Bearish Politics, Bullish Market

By ROGER COHEN
Op-Ed Columnist
International Herald Tribune
May 31, 2007

WARSAW

The world today looks very different according to which measure - political discourse or global markets - you use to gauge the mood. The vile and the incendiary are enjoying a political comeback, suggesting a planet on the brink. But soaring markets see a benign environment.

Nowhere is this dissonance more apparent than in Central and Eastern Europe. Russia, riding its switch from a one-party to a one-pipeline state, is booming even as its leader, Vladimir Putin, does his Godzilla act.

The Russian president draws a thinly veiled analogy between the United States and the Third Reich. He sees a world in "an abyss of permanent conflicts." But the Russians buying up the Côte d'Azur think it looks sunny enough.

Here in fast-growing Poland, the governing Law and Justice Party is busy digging up the past to poison the present. The Kaczynski brothers, who run the country, use Auschwitz and the Katyn forest massacre to sour relations with Germany and Russia. At home they show Bolshevik zeal in their bid to purge former Communist collaborators.

Diplomacy bows to diatribes. Putin's foreign minister calls Estonia "disgusting" and "blasphemous." The cause of his ire is the Baltic state's recent removal of a Soviet-era war memorial designed to commemorate the defeat of Nazi Germany but seen by many Estonians as a symbol of postwar Soviet diktat.

I would have left the memorial. In general history's warts, and zigzags, are best left exposed. They are a reminder that human nature resists all attempts to perfect it and that devising institutions to guard against perennial imperfection is the best course.

But the decision itself in Tallinn is less interesting than the fact that Estonians and Russians, who live more freely and travel more freely and do business more freely than at any recent time, choose to focus not on that freedom but on the rabble-rousing rhetoric of national identity.

They are not alone. Political fanaticism is fashionable. A radical fringe of the Islamic world responds to modernity with an atavistic call for a return to the caliphate and the edification of a culture of death.

Venezuela's President Hugo Chávez, another one-pipeline man, calls President George W. Bush "the devil" and raises the unlikely cry of "socialism or death."

The Bush administration itself, in its cultivation of a with-us-or-against-us school of diplomacy that once lumped Germany with Cuba and Libya, has contributed its share to the darkening and debasement of political exchange.

Yet markets see a brightening world. From the extravagant exuberance of Shanghai to the gravity-defying Dow, they proclaim the benefits of the technology-driven spread of more open, connected societies. A certain level of violence, from Gaza to Kandahar, is discounted.

Asked what is more important - Al Qaeda or the doubling of the world's labor force through the entry into the global economy of China, India and the former Soviet Union - markets say the latter.

Asked what is more powerful - old sovereign states with their governments and armies and nationalist hang-ups or the border-canceling force of science and technology and global corporations - markets have no doubt. They know Google's capitalization dwarfs the GNP of Jordan.

Power has shifted from visible politicians to less visible potentates. So politicians rail. There is a connection between the erosion of their influence and the radicalization of their discourse. Consumers have ever more choices; politicians have ever fewer.

As Ivan Krastev, the chairman of the Center for Liberal Strategies in Sofia, remarked at a conference organized by the Polish daily Gazeta Wyborcza: "Postmodern states are the way of the future. But we are seeing a strengthening of the nation state throughout the world because the only resource left for politics is culture and identity."

So what should we focus on? The world leaders, from Iran's Mahmoud Ahmadinejad to Russia's Putin, using crude identity politics to rouse populist followings? Or the spread of a borderless virtual world that makes such nationalist appeals anachronistic?

I side with the wisdom of the marketplace in believing that the post-Cold War introduction of one third of humanity to the possibilities of the global economy outweighs the menace that is the everyday currency of an impoverished political marketplace in the age of Iraq.

Beijing trumps Baghdad for now. I fear, however, that when the exuberance departs Shanghai and the global economy dips, the real danger of politicians playing with the fire of national identity will be felt.

Growth makes the bellicose innocuous enough. But when hard times and harsh political slogans coincide, watch out.