’s moral clarity, he writes.

Unfortunately, many admired Adolf Hitler for the same reason! Such moral clarity was also shared by the likes of Stalin and Mao.

Tudor Rickards has suggested that many people have a negative pre-conception of my book because they suspect that I am supporting, or promoting, the management practices of dictators. But, as Tudor understood, my intent was exactly the opposite I wanted to warn people about how easily it is to fall under dictatorial power! My book is about everything except moral clarity. My book is about reality! And the best way to avoid abuse of power is to avoid extreme moral clarity.

If people do not read a balanced account of the lives of such people as Napoleon, Stalin, Ataturk, Mussolini, Hitler and Mao, they will find it difficult to understand their attractions and thus avoid those attractions in the future. Then history is indeed condemned to be repeated.

Understanding Dictators like Gadhafi · 4 March 2011

Commenting on events in Libya, Jason Pack (St.Antony’s College, Oxford), who has had significant experience in Libya, recently wrote :

As policy makers the world over speculate about what Gadhafi will do next, they should look to the leader’s upbringing, psychology and ideology for clues. To get the true measure of the man and his motivations, one must see past the rambling demagoguery and YouTube parodies.

Pack wrote that after his bloodless coup d’etate in 1969, Gadhafi struck Westerners who met him as charismatic, confident and idealistic. Despite his brutality, Gadhafi, sees himself as a philosopher-king and is angry and bitter that his utopian vision has not been realized. He is prone to paranoid conspiracy theories about how outside actors have ruined his precious vision because they cannot afford to see his utopia succeed.

And, in conclusion, Pack wrote: Assured of his own righteousness, Gadhafi will fight to the bitter end with whatever trusted advisers and praetorian guards will stick by his side.

I do not know whether or not Pack’s assessments are correct, but I like his approach to the issue. Rather than simply saying that Gadhafi is a bad mad man, he has recognized that Gadhafi like all self-made dictators who have survived in power for a long time (in this case 40 years) has an idealistic side which attracts supporters.

When the writer Emil Ludwig asked Stalin why everybody in his country feared him, Stalin rejoined: Do you really believe a man could maintain his position of power for fourteen years merely by intimidation? Only by making people afraid?

Of course not!

Stalin like Hitler and Mao had ideals. The Yugoslavian politician, Milovan Djilas, who had close dealings with Stalin and his lieutenants from 1944, noted that in Stalin, certain great and final ideals lay hidden his ideals, which he could approach by moulding and twisting the reality and the living men who comprised it.

So, in my view Pack is being realistic. Such realism could also be applied to such people as Robert Mugabe and Fidel Castro.

But, there is another side to this. Just as many in the West fall into the trap seeing only bad in such dictators, they also fail to see that these idealistic traits can drive leaders of their own countries to cruelty and such leaders can attract many supporters.

Psychologically, I think that Tony Blair is the sort of personality who if had been born in Libya about the same time as Gadhafi could easily have become a Gadhafi.

And, many who have supported Blair over the years would even have been Gadhafi-type supporters.

Their sense of idealism and their own righteousness blinds them to their own cruelty in supporting suppressive regimes and countries.

Gustave M Gilbert, in his The Psychology of Dictatorship: based on an examination of the leaders of Nazi Germany, wrote about the ability of decent people to compartmentalize their thinking so that they can combine idealism with cruelty.

As a general principle . the normal social process of group identification and hostility-reaction brings about a selective constriction of empathy, which, in addition to the semi-conscious suppression of insight, enables normal people to condone or participate in the most sadistic social aggression without feeling it or realising it.

Many Germans and many Americans (in the case of their treatment of blacks) when confronted with these inconsistencies in their professed behavior as decent citizens, recognise the inconsistency intellectually, but still find it difficult to modify their behavior. Insight is not sufficient to overcome the deeply rooted social conditioning of feelings.

Gustave was writing about the internal workings of societies, and specifically countries. But, in the sense that the people of the world are also a society, the same psychological processes apply.

In my view, Blair and many others—despite all their idealism—have seen Arabs in the way described by Gilbert. So, what was Iraq all about? Blair simply wanted to be a hero of the sort his idealism imagined!

Psychology of Nazi Field-Marshal Keitel, George Bush & Hezbollah · 3 August 2006

When Admiral Canaris, head of German military intelligence, protested to Field-Marshal Keitel about Nazi brutality on the Russian-front, Keitel replied: These anxieties belong to the concept of chivalrous warfare. Here we are engaged in the destruction of an ideology. For this reason I approve of the measures and stand by them. Earlier, Keitel had signed a Decree on the Exercise of Military Jurisdiction, which said: For acts committed by members of the Wehrmacht (German armed forces) against enemy civilians, there is no obligation to prosecute, even when the act constitutes a military crime or offence.

Jon Alterman, Middle-East Program Director at the Washington based Center for Strategic & International Studies says that the Bush administration puts a lot of stock in the idea of moral clarity. They believe Hezbollah is full of bad people.

And, Field-Marshal Keitel, who was executed at Nuremberg for war crimes, was obviously a bad person! But was he really bad? And, is Hezbollah really full of bad people?

Keitel, Chief of the Wehrmacht Supreme Command Hitler’s most senior military man was not a rabid Nazi or an aggressive militarist. Gustave Gilbert, prison psychologist at the Nuremberg trials, described him as almost a Ferdinand the Bull type: Stripped of his military rank and power, Keitel revealed himself as an obsequious, gentle soul who had never really wanted to fight but had always longed to be a country squire.

General Halder wrote of Keitel: It was given to him to build bridges, to alleviate sources of friction, to reconcile enemies or at least to bring them closer He was a person of extreme diligence, literally a workaholic, of the highest conscientiousness in his field but always in a way that kept his personality out of it, so that he himself never stood out in a leading way.

Psychologist George Victor wrote that most of the people who carried out the Holocaust were reasonably normal. And those who helped, as were as those who knew and did not try to stop it, were ordinary people.

The case of Field-Marshal Keitel suggests that the world is much more complex than George Bush believes and, of course, much more complex than many in Hezbollah will believe.

Keitel was in most ways a normal man with admirable qualities. In different circumstances and times, he may have indeed been a gentle country squire. But like most normal people, Keitel’s insights and consequent actions were constrained by his own personality, his personal circumstances, and the environment in which he lived.

As a proud and loyal German (Prussian) military officer, he had little desire to understand people not in his own identification group; indeed, he went out of his way to avoid being placed in a situation which might require him to feel empathy with those in other groups. As a soldier, he believed in duty and in absolute obedience in carrying out orders.

