Ex-Speaker Mike Madigan, Illinois’ Capo di tutti capi
The corruption/bribery trial of the “ComEd Four” – Anne Pramaggiore, John Hooker, Jay Doherty and Michael McClain – is set to begin tomorrow, Tuesday, March 14. The spider at the center of this web is of course Michael Madigan, the former Speaker of the Illinois House of Representatives, who was indicted this time last year on charges stemming from the ComEd bribery scheme.
To make the long arm short, Commonwealth Edison’s Bribery Department (see July 20, 2020 Deferred Prosecution Agreement) offered its payroll and 1099 consulting gigs to Madigan as a patronage machine to perform for him the same function that the City of Chicago’s Streets and Sanitation Department used to perform for the late mayor Richard J. Daley back in the day. The trial will focus on the untrammeled control that ComEd and Exelon Corp., its dirigiste corporate parent, exercised over the Illinois General Assembly. Exelon had so many legislative victories in Springfield one might reasonably wonder if, as a recent orange politician once asked, they got tired of winning.
But ComEd’s influence over the General Assembly is one thing. Its influence over the Illinois judicial system is quite another, and the surface of that scandal hasn’t even been scratched yet. That’s what we’ll be addressing in the Sparkspread Blog going forward.
To understand ComEd/Exelon’s control over the Illinois judiciary, one must understand two things: first, Madigan’s control over the Cook County Democratic Party and its role in slating candidates for judicial elections; and, second, Madigan’s implicit, continuing obligation to safeguard the legislative victories he handed to Anne Pramaggiore. We’ll tackle the second one first.
Based on the July 2020 Deferred Prosecution Agreement, Madigan’s services to ComEd had a monetary worth of about $1,324,000, which is a pitiful sum in comparison to Larry Householder’s take from Ohio’s First Energy. But Madigan knew he had an obligation beyond just passing the legislation ComEd wanted. Madigan had to protect ComEd from actions by third parties that might diminish or threaten the value he was supposedly delivering to ComEd (i.e., favorable legislation). In this respect the ComEd-Madigan bribery arrangement is the same as a local mafioso’s protection/extorion racket. Madigan had a brand, a reputation for obtaining effective and lucrative legislative gains, to protect. The money ComEd paid to Madigan’s recommended persons was the protection money, or street tax, ComEd had to pay for Madigan’s benefit.
Yesterday’s article in the Chicago Tribune shows how Madigan’s protection racket played out in the ComEd bribery scheme when actions by third parties were concerned:
(Line blurs between politics, crime, Chicago Tribune, March 12, 2023).
Madigan had to kneecap the 2018 consumer protection bill to protect his client, ComEd. The effects on Illinois ratepayers were no less parasitic than that of a local mafioso on his own town.
Illinois is not the only place in which the speaker of the state house of representatives prostituted the civil power of the government in order to benefit the state’s largest electric public utility, not to mention himself and his cronies.
Today in Ohio a federal jury convicted former Ohio House Speaker Larry Householder, together with the former chair of Ohio’s Republican Party, of conspiracy in a $60 million bribery scheme in which Householder and his statehouse allies passed legislation to bail out two power plants owned by First Energy, the Ohio electric utility that serves 6 million customers.
The bribe money was also used by the Householder conspirators to thwart an effort to repeal the First Energy bailout legislation by referendum.
In Ohio that’s called “constituent service.”
Federal prosecutors, in their closing arguments, told the jury that all of FirstEnergy’s payments were secret and unreported, and that Householder and others knew the utility expected favorable legislation in exchange for its bribe money.
Now that the Madigan, Burke and ComEd Four trials are soon to begin, we’ll take a look at how the Madigan-ComEd-Exelon corruption metastasized throughout the entire political system of the State of Illinois – even into the Illinois judiciary.
For now, though, just note that First Energy had to funnel $60 million to Larry Houselholder in order to get its bailout legislation. Here in Illinois, though, ComEd only had to pay Madigan and his ilk a paltry $1,324,000 over ten years to get its legislation.
