April 21, 2015

Could Russia and Ukraine Be The Clouds of World War III?

If you’ve been paying attention to any newspaper, television, or radio station, the past 72 hours probably seemed like something straight out of a fiction novel or film.  Though the chances are still remote, a series of events has been set into motion that, due to the existence of several mutual defense treaties among various nations, could result in World War III if not diffused quickly.

Personally, I’m fairly optimistic it can be avoided as nobody wants a war, but given Russia’s behavior the past few years, I can’t say that with any certainty.  You never know what relatively tiny thing – like the assassination of an Archduke – can turn entire civilizations against one another and change history forever, which is why treading so carefully when arms are raised is important.

It All Started Back In November with the Ukrainian People Wanting to Increase Economic Ties with Europe

Ukraine is a sovereign nation.  It is recognized internationally as a sovereign nation.  It is a member of the United Nations.  Geographically, it has Russia on one side and Europe on the other.  Though not perfect, over the past twenty years, Europe’s system of free market capitalism and political liberty has resulted in a breathtakingly large difference in standards of living between the two.  Back in November, the government of Ukraine rejected an extensive accord agreement with the European Union in order to forge closer relations with Russia.  This went against the wishes of a significant percentage of the 45 million people who lived in the country and saw the opportunity closer ties to Europe meant; to expand trade with places like The Netherlands, Denmark, France, Germany, Italy, and Switzerland, which put Russia to shame on practically every imaginable front.  No small part of this was the fact that Russia had a history of using its oil and natural gas reserves to control Ukraine, shutting of the energy supply whenever the people wouldn’t comply with whatever Moscow wanted, so they, understandably, wanted to be free.  It’s human nature.  Nobody likes letting someone else manipulate them like that.  Who wants to become more dependent on the nation that controls your light switches?

Ukraine Map

Russia’s decline should come as no surprise to any of you.  When I wrote a post back in June of 2013 called Russia Is Sliding Into a Self-Reinforcing Cycle of Cultural Repression That Will Destroy the Nation that detailed some of the problems I was seeing in the country, I never expected things to fall apart this quickly.  Here we are, not even nine months later, and Russia has become one of the most discussed geopolitical forces on the planet.  In that time, the extent of the nation’s misery, political suppression, and mindset has become even clearer to the world, as has the desperation of its leaders who are doing everything they can to occupy the population with “enemies”, both domestic and foreign, as a distraction.

To put it bluntly, this is a country that is well past decline and is suffering outright necrosis.  One recent study in a medical journal calculated that 1 out of 4 Russian men will die before they are 55 years old, mostly as a result of alcohol, a rate exponentially higher than countries such as the United Kingdom or France and a general indicator of discontentment.  Economic conditions are so horrible that what would be considered middle class in Russia would be outright dirt poor in places like Canada, Australia, The United States, or Switzerland.  To distract from the horrific failings, the government has criminalized basic human rights, handed out jail sentences for the vague crime of “blasphemy”, and expanded the concept of Treason.  Freedom of assembly and protest has been severely curtailed and criticizing certain officials and political leaders can now be considered illegal defamation.  Not content to stop at the suppression of religious and conscience rights, the Duma began turning its attention to individual characteristics, as well.  In what isn’t a surprise to anyone who watched the Sochi Olympics, Putin’s regime all but criminalized being gay to the point there are popular groups of Neo Nazis with online video channels boasting 136,000+ subscribers that hunt down 15 year old boys on the Internet, lure them away from their family, and then record videos of them (NSFL) being given the choice to be raped by a fork or have an eye gouged out as punishment for their “sin”.  This is not a place any rational human would want to live.  It makes Detroit look like Shangri-La.

Lose Eye

The events in Russia have been well covered on international news networks, including those in the United States such as CNN.

I mean, this is a country where the cultural priorities are so irrational that a majority of the population considers playing blackjack to be exponentially more immoral than divorcing your spouse.  I cannot even get my head around that.  I’m not a gambler.  I rarely speculate.  That’s no secret.  But the idea that walking into a casino and sitting down to play a game of poker with friends is somehow evil, while tearing apart your family wouldn’t be a greater evil?  It is completely illogical.  If you enjoy the probability, are willing to accept the loss, and all parties involved are consenting, there is nothing moral or immoral about buying a lottery ticket as currently structured or participating in a fantasy football pool at the office.