As a soldier in World War I, he felt victimized by the Treaty of Versailles, which in his view like that of many Germans was caused by a stab in the back. In particular, he said, the flaming red torch (of socialism) flung out from the homeland had caused those immense, victorious battles to be fought in vain. Keitel became a willing tool of anyone who offered a way to avenge this.

Keitel allowed himself to be persuaded that this war was different: a (communist) ideology needed to be destroyed, and this meant that previously unacceptable brutal methods needed to be employed. (The Bush administration seems to have similar beliefs in relation to Hezbollah.)

While Keitel’s subservience to Hitler brought him promotions, prestige and wealth out of all proportion to his talents, he was a yes-man and a war criminal for psychological reasons: essentially for being quite normal. He lacked insight into and empathy with those not in his in-group; he sought vengeance for past injustices to his in-group and his broader society (in this case, his country); and, he was persuaded that the enemy this time was some-how different (ie ideological) and needed to be treated new (ie brutal) way.

Jon Alterman of CSIS has also said: I’m amazed how little they (radicals in the Middle-East) understand about American psychology. I’m also amazed at how little we understand their psychology. And ultimately, a lot of this is psychological.

Indeed! Hezbollah will contain many normal people who for reasons similar to that of Keitel will take up arms for their cause. If Bush administration and others are to defeat radicals in the Middle-East, they will need to recognize that they are mostly dealing with normal people albeit with their own psychological perspectives and circumstances. This requires dealing with nuances rather than moral absolutes.

Unfortunately, the Bush administration has about as much psychological insight as Field-Marshal Keitel.

**Jeff Schubert’s book, Dictatorial CEOs & their lieutenants: the cases of Napoleon, Hitler, Stalin, Ataturk, Mussolini and Mao, will be released soon.

Rumsfeld and Stalin as Dictatorial CEOs · 15 April 2006

US Defence Secretary Rumsfeld seems to have some of the dictatorial personality characteristics of Stalin when it come to the management of his fiefdom.

Retired US General DeLong says that “dealing with Secretary Rumsfeld is like dealing with a CEO”: “When you walk in to him, you’ve got to be prepared, you’ve got to know what you’re talking about. If you don’t, you’re summarily dismissed. But that’s the way it is, and he’s effective.”

It sounds like DeLong may have adopted the approach of Politburo member, Lazar Kaganovich, who admitted, that when I go to Stalin, I try not to forget a thing! I so worry every time. I prepare every document in my briefcase and I fill my pockets with cribs like a schoolboy because no one knows what Stalin’s going to ask.

Indeed, DeLong may have given the same advice to his own subordinates as that given by Soviet General Kotliar to Colonel Starinov when the latter was called to see Stalin: Don’t get excited. Don’t think about disagreeing with anything. Comrade Stalin knows everything.

No doubt, when he wants, Rumsfeld has charm. As Sergo Beria, who as a young man had direct official dealings with Stalin, wrote: When he thought it necessary he was able to seduce a Field Marshal just as well as a young man. It was not enough for me to be obedient, I had to be completely with him.

Dictatorial CEOs make sure that they get subordinates who are “completely with” them. Retired US General Swannack, says that Rumsfeld makes sure that he gets the subordinates that he wants: If you understand what Secretary Rumsfeld has done in his time in the Pentagon, he personally is the one who selects the three-star generals to go forward to the president for the Senate to confirm.” Beria wrote that above a certain level in the hierarchy of Party and State Stalin appointed only individuals he knew personally. He sent for them from time to time and never ceased studying them. Before promoting a cadre he spent a long time analysing them. He had one unchanging rule: one can never be too suspicious.

This is not to say that such subordinates are necessarily incompetent. Beria wrote that Stalin had not raised many intelligent people to the rank of his closest associates because he feared that such would hinder his actions. But neither could he allow himself to choose only imbeciles if he wanted results.

Rumsfeld, suggested Retired US General Batiste, has other characteristics that are similar to Stalin: We served under a secretary of defense who didn’t understand leadership, who was abusive, who was arrogant, who didn’t build a strong team.”

Sounds like Rumsfeld wants to dictate from above! Thus, it is not surprising, as Retired US General Newbold wrote, that even though the Iraq war plan was “fundamentally flawed,” many senior officers “acted timidly when their voices urgently needed to be heard. “When they knew the plan was flawed, saw intelligence distorted to justify a rationale for war, or witnessed arrogant micromanagement that at times crippled the military’s effectiveness, many leaders who wore the uniform chose inaction.”

Soviet Marshal Voronov wrote of Stalin’s excessive centralization: It not only robbed one of a great deal of time and prevented one from concentrating on the main thing, but it fettered the initiative of subordinates, slowed things down and lowered efficiency. Stalin could not tolerate the decision of even secondary matters without his knowledge.

In relation to Iraq, Swannack says that Rumsfleld has micromanaged the generals who are leading our forces there. Batiste says: “When decisions are made without taking into account sound military recommendations, sound military decision-making, sound planning, then we’re bound to make mistakes. When we violate the principles of war with mass and unity of command and unity of effort, we do that at our own peril.”

Cardinal Pell’s God and Hitler have a lot in common · 29 November 2010

Cardinal George Pell, Archbishop of Sydney, has said Mass to install the former Australian Defence Force chief General Peter Cosgrove as chancellor of the Australian Catholic University, saying:

‘’A minority of people, usually people without religion, are frightened by the future,’’ Cardinal Pell, the Archbishop of Sydney, said: “It’s almost as though they’ve nothing but fear to distract themselves from the fact that without God the universe has no objective purpose or meaning. Nothing beyond the constructs they confect to cover the abyss.’’

According to the Sydney Morning Herald (29 November), Pell said education was not enough to create a civilised society, that faith was necessary too. He cited the example of 20th century Germany, which he said was the best educated society in the world when Hitler became leader. We should not create an ‘’ideological apartheid’’ between faith and reason, Pell said.

Some extracts from my book, Dictatorial CEOs & their Lieutenants: Inside the Executive Suites of Napoleon, Stalin, Ataturk, Mussolini, Hitler and Mao, suggests that Cardinal Pell’s God and Hitler had a lot in common.

I wrote:

All CEOs benefit from the need of people to believe in someone who can take care of unfamiliar or scary issues, leaving them to get on with their daily lives and work. Sometimes belief in a mystical God fulfils this need, but often and sometimes concurrently this need is fulfilled by a Man: some individual who is perceived to be so special and unique that religious terminology is often used in reference to him.

