The Cost of Corruption

I found this report by Isabel Coles in the Wall Street Journal on the activity in Ukraine to root out corruption in military procurement very encouraging. The short version is that the Ukrainian government has realized that the country cannot endure with the level of graft that has afflicted its military procurement.

KYIV, Ukraine—Masked Ukrainian security officers have raided properties, seized wads of cash and detained suspects in a recent crackdown on graft in the purchase of goods for the military ranging from eggs to artillery shells.

At the same time, a quieter operation is being waged by a new team of professionals including a former energy executive called Maryna Bezrukova. From her office in a gleaming business center in Kyiv, she is on a quest to save money and ensure new arms contracts are untainted.

“We need to change the system,” said Bezrukova, who became head of Ukraine’s Defense Procurement Agency earlier this year. “Unless we change the system, nothing will happen.”

As Ukraine faces setbacks on the battlefield in the third year of Russia’s invasion, attention has turned to corruption that is corroding support for the war effort at home and abroad.

Allegations of graft have helped galvanize Republican opponents of military aid to Kyiv, who are holding a $60 billion package hostage to their demands for tighter border control. Short of munitions and men, Ukrainian forces are struggling to hold the line against a much larger enemy. Corruption is also denting morale and making it harder to persuade more Ukrainians to risk their lives.

Ukrainian anticorruption activists say the steely-eyed Bezrukova has what it takes to challenge entrenched interests and shady middlemen while negotiating arms deals worth billions of dollars. Her efforts to clean up arms procurement could prove more meaningful than the recent spate of arrests, they say. But the scale of the challenge is huge. “Of course, it’s not easy,” said Bezrukova, likening her mission to sewing a parachute while in freefall.

Don’t underestimate how difficult a task this will be. Ukraine is generally considered the second most corrupt country in Europe, right after Russia, and some of those who profit from all of the corruption are very powerful.

The position that has been articulated by U. S. officials, that they are confident that non of the $113 billion that Ukraine has received from the U. S. has gone into anybody’s pockets, is facetious. For one thing money is fungible.

But it’s definitely a step in the right direction.

0 comments

Eclipse of 2024

My wife and I just finished watching the solar eclipse. Here in Chicago they’re saying we had 94% totality. The weather is perfect for it—hardly a cloud in the sky. We carefully looked up with our solar glasses.

Quite an experience.

10 comments

Six Questions

I recommend John Zavales’s post at Responsible Statecraft on questions the Biden Administration should answer for Congress:

The first should be: Can you define what constitutes victory in this war? Does it require Ukraine recapturing all its internationally recognized territory, as President Zelensky and others maintain? Or can victory be defined more simply as preventing the collapse of the current government? What do we mean by providing Ukraine aid “as long as it takes”? The Biden administration should provide actual analysis, based on U.S. national interests, and not simply Ukrainian government talking points.

Second, if our definition of victory is the expulsion of all Russian forces from Ukrainian territory, how plausible is that from a military perspective? Can the Biden administration provide a historical example in which a numerically smaller force, without air superiority, successfully attacked a larger force entrenched in strong defensive positions hundreds of miles long, dislodged that force, and inflicted more casualties on the defender than it suffered itself while on the offensive?

Next, there has been much speculation about the risks of nuclear escalation, and whether Russian statements are merely aggressive bluffing, with no likelihood such weapons would be used. During the Cold War, wasn’t it U.S. doctrine to implicitly threaten to use tactical nuclear weapons, not just to deter the Soviet Union from attacking the US homeland or using nuclear weapons in Europe, but to deter a conventional attack by the Warsaw Pact? If those threats were credible, why would Putin not consider using tactical nuclear weapons if he were facing a conventional defeat in which Ukraine threatened to retake Crimea and the Donbas, areas Russia now considers part of its territory?