Personally, I think it’s only a matter of time before Russia outlaws abortion to deal with its declining birth rate, and experiences a repeat of former Romanian dictator Nicolae Ceauşescu’s mistake.  One of the great economic hypotheses that seems clearly evident by the data is that when you make abortion impossible, you have a lot more births in a certain sub-demographic: low income, poorly educated mothers who don’t want children.  This leads to a predictable rise in violent crime 20-30 years after the ban goes into effect as these neglected children become socially undesirable adults.  (On the flip side, in the United States, the reason for our crime rate collapsing to levels thought unthinkable only a few decades ago has now been traced, at least partially, to Roe v. Wade, a fact that I accept as a rationalist but that makes me extremely sad as someone who veers heavily pro-life, personally.  It’s a mental model called the Donohue-Levitt Hypothesis and you can read about it in this PDF from The Quarterly Journal of Economics.)

I’m getting sidetracked now, but it’s all relevant in the bigger picture.  Let’s get back to the main story.

The People of Ukraine Begin to Protest In Support of a Closer Relationship with Europe

Peaceful protests began to take hold across the country and within two weeks, 300,000 people were demonstrating in Kiev’s Independence Square.  They took over city hall, and demanded the government listen to the citizens.  In response, the Ukrainian politicians, who were essentially acting as stand-ins for Moscow, passed twelve draconian laws violating the fundamental human rights of every man, woman, and child in Ukraine.  They made it a crime punishable by years in prison to protest the government; to setup any sort of stand, tent, or stage unless authorized by the government; to assemble with other people and criticize government officials.  Even talking badly about government or officials on the Internet could be considered “slander” that would require a sentence of one year of forced labor.  The list goes on and is horrifying.

To terrorize its citizens into compliance, the government used its surveillance capability and broadcast a text message to the cell phone of every protester warning them they had been “registered as a participant in a mass disturbance”, with the subtext being perfectly clear: You are being watched.  Do what we say or you will be punished.

Meanwhile, to try and bribe the Ukrainian people, Putin promised to buy $15 billion worth of government bonds to lower the cost of debt in the county, and slashed natural gas prices, making energy cheaper during the winter.

The Government Cracked Down On Its Own Citizens So The People of Ukraine Revolted

It didn’t work.  The protests continued so the government turned its weapons on picketers and students, housewives and business owners.  Innocent people were murdered in the street for doing what we take for granted.  One of the protest leaders was kidnapped and tortured for eight days.  (If you have the stomach for it, here are some of the news images of the citizens who were gunned down to put a human cost on how evil the government was behaving.)

This violence against the Ukrainian people by their leaders had the opposite effect of what the Russian-backed puppets wanted.  The country went into outright revolt.  Citizens seized government buildings.  They overthrew the administration, Parliament repealed most (not all) of the anti-protest laws, and the Prime Minister escaped to Moscow, where he has since been spotted.  The protest leaders announced plans to create a new government and hold elections, giving people control over their own destiny (and, presumably, to join Europe while lessening dependence on Russia).  A warrant for the arrest of the former Prime Minister for the crimes he committed was issued.

During this time, a smaller group of pro-Russian forces seized some government buildings in Ukraine’s Crimea region from the new government.  They sent requests for help back to Moscow.  Putin went to the Duma, Russia’s version of Congress, and received authorization to use military force.  Russian troops were mobilized.  They invaded Ukraine, seized control of Crimea, and have all but declared war on the new government instituted by the people.  It is unquestionably an act of war.  It would be akin to Mexico deciding it didn’t like political unrest in Texas and sending its military to occupy Dallas or Houston.

Kremlin Moscow War

Europe and her allies are drawing up severe economic sanctions to retaliate against The Kremlin’s act of war on a sovereign nation.  Image licensed under Creative Commons Attribution-Share Alike 1.0 Generic, Минеева Ю. (Julmin).

The Pentagon Suspends Relations, Ambassadors Withdrawn, Economic Sanctions Threatened

Forty-eight hours ago the United Nations had an emergency session during which Ukraine’s ambassador pleaded with the world to intervene following the unprovoked act of foreign aggression.  International news sources drew parallels to Hitler’s comparable moves in Czechoslovakia and Poland prior to World War II.

