Russia in the World – La Guerre est Finie!

white flag e1288188247759 300x179 Russia in the World – La Guerre est Finie!

We are gratified to see confirmation of a trend we have repeatedly referred to over the past year, i.e. the end of what Edward Lucas termed The New Cold War– with a striking improvement in Russia’s position as a major regional power in Eastern Europe, as well as an independent player on the global stage.

Two years ago, as the Bush presidency drew towards its ignominious close, there was reason to fear a further and very severe deterioration in relations between Russia and the West in general –the US in particular. Georgia’s crushing defeat by the Russian army and the final de-jure split of South Ossetia and Abkhazia constituted a severe humiliation for the assertive and triumphalist Washington Neocon Faction, essentially threatened with political irrelevance if seen to be unable to protect its paladins in Eastern Europe.

The Cheney faction was desperate to extract swift revenge so as to re-establish its credibility in the region and beyond – at the low point, the US fleet sailed up and down the Black-Sea coast in an angry (if rather ineffective) show of gun-boat diplomacy.

In the event, under a French presidency the EU brokered the cease-fire agreement which essentially spelled the end of any pretence of Georgian control of So. Ossetia and Abkhazia (de-facto, these regions had become independent in short, bloody civil wars during the mid-1990s, in the wake of the collapse of the USSR).

Meanwhile, relations with the UK had reached a low ebb following Russia’s refusal to extradite Alexander Lugovoi, wanted by London in the investigation of the poisoning death of Russian former spy Litvinenko. Moscow refused the extradition, arguing that not only was it unconstitutional for it to extradite a Russian citizen, but also, as confirmed by American investigative journalist Ed Epstein (3), the dossier sent by London was virtually empty – in particular lacking the vital toxicology and the autopsy reports, or indeed, any concrete evidence suggesting Lugovoi’s guilt or even his involvement.

Encouraged by the global ascendancy of Neocon ideology, the anti-Russian rhetoric in the Baltics and Poland reached a fever pitch, hindering any attempt at normalization of relations with the EU. With the Ukraine matters hit a still lower ebb, with anti-Russian policies virtually the sole ideological vector uniting an increasingly fractious and unstable Yuchshenko government, itself installed in an Orange Revolution largely organized and funded by Western NGOs. Whether or not credible, threats of further “Orange Revolutions” elsewhere in the CIS, or indeed, in Moscow itself, appeared to be taken quite seriously by the Kremlin – which acted with typical heavy-handedness to counter any domestic organizations perceived to be possibly working for the Western powers.

3 (Epstein suggests that Litvinenko may have been smuggling polonium, and may have accidentally ingested it; the toxicology study would have been vital to establish when and where the Polonium had been manufactured)

Fast Forward Two Years : “Un donno delle Signore”

With his trademark showman style, Italian PM Silvio Berlusconi unexpectedly shook up the otherwise excruciatingly dull Yaroslav forum, hailing Vladimir Putin as “un donno delle Signore” – a gift of God (i.e. to Russia). T&B, of course, could not agree more (and generously inclined, shall risk irritating our many Italian friends by conceding to Silvio the unlikely role of a (minor) saint!)

Two years later – and the changes to the diplomatic situation could hardly be more striking. With the election of a centrist American administration, relations with the United States are probably as good as could be hoped for between two countries with substantially divergent interests and priorities – although also some important areas of common interest; a “cold peace” is a far better outcome than could have been reasonably expected just two years ago. Meanwhile, relations with Europe – both Eastern and Western – are anything but cold.

While the diplomatic relationship with the UK remains distinctly chilly, there has been a striking reactivation of dealings with the other EU majors – Germany, Italy and France, in approximately that order. There has been a reacceleration of high-level diplomatic contacts, discussions of energy policy, cultural and social exchanges, and especially, a substantial deepening of economic relations.

Bitter Oranges – Ukraine Rethinks

The most striking changes have, however, occurred in Russia’s “near abroad” – the CIS and the former USSR/Comicon. The electoral defeat of the Ukrainian Orange “Coalition” and the election of Victor Yanukovich resulted in a sea-change in relations between the two countries – a matter of vital concern for Russia, not just economically and militarily, but also from the national and cultural standpoints.

Attempts to bring Ukraine into NATO, viewed by the Kremlin as a potentially hostile military alliance, clearly constituted a bridge too far – virtual casus belli (4).

Ukraine has been closely integrated with Russia for the past thousand years; the Russian nation got its start as Kievan Rus under Vladimir and Yaroslav (980-1054) leaving strong cultural, religious and linguistic bonds; the two nations formed part of a single state – the USSR – for most of the 20th Century. Many of the Russians T&B knows in Moscow were born in Kiev; the majority of the population of Eastern Ukraine speaks Russian as a first language, and feels a strong national identification with the Eastern Fatherland.

In the event, economic and political realities rendered a rapprochement with Russia inevitable. The aggressively pro-Western policy of the deeply corrupt Yulia Timoshenko and especially, of the dangerously ideological Yushchenko, eventuated in a widening cultural divide within a country ethnically and politically split in two – between an agrarian Western moiety looking to Poland, and a Russian-speaking Eastern industrial heartland still largely integrated into the old Soviet production system and virtually crippled by the de-facto breakdown of relations.

