War in Ukraine: Why I Was Blindsided, Part 1

I have written quite a lot, and I keep writing. This how I bleed, one word at a time. I am going to break it up into smaller, more readable chunks. I’ll send them out as soon as I finish writing them. You’ll be getting a lot more emails from me than usual. I hope this war ends soon so I can go back to writing on more trivial topics.

By the way, I share my more real-time, unpolished thoughts on Twitter – you can follow me here.

One last thing. If you know any charities that help folks in Ukraine, please send the info to me. I’ll be delighted to donate and will start accumulating a list at the bottom of each email.

Why was I blindsided by the war?

Eight days before Russia invaded Ukraine, I wrote an article saying there would be no war. I was certain of it. I was wrong. How could I get it so wrong? The more you knew about the situation, the more likely you were to get it wrong.

Let me take you back to my childhood in Russia. I and everyone around me hated the Nazis with every ounce of our souls. Every other movie made in the Soviet Union was about WWII. A lot of those movies were in black and white. I am not referring just to the color of the film but to the lack of ambiguity of the message: Without provocation, the Nazis invaded the Soviet Union. Russians were good, courageous, honest, peaceful people. Germans were heartless, evil, soulless invaders that slaughtered innocent Russians. Russians were good. Germans were bad.

Reminders about WWII were not just in the movies. We studied the horrors of WWII in school, and then there was the May 9th celebration of Victory Day, when Germany surrendered, on May 9, 1945. Unlike Independence Day in the US, which is just an excuse for BBQ and to sell couches at a 30% discount, May 9th was a day that was truly dear to everyone. We all went out onto the streets to celebrate it. We all knew someone who had fought or died in WWII, and most of our parents had lived through its horrors. WWII is not just an entry in a history book for Russians; its memories and lessons are deeply embedded in Russian culture.

This is the first reason why war with democratic Ukraine seemed unfathomable. Even after it happened, my mind still didn’t want to recognize that at 4 AM – the same hour that Germany attacked the Soviet Union in June, 1941 – Russia invaded and started to bomb Ukraine. This makes Russia just like Nazi Germany – behavior that we despised all our lives.

The Soviet Union was a melting pot. Take my family for example. Three quarters of my ancestors, including my mother, were born in Vitebsk, a small town in Belarus. My father’s father was born in Pavlograd, a city in Ukraine – he was a lieutenant colonel who fought in WWII in the Soviet army. My father was born in Moscow. I was born in Saratov, a city on the Volga River to which my mother’s family evacuated during WWII. From the time I was three months old until I was 18, we lived in Murmansk, in far northwestern Russia. Was I Russian, Ukrainian or Belarusian? Add the fact that I am Jewish to the mix to confuse things a bit more. (I posed this question in the past and tried to answer it here). Most importantly, I am not an exception, but the rule (except for the being Jewish part).

To this day when I say Russia, I catch myself referring to more than just the geographical territory of Russia but not to the whole Soviet Union, either. I am referring to all the Slavic countries, including Russia, Ukraine, Belarus, and Moldova. These countries share a common culture. We watched the same movies, sang the same songs, laughed at the same jokes, and we even spoke the same language. We considered anyone from these republics to be “Russians plus.” The plus being that they had their own cultures and languages, but the Russian language and culture was a common denominator. This was and remains the perspective of my and the older generations that grew up in Soviet Russia. I am sure that today it is not shared by the citizens of the other Slavic countries I mentioned above.

Slavs also look the same. You wouldn’t be able to tell any physical difference between Ukrainians, Byelorussians, and Russians. This point is very important.

I remember visiting the Holocaust Museum in Jerusalem and hearing a story about a group of Jewish refugees from the Soviet Union finding their way to Japan during WWII. Japan and Germany fought on the same side, but Japan did not embrace the German Aryan ideology that wished to purge the human race of Jews.

Germany demanded that the Japanese send these Jewish refugees to Germany. The Japanese were somewhat bewildered by this request. They asked the Jews, “Why do Germans hate you so much?” To answer this question fell on a Rabbi, the head of the group. Just imagine you are this Rabbi, the heaviness of this question. Your answer will decide the fate of hundreds of people, many of them your relatives. The Rabbi thought about it for a few minutes and answered, “They hate us because we look like you.” This brilliant answer saved the lives of these people; they were not shipped to Germany.