While a CEO can achieve and maintain dictatorial power without being the Man, that power will be precarious because of its narrow base of discipline and reward that is, a narrow base of interest and fear. Being the Man adds emotion to the support base of the dictatorial CEO: what people want to believe and what they hope for blinds them to many realities, and often wilfully so; they became gullible, often to an extreme degree. What would otherwise be seen as good, is seen as very good; what would otherwise be seen as very bad, is seen as merely bad; logical connections between issues and events are dismissed in favour of more emotional responses; and the alternatives to the dictatorial CEO are regarded with excessive concern.

Those people in a country, or in any other organisation who believe in the Man provide not only a powerful general support base, but the well from which the successful dictatorial CEO draws many of his lieutenants.

As Mussolini put it, people do not want to rule, but to be ruled and to be left in peace. This is what attracted Speer to Hitler and the Nazi party in the early 1930s: My inclination to be relieved of having to think, particularly about unpleasant facts In this I did not differ from millions of others.

Aspiring and actual dictatorial CEOs exploit these desires. They know, as Hitler said, that the masses need an idol, and they encourage and promote this idea. In 1937, when Stalin’s daughter, Svetlana, had a birthday and wanted to take a ride on the new Moscow Metro, Stalin who rarely made public appearances decided to join the group in a special train. The passengers going to and from the other trains noticed Stalin and gave him ovations. One of Stalin’s group later described his reaction: He sort of said about the ovations given to him: the people need a tsar; that is, a person to whom they can bow low and in whose name they can live and work.

As use of the term a Tsar suggests, the Man is only one of several terms that can be used to convey the same sentiment; others, as we shall see, include Tribune and God himself.

Aspiring and actual dictatorial CEOs also know that this desire for someone special who can rule and deal with unpleasant facts particularly in times of organisational stress is so strong that a blind eye will often be turned to concerns about methods. As editor of the newspaper Popolo dItalia in 1917, Mussolini wrote that Italy needed a Man:

A man who has when needed the delicate touch of an artist and the heavy hand of a warrior. A man who is sensitive and full of will-power. A man who knows and loves people, and who can direct and bend them with violence if required.

Maybe this is Pell’s—and also Islamic extremists—view of God, Iraq and Afghanistan?

Brooks and Tett on policy psychology · 22 October 2012

David Brooks (writing in the The New York Times on 12 October) and Gillian Tett (writing in the Financial Times on 18 October) have each produced a useful article on the relationship of individual psychology (or personality) to the wider world of government policy although the articles do it by heading in different directions from essentially the same starting point.

The Brooks article suggests that not enough attention is presently paid to the effect of individual psychology (personality) on leadership decisions and thus on personality when choosing leaders. The Tett article relates individual psychology (personality) concepts to the whole populations of countries. Taken together, the articles act almost like a circle with the two directions eventually meeting each other and encompassing a lot of wisdom that is all too often overlooked when considering issues of public policy.

The motivation for the Brooks article seems to have been the US presidential election, while the motivation for the Tett article is the Euro-crisis and the effect of subsequent policies on the populations of countries such as Greece.

The US and Greece may seem to be almost different worlds, so it may be easier to explain what Brooks and Tett are each (in their own articles) on about and the connection between the two with the help of German and Russian examples in which the leadership and population issues can be more directly related to each other.

Tett wrote about the humiliation felt by a country’s population when it feels that something very unpleasant has been done to it by some other party. Leaving aside the issue of how justified these feelings of humiliation are, good examples are Germany in the period after the First World War (and the Treaty of Versailles) and Russia in the 1990s when the collapse of the USSR led many to feel that Russia’s economic and political chaos was the result of bad advice from the West which then turned it back and gloated at the result.

Tett’s article (essentially based on the work of Prof. Dennis Smith, a historical sociologist) suggests that the humiliation being forced on the national psychologies of Greece (and possibly Spain) could have quite pathological (read abnormal or diseased psychology) results. She does not say so, but at some level this pathology could be similar to that of Germany and Russia in the times I have mentioned.

Brooks does not go into this issue, but in situations of national pathology, the leaders that emerge are not likely to be those mostly driven by rational cognitive decision making on behalf of the population, but those whose own personalities will ultimately provide the best guide to the decisions that they will make. Here, we might think about Adolf Hitler and Vladimir Putin (although, I am not suggesting that Putin has the same degree of personal pathology as Hitler).

To some degree, the concepts covered in the Brooks and Tett articles might also be applied at the intra-country group level.

For example, the humiliation that Putin and Co. are willingly to attempt to inflict on the aspiring Russian middle class (for want of a better word) may result in some of the responses mentioned by Tett:

Typically, it occurs in three steps: first there is a loss of autonomy, or control; then there is a demotion of status; and last, a partial or complete exclusion from the group. This three-step process usually triggers short-term coping mechanisms, such as flight, rebellion or disassociation. There are longer-term responses also, most notably acceptance via escape or conciliation, to use the jargon or challenge via revenge and resistance. Or, more usually, individuals react with a blend of those responses.

But Tett also wrote that “Prof Smith believes, for example, that Ireland already has extensive cultural coping mechanisms to deal with humiliation, having lived with British dominance in decades past. This underdog habit was briefly interrupted by the credit boom, but too briefly to let the Irish forget those habits. Thus they have responded to the latest humiliation with escape (ie emigration), pragmatic conciliation (reform) and defiant compliance (laced with humour).”

Thus, the responses of the “national psychologies” of Ireland and Greece to their “humiliation” resulting from the Euro-crisis may exhibit significant differences.

The Russian “middle class” is certainly using Irish-style escape, pragmatic conciliation and defiant compliance to cope with its humiliation—- but in the longer term the coping mechanism could become more pathological. If this were to happen, I suspect Putin’s response would largely be determined by his personality.

The full Brooks article (which quotes psychoanalysts such as Karen Horney) and the full Tett article can be read below.