Within the past few hours, the United States Pentagon announced it has suspended “all military engagements with Russia, including bilateral meetings, military exercises and port visits”.

Other world powers have begun to cut ties, and, it appears, the very real threat of economic sanctions are on the horizon, which could devastate Russia’s already low standards of living as Russia’s main economic lifeblood comes from the fact it sells roughly 25% of the gas consumed in the entire European Union.  Such a move would also harm Europe, which would be faced with escalating energy prices as the continent had to find alternatives to Putin’s energy reserves.  Just a few hours ago, the British Prime Minister, David Cameron, announced the Crown is drawing up a series of economic penalties that will severely cost the Russian government and people for this invasion.  Details have not been released, yet, but if the chatter and historical precedent is any indication, options on the table could include freezing bank accounts, assets, and stockholdings of Russian investors, banning business relationships with Russian companies, and forbidding Russian citizens from traveling within Europe or North America.

Russian investors panicked at the idea of facing such economic devastation, as well as international speculators who were betting against Russia in a global conflict, caused the liquidation of shares en masse.  By the end of the trading day, the Micex index had collapsed just shy of 11%.  In response, Russia’s central bank jacked up interest rates to try and attract capital.  Meanwhile, Ukraine, the innocent victim in all of this, is running low on money, with foreign currency reserves at an estimated $17 billion, or enough to fund approximately sixty days’ worth of global imports.  Without the bribe money that Russia had provided, it’s checks would start bouncing, leading to tremendous suffering for the Ukrainian people.  To provide some real numbers, here is an excerpt from Britain’s The Guardian:

Some £34bn was wiped off the value of companies on the Moscow stock exchange on Monday and the central bank burned through an estimated £10bn of its reserves propping up its currency as investors took fright at the most serious standoff between Russia and Ukraine since the fall of the Soviet Union.

The bank was also forced to raise its main interest rate from 5.5% to 7% – the largest hike since financial crisis ruined Russia in 1998.

Personally, I wouldn’t want any money working in Russia even if the assets were incredibly cheap because there is a very real possibility of retaliation against sanctions.  Were the conflict to escalate – and the State Department has said it has moved beyond the theoretical and the paperwork is being drawn up as I type this – I don’t think any American investor’s money would be safe within the borders of Russia or her allies.  It doesn’t do a bit of good to buy a stock at 2x earnings if it’s taken from you without recourse or, perhaps more likely, you are unable to move your money outside of the country.

What Happens Next Depends on Russia and Putin

Ideally, Russia won’t do anything.  It will call it a day, bring its troops back to Moscow, and leave the Ukraine alone.  If the Russian government did something monumentally stupid, like invading another country in the surrounding area, it would likely trigger certain NATO agreements that would escalate to war overnight.  In very short order, you’d have almost three dozen of the world’s most powerful countries fighting on opposite sides of one another as certain treaties triggered other treaties.

It would make no sense for Russia to do this, economically.  The European Union is Russia’s largest trading partner.  If the EU cuts it off, a bad situation in Russia gets much worse.

Here in the United States, our biggest concern is China.  China is often seen as being buddy-buddy with Russia, but given the enormous cross-investments it and the United States have made over the past generation, it would be economically excruciating for our friends in the Far East to go to war with us.  Last year, we sold $122 billion worth of stuff to China and bought $440.4 billion worth of stuff from them, resulting in a net transfer of wealth equal to $318.4 billion from U.S. citizens to Chinese citizens.  Meanwhile, its imports and exports with Russia are almost a rounding error in comparison.

We are a big, fat piggy bank they continue to shake, drowning in the huge sums of money we send their way.  If money talks, China would never attack us.  The moment the first missile is fired, they’ll have cut themselves off from the biggest stream of earnings their country has.  Could it happen?  Sure.  But the political class in China has grown very rich thanks to its ties to the United States and it would take something extraordinary to get them to vote against their own self-interest.

I hope it’s all much ado about nothing and we can go back to relatively non-important things like a 10 basis point movement in the unemployment figure or whether or not Justin Bieber is addicted to cough syrup.  As trivial as it may sound, it’s a luxury for society to indulge in that kind of nonsense because it no longer has to worry about survival and safety.  It also demonstrates the importance of so-called “cultural victories”, which are familiar to any of you who play the game Civilization.  If the world went to war, I wouldn’t just be concerned about the United States, my thoughts would be with other nations that now have a role in my everyday experience.

