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Paging Ronald Reagan . ..

When I got out of the Army, I was well-steeped in the core belief of Special Forces that “the ultimate weapon is not the atomic bomb but is a guerrilla fighter.”  It is the belief that isolated, unpredictable acts of savagery can bring down a nation more cheaply than a fleet of B-52’s.

Also, when I got out of the Army, I knew my future was in economics and recall standing in the hallway talking to a professor.  When I shared that core belief with him, he said “the ultimate weapon is economic power.”  He believed no nation could afford sustained military power without sustained economic power.

When Ronald Reagan was President, I thought a great deal about the professor’s comments.  Reagan started an arms race that Russia could not win.  Milkail Gorbachev was the last General Secretary of the USSR and was forced to capitulate, sealing the collapse of the USSR.  Out of those ashes, modern-day Russia arose, but I question whether it has learned the lesson my professor taught.

Because it has such a large supply of nuclear warheads, Russia has more power/influence externally than internally.  Putin is a major player on the world stage today.  Things look good for him.  His popularity is far greater than any US president since 9-11.  While stock markets for the emerging markets are down 6% since the US election last month, the Russian stock market is up a stunning 16% — an irrational difference of 22%.

Putin has made no fundamental economic change.  The Russian population is actually decreasing, as the death rate from diabetes, suicide, and alcoholism soars.  Actual unemployment is estimated in excess of 10%.  The economy is just as much of a “one-trick pony” now as it was in 1984 and is just as vulnerable to the price of oil as Saudi Arabia.  Flooding the world with shale oil now will hurt Russia more than sanctions.  In addition, Russia views technology not as a productivity tool but another foreign policy tool.

Russia is rotting from within, just like the USSR did.  This year, it has only the sixth largest defense budget and is expected to drop to seventh place next year, as it falls behind France.

Some people argue that Russia and North Korea leaders have the same psychological profile, i.e., a pathological need for international respect — to be feared and consulted with.  Like my late mother always told me, respect has to be earned.