Fourth, a major talking point has been that a Russian defeat would deter China from attacking Taiwan, and represent a victory for the democratic world over an authoritarian axis. If this is a rationale to keep the war going, wouldn’t China take us at our word, and decide that a Russian defeat is an unacceptable red line? Why wouldn’t China begin providing munitions, artillery, tanks, and aircraft to Russia to prevent such an outcome?

Fifth, in addition to Ukraine’s shortage of ammunition and weapons, we increasingly hear about a manpower shortage, and an inability to replace casualties. Despite the battlefield situation, hundreds of thousands of Ukrainian men remain outside the country or are in Ukraine but making extraordinary efforts to avoid being drafted. Is this due to dissatisfaction with the current government, or a sense that while it was important to save the country in 2022, it’s not worth continued fighting to retake Crimea and Donbas, or something else? Regardless of its cause, why should the American taxpayer be more committed to a Ukrainian victory than hundreds of thousands of Ukrainian citizens themselves are?

And finally, following Ukraine’s unsuccessful counteroffensive last year, Russia is now undertaking limited attacks in several areas, using its superiority in artillery and airpower to wear down Ukrainian defenses. The Biden administration often states that its objective is to give Ukraine as strong a position on the battlefield as possible going into any negotiations. Is it possible that Ukraine is now in the best position militarily that it can reasonably hope for? Is it time for us to urge Ukraine to begin negotiations now, based on realities on the ground, rather than strive for maximum objectives, before it loses any more territory, and its bargaining position is further weakened?

I presume that one’s view on how worthwhile answering such questions depends on your view of Congress and the majority. If you think that the Republican majority doesn’t want to give the Biden Administration a “win”, you may think that answering such questions is a waste of breath. It doesn’t matter. It’s the White House’s responsibility to convince Congress.

8 comments

Is It the West Whose Values Are Diverging?

I received a notification by email of an article in The Economist that I wish I could read but, alas, it’s inaccessible behind a paywall. The title of the article is “Western values are steadily diverging from the rest of the world’s”.

I have a two-part question about that statement. The first part is to wonder if that’s true? The second part is to wonder if the truer statement would be that “Western elites’ values are diverging from those of the entire world”? I.e. including many in the West.

11 comments

Today’s Talking Heads Programs

The talking heads programs (Face the Nation, Meet the Press, This Week, etc.) were pretty tightly focused on the war in Gaza, especially because of the IDF attack on World Center Kitchen vehicles in Gaza that took the lives of seven aid workers.

IMO the attack put the Biden Administration on the horns of a real dilemma. On the one hand the president has been full-throated in his support for Israel for over a generation including a statement of support following Hamas’s attack on Israel six months ago. That makes it difficult for the president to “walk back” his support regardless of the domestic political consequences. On the other the attack raised the question of what Israel’s actual objectives in the war are.

One of the things I noticed is no one on any program that I heard made the critical point that Hamas could end the war tomorrow. All they need to do is surrender. The inescapable conclusion from that is that Hamas values its own members and their continued genocidal war against Israel more than they do the civilian population of Gaza.

My opinion as I have tried to make clear is that the Israelis are not our friends and Israel is not the 51st state. However, I also think that the members of Hamas are hostis humani generis—enemies of humankind. Their views are incompatible with ordinary decency let alone with liberal democracy. Talk of a “two-state solution” in the context of the continued existence of Hamas is a cruel fantasy. By its own admission Hamas doesn’t believe that any state is legitimate other than the Dal al-Islam (the abode of Islam).

Given a choice between Israel continuing to survive and Hamas continuing to survive, the preferred alternative is clear. Israel should continue and Hamas must be destroyed. That’s a step short of the full-throated support of Israel the Biden Administration appears to be trying to walk back.

8 comments

Who You Gonna Believe?


I’m seeing quite a few editorials, articles, and posts claiming that Americans are misinformed about the economy. I don’t believe that Americans are misinformed. I believe that economists are. Ordinary people being nervous about the economy is rooted in their day-to-day experiences.