It may be quite a while before ComEd/Exelon gets a bargain like Mike Madigan again.
Today’s Chicago Tribune reports that Illinois Chief Justice Anne M. Burke has announced her retirement.
To the active and energetic mind, to the profound intellect, to the ever-restless curiosity, to the lifelong seeker after justice, the ease and indolence of retirement can often be harder to bear than continued labor in one’s metier.
Illinois Chief Justice Anne M. Burke will have no problems in this regard.
Although former Illinois House Speaker Mike Madigan may have wished that Illinois had a palace, its absence was no bar to the creation of his own palace clique of sycophants, not-so-brave adventurers, lobbyists, hangers-on, lackeys and lickspittles. And of this Madigan camarilla C.J. Burke was certainly the most important figure. Madigan had a live human wiretap into the highest, most important and most sensitive judicial deliberations in the state.
Madigan opposed the independent redistricting referendum, which came before the Illinois Supreme Court in 2016. Burke ensured that this measure, which favored voters’ rights and democracy in Illinois, was a non-starter. Any act or measure disfavored by Madigan that came before Burke’s Supreme Court would be condemned. In all matters Burke carried out Madigan’s will to the best of her ability.
Madigan, ever bashful, continually disclaimed having any influence or power over any one or any thing in Springfield, and he affected to be no more than a simple state rep and ward committeeman. But if he ever expressed his opinion on any issue, or, even less, granted or withheld his wink or nod, none could doubt what the final result would be. We miss Madigan’s ostentatious pretenses of powerlessness, humility, meekness and modesty. Well, at least we will until his criminal trial begins.
Then Commonwealth Edison’s Bribery Department (see July 20, 2020 Deferred Prosecution Agreement) offered its payroll to Madigan as a patronage machine to supply the place of Chicago’s Streets and Sanitation Department. The influence of Exelon in the Illinois General Assembly became paramount, and the interests of and protections for Illinois ratepayers concomitantly declined. Chief Justice Burke ensured that as far as Exelon’s bespoke laws protecting its revenues were concerned, constitutionality was nothing more than a dangerous luxury. With Madigan’s wink and under Burke’s watchful eye, Illinois legislation became Chris Crane’s own pull-toy. Sadly, Exelon must now do without either Mike Madigan or Anne Burke. Crane must know how Napoleon felt when he bade farewell to his Imperial Guard before setting sail for Elba.
Today, abortion. Tomorrow marriage equality and contraception.
Today the U.S. Supreme Court overturned Roe v Wade, the 1973 decision that established a constitutional right to abortion. This was expected, given the recent leaking of the Alito draft opinion.
The Alito opinion purports to determine the validity of the most fundamental rights of American citizens not by any contemporary legal or moral principles, but rather by turning the clock backwards by two or more centuries to see what the Founding Fathers meant by the words they used in the Constitution. In practice, this amounts to an exercise in historical fiction by the six conservative justices as they attribute their own policy preferences to their favorite Founding Fathers.
At any rate, the high court’s Dobbs decision should not be viewed as some sort of sudden or unforeseeable event. Dobbs is neither an earthquake, tornado, nor any other kind of surprise, even before the Alito opinion leak. Not at all. Dobbs is the result of the basic structure of the United States Constitution.
Contrary to what the GOP politicians spout, the Constitution wasn’t written by a benevolent deity. It was written by a group of white men, many of whom were slave-owners. Indeed, slavery and concessions made to the slave states to induce them to sign on to the Constitution (e.g., the Three-Fifths Compromise) comprise the ultimate foundation of the U.S. Constitution. Chief among those concessions, and a leading cause of today’s Dobbs decision, is the Electoral College.
The GOP’s smart move was to recognize the Electoral College for what it really is: the single greatest gerrymandering device in all of American law. The Electoral College means that there really is no such thing as a national presidential election. Rather, the Electoral College means that competing candidates for the U.S. presidency run for governor in each of the fifty states, and if one wins enough states to obtain a majority of the Electors, he or she wins regardless of the popular vote.