Merkel & Co should look at the H factor by Gillian Tett

This month, the guessing game is intensifying in Spain. But the issue is not just the size of the Spanish banks bad loans; the key uncertainty for investors is the mindset of the government of Mariano Rajoy. Will Madrid buckle under external pressure, and seek a bailout? Or will the domestic backlash be too great? In other words, what level of humiliation can the Spanish government, and people, bear?
For Dennis Smith, a prominent British historical sociologist, the question is a significant one across the eurozone. As he explained at a recent sociology conference, one way for policy makers and investors to make sense of the eurozone’s trajectory is to look at how humiliation operates in a psychological and cultural sense. After all, Prof Smith argues, one defining feature of the postwar European experience was that the union always presented itself as a post-humiliation regime. It was forged to heal the wounds of the second world war and thus, liberty and equality [were] highly valued as well as the spirit of fraternity. But since the financial crisis erupted, humiliation has returned to Europe on a large scale.
Inside nations, weak groups have suffered economic pain, and across the eurozone, weaker countries are being humiliated in a way that was taboo in the postwar post-humiliation period. Even more striking than this turnabout, Prof Smith argues, is the variety of responses from countries such as Greece and Ireland, as they reel from that humbling.
To understand this, it is worth noting that psychologists believe the process of humiliation has specific attributes, when it arises in people. Unlike shame, humiliation is not a phenomenon which is internally driven, that is, something that a person feels when they transgress a moral norm. Instead, the hallmark of humiliation is that it is done by somebody to someone else.
Typically, it occurs in three steps: first there is a loss of autonomy, or control; then there is a demotion of status; and last, a partial or complete exclusion from the group. This three-step process usually triggers short-term coping mechanisms, such as flight, rebellion or disassociation. There are longer-term responses also, most notably acceptance via escape or conciliation, to use the jargon or challenge via revenge and resistance. Or, more usually, individuals react with a blend of those responses.
Such psychology jargon may sound irritatingly abstract. But, just as investors can sometimes make sense of market crises by thinking about the five-stage cycle for processing human grief (denial, anger, bargaining, depression and acceptance), looking at the psychology of humiliation can be revealing for the eurozone. Those periphery countries, after all, have experienced a loss of control, a demotion in relative status and exclusion from decision making processes (if not the actual euro, or not yet). And there are echoes of the classic humiliation coping strategies in the eurozone tale today.
National stereotypes are, of course controversial and dangerous. But Prof Smith believes, for example, that Ireland already has extensive cultural coping mechanisms to deal with humiliation, having lived with British dominance in decades past. This underdog habit was briefly interrupted by the credit boom, but too briefly to let the Irish forget those habits. Thus they have responded to the latest humiliation with escape (ie emigration), pragmatic conciliation (reform) and defiant compliance (laced with humour).
This tactic parades the supposedly demeaning identity as a kind of banner, with amusement or contempt, showing that carrying this label is quite bearable, says Prof Smith. For example, he says, Irish fans about to fly off to the European football championship in June 2012 displayed an Irish flag with the words: Angela Merkel Thinks We’re At Work. However, Greece has historically been marked by a high level of national pride. During 25 years of prosperity, many Greek citizens had been rescued by the expansion of the public sector … they had buried the painful past in forgetfulness and become used to the more comfortable present (now the recent past), Prof Smith argues. Thus, the current humiliation, and squeeze on the public sector, has been a profound shock. Instead of pragmatic conciliation, a desire for revenge is a much more prominent response than in Ireland, he says, noting that politicians are physically attacked in the streets. Major public buildings are set on fire. German politicians are caricatured as Nazis in the press … the radical right and the radical left are both resurgent. Prof Smith’s research has not attempted to place Spain on the coach. But I suspect the nation is nearer to Greece in its instincts than Ireland; humiliation is not something Spain has had much experience of coping with in the past.
Whether the Spanish agree with this assessment or not, the key issue is this: if Angela Merkel or the other strong eurozone leaders want to forge a workable solution to the crisis, they need to start thinking harder about that H word. Otherwise, the national psychologies could yet turn more pathogical.

The Personality Problem by David Brooks

In the 19th century, sermons were a big deal. They’d be reprinted in newspapers. In the 20th century, psychoanalysts were a big deal. There were a number of best-selling authors spinning theories about the psyche, which had a large impact on how people saw the world and themselves. This includes not only Freud and Jung, but also people like Erick Erikson, Erich Fromm, Carl Rogers, Viktor Frankl and Philip Rieff. Today we’re more into cognition and the brain. Over the years, attention has shifted from the soul to the personality to decision-making. Preoccupations have migrated from salvation to psychic security to success.
When it comes to treating mental illness, I guess I’m glad we’ve made this shift. I put more faith in medications and cognitive therapies than in Freudian or Jungian analysis. But something has been lost as well as gained. We’re less adept at talking about personalities and neuroses than we were when psychoanalysts held center stage.
For example, in the middle of the 20th century, a woman named Karen Horney (pronounced HOR-nigh) crafted a series of influential theories about personality. Like many authors of these intellectually ambitious theories, she was raised in Europe and migrated to the United States before World War II.
More than most of her male counterparts, Horney felt that people were driven by anxiety and the desire for security. People who have been seriously damaged, she argued, tend to react in one of three ways.
Some people respond to their wounds by moving against others. These domineering types seek to establish security by conquering and outperforming other people. They deny their own weaknesses. They are rarely plagued by self-doubt. They fear dependence and helplessness. They use their children and spouses as tools to win prestige for themselves. These people are often excessively proud of their street smarts. They deeply resent criticism and seek the vindictive triumph the reversal of fortunes in which they can lord their excellence over those who scorned them. These people can’t face their need for affection, so they seek to cover it by earning admiration and deference.
Other people respond to anxiety by moving toward others. These dependent types try to win people’s affections by being compliant. They avoid conflict. They become absorbed by their relationships, surrendering their individual opinions. They regard everyone else as essentially good, even people who have been cruel. They praise themselves for their long-suffering forbearance, their willingness to live for others, even though in reality they are just too scared to assert themselves. They think they are behaving selflessly, but they are really using others for whatever drips of affection they can provide.
Other people move away from others. These detached types try to isolate themselves and adopt an onlooker’s attitude toward life. As Terry D. Cooper summarizes the category in his book, Sin, Pride and Self-Acceptance, To guarantee peace, it is necessary to leave the battleground of interpersonal relationships, where there is constant threat of being captured. These detached people may put on a charming veneer to keep people away. They tamp down desire, avoid ambition and minimize conflict and risk. They want to avoid the feeling of needing someone. They seek to live tranquilly in the moment.
The domineering person believes that, if he wins life’s battles, nothing can hurt him. The dependent person believes that, if he shuns private gain and conforms to the wishes of others, then the world will treat him nicely. The detached person believes that, if he asks nothing of the world, the world will ask nothing of him.
These are ideal types, obviously, conceptual categories. They join a profusion of personality types that were churned out by various writers in the mid-20th century: the inner directed, the outer directed, the Organization Man, the anal retentive, the narcissist, the outsider.
The books that explained these theories were good bad books. The good bad book (I’m deriving the category from a phrase from Orwell) makes sweeping claims, and lumps people into big groups. Sometimes these claims are not really defensible intellectually. But they are thought-provoking and useful. They provide categories and handles the rest of us can use to understand the people around us, seeing where the category fits and thinking more precisely about where it doesn’t.
We’re probably poorer now that people like Horney have sunk to near oblivion less adept at analyzing personality. We probably have less practice analyzing personalities, whether it’s the people around us or even, say, presidential candidates.
More than that, the vocabulary you use shapes what you pay attention to. If you learn about the cognitive skills that lead to success, you’ll think a lot about success. If you learn a lot about personality, you’ll think a lot about personality.
Which is more important?

