BENJAMIN WEY SAYS, The World Is Simple: “It’s All About Business and Economics”
While I, Benjamin Wey was a graduate student pursuing my second master’s degree at the Columbia Business School, I had a professor by the name of Fred Mishkin. His teaching had a profound impact on my career and professional development. Professor Mishkin was a former board member of the U.S. Federal Reserve, earned his PhD from MIT and was a distinguished scholar in global economics.
Of the many books that I read and of the many classes that I took at Columbia University, Professor Mishkin’s words were among some of the most memorable:
“Benjamin Wey, let me tell you, most of the world’s issues and problems are driven by economics. Politics simply reflects economic interests,” stated Professor Mishkin.
As a global financier, I have traveled to many countries on this planet. Behind the hundreds of millions of dollars in growth capital that I have helped finance to expand businesses and build factories, the same concept has always worked: economics plays a fundamental role in people’s lives and economic interests often drive political agenda. The recent Ukrainian crisis is a reminder of just that.
Benjamin Wey: Economics Dictated the Outcome of the Ukrainian Crisis
On March 11, I authored an article titled “A Practical Viewpoint: The Crisis in Ukraine Is Not America’s Problem.” It was published on TheBlot Magazine, an open voice for everyone to express his or her opinion.
In the article, I predicted that a new map of Russia would include Crimea, and I stated the following: “Whether the rest of the world likes it or not, voters will most likely vote to join Russia. If that happens, then it’d be time for all of us to buy a new world map and take a fresh look at Russia because it will have a new province called Crimea. America will not go to war with Russia; it would be the beginning of World War III. Europe has nothing but talk and good wishes. The real winner, unfortunately, is Russian President Putin.”
On March 16, an overwhelming majority of Crimean voters backed a referendum to secede from Ukraine and join Russia. CNN had this to say about the outcome: “Ukraine’s autonomous Crimea region voted yesterday to join Russia. The vote was more than 96% in favor of joining Russia and took place under the watchful eye of pro-Russian troops who remain firmly in control of the Black Sea peninsula. The United States and other Western nations condemned the referendum and threatened sanctions.”
Despite the many differences in policy and ideology between the East and the West, the grim outlook facing Ukraine is purely economic. A population of 46 million, Ukrainians rank among some of the poorest people in Europe. Ukraine is literally bankrupt. With debt levels reaching 80% of GDP, the country simply cannot sustain that level of debt since its economic output is not strong enough.
To complicate matters further, Ukraine and most of Western Europe depend on Russia for gas, and Ukraine currently owes Russia $1.8 billion in unpaid gas bills. If the gas supply is cut off, I wouldn’t want to imagine what winter in Ukraine would be like.
Ukraine Is the “Meat,” Russia Is the “Butcher”
America, the EU and the International Monetary Fund have all come forth to pledge financial support to Ukraine, but the collective total from each lender falls far short of the $35 billion Ukraine needs by the end of 2015 to avoid default. Ukraine has no economic flexibility, and as a result, it has no leverage in anything else.
America has promised $1 billion in economic aid. It’s not free money, though. It is in fact new debt that Ukraine must repay. The International Monetary Fund has also promised assistance, further debt that Ukraine must repay someday. We all witnessed what happened to Greece during the financial crisis when a sovereign borrower defaulted on its debts — a total collapse of its economy, massive political unrest and the rise of extreme political factions. Given that the EU is cash-strapped and America is unwilling to challenge Russia militarily, there is only one real option on the table: Russia will dictate Ukraine’s destiny and will continue so for many years. Russia has all the “cards” and all the leverage. On the Ukrainian matter, Russia is the “butcher.”
Can you fight a war and win it without a will to win and without the monetary commitment to support it? No. Everything costs money. Strategically, the Obama Administration has made the right decision for America: America does not have vital interest in either Ukraine or Crimea and the lives of America’s brave soldiers should not be lost in Ukraine. America simply has too many economic issues internally. TheBlot Magazine has exposed a few structural issues relating to America’s capital market:
Regulatory Abuse in America:
Market Manipulation in America:
Last week, after the Ukrainian Prime Minister paid a visit to the White House, America’s mighty military offered “support” to the Ukrainians. Such “strongly worded support,” literally, offered nothing tangible for Ukraine to fight off Russian aggression. The Pentagon rejected the Ukrainian government’s requests for weapons. Instead, it only approved food aid to the Ukrainian military — economic aid, not military aid. The message was clear: America was not interested in getting involved in military conflicts with Russia.
In the end, economic interests will always dictate global politics. By not being able to sustain itself economically, Ukraine lost the war against Russia long ago.