The popular vote for president is still important, but not on a national basis. It’s important only on a state-by-state basis, that is, within each individual state. That accounts for the GOP’s long game on voting rights, because for most of the states, if they can flip a state by as little as one vote they get all that state’s electors. Just look back to Karl Rove’s efforts to fire a bunch of U.S. attorneys who said they had more important things to do than going after voter fraud. Moscow Mitch McConnell then piled on to make sure that Obama didn’t get to appoint Merrick Garland, while Trump got to appoint three far right conservatives. McConnell violated some “traditions” of the U.S. Senate, but what he did was neither unconstitutional nor illegal.
The take-away here is that the GOP has had a long game of using the Constitution as it exists to enforce their minority rule, and Dobbs is just the latest evidence of that. Marriage equality and even the right of Americans to obtain and use contraceptives are next on the 6-3 Supreme Court chopping block. That’s no exaggeration. Clarence Thomas has expressly said he wants to eliminate those rights.
What’s required goes far beyond just getting out the vote this coming November. The GOP has been working, and will continue to work, on sabotaging Americans’ voting rights. If that includes the federal seizure of state voting machines because Italian satellites were allegedly switching votes from Trump to Biden, so be it. Trump sent the U.S. Gov’t. off on a wild goose chase to investigate that, and as yesterday’s January 6 Committee hearing showed, only two or three sane officials in the Justice Department stood between the United States and a constitutional crisis.
No, what’s needed is a new Constitutional Convention so that we can scrap what is essentially a constitution designed to embrace slavery and advantage slave states and bring it into the 21st century. I, for one, am rather tired of listening to right wingers tell us what a group of 18th century slaveholders and slavery enablers might have been thinking.
Alito’s Leaked Opinion Justice Samuel Alito’s leaked majority opinion in Dobbs v Jackson Women’s Health Organization, _ U.S. _ (2022) discloses that the U.S. Supreme Court is primed to overrule both Roe v Wade, 410 U.S. 113 (1973), and Planned Parenthood of Southeastern Pa v Casey, 505 U.S. 833 (1992), the two leading cases holding that the right to an abortion is protected under the United States Constitution.
Yesterday’s Chicago Tribune reported that when the U.S. Supreme Court officially hands down its opinion, twenty-six (26) states, including Texas and Florida, are either certain or likely to enact laws that either severely restrict the right to abortion or ban it outright. (“If Roe is overturned, ruling could have secondary effect on Illinois’ economy,” Chicago Tribune, June 13, 2022). The Tribune article suggests that corporations may seek to relocate their headquarters to states like Illinois, in which the right to obtain an abortion will be protected. The article concedes that it may take years for such changes, and their related economic effects, to come about.
Assuming that there’s sufficient political will, the economic effects on renewable energy from overturning Roe could occur much sooner.
That there exists any tangency at all between energy law and reproductive rights may sound unusual, but the response to Alito’s ruling should take advantage of the principles Alito himself announces in his leaked opinion. In particular, Alito stresses that our nation’s historical understanding of ordered liberty should enable the people’s elected representatives to decide how abortion should be regulated (Dobbs, pgs. 6, 31). Elected representatives in other states are likewise at liberty to respond to Dobbs by deciding how to regulate certain aspects of renewable energy.
How Renewable Energy Works Because one electron is indistinguishable from another on the grid, electricity generated by renewable resources (wind, solar, etc.) is indistinguishable from electricity generated by a nuke or a coal-fired plant. To address this, renewable energy certificates (RECs) were developed as tradable certificates that recognize the green energy attributes of renewable electricity generation sources. One REC represents one megawatt-hour of renewable generation. RECs are tradable because they may be bought and sold separately from the actual electricity generated by the renewable system. The sale of RECs provides additional revenue for renewable generators and obviates the (nearly impossible) task of trying to schedule specific generation for specific load. The issuance and claiming of RECs is tracked, usually by the relevant transmission system operator.