Tony Blair a dangerous leader · 6 February 2010

Much has been written on the leadership qualities for better or worse of Tony Blair. Most of the recent focus had been on the appearance of Blair before the ongoing Iraq War Inquiry. Yet, from what I have read, the evidence of Clare Short tells us more about Blair’s leadership than Blair’s own appearance. She described his leadership-style as unsafe and she is right! In fact, it was downright dangerous.

Reading Short’s comments I was reminded of Napoleon who, of course, had his own war plans. Like Blair, Napoleon’s invasion of another country in this case Russia went awry.

Blair

SIR MARTIN GILBERT: When it came to the actual discussion of the new Iraq policy framework, we asked Mr Blair whether it had been discussed in Cabinet, and he replied that it had not been discussed in Cabinet, but he went on to tell us: The discussion we had in Cabinet was substantive discussion. Do you recall such a discussion and what was your contribution to it at that time?

SHORT: The first thing to say the Cabinet doesn’t work in the way, and didn’t under the whole of the time I was in government, in the way that, according to our constitutional theory, it is supposed to work. I mean, the meetings were very short. There were never papers. There were little chats about things, but it wasn’t a decision making body in any serious way, and I don’t remember at all Iraq coming to the Cabinet in any way whatsoever at that time.

SIR MARTIN GILBERT: So the phrase substantive discussion is not as you recall?

SHORT: I do not think there was substantive discussion, I am afraid, of anything at the Cabinet. if ever you raised an issue that you wanted to bring to the Cabinet, Tony Blair would see you beforehand and cut it off, saying, We don’t want those things coming to the Cabinet, which he did to me in July before we broke up for the summer, when the Cabinet doesn’t meet, when there was stuff in press about Iraq and I said, I really think we should have a discussion about Iraq, and he said, I do not want us to because it might leak into the press. I raised my concerns at Cabinet repeatedly, but what we had at Cabinet were little chats. They weren’t decision making meetings. So Tony would say, Well, Jack, you have been to see Colin Powell, and that had all been in the press anyway, Why don’t you tell us how the meeting went? So Jack would make a few jokes, as he does, and so on.

Napoleon

Napoleon, who had come to power in 1799, had a similar approach. By 1809, members of the Napoleon’s Council of State holding dissenting opinions now offered them cautiously. Napoleon would say: Read the draft proposal aloud. He would then give his view on the decision that should be made, before concluding: Does someone wish to speak about the wording?

Blair

SIR RODERIC LYNE: I would like to go back into the machinery of government that you mentioned. You said there wasn’t substantive discussion in Cabinet, but the argument we have heard from Mr Blair, from Jonathan Powell, from Alastair Campbell, among other witnesses, is essentially that it didn’t matter if the official Cabinet Committee didn’t meet or if, indeed, committees were ad hoc with a small a and a small’h, but that what mattered was that policy on Iraq was being discussed intensively with the relevant people, with the appropriate information, with challenge, with risk assessment, with diversity of views. Was that the impression you had?

SHORT: Absolutely not. The government doesn’t, and didn’t, work like that. It is partly the 24hour news thing. So everything is for the media. Power is pulled into Number 10. Everything is announced to the media. After the guillotines came in, the House of Commons is now a rubber stamp, it doesn’t scrutinise, things are guillotined.

Napoleon

Louis Bourreinne, Napoleon’s first secretary, noted that Napoleon worked hard to ensure that the media got the story right. He wrote news bulletins from the battle fields and his campaigns to be published in the Moniteur newspaper. These bulletins always announced what Bonaparte wished to be believed true. Normally, there was falsity in the exaggerated descriptions of his victories, and falsity again in the suppression or palliation of his reverses and losses.

Blair

SHORT: I think the machinery of government in Britain now is unsafe bills are properly not thought through policy. That’s a general critique. In the case of Iraq, there was secretiveness and deception on top of that. So I heard Tony Blair talking when he gave evidence to you about an ad hoc committee with a small a and small’h. I simply don’t accept that. There were no minutes. It is just not a proper way to proceed. If you are discussing things that other departments are supposed to know about and are supposed to be preparing for, and they are completely excluded from the discussion and don’t know what the government is planning, I think this is a chaotic.

Napoleon

According to Bourreinne, Napoleon never neglected any artifice to conceal, as long as possible, his designs. Not dissimilar was Napoleon’s approach to allocating responsibilities, as described by one of his lieutenants: In the government that he established, each person was occupied only with the particular area that he was authorised to deal with, and the benefits he could expect from it.

Blair

SIR RODERIC LYNE: You don’t think that they were really looking at a range of options and at all the possible risks in this course.

SHORT: I presume you are looking at the leaked documents. The Downing Street memo now tells it all? that Blair had given his word that he was in favour regime change and would be with Bush.

SIR RODERIC LYNE: We will come back to that, but you could see who the people were around the Prime Minister advising him, although, clearly, you weren’t one of them. But wasn’t this a group that was pretty expert and diverse? Did it have expertise in the Middle East?

SHORT: Well, one, I didn’t know they were meeting, two, it is an ingroup. That’s the way Number 10 worked. You keep Tony’s favour and Alistair doesn’t brief against you, if you do whatever they want, and challenge is the opposite. Indeed, I have a friend who was doing research at the time, and therefore interviewing people at Number 10, and a message came back to me that I shouldn’t keep challenging in the Cabinet. I was making myself unpopular. Yes, I have seen it since. Could I just say another thing? The Foreign Office, as you will know, had some famous Arabists, who spoke Arabic, who had served in the Arab world. I think they were kept completely marginalised, not allowed to give their advice. They were seen as dangerous because they might not agree.

