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Diplomacy in the Second Cold War



We have engaged in a rebranding, adding the slogan to our website and other marketing materials 'Diplomacy in the Second Cold War'. In this article we want to explain just what this entails.


There is no doubt that even as hot war rages in Ukraine, symptoms of a new period of Cold War are emerging and at some speed. The application of sanctions by the West is being reciprocated by Russian sanctions, driving the two sides into mutually exclusive economic blocks that do no trade with one another. Western businesses have pulled out of Russia; Russia increasingly restricts supply of her hydrocarbons to the West. This drives what economists call trade diversion - the most natural routes for sale of commodities, whether primary or secondary, is cut off and instead those commodities are sold to third countries.


All economists know that quantitative restrictions upon the sale of goods over specific borders drives up prices for everyone. Trade sanctions are hopeless against a massive resource rich country such as Russia; they simply help the country get richer as prices go up. At the same time, the cost of consumer goods will go up in Russia, impoverishing the citizenry. Trade sanctions are a lose-lose remedy.


Movement of peoples is also being curtailed, just as in the first Cold War. You can no longer fly from any Russian airport to western Europe; and vice versa. This discourages cultural intermingling, the central plank to common understanding between peoples that their real interests are all really the same. Add to this increasingly onerous visa regulations, together with lots of individuals being issued travel bans and asset freezes for no apparent reason other than the company they may once have kept with the Russian President, is silly. It is like sanctioning all the outgoing members of British Prime Minister Boris Johnson's cabinet, to encourage a sense of collective responsibility for his personal sins. These actions only serve to separate people between political borders, thereby making diplomacy all the harder.


Indeed there is no diplomacy going on right now. None of the interested parties in the war in Ukraine are talking to one another about how to bring the war to a peaceful settlement, even though everyone professes to want a peaceful settlement. Every litigation lawyer knows of the economic rationality of constant settlement negotiations in parallel with war, as the relative positions of the parties continue to change and the final outcome starts to fall within a narrower margin of error when compared to the parties' relative hopes and rational expectations about how the war will end.


Every litigation lawyer also knows that if you fight a war to the end, the costs on both sides may well end up being more than the amount being fought over. One might respond that no sum of money or lives of men can compensate for loss of territory; but that is demonstrably wrong. Eventually this war will end with an adjustment of relative territories. And then the fighting parties will be left to assess whether the territorial adjustments they gained or lost were worth it all in the blood of young men and levels of economic devastation incurred. Only a heartless psychopath would discount the value of human life to zero, which is the logical corollary of saying that the only thing that matters is territory.


This makes it all the more perplexing that all sides are persisting in their silo mentalities, each blaming the other in absolute, moralistic tones a world away from the crude utilitarian calculus that is necessary for all parties to adopt if a ceasefire is to be brought to so serious a conflict. Nobody gets everything they want in a settlement, save where one side has been fought into the ground in which case they take all of what is left. Although the war in Ukraine has mysteriously fallen out of the news in recent days, the fact is that the Russians are advancing and are moving closer towards territorial domination of increasingly large parts of Ukraine. Surely it is better to negotiate a resolution now, before things get even worse?


No sane voices expressing this rational, economist's perspective on how to conclude a war can be heard. This is hardly surprising, in an environment of common diplomatic hysteria on every side hurling insults and platitudes upon one's foes. Diplomats work by finding common ground. In this war, as in the first Cold War, the silo mentality in which diplomats do not talk to one another but instead just scream each at the other across the international media networks excludes all space for rational discussion and successful diplomatic dialogue which always requires each side to understand something of the attitudes and perspectives of the other parties.


In these circumstances, there is a compelling argument for diplomacy to be privatised - much as it was in the first Cold War. If the Great Powers' official diplomats - quite possibly following the lead of their political overlords - are incapable of negotiating with one another (and right now we are in a position where the relevant countries' diplomats are not talking at all), then the task of keeping diplomatic dialogue open, with at least a tinge of rationality, may fall to others. In the first Cold War much of this less formal diplomacy was undertaken by academics who crossed the Iron Curtain on official exchanges, and at the same time could deliver messages or initiate dialogues. Travelling businessmen were also involved; but a greater suspicion fell upon them as potential spies, through the (usually totally false) civil servants' presumption that as men of commerce their loyalty could be bought.


Thankfully modern international legal practice has created a profession of mediators, who specialise in things like shuttle diplomacy as a way of pursuing the rational deblockage of seemingly intractable confrontations. These are people specifically hired for their skills in gently but inexorably pushing warring parties towards a mutually comprehensible rational settlement. Modern lawyers of calibre are all innate mediators, a skill they learn because they want to help their clients close expensive or damaging problems and move on; and the usual way of doing that is to use the mediator's skills in shuttle diplomacy to find some compromise with one's protagonists.


We seek to lead a brave new world of private mediators and conflict experts, when traditional diplomats for whatever reason (and there are manifold agency problems in the operation of government that might explain why) are simply not doing their jobs. This new phenomenon, we predict, will become increasingly prevalent as the parties to civil conflicts and other geopolitical frictions come to realise that the commercial engagement of professionally experienced mediators is so pathetically cheap compared to the price of a single hypersonic cruise missile or stealth fighter as to render the costs of employing such expertise marginal.


Private negotiators and mediators build trust by starting with smaller problems, and then lay the ground for subtle shifts in the attitudes of political decision makers, that eventually in a third stage enables the official diplomats to engage formally to end the dispute.


In the past, this approach was known by some as 'Track II diplomacy'. As it has been increasingly professionalised, principally due to the remarkable globalisation of the legal profession over the last 25 years, we now give this approach a new title: Diplomacy in the Second Cold War.