A Renewable Energy Response to Dobbs A state’s renewable portfolio standard (RPS) generally requires that electric public utilities procure a specified portion of their electricity supply requirements from renewable generation resources such as wind or solar power. These requirements may be met through a utility’s own renewable generation assets or through the purchase of RECs. A state has a lot of leeway to structure its RPS as it sees fit. A state RPS may have tiers of preferred RECs, or it may prefer RECs purchased from generation resources located within the state or in adjacent states. The RPS market is often referred to as the “mandatory market” because public utilities are required by law to purchase certain volumes of renewable energy.
The gist of the renewable energy response to Dobbs lies in two separate measures. First, in states like Illinois, where the right to abortion will be protected, RPSs would be amended to prevent RECs generated in states that restrict or prohibit abortion from being used to satisfy the RPS.
The second measure pertains to the “voluntary” market, that is, the market for the purchase of RECs by persons who are not legally required to purchase renewable energy but who nevertheless wish to support the development of renewable energy. Voluntary market purchasers may procure all or a portion of their electricity supply requirements from renewable generation. These REC purchasers “green” the electricity they actually use by buying a quantity of RECs. Buyers in the renewable energy market have the freedom to choose which RECs they buy, including choosing the state of origin of the RECs. The second response to Dobbs involves making clear to voluntary market buyers where a REC was generated, and the REC buyer can then choose whether it wishes to purchase a REC generated in one of the 26 states that are set to restrict or eliminate abortion rights. Welcome to your free market at work.
The Dormant Commerce Clause The Dormant (or Negative) Commerce Clause is a doctrine that federal courts have inferred from the Commerce Clause of the U.S. Constitution. In a nutshell, the doctrine prohibits protectionist legislation by states.
The Sparkspread previously posted an entry on Judge Posner’s 2013 opinion in Illinois Commerce Commission v. FERC (“7th Circuit Casts Shadow Over State Renewable Portfolio Standards,” The Sparkspread, August 14, 2013), a cost allocation rate case in which Posner, when discussing RECs and RPSs, stated that the Dormant Commerce Clause would prohibit one state from discriminating against another’s renewable energy. Posner’s reasoning was wrong because he did not understand how REC markets operate and did not take into account the difference between the mandatory and voluntary REC markets.
Contrary to Posner’s position, a state’s limitations on the kinds of RECs that are acceptable for satisfaction of its own RPS do not present a dormant commerce clause issue because none of those limitations prevent a REC seller from selling its RECs in that state. In the voluntary market, any REC seller from any state can sell RECs generated anywhere in every other state. An RPS limitation on RECs from abortion-restricting states, on the other hand, pertains to the mandatory, not the voluntary market. Every state is free to determine as a policy matter what types of RECs may be used to satisfy its own RPS. A state’s elimination from its mandatory market of RECs generated in abortion-restricting states is no different than that state’s preference for, say, solar over wind RECs, or for RECs generated only in adjacent states. An RPS has nothing to say about the voluntary market, which it does not in any degree control.
I am not aware of any previous effort to address REC markets from this angle. Legislation would, of course, take time and effort to enact, but if, pursuant to Dobbs, elected representatives in 26 states see fit to restrict or eliminate a constitutional right that has been in place for nearly half a century, the elected representatives in the other 24 are equally free to express their policy preferences in their own RPSs. Alito would surely approve, no?
Energy markets tend to be exquisitely sensitive. The mere announcement of such a legislative initiative by a state would likely send through renewable energy markets a shock wave warranting measurement on the Richter scale. Expectations on REC sales would be affected, and, even more importantly, so would plans for new generation.
Ex-Speaker Mike Madigan, Illinois’ Capo di tutti capi
Sometimes events in real life bear odd similarities to events portrayed in movies.