The graphic at the top of the page (sampled from the WSJ) illustrates the change in grocery prices since 2019. In preemptive response to charges that the WSJ is a right-wing rag, today economist Greg Ip has an op-ed in the Wall Street Journal arguing exactly what I said above: Americans are misinformed about the economy. He dismisses new homebuyers faced with much higher mortgage payments as being a very small segment of the population.

He neglects to consider those with adjustable rate mortgages (ARMs), between 10% and 20%.

People with credit card debt aren’t a small percentage of the population. 82% of Americans have credit cards and of those almost half carry balances month-to-month. The interest rate you pay on your credit card debt is usually prime rate plus. Consider the change in the prime rate over the last few years:

Furthermore, 20% of Americans have home equity lines of credit (HELOC). The rate you pay on your HELOC is also usually prime rate plus.

If you make the reasonable assumption that there is not a perfect overlap between people carrying credit card balances and people with HELOC balances, that’s nearly 50% of the population who are paying considerably more for their credit (in one form or another) based lifestyle.

When you combine new homebuyers, people with ARMs, credit card debt, and HELOCs with the increased price of groceries, and rents, being nervous about the economy sounds pretty reasonable to me. Even more so the younger you are since younger people tend to run credit card balances and have HELOC debt.

12 comments

What Does NATO Want?

I want to call your attention to this piece by former NATO Ambassador Robert E. Hunter at Responsible Statecraft on the occasion of the 75th anniversary of the founding of NATO:

Seventy five years ago today – April 4, 1949 — foreign ministers of the United States, Canada, and 10 West European countries concluded the Treaty of Washington, creating what became the North Atlantic Treaty Organization.

The treaty committed U.S. (and Canadian) power and purpose to Western Europe to contain the Soviet Union. In the subsequent four decades, NATO was critical in ending the Cold War and Soviet suzerainty over Central and European Europe, and playing a role in the collapse of the Soviet Union.

I materially agree with his assessments. Consider:

Historians will contend it is useless to revisit events and pretend that what happened in 2014 and 2022 could have been deterred. But in this case, there were leaders just after the Cold War who did try to shape European security in a way that might have avoided the current confrontation with Russia. Perhaps Putin always had ambitions to swallow Ukraine and advance Russian influence farther West. But an equally plausible (I would argue more compelling) argument can be made that the West — and later Russia — ultimately forfeited the chance to develop “history” differently.

This passage is crucial:

Even before the fall of the Iron Curtain in 1989, the H. W. Bush and later the Clinton administrations had a critical insight: A defeated Russia should not be treated with the harshness meted out to Germany in 1919, with the Versailles Treaty’s so-called War Guilt Clause that required Germany to accept total responsibility for causing the First World War. In Hitler’s rise to power, the treaty proved to be highly useful propaganda for targeting the demoralized and resentful German people.

Bush thus proclaimed the ambition of a “Europe whole and free” and at peace. As much as anything, that meant not stigmatizing Russia and, to the extent possible, enabling it to play a serious role in the new security architecture the West was putting into place instead of simply disbanding NATO and tempting fate.

NATO thus gained Russia’s membership in its flagship Partnership for Peace and Euro-Atlantic Partnership Council. It also welcomed Russian troops in the post-Bosnia War Implementation Force (IFOR) – the first such military cooperation since U.S. and Soviet forces met on the Elbe River in 1945.

Why, then, did the Clinton Administration proceed to treat Russia as disdainfully as it did? I completely agree with this:

Most damaging to the chances for building shared security and avoiding a new confrontation, in 2008 President George W. Bush pressured NATO to declare that Ukraine and Georgia “will become members of NATO.” This was clearly beyond what any major country could accept (for the U.S.: think Cuba) and violated the 1997 tacit understandings on Ukraine’s position between East and West.

Both NATO and the United States have repeated that pledge regularly ever since — ironically so, since it is virtually inconceivable that the alliance could get the required consensus of its 33 members in order for Ukraine to join.