Whatever happens, make no mistake about one thing: The only reason the world hasn’t declared war on Russia is because Russia has nuclear weapons.  If this were 1914, there would be a very real possibility we’d all be drafting troops and shipping off to battle.  Nobody wants to get into a fight with a counterparty that can guarantee mutually assured destruction.

I’ve given up trying to understand Russia’s motivations.  The thinking is so twisted, so warped, and so primitive that it’s like the country was suspended in the last century and didn’t advance as the rest of the world moved forward.  This is a government that refuses to recognize reality, and its economic failures are clear to everyone, yet it steadfastly sticks to the same failures.  This is a country that, despite facing the worst economic growth rate in 14 years and still being far behind nearly everyone of its European customers, still insists everything is fine; that “Economic freedom, private property and competition, a modern market economy but not state capitalism should be the core of the new economic growth model”.  It must be a magical world where restricting personal political freedoms, and a ban on capitalism proper, somehow leads to economic freedom, private property, and competition.  I wish I could figure out how to work that kind of alchemy.  The guy must have some pixie dust in his back pocket or something.

On the upshot, the /r/gaming forum is treating this like it is a game of Civ now that “everyone has renounced Russia”.  If you play the game, you’ll get it immediately.

Russia Denounce

  • innerscorecard

    Worrying, for sure. How do you think ordinary people should react to this? Any applicable mental models? Turn off the news? Find some way to help people (in Ukraine) or elsewhere who are suffering and/or make money (in other ways except buying Russian stocks or Ukrainian government bonds)?

    Also, do you think Berkshire Hathaway’s various insurance businesses will materially interact with this piece of news somehow?

    • http://www.joshuakennon.com/ Joshua Kennon

      For the most part, there is nothing to do. It plays out at a high level among the various representatives of the two government and people go on with their lives while it is happening, hoping and praying it gets negotiated.

      On the personal, risk front: If your affairs are run well and you don’t have a lot of exposure to any particular asset or asset class where your money is tied up in Russia (which 99% of the population shouldn’t), financially things should be fine unless there was an all-out nuclear war, in which case, it wouldn’t matter anyway as God doesn’t accept T-Bills as a cover charge to heaven. Keep enough liquidity on hand that if the market is closed for several months at a time, like it was during World War I, you can still pay your bills without accessing any of your investments.

      I’d think Berkshire Hathaway would be okay in the long run (it would get swept up in general equity movements in the short-term) as practically every insurance policy in the United States has an exclusion for war. Check your homeowner and car policy, for example. Odds are good if your house is damaged in an attack by a foreign entity as an act of war, you’re not covered for anything. That means no insurance claims. (After September 11th, you had a rush to add “terrorism” to quite a few standard policy documents, too.) If it does fold under the catastrophic expense in an event large enough to take it down, it would be the last thing standing so everything else would have gone before it, anyway, at which point it isn’t going to matter much. Assuming it isn’t cataclysmic, it very well might give Berkshire a chance to buy up a bunch of cheap assets in Europe if management determines the probability of occupation low.

      On a somewhat philosophical note, I sometimes think Americans forget how war works. If we were invaded, and lost, suddenly your shares of Wal-Mart might not be worth anything because the army could take control of the business, issue new shares to whomever they want, and have the force to backup their new “ownership”. I did a case study once of what happened to the factories in World War II and a lot of international enterprises had their foreign subsidiaries taken over and that was that. Or, if you were living in New York and had shares of a German department store, when the Allies started bombing, they were just gone.

      • innerscorecard

        Happily, it looks like Russia just backed down. Like you said, a useful reminder of how peace is a default condition, but not necessarily a universal we can just assume.

      • innerscorecard

        As for Russia’s reasoning, I think you should look at Brooks’ column in the New York Times on the philosophical underpinnings of Putin’s mentality. While it’s only a vaguely educated guess, it is entertaining and might have some fraction of truth to it.