That thought occurred to me last week after reading that the actor Ray Liotta died at age 67 while filming a movie on location. Since I always liked his movies, I decided to watch a few YouTube clips from the movie Goodfellas, a film set in late 1970’s New York. In that film, Liotta played the character of Henry Hill, a young half-Irish, half-Italian guy whose biggest ambition is to be a “made man” in one of the New York mafia crime families. Robert DeNiro also stars in the movie as Hill’s buddy in crime and fellow made man wannabee. But what drew my attention was the film clip depicting the Goodfellas’ Christmas party because it teaches a lesson that the now-indicted ex-Speaker Mike Madigan should have known as the boss of his own state government crime family.
One of the off screen events in Goodfellas is modeled on an actual crime that occurred in December 1978. The DeNiro and Liotta characters and their crew rob the Lufthansa cargo terminal at JFK Airport and get away with $6,000,000 in cash. After they divide the spoils, Robert DeNiro’s character warns the robbery crew not to start spending the money because the FBI will be looking for clues like that to find out who pulled off this heist.
At the gang’s Christmas party at some bar, one of the gang members arrives and proudly shows off his brand-new pink Cadillac. Then another one arrives and shows off the $20,000 white mink coat he just bought for his wife. DeNiro’s character goes berserk, berating his co-gangsters for doing exactly what he told them not to do: buying expensive things and then flaunting them, drawing unwanted FBI attention to them so soon after the Lufthansa heist.
Obviously the FBI agents would ask themselves: “Where’s all this money coming from?”
Mike Madigan should have gone to school on Goodfellas. Madigan was the capo di tutti capi (boss of all the bosses) in the State of Illinois, Cook County and Chicago governments. He was the one who decided what did or didn’t happen in the state. But in any public comments Madigan always played it like the dwarf Bashful from Disney’s Snow White, disavowing any control over anything.
Ex-Illinois Speaker Mike Madigan at a recent deposition.
Madigan wanted, and still wants, to keep everything secret. He always tried to keep his fingernails clean by avoiding things like email or texting that could be linked back to him. Like Osama bin Laden, who let others carry his messages out to his far-flung terrorist cells, Madigan used members of his inner circle, like Michael McClain, to convey his orders to his acolytes in Springfield and Chicago. If anybody were to get whacked, it would be a Madigan runner like McClain, not Madigan himself.
In early 2018, Madigan had to fire Kevin Quinn, one of his political aides, after Quinn sexually harassed a woman who also worked in Madigan’s political organization. After he fired Quinn, though, Madigan decided to help Quinn financially. He ordered his harem of lobbyists to start making monthly payments to Quinn, who was having trouble landing a job. The lobbyists, ever eager to display their spaniel-like devotion to Madigan, complied.
Now, if DeNiro’s character in Goodfellas had been in the room when Madigan decided to get money to Quinn, he would have berated him for making the same stupid mistake that his half-witted gang members made: spending money in a way that would likely draw FBI attention. Just as in Goodfellas, the FBI was watching Madigan and his henchmen. The FBI saw Quinn get fired. Then the FBI saw Quinn start to get monthly payments even though he didn’t have a job. So the FBI agents tracking Madigan must have asked themselves the same question that their predecessors asked themselves about Henry Hill’s gang after the Lufthansa heist four decades earlier: “Where’s this money coming from?”
As the supposed brains of his own outfit, Madigan should have known that payments create a trail, and that a trail can always be followed. Hell, even Watergate’s Deep Throat told Woodward and Bernstein to “follow the money.”
Putin might set a new trend in commercial office decorating: conference tables that begin at Chicago’s lakefront and end somewhere in DuPage County.
That’s an exaggeration of course, but so are claims that Putin’s insane. He’s neither insane nor irrational. For example, Putin knows what he’s doing is wrong. If that were not the case, then he would have no need to create false flag stories about British “crisis actors” staging fake Russian atrocities for the western media, and so on.