Napoleon

General Caulaincourt, whom Napoleon had a particular liking for, was a former French Ambassador to Russia and knew something about winter in Moscow. He persisted during a five hour conversation in trying to dissuade him from invading Russia in 1812 (many years later, Goering had a conversation of similar length with Hitler on the same issue, and Colin Powell had a long conversation with George W. Bush). Napoleon’s response was to jokingly say: You don’t believe in spoiling me. But Napoleon was not happy with Caulaincourt’s views and he was later warned by General Duroc, that the Emperor was more incensed against me than ever. He observed that when the Emperor discussed business with me I appeared to be putting him in the wrong, and that this irritated him.

Blair

SIR RODERIC LYNE: Okay. Why do you think you were kept out of the policy planning process? Was it because it didn’t concern your department or was it because Number 10 didn’t trust you? You probably saw the answer you had from Alastair Campbell.

SHORT: Yes, indeed. He and I never got on. I didn’t obey him, and, therefore, he would brief against you and that’s how the government worked.

SIR RODERIC LYNE: I would like to come back to that last point in a minute, but just pursuing the machinery of government just one more step first, I mean, what we have heard from Mr Blair, Mr Powell, Mr Campbell, is that the Iraq decisions were effectively very much a personal judgment that the Prime Minister of the day made, that this was based on the very strong convictions, which, indeed, he described to us in his evidence on Friday, but they have argued that it was his responsibility as a leader, as Prime Minister, to take the tough decisions and that these were then endorsed by the Cabinet. You said it wasn’t substantive discussion, Mr Blair said it was. It is a Cabinet of which you were a member. Then these decisions were endorsed by the House of Commons, of which you are still a member. Now, if you and other Cabinet ministers weren’t satisfied with the information you were getting, you weren’t satisfied with the level of debate or the decisions, surely it was up to all of you to do something about it?

SHORT: The first thing to say is that I noticed Tony Blair in his evidence to you, kept saying I had to decide, I had to decide, and, indeed, that’s how he behaved, but that is not meant to be our system of government. It is meant to be a Cabinet system, because, of course, if you had a presidential system, you would put better checks into the legislature. So we were getting his view that he decided, him and his mates around him, the ones that he could trust to do whatever it was he decided, and then the closing down of normal communications and then this sort of drip feed of little chats to the Cabinet. Now, that’s a machinery of government question and there is a democratic question, but, also, there is a competence of decision making question, because I think, if you do things like that, and they are not challenged and they are not thought through, errors are made, and I think we have seen the errors.

SIR RODERIC LYNE: But the Cabinet endorsed this.

Napoleon

Caulaincourt wrote that as the Grand Army marched toward Moscow and doom, the passivity continued: As the Emperor wanted to do everything himself and give every order, no one, not even the Chief-of-Staff, dared to assume the most responsibility. The King of Naples (Marshal Joachim Murat) was better able to appreciate these troubles than anyone, and he told the rest of us about them when he chatted with us. He even ventured to make some remarks to this effect to the Emperor, but His Majesty did not care for reflections that ran counter to his projects, and lent a deaf ear. He changed the subject; and the King of Naples, who above all wished to please him and who flattered his vanity at the same time, by doing so kept to himself the wise reflections which he had voiced to us alone.

Blair

SHORT: It was hardly an endorsement. By then, everything was very, very fraught, enormous pressures and it kind of I think he misled the Cabinet. He certainly misled me, but people let it through.

SIR RODERIC LYNE: Sorry, who misled the Cabinet?

SHORT: The Attorney General. I think now we know everything we know about his doubts and his changes of opinion and what the Foreign Office legal advisers were saying and that he had got this private side deal that Tony Blair said there was a material breach when Blix was saying he needed more time. I think for the Attorney General to come and say there is an unequivocal legal authority to go to war was misleading, and I must say, I never saw myself as a traditionalist, but I was stunned by it, because of what was in the media about the view of international lawyers, but I thought, This is the Attorney General coming just in the teeth of war to the Cabinet. It must be right, and I think he was misleading us.

SIR RODERIC LYNE: Okay. In your book you wrote about Lord Goldsmith’s final advice which you have just referred to and you said there: It is difficult not to believe he was leant on. Now, Lord Goldsmith has denied that he acted under pressure. He said he reached a purely legal decision in his evidence, and Mr Blair said that he could not recall any specific discussions that he had had with Lord Goldsmith at this critical stage and he said that Lord Goldsmith had given legal advice and that this was: done in a way which we were satisfied was correct and right. Now, do you accept what Lord Goldsmith and Mr Blair have said about this?

SHORT: I am afraid I don’t. I noticed that Lord Goldsmith said he was excluded from lots of meetings. That is a form of pressure. Exclusion is a form of pressure. I noticed the chief legal adviser in the Foreign Office said in his evidence that he had sent something and Number 10 wrote, Why is this in writing? I think that speaks volumes about the way they were closing down normal communication systems in Whitehall.

Napoleon

Napoleon knew how to use exclusion as a form of pressure. He wanted Caulaincourt to tell the Russian ambassador that France stood by its alliance with Russia. Caulaincourt later wrote: Since it was clear enough that all he wanted of me was that I should allay Russia’s suspicions so that he might gain time, I avoided becoming his intermediary, and begged the Emperor to entrust (another official) with any communications he might wish to make to the Russian Government. This suggestion greatly displeased him, and brought our conversation to a summary conclusion. Henceforth the Emperor, besides persecuting my friends, inflicted on me every sort of vexation which could be inflicted on a State official, even to the extent of withholding payments to which I was entitled. He let slip no occasion to make me feel the weight of his displeasures, and replied to my complaints about my financial claims by pleading ignorance of the matter. General Duroc advised Caulaincourt against resignation: Less than ever is this the moment to take such a step. You will lose your friends and ruin yourself. Have patience, and things will straighten out. Just now the Emperor is annoyed with you; but he holds you in esteem; he is even fond of you. Things will straighten out, I tell you, if you do not lose your head and put yourself in the wrong. But, there was no alteration in the Emperor’s acerbity towards me.During the winter there were many festivities, full-dress balls and masked balls. At the state ball (February, 1812) I was the only high official not included in the grand quadrille with the Empress and Princesses. I was likewise passed over, or rather I was the only high official not invited, to supper at the Empress’s table. So far as the supper was concerned I took this rebuff lightly, for it was possible to consider invitations to that as a personal matter; but as the quadrille concerned one of the prerogatives of my position and was much commented upon, I considered it my duty to lodge a complaint.The Emperor sent me word that the omission of my name had been a mistake; but I learnt from Duroc, to whom he had dictated the list that it had been intentional.