It is in our genetic programming that it is easier for us to kill (yes, that is what war is) people that are not like us (from a different tribe). We are more sympathetic to people like us, just as we prioritize our family over strangers. This horrible invasion of Ukraine by Russia is as close as you will come to a civil war between countries that are blood brothers.

Now, combine a shared hatred for behaving like Nazis, a common culture, and physical likeness, and you can you see why this war was unimaginable to anyone who had spent any time in the Soviet Union.

Another thing I missed

The Russia I knew 30 years ago is gone. The flame of democracy that was lit with Perestroika died out a decade later. Today, Putin’s dictatorial regime is starting to resemble Stalin’s Russia of 1937 or Hitler’s Germany in 1939.

My father always said that Russians may be skeptical of their government, but they love their leaders to death. I have watched interviews with historians who studied Stalin, and they are convinced it was impossible to predict that Stalin would turn into a despot, propped up by a cult of personality, who would kill millions of Russians. I have also read interviews with people who knew Putin well, and there was no sign that he would turn into the dictator that he is today.

But Dalberg-Acton’s quote “Power tends to corrupt, and absolute power corrupts absolutely” is like an immutable law of the human condition. After a while, unlimited power poisons everyone’s soul. You start taking little shortcuts to achieve results that will bring about an even greater good. Little by little, taking shortcuts becomes the norm. The rule of law becomes an inconvenience that you either ignore or change as you wish.

People you surround yourself with may be good people but are terrified of you and thus tell you only what they think you want to hear. You find yourself surrounded by sycophants. You lose touch with the outside world. Money and possessions lose their luster. Power is the only drug you’re after. So, as a dictator you have only two goals – stay in power and get more power. This is why, despite appearances, there are no free elections in Russia and any candidate that dared to run against Putin is either dead or rotting in jail.

Putin did not become a dictator overnight. He became the president of the democratic Russia in 2000. But then he asked for a little bit more power. People loved him and gave it to him. He kept asking for more and more. With every little tweak to the law, the country became a little bit less democratic. Fast forward to today. Putin is a dictator for life and no longer needs to ask. He just takes.

I also missed this point: I was looking at the Ukraine situation from the perspective of Russia. But we are not dealing here with a rational national leader – or at least his rationality has nothing to do with Russia or geopolitics. As we do analysis of the situation going forward, we have to keep this in mind. Putin doesn’t care about Russia; he only cares about Vladimir Putin. Trying to predict what Putin will do to maintain power is very difficult. The are no ex-dictators, there are only dead dictators, and Putin knows it.

This is a lesson not just for Russia but for any democracy, including the United States. The law should not be crafted for a person in office today – no matter how much you admire the person. Never love your politicians unless you are married to them; you lose your objectivity. People change – power corrupts them. Also, you don’t know who will be replacing them. It is a miracle that the US has been a democracy for this long. We should never take it for granted.

I was not going to include music with this email – I don’t feel like writing about composers right now. But then I remembered the origin of Dmitry Shostakovich’s 7th, “Leningrad” Symphony. Listen to it here.

Shostakovich completed it in 1941. He was in Leningrad (now Saint Petersburg), and the city was surrounded by the Nazis, blockaded, completely cut off from the rest of Russia. The Germans were bombing day and night. People were dying of hunger.

This symphony starts out peacefully – the first 7 minutes are just about normal everyday life. Then in minute 7 you start hearing the faint sound of drums – that’s the German army marching on Russia. Minute by minute the drums grow louder, and then all peace is gone and all there is war. This symphony portrays well the irony and tragedy of what is happening right now. If Shostakovich were alive, he would have renamed this symphony “Kiev.”

Next: I’ll discuss how the war with Ukraine has changed the world.

List of charities

www.tikvaodessa.org

(Please send charities my way and this list will grow with each new article!)

Vitaliy Katsenelson is the the CEO at IMA, which is anything but your average investment firm. In a brief moment of senility, Forbes magazine called me "the new Benjamin Graham”.

I’ve written two books on investing, which were published by John Wiley & Sons and have been translated into eight languages. (I’m working on a third – you can read a chapter from it, titled “The 6 Commandments of Value Investing” here).

And if you prefer listening, audio versions of my articles are published weekly at investor.fm

Read more articles by Vitaliy Katsenelson