But Putin’s sanity and rationality are no guaranty that he’s going to win his war in Ukraine in any sense that we as Americans would understand. His military operations in Ukraine have failed very badly in any number of respects, and Russia doesn’t have the conventional military capacity to completely overrun Ukraine, install its own puppet leader in the old Soviet style, and hold the country.
Putin is a psychopath as opposed to just a typical insane or irrational person. A psychopath can plan things, understand his environment, and act so as to achieve his objectives. A psychopath knows right from wrong, but it makes no difference to him. He feels neither remorse nor regret about anything he’s done. Slaughtering civilians and children, bombing hospitals, whatever he deems necessary he’ll do, and he sees himself as above any conventional sense of morality. Killing someone is no more important to him than deciding whether he’ll have cereal or scrambled eggs for breakfast.
In short, Putin is the geopolitical version of the psychopathic, jilted ex-boyfriend who stalks his ex and won’t stop stalking her until he either gets her back or kills her.
His revanchist idea about dragging Ukraine back into Russia isn’t new. Pan-Slavism as a political ideology goes all the way back to the post-Napoleonic period, and one of its components is the common Eastern Orthodox faith. Americans have a hard time grasping things like pan-ideologies because in this country they’re usually doctrines of the political fringe (see, e.g., Proud Boys). However, neither Pan-Slavism nor any affinity for co-religionists has ever been able to completely extinguish the nationalism of the various individual states that comprise the Slavic world. Sure, Slavs of different nationalities fought under the Austrian flag in the 19th century, but that was because other factors were at work. To Slavs within the Austro-Hungarian Empire, domination by Hungarians (Magyars) would have been worse than domination by the Hapsburgs. In June 1914, Slavic nationalism and its desire to throw off the Austrian chains lit the match that led to World War I. Russia mobilized to protect its fellow Slavs in Serbia from the combined Austro-Hungarian and German Empires.
And just like the Serbians jilted Franz Josef, the Ukrainians have jilted Vladimir Putin. To Putin, Ukraine is the girl who used to be his. Ukraine used to admire Vladimir’s pecs when he went horseback riding with no shirt on. Then she started flirting with westerners. Next she held a wild street party where everybody wore orange. She threw Vlad’s good buddy Viktor Yanukovich out of her house, and for the last eight years he’s had to live in Vlad’s basement. Vladimir’s FSB even showed him a photo of Ukraine hugging NATO, and things might have gone further if he hadn’t stormed into Crimea.
So, like the obsessed, psychopathic ex who just can’t quit his old girlfriend, Putin will pursue her, no matter what. Putin is what you’d get if you turned Jodi Arias into Russia and Travis Alexander into Ukraine. Obsessed ex Jodi Arias killed Travis Alexander rather than let him leave their relationship, and in the same way Putin would sooner destroy Ukraine brick by brick than allow it to fall in love with the West and be a democracy. Like Jodi Arias and other obsessed, psychopathic ex’s, Putin’s bottom line is that if he can’t have Ukraine, then nobody can have Ukraine. That’s why Putin will keep firing missiles and artillery into Ukrainian cities. He knows at some level that he’ll never hold Ukraine in his arms again, but he can sure as hell make the country unlivable. That’s his way of killing his unattainable ex-girlfriend.
Yesterday the U.S. Attorney’s Office for the Northern District of Illinois brought out its 22-count indictment of Michael (“I’m not the target of anything”) Madigan.
In July 2020, the U.S. Attorney’s Office entered into a Deferred Prosecution Agreement with Exelon Corp. and Commonwealth Edison Company, which served as Madigan’s political patronage machine for close to a decade. The DPA refers to Madigan as “Public Official A,” and includes messages from people in his corrupt network that refer to Madigan as “Himself” or “Our Friend.” It seems like Madigan was more popular among the federal prosecutors than he thought. In exchange for bribes to or for the benefit of Madigan, ComEd and Exelon ensured the passage of legislation favorable to them, and hindered or prevented legislation Exelon didn’t like.