This geopolitical folly does not justify any of Putin’s actions. But, along with further NATO enlargements and a 2014 U.S.-led government coup in Kyiv, it has helped Putin make the case at home that NATO is seeking to surround Russia.

It does raise a central question: what does NATO want? Its intention is clearly not to incorporate Russia into Europe. That would have been a “Europe whole and free”. Had that been the case when Putin floated the idea of Russia’s joining NATO 25 years ago it would have been taken more seriously. Is it to reject George H. W. Bush’s vision in favor of a new Cold War? How do we benefit from that? Is it to separate Russia from its allies and isolate it? Is it to fragment Russia?

What does NATO want?

12 comments

Respect for Institutions Is Declining and For the Same Reason

In his Wall Street Journal column William A. Galston declaims:

Between 1973 and 2005, according to the German think tank Bertelsmann Stiftung, the number of governments rated as liberal democracies more than doubled. Since then, the number of liberal democracies has fallen, while attacks on this form of government have intensified. Some attacks are external, from autocratic governments such as Russia and China, whose leaders view liberal democracy as a threat to their power. Other attacks are internal, led by those who see liberalism as a source of political and moral decline.

The effort to explain rising internal opposition to liberal democracy has become a cottage industry in the past decade. In an op-ed for the Washington Post last month, journalist Fareed Zakaria argued that since the fall of the Berlin Wall and collapse of the Soviet Union, rapid economic and social changes have corroded communal life and empowered minority groups in ways that have “unnerved” longstanding majorities. “Freedom and autonomy often come at the expense of authority and tradition,” Mr. Zakaria wrote. “As the binding forces of religion and custom fade, the individual gains, but communities often lose.” The result, he said: We are freer but lonelier, and we struggle to fill our sense of emptiness.

New York Times columnist David Brooks agreed, contending last month that dissatisfied Americans are feeling an absence of “meaning, belonging, and recognition.” Like Mr. Zakaria, he suggests that infusing liberal politics with moral meaning is the remedy for the declining power of religion.

I have two qualms with this argument. First, it minimizes simpler explanations for the declining confidence in liberal democracy. One is that the U.S. has been ill-governed for the past two decades. Consider the record: two costly, mostly failed wars; a financial crisis from which it took years to recover; a pandemic during which Americans experienced more restrictions and more deaths per capita than many other advanced societies; a postpandemic inflationary surge; cultural conflict that has polarized politics. Against this backdrop, we need not invoke religion to explain declining confidence in liberal institutions, which are, like all forms of government, judged mostly by their fruits.

Second, if the decline of religion is contributing to the weakening of liberalism, it is dangerous to look to politics as the solution. Yes, politics can be an arena of common purpose during wartime, economic calamity or natural catastrophe. For those seeking social change, political movements offer the satisfaction of collective action guided by shared moral commitments.

As Gallup has documented confidence in practically all institutions has declined over the last 50 years. That includes government, big corporations, banks, religion, science, the medical profession, the media, labor, and practically every institution except for small companies. Faith in Congress is nearly zero. I believe that loss of trust is for a single reason: information. Mme. de Cornuel quipped more than 200 years ago: no man is a hero to his valet. The reason for that is that in the intimate relationship between the valet and the master, the valet knows too much.

We’re all in that position now. Things that would have been kept comfortably secret 80 years ago are now broadcast all over the world in moments.

BTW I think that reports of the decline of religion in the United States are greatly exaggerated. Americans are increasingly tending to call themselves “spiritual” rather than “religious”. I suspect that’s because being spiritual doesn’t limit your conduct the way being religious does. But that’s a subject for another day.

2 comments

All You Gotta Do Is Dream

I found these remarks by the editors of the Wall Street Journal interesting but possibly not for the reasons they editors might want. The editors comment on the difficulties being encountered by the Internal Revenue Service in accomplishing what President Biden intended:

The Internal Revenue Service got an audit of its own in time for Tax Day, and two irregularities jump out. President Biden’s plan to hire a new army of tax collectors is falling flat, and the agents already at work are targeting the middle class.