  • Matt

    Great post, and definitely a concerning (although interesting) turn off events. Especially since this is coming so close on the tail of the Olympics (though I don’t think anyone except the less educated Russian nationalists were filled by the facade). There is one slight error though and that is your statement that a majority of Ukrainians supported the protests or deeper ties to Europe. Ukraine is a divided country and arguably like the Czechoslovakia of over 20 years ago. While the west is predominantly Ukrainian and supports deeper integration with Europe, the east is predominantly Russian speaking and associates more with Russia. Some of the citizens in east Ukraine in the heavily industrialized Donetsk area still (mistakenly) believe the old Soviet propaganda that they are the breadbasket of Ukraine (the USSR) and that they feed the nation even though in reality they are dirt poor and are experiencing massive urban decay and pollution.

    But in any case, Ukraine is a complicated case given its quite polarized politics, non homogenous culture, and complicated history.

    • http://www.joshuakennon.com/ Joshua Kennon

      Didn’t it depend on the specific poll and how the question was asked? Re-reading the post, I’m guessing I shorthanded my thoughts as I was thinking of the combination of the GfK Ukraine poll around the time that showed the ratio of support going 3-1 for supporting the EU agreement over the Customs Union (Russia) while later that month another poll showed 58% of the Ukranian population wanted to join the European Union (though there was significant disagreement as to the timing – immediately, in five years, in ten years, etc.) English source summary from the Brookings Institute with links to actual data in non-English.

      In another, the disagreement seems to be predicated mostly by age group, with older, USSR-era Russians wanting to stick with Mother Russia and the young folks wanting to jump ship to Europe. There is a very clear geographic component, too, exactly as you said (the DW Trend poll showed 50% of the population in the East and South wanted to stick with Russia, which was higher than everywhere else.)

      Maybe I should change it to “a significant percentage” of the population instead of majority because it’s clearly the more popular political position, but the mathematical term depends on how you interpret it and how the question was asked? That’s what I’ll do. I’ll swap out the text for that and then it should show up in a few minutes refreshed on the blog. That seems more accurate.

      Thanks for pointing that out to me. I appreciate it.

    • VR

      Yes, the situation is more nuanced than presented in the Western mass media. Over 60% of the population in Crimea are ethnic Russians, and more are native Russian speakers (some polls put 95% as speaking Russian at home). That percent overall in Ukraine is estimated around 40%, and is highest in South and East. Crimea was “given” to Ukraine in 1954, when it was part of the USSR, and it didn’t really matter under which of the Soviet republics it would formally be. Population of Crimea feel the right to continue to speak their language and have their kids be educated in it. One of the decisions of the new gov’t in Kiev was to remove Russian as the second official language, which obviously upset a lot of Russian speakers in the South (Crimea), East.
      It is true that Russia used the situation to its advantage by “guiding” the Crimea on the solution on how best to protect their rights.
      The referendum in Crimea will likely be for separation from Ukraine and joining Russia. And it will be in my view an expression of the majority opinion of Crimea’s population.

      Russia has expressed a view that the West is using double standards in foreign policy. It’s OK for US to put military and start wars in countries far removed from its borders to pursue its agenda of defending own geopolitical interests (expanding NATO being one of them).

      Yet, in this case, we have a majority Russian population in an autonomous republic of Crimea of a neighboring country (that is historically very close to Russia). There hasn’t been a shot fired as far as we know in Crimea. A referendum by the population on issue of its own sovereignty is probably not the most egregious act, compared to past actions of some Nato members.
      I’m not saying Russian foreign policy actions are justified here. But neither in my view were US actions in Iraq. What we can try to do is be a bit more objective in evaluating foreign policy actions by various countries. Understanding that there are concrete geopolitical interests governments pursue, which are not always the same as internally presented goals of defending some sort of democratic ideals..

  • FratMan

    I use the prospect of repeat Great Depression/WWII type conditions as a mental device to stimulate courage anytime I’m tempted to be a whiny bitch.

    Hard to get mad about a stock dropping $20 per share, a gorgeous woman rejecting you for the affections of a bozo, or a BS parking ticket when you think about what life was like in 1933 or 1940.

    Thinking about WWIII is a great secret sauce to speed up efforts for financial independence and the accumulation of the highest quality cash generators as well. I don’t suggest it as a motivational tool often because it could lead to spiraling depression rather than motivation if put in the wrong hands, err, minds.

    • innerscorecard

      Great mental model.

      That’s another reason I think it pays to have applied study of biographies of great investors and businessmen, like Joshua does and like you do on your site. It’s like applied history (history in the classical humanistic sense, not in the academic professional sense). A great way to think about the continuity of the human existence and to take inspiration and warnings from it.