If we could delve into the inner recesses of Madigan’s mind, we’d find that his Id, Ego, and Superego are all composed of one thing: a driving ambition to be the Second Coming of Richard J Daley. Madigan’s father and Daley the Elder became friends when both held political patronage jobs in the Cook County Clerk’s Office. Using political patronage, Daley the Elder went on to build one of the most powerful political machines that any American city had ever seen. During old Mayor Daley’s tenure, parts of Chicago’s government, like the Department of Streets and Sanitation, were turned into political patronage machines that Richard J. Daley used to provide jobs for his supporters.
One of old Mayor Daley’s chief precepts, which Madigan was later to adopt as his guiding principle, was to help your friends and either punish or co-opt your enemies. To Madigan, Daley the Elder had achieved what he considered political Nirvana: a world in which everybody both depended on you and was afraid of you.
But Old Man Daley passed away in 1976, and in 1983 the Shakman Decree ended Chicago city government’s role as a perpetual patronage machine.
Madigan’s alternative was to use ComEd and Exelon as a way to create a new political patronage machine and do an end run around the Shakman Decree. For Exelon and ComEd it was a match made in, well, maybe not heaven. As the DPA showed, bribery and corruption are integral components of Exelon’s business model: the utility parasite and the political parasite established a symbiotic relationship.
Over the next few weeks we’ll go further into the specific chapter and verse of the legislative benefits that Exelon and ComEd obtained at the expense of Illinois ratepayers. Nothing in the 22-count Madigan indictment revises the amount of bribes that Madigan directly or indirectly received: about $1.3 Million. We’ll tally up the economic benefits that Exelon and ComEd obtained from these illegal payments, and see how they balance out.
But Madigan and the Illinois legislature comprise just one sphere of influence. We’ll also take a look at how Madigan’s malignant principles have metastasized throughout the Illinois courts — an area the U.S. Attorney’s Office might be interested in. The General Assembly and the Illinois courts are the two poles between which the Madigan supremacy oscillated for nearly a half century. Within the courts Madigan’s fingerprints are harder to see, but it must be borne in mind that, whether Madigan was acting at one or the other of these poles, it was the Madigan supremacy still. His control was absolute and coordinate.
Maybe this Ukraine thing wasn’t a good idea after all…
Last week Putin began his blitzkrieg invasion of Ukraine. His war machine is using rockets and artillery against the much smaller, but more highly motivated, Ukrainian military.
In anticipation of economic sanctions, Putin built a war chest of USD630 Billion. That sounds like a lot of money, but wars have a funny way of outlasting the money available to pay for them. With the ruble no longer accepted anywhere in the west, and with Russia cut off from every advanced funds transfer system, he may not be able to use that money. But even if he could use it, would USD630 Billion be enough to make a difference for Putin?
For some historical context to answer to that question we can turn on the Wayback Machine and revisit an earlier conquest of a hostile little puppy state by a Great Empire with an overwhelming military machine: the Anglo-Boer War of 1899 to 1902 in South Africa.
In 1899, Great Britain was the preeminent economic and military power of the world. London had not yet ceded to New York the title of world financial center. The United States and Germany had been catching up to Great Britain both economically and militarily, and in the latter sphere Kaiser Wilhelm II was determined to challenge England for naval supremacy. But England was still heads above the rest, and when European nations considered important policy choices they gave a great deal of weight to how Whitehall might react to the change.
From a geographical perspective, Russia today sees Ukraine, part of its “near abroad,” as a territory that it must dominate, if not control. In 1899, South Africa held an importance for Great Britain similar to that of today’s Ukraine for Russia. South Africa was key to maintaining a reliable and defensible sea route between England and India. Cape Town was the re-coaling station for steamships on that route. And although by 1899 the Suez Canal had already been open for about thirty years, England could not rely on it: it was owned and operated by France. If, in a conflict, France were adverse to England (which had happened a few times in the past), access to India through the Suez Canal would be lost.