Those are two findings of the IRS’s watchdog, the Treasury Inspector General for Tax Administration (Tigta). The report examines IRS progress on mandates from the Biden Administration backed by tens of billions in new funding. The first supposed goal was to audit more ultrawealthy and fewer middle-class filers, but it’s not going so well.

By last December the IRS decided that it wouldn’t begin tracking its progress until later this year. That’s because the agency has been slow to shift its focus to high-income taxpayers, who make up a small share of total filings. Its April 2023 strategic plan pledged that future audits would disproportionately target individuals making at least $400,000, but “did not include specifics on how the IRS was going to ensure it met this commitment,” says Tigta.

That part isn’t surprising at all. In fact, it’s exactly what I predicted. There’s a reason the IRS “targets the middle class”. That’s the low-hanging fruit. Those earning under $200,000/year don’t fight back as hard as the “ultra-wealthy”.

But I found this surprising:

Tigta reports that revenue-agent recruitment is “far below” the agency’s target, and it hired only 34 in the first six months of its expansion, according to trade publication Government Executive. That compares with its goal of 3,700 in the first year.

The agency faces the same tight labor market as any other employer, but the job specs aren’t bad. A typical salary for these agents is about $125,000, plus public-employee perks such as up to $60,000 in student-loan forgiveness. But for one reason or another, America’s treasurers and accountants aren’t lining up to become federal tax collectors.

I’m skeptical that the shortfall is due to a “tight labor market”. I suspect that there are other reasons that are keeping the hiring low. An example of such requirements could be the credentials being required or relocation requirements. Given that only 34 have been hired, an enterprising journalist should be able to identify them (their hiring is public record after all) and check their locations and biographies. I suspect the truth won’t fit either the editors’ agenda or the image the IRS wants to project.

11 comments

Should the U. S. and Israel Be “On the Same Page”?

SPOILER ALERT: I think that the United States and Israel are different countries. Although there is some overlap our national interests are different than Israel’s national interests and that situation will persist. We ignore that at our peril.

The editors of the Washington Post have some thoughts on keeping the United States and Israel “on the same page”:

As the war in Gaza grinds on into its sixth month, cracks are showing in the once unequivocally united front between Israel and the United States. Meantime, hunger threatens Gaza’s civilians, who, through displacement, disease and death, have already paid a horrible price.

If Israel and the United States do not resolve their differences and agree on a viable approach to Gaza’s next phase, including on how to alleviate Gazans’ suffering and to sideline Hamas, only Hamas itself might emerge as anything like a victor, after starting this war by massacring Israelis on Oct. 7. Such a result could threaten not only Israel’s stability but also the region as a whole.

I think that the editors are conflating the Biden Administration’s political problems with a program for Israel. IMO the Biden Administration is viewing the war in Gaza primarily through the prism of domestic electoral politics. The Biden campaign faces an unenviable conundrum. As they see it they need to retain the support of Jewish voters and Muslim voters and those camps are drifting apart, pulling them in opposite directions. If Michigan and Minnesota are “must win” states for President Biden, the statements of the Biden White House WRT the war in Gaza make perfect sense.

I continue to have no idea of what Israel’s actual objectives are in the war. If their intention were to eliminate Hamas while minimizing civilian casualties, I believe they’ve made some serious mistakes. If their intention were to exterminate the population of Gaza, they would certainly have herded the civilian population into a tiny corner of the territory as they’ve done but they’re proceeding with a very light hand. That sounds conflicted to me.

I also think there’s a lot of fantasizing going on from all sides. Fantasizing about an Israel that does not, in fact, exist. Fantasizing that Gazans who voted to make Hamas their government have no responsibility for the repercussions of that choice. Fantasizing about the viability of a “two-state solution”. Who would govern the Palestinian state? Hamas? Fatah?

3 comments