  • BukaHanersib

    I just want to throw a rose in your general direction. I have loosely followed these developments over recent months. Now, having read this post, I actually understand the situation in a whole new way. Thank you for that.

  • Rob

    I agree with your statement regarding Russian investments at this point in time, however OAO Gazprom ADRs are beginning to look real interesting after yesterday’s massive sell-off. Be interesting to see how the company and its stock play out.

  • mikecrosby

    I learned a lot. Thank you Joshua.

  • Kevin

    The EU will probably do nothing meaningful. The sort of ‘consequences’ being discussed by EU leaders are things like not sending official delegations to the opening of the Paralympic Games, freezing talks on making the visa process faster for Russians visiting the EU and possibly, at the most extreme end of things, travel bans and/or asset freezes on senior Russian officials. I read in the paper this morning that the UK, Germany, France, Italy and Spain are all opposed to economic sanctions on Russia. Only Sweden and a handful of Eastern European nations (i.e. the ones that don’t depend on Russian gas) are pushing for more.

    While the majority of Europeans are opposed to Russia’s actions, there is also a feeling that the US reaction is comically hypocritical and that, well, you reap what you sow. The US and allies paid no attention to Russia’s opposition to attacks on Serbia, Afghanistan, Iraq or Libya. Now Russia pays no attention to Western opposition to them doing the same in Ukraine (or indeed, Georgia a few years back). There also seems to be a fair amount of support in the Crimea itself for Russia. That doesn’t make what Russia has done right (and I’m sure there is opposition too), but it is worth bearing in mind. Also worth remembering that what Russia says about far right and neo-Nazi elements in the Kiev protests is not something they have just made up, it’s been reported in European news outlets for a while now. The Right Sector group were blamed for starting the first clashes with the riot police, and Vitali Klitschko was booed when he addressed the crowd and appealed to them to refrain from violence against the police. It’s really not a simple good side vs bad side situation, although that doesn’t change the fact that Russia probably isn’t helping things by invading the Crimea.

    What can the West do? The EU will do nothing. Cutting off trade with Russia in any meaningful way would pretty much halt any hopes of economic recovery in Europe. The US may talk big, but in reality, US – Russian trade is worth less than $20bn, in comparison with EU – Russian trade closer to $270bn and Chinese – Russian trade of around $65bn. Even Belarus (and Ukraine, for that matter) is a larger trading partner than the US. If Gazprom end up signing the deal to supply China with gas that they are supposedly getting closer to, that $65bn will likely increase significantly as China looks to decrease its dependency on coal power. What should be done, however, is to give Ukraine the support it needs to keep its economy afloat, and obtain energy if Russia turns the gas off.

    All we can really hope for is that wherever the Crimea ends up being part of, it will end without any further violence, because there’s a lot of potential for things to get nasty if someone starts shooting.

  • John

    The internal politics in the Ukraine and the autonomous republic of the Crimea are more significant that I think you give them credit. As to Russia I believe you need to go back and read a little bit of Alfred Thayer Mahan. A major warm water port is not something that Russia will give up without a fight, and our State Department is failing us if we believed that Putin would walk quietly away from the Ukraine.
    I’m really curious what will happen with XOM in Russia.

  • RogerMKE

    “I’ve given up trying to understand Russia’s motivations.”

    It’s all about geography.

    If you look at a topographical map of Russia, you’ll see that west of the Ural mountains, where most of the population lives, Russia has no natural borders. It’s one big flat grassy plain that is easily rolled over by an invading force, be it the Mongols, Napoleon, or Hitler.

    Russia has only one defense against invaders, which is to dominate the weaker states that border it and turn them into buffer zones. In doing so, it pushes potential attackers far away from its borders, making an invasion vastly more difficult. Long supply lines ultimately doomed Napoleon’s Grand Armée and Hitler’s Operation Barbarossa. Establishing these buffers has been fundamental to Russia’s national security for centuries.

    Ever since the collapse of the Soviet Union, the US and NATO have been steadily trying to neuter Russia by encroaching on its borders, whether through missile defense treaties, various colored revolutions, placement of military bases, or enticing border states to enter into alliances with Western Europe. These facts, coupled with a long history of brutal invasions, makes Russia feel very insecure, causing it to assert itself against its neighbors in an attempt to re-establish the buffers that have served it well over the centuries.