Natural resources ran a close second to global strategy concerns. Within the fifteen years preceding the outbreak of the Anglo-Boer War, gold had been discovered in the Transvaal, and diamonds in Witwatersrand, making South Africa one of the richest spots on the planet. South Africa had become the leading source of gold in the world. The world was on the gold standard then, and because London was the center of world finance, England had a keen interest in the volume of gold in circulation and held in government reserves. Too little gold would unduly constrain commercial and industrial access to capital, while too much would risk metallurgical inflation. Europe had endured that type of inflation back when Spain was its most powerful country. The massive quantities of gold and silver that Spain imported from its possessions in central and south America caused more than a few monetary problems.
Russia now claims that ethnic Russians are being mistreated by Ukraine’s government, which Russia views as illegitimate. By 1899, the Boers had declared the Transvaal and the Orange Free State to be independent republics not subject to rule from London. The many Englishmen extracting wealth from South Africa’s mines in these new Boer republics were second-class citizens, without voting and other civil rights.
Today Russia worries about the consequences of having a successful fledgling democracy like Ukraine on its doorstep because it might give Russian citizens the idea that democracy might be worth a try. Similarly, in 1899 Britain viewed the newly declared Boer republics as an affront to its sovereignty over South Africa, and it worried about the effect such new little breakaway states might have on its subjects in other British colonies around the world. Would they start breaking away too? This was an early domino theory.
Just like Putin’s propaganda about the benevolent nature of rule from Moscow, the British in 1899 thought that British rule was a divine gift to all the empire’s subjects, even if some of those subjects were trying to persuade the Brits to leave by shooting at them.
Russia looks down on the people of Ukraine in the same way that Great Britain looked down at the Boers. Both Russia and England thought they’d have a splendid little war, that it would be over quickly, and that they would easily squelch these little republics.
But every present-day Ukrainian, like every Boer back then, was armed to the teeth and ready to fight. Sure, the Boers were not a regular army with chains of command and discipline in the ranks, etc. But, like Ukrainians today, that strategic weakness becomes a tactical strength when the irregular force is highly motivated and fighting against an outside invader on its home turf. The Boers would attack some organized British column moving through the countryside, and then melt back into the wilderness. The Ukrainians have already ambushed some Russian motor convoys. The Russians will also have to fight Ukrainians in urban environments, which is a nightmare for an attacking force. Think Stalingrad.
So how does all this tie in to Putin’s USD630 Billion war chest?
Well, in October 1899, the government of Prime Minister Robert Cecil, Lord Salisbury, calculated that England’s fine little war against the Boers could be “put through” for 10 million British pounds.
By the time peace was finally negotiated in May 1902, the British government had spent more than 217 million British pounds on its war against the Boers. That was enough to bring down the government of Lord Salisbury, which was replaced by that of Arthur Balfour. To get an idea of how much money that was at the time, it represented 12% of the entire gross national product of the United Kingdom – then the world’s leading economy – for the preceding year.
Were we to apply that same percentage to the 2020 GDP of the United States, today’s leading economy, that would be 12% of USD20.94 Trillion, or about USD2.51 Trillion. That would be not quite twice Russia’s entire GDP of USD1.483 Trillion. So Tsar Vladimir could well find himself a bit short on funds as his Ukraine war drags on, and that’s without any consideration of what happens when no other country in the world accepts your currency.
If Putin had read up on the Anglo-Boer War, there’s no way to know whether he would have changed his mind about invading Ukraine. But at least he would have learned that it was possible, and even likely, that Russia would get Boer-ed.
Every once in a while you come across a claymation picture that just encapsulates everything. Someone in the UK created this one, which shows the Queen and Prince Andrew visiting the nearest ATM to get cash to settle the suit brought against Andy by Virginia Giuffre.
“Andrew, this is the LAST time I’m going to do this…”
Energy Law, Policy and Development 