A Hero's Welcome, by Janet Daley
Britain greets a Guantánamo detainee
The Weekly Standard, Mar 09, 2009, Volume 014, Issue 24
LondonWell, it wasn't quite Nelson Mandela's release from Robben Island, but the treatment was nearly as reverential. The news channels followed every detail of the progress of Binyam Mohamed, the first detainee released from Guantánamo by the Obama administration, from the moment it was solemnly announced that his plane had left the ground to return him to Britain--the country that had granted him asylum (but not citizenship) before his unfortunately timed journey to Afghanistan in June 2001--until the moment the private jet touched down at RAF Northolt in west London.
It was the works: minute-by-minute live coverage of Mohamed's deplaning, flanked by burly men who ushered him quickly to a waiting car. These proceedings were enlivened by an offstage chorus of demands from Labour MPs, human rights lawyers, and the liberal media that the government and the security services tell all they knew about Britain's alleged role in Mohamed's alleged torture at Guantánamo. A parade of activists, from the openly Trotskyite leaders of the Stop the War Coalition to the usual array of anti-American protesters and always-available legal experts, weighed in with speculation on everything from the released man's mental state after force-feeding during a hunger strike to the judicial implications of Britain's participation in torture.
Particularly notable was the psychologist who specialized in the study of torture victims. He had not met Mohamed, nor did he have any personal knowledge of the specifics of his case, but that did not prevent the BBC news presenter from engaging him in a lengthy discussion of the likely effects on Mohamed of the treatment he might or might not have endured at Guantánamo--which might or might not have involved the active assistance of the British security forces. The final exchange in this rather surreal dialogue went something like this:
BBC: Isn't it possible that a victim of torture could actually be radicalized by his treatment and led into terrorism, even if he had had no inclinations of that kind in the first place?
Psychologist: Oh yes. We often find that torture victims are so alienated by their experience that they turn toward active terrorism.
This speculative analysis is, of course, plausible. It just happens that neither the psychologist nor his inquisitor had the remotest idea whether it applied in any way to Mohamed. They were simply weaving a hypothesis. But the subtext of this flight of fancy is not insignificant: If Mohamed should, in the future, be found to be involved in terrorist activity, it will be argued not that this vindicates the U.S. decision to detain and interrogate him in the first place--but that he was radicalized by his (wrongful) detention and interrogation. So even if he turns out to be a terrorist, it'll be our fault.
By the time the main evening news came on, the BBC coverage had become a bit more skeptical. Judicious doubt was inserted into the accounts given by Mohamed himself and his eager legal team about the treatment he had received and his absolute conviction that British forces had been somehow complicit in it. But after another 24 hours, there was a new hyperbole in Mohamed's descriptions of his torture as "medieval" (the rack?) and an apparent acceptance by much of the media of his confident assertion of British involvement.
No one seemed inclined to ask the obvious question: If he believed so firmly that Britain had betrayed him ("Those I hoped would rescue me were allied with my abusers"), why was he so eager to return and make his home here? One sentence from the Guardian's coverage captures this paradox neatly: "Binyam was 'extraordinarily grateful to be back in Britain,' said [his lawyer] Stafford Smith, who said he had 'zero doubt' Britain was complicit in his client's ill-treatment."
How very strange: to be extraordinarily grateful to be back in a country which you believe to have helped to torture you. Now this is not inconceivable. People often have confused and contradictory emotional reactions to traumatic events. But it does seem odd that, in all the excitement of pursuing the British government over its possible engagement in torture, scarcely anyone has thought to raise this query.
Any doubts about the credibility of Mohamed's testimony were pretty well lost in the scrum of the early coverage. This story has everything: above all, anti-Americanism combined with the delights of British self-flagellation.
As one pundit put it, "Now that Binyam Mohamed has returned to the U.K. from detention at Guantánamo Bay, there must be quite a few Whitehall mandarins--not to mention some ex-ministers--who are wandering Westminster frantically trying to clean the blood from their hands." Bush and Blair meet Lady Macbeth: The image is irresistible.
Janet Daley is a columnist for the Daily Telegraph (London).
