For Sale: Siberia

Written by John Ellis on . Posted in Breaking News, Posts.

enablement is now no longer a sustainable Russia policy. So what do we do? In
two words: buy it, or, more precisely, buy Siberia and neighboring territory
from Russia.

Almost eight
years ago, Walter Russell Mead of the Council on Foreign Relations proposed
in a Los Angeles Times op-ed piece that the United States buy Siberia
from Russia for $2 trillion. At the time, Russian President Boris Yeltsin had
offered to sell oil fields, production plants and land to the United States
to help pay down some of Russia’s then-$70 billion in foreign debt. President
Bush turned Yeltsin down, reasoning that it was one thing for America to win
the Cold War, quite another to buy up its assets in a fire sale.

Times have
changed. Russia’s gross domestic product is roughly half the size it was
in 1991 and nearly half of its people–more than 60 million of them–live
below the poverty line. The poverty line in Russia makes the poverty line in
America look like Southampton. The near-term outlook could hardly be bleaker.

Russia is
a country on the verge of economic implosion. Mead’s proposal fixes all
that with the stroke of a pen. A $2 trillion purchase of Siberia pays off Russia’s
debt, stabilizes its currency, upgrades its infrastructure (which would be done
by American businesses, thus helping alleviate the U.S. current account deficit)
and leaves more than enough left over to pay all the back wages of every last
pensioner. There would even be enough left over for an Alaska-style rebate to
every Russian citizen, assuming the kleptocracy doesn’t skim off more than
the usual 33 percent.

In return,
the United States would acquire a land mass larger than its own with a population
of roughly 30 million people. "The combination of new territories in Asia,"
Mead wrote, "and a vast, suddenly solvent market in European Russia would
amount, literally, to a new frontier with new opportunities and challenges for
generations to come… This deal would double our size and put us on the
Pacific Rim at the intersection of China, Korea and Japan.

more," Mead continued. "Part of the deal would be for cash and part
for credits: with, say, half the money, the Russians could place orders in the
United States. Fiber optics, consultants, computers, machine tools, whatever
they wanted from whomever made the best deal as long as the stuff was American-made.
Over, say, a 20-year payment period, we would see something like $75 billion
in exports each year to Russia. Minimum. That means 1 million jobs in today’s
50 states… Even with all the incidental expenses–environmental cleanup,
infrastructure–the deal could help balance the budget."

And there’s
even more than that. Siberia is a land rich in natural resources. By purchasing
it from the Russians, America would acquire all the mining rights therein, the
great timberlands of the southeast and the warm-water port of Vladivostok. Overnight,
the U.S. would become the largest oil producer in the world. Overnight, the
U.S. would become the second most important regional player in the Pacific Rim.

up the American flag over Siberia would create an enormous opportunity for global
investors. No one in his or her right mind would invest in Siberia today. But
if it were an American protectorate or territory (on its way to becoming an
American state or states), a stampede of investment would ensue.

Two questions
arise: Would the Russian political elite sell Siberia, and how would the deal
be underwritten? The answer to the first question is obviously "yes."
Most of the Russian political elite are veterans of the Soviet system of government.
During its reign, Soviet Communists killed more than 60 million of their own
people. Does anyone think that such people would have any qualms about selling
parts of their country for cash? Not only would they sell the motherland for
cash, they’d sell their mothers for cash.

The answer
to the second question is equally straightforward. The U.S. government would
have to write the contract and guarantee some of the moneys, but let’s
be honest: The investment banking community would kill to get a piece of this
action. Morgan Stanley Dean Witter and Goldman Sachs and Merrill Lynch and all
the rest of the Mercedes S-class would be lining up outside the State Dept.
for weeks just to get a shot at it. It would be the greatest bonanza in the
history of Wall Street.

In 1803,
President Thomas Jefferson did just such a deal. Napoleon was caught in a political
and financial bind. Jefferson made him an offer. The result was the Louisiana
Purchase. The Siberian Purchase makes every bit as much sense. Indeed, in the
current context of loose nuclear and biological weaponry, it makes even more
sense. And it probably guarantees 10 years of economic growth in the U.S. That
alone should recommend it to Vice President Gore.

Of course,
if the idea were even proposed at a meeting of Clinton administration foreign
policy decision-makers, it would be shot down in an instant. Too risky. Too
tricky. They’d lawyer it back to an IMF loan guarantee program so fast
it would make your head spin.

Which is
yet another reason, if any more were needed, why it is imperative that we get
rid of these people as quickly as possible, and get ourselves a whole new team.