Blair

SHORT: No, I do not have any evidence, but I think him (Goldsmith) changing his mind three times in a couple of weeks, and then even in order to say unequivocally there was legal authority, to require Tony Blair to secretly sign a document saying that Iraq was in material breach, and not to report any of that to the Cabinet, is so extraordinary and by the way, I see that both Tony Blair and he said the Cabinet were given the chance to ask questions. That is untrue.

SIR RODERIC LYNE: That is really my next question, because 16 in March 2005, after you left office, you wrote to Lord Goldsmith stating that in the Cabinet meeting of 17 March, you had attempted to initiate a discussion but that this was not allowed. What was it that you were trying to discuss in the Cabinet on 17 March, and why were you not able to do so?

SHORT: I had asked for that special meeting with the Attorney General and it had been readily agreed that it would take place. That was the first time he came to the Cabinet that I’m aware of. There was a piece of paper round the table. We normally didn’t have any papers, apart from the agenda. It was the PQ answer, which we didn’t know was a PQ answer then, and he started reading it out, so everyone said We can read, you know, we didn’t and then so he everyone said, That’s it. I said, That’s extraordinary. Why is it so late? Did you change your mind? and they all said, Clare! Everything was very fraught by then and they didn’t want me arguing, and I was kind of jeered at to be quiet. That’s what happened.

SIR RODERIC LYNE: So you went quiet?

SHORT: If he won’t answer and the Prime Minister is saying, Be quiet, and that’s it, no discussion, there is only so much you can do, and on this, because I see the Prime Minister the Attorney, the then Attorney, to be fair to him, says he was ready to answer questions but none were put. I did ask him later, because there was then the morning War Cabinet, or whatever you call it, that he did come to and he gave all sorts of later legal advice, and I asked him privately, How come it was so late? and he said, Oh, it takes me a long time to make my mind.

Lowy, Defence and Assange · 16 June 2012

This is from the internet site of the Lowy Institute:

The Lowy Institute is … introducing a new blog feature, Australia’s Defence Challenges. This feature, supported by the Australian Department of Defence, will explore Australia’s defence challenges as the 2013 Defence White Paper planning process begins. Discussion will range across the spectrum of questions facing Australia’s defence policymakers. We will focus especially on these four themes:

Strategic environment: what are the challenges, threats, risks and contingencies the Australian Defence Force may have to face between now and 2035? The future of the Australian Defence Force: what capabilities will Australia need and what are the challenges inherent in preparing for uncertainty with constrained resources? Defence and diplomacy: what are the opportunities and limits of defence engagement with other nations, not only our ally the US but also partners and neighbours? What Australia thinks: what are the views in the wider community, including the business community?

The first non-Lowy Institute contribution to the debate was from Robert Ayson, Director of Centre for Strategic Studies at Victoria University, Wellington. Ayson offered ten propositions about the strategic environment which I think the writers of Australia’s 2013 Defence White Paper need to keep in mind”:

His proposition 9 was: The development of advanced conventional weapons systems and postures in Asia (especially in the maritime environment) is more significant than nuclear proliferation. There are few signs that the main contributors to this advanced conventional military competition have rules of the game and ideas for restraint. Cyber capabilities will grow without fundamentally altering the balance of power.

I know next-to-nothing about Ayson and next to nothing about cyber warfare, but as a result of reading other blogs (or lack of them) about cyber war on the Lowy site I was almost sure that it was going to be treated in a rather casual way.

In my view, the issue of cyber capabilities should be taken much more seriously. Here are some things to think about:

(1) History shows swings in power over time between the offensive and the defensive (sometimes called the sword and the shield, but think how the defensive power of the machine gun obliterated the offensive power of the horse, and in turn led to the development of the offensive power of the tank). Does, or will, cyber warfare alter this offence-defence balance? Will it in turn lead to further developments (perhaps even in the non-cyber field)?

(2) Or, is cyber capability a sort of leveler—like the six-gun became in the American West when even a skinny weakling could beat a big muscular guy if his reflexes were faster and he could out-draw him! So, how closely will cyber power relate to economic muscle power (which has been a significant determinant of the ability to spend huge amounts of money on ships, planes etc).

(3) Up until now it has been fairly easy to judge who is fighting against you and who is actually supporting you ie who your enemies and allies are and the extent that they are actually doing this. Except is cases of espionage, even people of moderate intelligence could almost always see and hear it with their eyes and ears. With cyber war this may become much less clear? Who is actually attacking you? How much are your supposed allies doing to help you? (And, will governments tell the truth about this—if they know it —to their citizens?)

(4) Will a country’s set of actual/potential enemies and/or allies in cyber war be the same as in a more conventional war of the type up to date? For example, would it always be in the interests of the US to ensure that each of its allies is protected from cyber attack if that attack had desirable flow-on effects on a “enemy” third country. A simple example might be the flow of energy supplies to China.

(5) Does control of geographic areas on the surface of the earth become less or more important? Does control of outer-space become more important? Are space based cyber war assets more vulnerable to attack than those on/under the surface of the earth, and does this bring advantages to some countries more than others?

(6) Does the availability of mechanisms for cyber war impact on the psychology of those making the decisions? Are aggressors more willing to go on the offensive (eg US and Israel against Iran with Stuxnet)? Do the leaders of some countries begin to judge the possibility and implications of being attached in a different way? What are their likely responses?

(7) How vulnerable is Australian to cyber attack? What economic and social disruption could occur? To what extent (and at what cost) can Australia — now and in the future be master of its own destiny in the cyber war field?

(8) Are Australia’s present-day defence strategists and generals up to the task either psychologically or in terms of technical knowledge — of making such assessments? Is a man or women who likes to be in uniform (and thinks a lot about guns, bravery and comradeship) almost intrinsically incapable of highly innovative or lateral thought, or of productive imagination? Are they capable of recognizing or accepting such attributes in others?

(9) Are relevant technology experts presently working in normal business and government organizations up to the task of offering defence against cyber attack? Would Julian Assange, and some other individualistic cyberspace experts be better at evaluating the possible threats, and designing defences?

(10) Should Assange be made an adviser to the Australian Defence Department? (As a bonus, he might even be able to contribute some — much needed — intelligent thoughts outside the cyber capability sphere.)