While both the US and Western Europe were typically generous with words of praise and encouragement for the Orange government, given their own economic crises, both were deeply disinclined to assume economic responsibility for a failing country of 50 millions.

If the economic folly of Yushchenko’s policies was initially masked by massive private capital flows from the West, in particular hard currency lending by EU banks, when the capital flows suddenly dried up at the beginning of the 2008 crisis, Ukraine suffered an economic implosion of a social impact exceeding that even of the Baltic states. In many areas of Eastern Ukraine public transport stopped, the city heat supply was interrupted, factories laid off workers, and actual hunger seemed a real possibility. As a result of the economic hardship, as well as his provocative diplomacy and inability to control the factions, Yushchenko’s presidency collapsed, with his popularity dropping into the low single-digits; he polled a distant third in the ensuing presidential elections.

While stressing the importance of improved relations with the EU, his successor Viktor Yanukovich has moved Ukraine closer to Russia. One of his first acts upon assuming the Presidency (delayed by Timoshenko’s refusal to recognize the polling results until pressured to do so by the European Union) was to extend the agreement allowing Russian forces to use the naval base at Stavropol until 2047, this in exchange for a reduction of export taxes on Russian gas supplies for domestic consumption (gas which, otherwise, the Ukraine could not have afforded to purchase).

Having won a decision by the Supreme Court shifting Ukraine back towards a Russian-style presidential regime, Yanukovich is now seeking to render the Russian language co- official with Ukrainian, and has been generally very supportive of Russian policy in the region although actively seeking to maintain a balance between Moscow and Brussels.

(4) Those inclined to support Ukraine’s self-determination might wish to consider how the UK would have reacted to the threat of Wales – or Washington to Mexico – joining the Warsaw Pact. Global politics is driven not by morality but by relationships of power, and Moscow is simply no longer in the totally subservient position of the early 1990s.

Baltics – Downside of the Miracle

After gaining a deeply desired independence from the Soviet Union in 1991, the Baltics adopted a bitterly anti-Russian approach, not just diplomatic but also towards their own Russian-speaking populations, largely on historical grounds (5).

Ideology seems to come as a package, and happy to throw off the bonds of a socialism imposed (only in part) from abroad, they embraced the Neo-liberal credo with gusto, adopting a fiscal system which crushed domestic employment and production while leaving capital and real-estate almost entirely untaxed. This resulted in massive emigration to the EU, as well as the mother of all credit bubbles – with Latvia attaining a breathtaking current account deficit in excess of 27%, i.e. several times the records set by any of the Latin American serial defaulters. While, as always, the huge increase in debt briefly created the illusion of prosperity, leading to a certain smug disdain of their larger, chaotic Slavic neighbour, the bursting of the credit bubble led to severe recessions occurred throughout the region (6).

With the support of the IMF and the EU, the Baltics have undertaken a very painful restructuring and a multi-year fiscal retrenchment. Perhaps as a result, aggressive foreign policies now seem an unnecessary luxury and they now seem more interested in seeking markets and investment flows from Russia. In any event, the political noise has died down most wondrously.

Perhaps the most vehemently anti-Russian country – at least ex-Georgia – in the region was Poland, again largely on religious/cultural and historical grounds (conveniently forgetting that the repeated partitions of Poland had been as much the work of Imperial Germany as of Tsarist Russia (7.) Here again, we are witnessing a veritable sea change. With the recent election of Bronisław Komorowski, the moderate, pragmatic government of Donald Tusk now has full institutional control, and is moving to normalize relations with its larger neighbours – Russia and Germany – both of whom had been seriously antagonized by the hectoring rants of the mad Kaczyński brothers.

The remaining areas of trouble include several smaller peripheral countries – Moldova, Armenia, Azerbaijan, the frozen conflicts of Transdinestria, and especially Georgia (where we see little prospect of improvement for as long as the sociopathic Saakashvili clings to power – alas, apparently for quite some time to come) and are of relatively limited political/economic significance.

5 largely justifiable, but conveniently forgetting some of the less attractive aspects of their own histories, e.g. the enthusiastic collaboration of various domestic factions in Lithuania and Estonia with the Nazi forces, resulting in the wholesale slaughter of their own large Jewish populations; see Wikipedia on this subject, e.g. http://en.wikipedia.org/wiki/The_Holocaust_in_Lithuania

6 The IMF has stated that Latvia suffered the deepest recession of any country in the recent crisis.

7 and, inter alia, that the most vicious pogroms were not Russian, but rather Polish-Ukrainian…let he who is without sin throw the first stone!

A Farewell to Arms

Perhaps the most interesting question is why this fundamental political shift has occurred now.

We believe that a number of factors may have been involved, perhaps the most important being the global credit crisis, which resulted in severe financial stress for numerous Eastern European countries, and thus, in more attention being given to rebuilding effective economic relationships in the immediate neighbourhood, rather than refighting old conflicts.