Russian fairy tales with Anatoly Chubais · 27 February 2010

Some people have a talent for spinning business stories and seem to be able to attract investors into their schemes in spite of their past failures. Of course, sometimes they eventually succeed and become admired for their persistence and leadership. One such story teller is Anatoly Chubais in Russia. According to Wikipedia, a 2004 survey by PricewaterhouseCoopers and Financial Times named him the world’s 54th most respected business leader.

Chubais has succeeded in making a lot of money for himself, but despite what the PwC/FT survey suggests the return to those who have believed in him has so far been negative. Now, he is at it again! Will he succeed?

Russia is proposing to create a sort of city of the future as part President Medvedev’s modernization drive. Located near Moscow it will supposedly accommodate between 30 and 40 thousand people who will be engaged in developing innovative products and commercializing them.

The process is being overseen by a working group headed by Vladislav Surkov, who is often described as the Kremlin’s ideological strategist and holds the position of first deputy chief of staff to Medvedev. Surkov is also deputizes for Medvedev as chairman of his Presidential Modernization Commission. Members of the working group include Medvedev’s personal economic adviser and another member of his staff, deputy ministers from the ministries of Finance, Economic Development, Industry and Trade, and the Ministry of Education and Science, and the Governor of the Moscow Region.

According to media reports, the Commission will in April/May begin making preliminary choices of innovative products to be developed and commercialized in the tentatively named InnoCity. They will initially be nurtured within selected large private Russian companies that are being allowed to participate in the scheme, and from the end of 2010 the most prospective projects will be transferred to InnoCity.

To be eligible for participation in the scheme, the products will need to fall within one of the five areas identified for pushing Russian modernization: energy efficiency and energy saving, nuclear technology, space technology, medical technology, and strategic information technology.

The Russian government will supposedly put up no more than 50% of the funding (although there will also be various tax and social security contribution concessions). Various outside investors are being sought.

What has this got to do with Anatoly Chubais?

For a start, he has joined the working group and this paragraph was carried in the Russian language newspaper Vedomosti last week:
The criteria for choosing innovative products include scale. For example, Chubais said that sales of a new innovative product should be able to reach $500m by 2015. The first 10 individual projects should be able to result in total sales of innovative products of between $3.3bn and $6.6bn. And, if 10 new innovative products are put in production each year sales should reach $33bn by 2015.

Do you get the picture? A group of people (including government officials) is going to choose those innovative products which will be commercially very successful. It all sounds like a fairy tale!

The involvement of Chubais is both surprising and not surprising.

It is not surprising because he is head of a Russian government owned entity called Rosnano which, according to one description for an event addressed by Chubais, was established in 2007 to enable Government policy in the field of nanotechnology. To accomplish this task, RUSNANO co-invests in nanotechnology industry projects that have high commercial potential or social benefit. Early-stage investment by RUSNANO lowers the risk of its investment partners from the private sector. RUSNANO participates in building nanotechnology infrastructure, which includes the nanotechnology centers of excellence, business incubators and early stage investment funds. RUSNANO provides scientific and educational programs that are required for its investment projects to succeed, and also supports the popularization of nano science and nanotechnology. RUSNANO selects promising spheres for investment based on longer-term foresight created by the leading Russian and world experts. To assist the Russian nanotechnology industry advance to the global market and strengthening of its international links RUSNANO develops partnerships with the leading nanotechnology centers in the world and organizes the annual Nanotechnology International Forum in Russia.

In early February 2010, Chubais said that Russian nanotechnology has more than 60 cooperation projects on the table, and some of them will be put into practice in the near future. In particular, Russia is building its largest solar panel factory, he noted. He added that dozens of new nanotechnology factories are being built with sponsorship from Russian Nanotechnology. The factories, which will work on national innovative projects, are expected to number more than 100 by 2015.

It—and I emphasise IF—this all true, it is not surprising that Chubais is part of the working group.

What is surprising is that Rosnano is being described as the general builder or contractor for InnoCity. Morever, it may be made responsible for general summarizing of possible projects for the Commission. Nano seems to mean anything but extremely small !!

It is also surprising to me at least that Chubais is head of Rosnano given his past success rate.

Under the then president Putin, Chubais was responsible for the privatization of most the Russian electricity generation sector. Putin, who may have had reservations at the time, is now complaining that the Russian buyers of these assets are not living up to their promised investments in additional power capacity. This is hardly a surprise as such commitments would be difficult to enforce in any economy!

Under the then president Yeltsin, Chubais became chairman of the State Property Committee in late 1991. From this post, he supported “shock therapy” for the Russian financial system and was one of the strongest advocates for privatization. From late 1994 to early 1996 Chubais served as First Deputy Chairman of the Russian Government in Charge of Economy and Finance. He was the leading proponent and for a time responsible for rapid privatization of state assets. In 1995, he implemented the controversial “loans for shares” scheme, in which the state borrowed money from private oligarchs with oil fields, metals producers and other state assets as collateral. When the state didn’t repay the loans, the oligarchs became owners of huge resource assets at discount prices. Chubais defended it at the time as necessary to break state control over the economy and says that the privatization of ‘90s was aimed at fighting Communism.

In mid-1992, after visiting Russia for the second time (when I was chief economist of HSBC in Australia), I could see that Communism was clearly dying and did not need to be overtly fought. I wrote that the planned pace of privatization is unachievable because of the lack of an existing market and institutional framework to support it. This pace is dangerous because of the massively disruptive effect that ownership changes and reorganization will have on the already mangled process of production in medium and large enterprises. Small enterprises and some service sectors, of course, may be privatized rapidly with less disruption. The other danger with rapid privatization of larger enterprises is that its lack of control may deliver many state assets into the hands of only a few groups who will then exercise monopoly powers and control over the economy. This appears to be a particular danger in Russia.

What is the secret of Chubais� �success�?

If we are to go by the claims for InnoCity, I suspect it is that he is a good story teller who has no difficulty in promising magical returns whether these yields be political, financial or modernization. He can truly be described as a leader even a creative one. But, of course, creative leaders do not always lead people to a better life. (Guess who I have in mind! They are characters in my book!)

As for the PwC/FT survey it simply tells me that Chubais has been very good at promoting himself to foreigners who are generally ignorant about Russia.

P.S. InnoCity is being marketed as Medvedev’s idea. Whether this is true or not, it is trashing his image with many intelligent and educated young Russians. One joke I have heard concerns a nano-bucket for nano-bolts, and nano-tweezers to pick up the nano-bolts, and possibly a nano-person to hold the nano-tweezers.