The manifest failure of Western “liberalized, self-regulating financial markets,” could not help but trigger a reappraisal of economic models, or at least an awareness that there were a number of possible alternatives. The inability of Washington to protect Saakashvili from the consequences of his own folly, the collapse of the Orange Revolution and the end to the dream of further “coloured revolutions” in Eastern Europe probably further contributed to a broad reappraisal of political options. Finally, Russia offers by far the largest and most solvent consumer market in the region, as well as being a vital financial partner and energy supplier – factors which, in times of trouble, are less likely to be ignored.

This is not to suggest the imminent reconstitution of the USSR, much less of the Warsaw pact – Yanukovich is intent upon maintaining an equidistant relationship with both East and West; Belorussia is proving a hard nut to crack; Poland will most likely remain cautious regarding Russia, seeking to rebalance rather than to intensify relations. Quite simply, a new pragmatism is informing these relationships, to the likely benefit of all parties.

Washington: The End of the Honeymoon?

T&B was delighted by the “reset” of a Russia- US relationship which, at its nadir late in the second Bush mandate, was growing frankly dangerous. That said, our optimism was tempered by the expectation that Washington factions geared to a continuation of the Cold War – both manipulating and manipulated by the likes of Khodorkovsky and Saakashvili – would most likely find the means of limiting a rapprochement based more upon good intentions than shared politico-economic goals.

The outcome has indeed been somewhat mixed, with a resolution of several of the most contentious dossiers including an end to talk of further NATO expansion or the positioning of American missile batteries in Eastern Europe, but relatively little else of substance. We have heard persistent rumours of a diplomatic trade-off whereby Washington refrains from interfering with Russian policy in her “near-abroad,” in return for Russian cooperation on dossiers more important to the Obama administration. If true, this would represent a return to a more pragmatic and less ideologically-driven approach as the US comes to terms with the limitations on its global reach.

As discussed above, what appears to be a gradual shift in Russian foreign policy was confirmed by Moscow’s surprise vote in favour of the US-backed Security Council sanctions against Iran.

T&B has long argued that the Iranian story has less to do with the nuclear issue then with great-power politics (8). Given increasing US dependence upon Middle-Eastern oil, since the 1950s policy has been centred about maintenance of American political and economic supremacy in the Middle East, based upon a very pragmatic support for Sunni monarchies far more corrupt (and easily as undemocratic) as anything in Teheran. This geopolitical control is now seriously challenged by an ascendant Iran – the position of which was unwittingly advanced by the ignorant, arrogant foreign policies of the Bush administration.

Having spent an estimated $3 trillion with little to show for it (other than handing the theocratic Iranian regime an unexpected victory over Iraq, its sole natural predator) the US is at risk of finding itself in a situation of having to either double or fold.

Until Saddam Hussein disastrously overplayed his hand by invading Kuwait (possibly due to his misunderstanding of a message delivered by an American ambassador) he enjoyed unstinting US diplomatic support, as well as covert supply of advanced weaponry and technologies in his long war against Teheran; even after the truce, Saddam continued to pose a constant threat to the Shia regime.

As a result of the American invasion, the future of Iraq as a unitary state is imperilled, thus creating a power vacuum. T&B is on the record for predicting that the US, able to occupy but never to durably control Iraq, would eventually declare victory and march out – leaving Iran an opportunity to surge into the power vacuum left in the wake; as of this writing, this appears to be playing out more or less as predicted (minus the Victory speech), with a mercenary army being left to shore up a deeply fragmented and unpopular Iraqi regime.

Given that the US seems disinclined to become entangled in further Middle-Eastern conflicts, the only hope for it to extricate itself would be to force a radical inflection of Iranian policy. This would imply “regime-change” and the nuclear issue is providing a very convenient means to harness multi-lateral diplomacy to the achievement of US goals.

8 those wishing to concern themselves with nuclear proliferation might start by worrying about Pakistan – Pashtuns, armed not with hypothetical, someday-nukes but with an estimated 50-100 fully tested and functional thermonuclear devices, mounted on ballistic missiles and ready to deliver – thanks to a North Korean re-export of Chinese technologies.

Nabucco – Still just a Pipe-Dream

While the Middle East is not of vital importance to Russia, Iran on the other hand is a critical part of the Central Asian game. The stated energy policy of both Washington and Brussels involves an attempt to limit Russian influence in hydrocarbon markets by bringing Caspian oil and gas directly to Western Europe, bypassing Russian territory.

Since both Russia and Iran have effective vetoes over any pipeline under the Caspian Sea, there are only two possible land routes to Europe: either via Russia, or via Iran.

Were Russia to support the reassertion of American control over Iran, it would score a spectacular own-goal, sharply curtailing its own influence in the European energy space.

Mr. Putin, at least, is clearly cognizant of this danger, and had recently moved to reassure Tehran of continued Russian support (while pressing Iran to abandon its nuclear fuel enrichment program – alas, no more likely under Russian than under American pressure) in order to forestall the threat of a Nabucco pipeline being built via Iran. Given the recent confusion surrounding Russian policy, this issue deserves to be watched closely.

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