Showing posts with label europe. Show all posts
Showing posts with label europe. Show all posts
Monday, March 9, 2009
Wednesday, March 4, 2009
WaPo: No deal on Iran and missile defense
No Deal. WaPo Editorial
Barack Obama and Dmitry Medvedev offer welcome clarity on Iran and missile defense.
TWP, Wednesday, March 4, 2009; A14
PROPONENTS of a diplomatic "grand bargain" between the Obama administration and Russia -- by which the United States would obtain Russian cooperation in stopping Iran's nuclear program in exchange for concessions to what Moscow sees as its security interests in Europe -- got a double drenching of cold water yesterday. Russian President Dmitry Medvedev told a news conference that "any swaps" between action on Iran and a planned U.S. missile defense system in Poland and the Czech Republic "would not be productive." For his part, President Obama made clear that his administration's decisions on missile defense would be guided not by Russian behavior but by the threat from Iran.
As Secretary of State Hillary Rodham Clinton prepares for her first official meeting with Russian Foreign Minister Sergei Lavrov on Saturday, these were revealing and important clarifications. Vice President Biden's call for a "reset" in U.S.-Russian relations and long-standing questions about the efficacy and cost of missile defense may have encouraged Russian expectations that the new administration could be bluffed into retreating from the deals struck by the Bush administration with Poland and the Czech Republic to deploy missile interceptors and a radar station. If undertaken as a concession to Russia, any such move would have the effect of undermining the bonds between former Soviet bloc members and the United States and NATO -- which, of course, is Moscow's aim.
That's why it was important for Mr. Obama to say yesterday that his willingness to reconsider missile defense would be based on judgments about Iran, not about Russia -- and that any decision made in that context does not diminish "my commitment to making sure that Poland, the Czech Republic and other NATO members are fully enjoying the partnership, the alliance and U.S. support with respect to their security." One way to back up that principle is for the administration to make clear in public -- as it has in private -- that deployment of a U.S. Patriot missile defense battery to Poland, promised by the Bush administration, will go ahead regardless of what is ultimately decided about the larger missile defense system.
Such a statement might be somewhat out of sync with the honeymoonish tone of much of the public rhetoric between Moscow and Washington since Mr. Obama's inauguration. But as Mr. Medvedev made clear yesterday, so far there isn't much substance behind the cheery facade. He declared that Russia, which is about to complete a nuclear power plant for Iran and has repeatedly opposed tough sanctions, is "already working in close contact" with the United States on Iran. In other words, while Russia expects the new administration to "show common sense" on missile defense by proposing something that "would be acceptable to us," it shouldn't expect more help stopping an Iranian bomb. Perhaps the Kremlin leadership believes that "reset" is another way of saying "capitulate." If so, Ms. Clinton would do well to clarify the administration's policy when she meets Mr. Lavrov.
Barack Obama and Dmitry Medvedev offer welcome clarity on Iran and missile defense.
TWP, Wednesday, March 4, 2009; A14
PROPONENTS of a diplomatic "grand bargain" between the Obama administration and Russia -- by which the United States would obtain Russian cooperation in stopping Iran's nuclear program in exchange for concessions to what Moscow sees as its security interests in Europe -- got a double drenching of cold water yesterday. Russian President Dmitry Medvedev told a news conference that "any swaps" between action on Iran and a planned U.S. missile defense system in Poland and the Czech Republic "would not be productive." For his part, President Obama made clear that his administration's decisions on missile defense would be guided not by Russian behavior but by the threat from Iran.
As Secretary of State Hillary Rodham Clinton prepares for her first official meeting with Russian Foreign Minister Sergei Lavrov on Saturday, these were revealing and important clarifications. Vice President Biden's call for a "reset" in U.S.-Russian relations and long-standing questions about the efficacy and cost of missile defense may have encouraged Russian expectations that the new administration could be bluffed into retreating from the deals struck by the Bush administration with Poland and the Czech Republic to deploy missile interceptors and a radar station. If undertaken as a concession to Russia, any such move would have the effect of undermining the bonds between former Soviet bloc members and the United States and NATO -- which, of course, is Moscow's aim.
That's why it was important for Mr. Obama to say yesterday that his willingness to reconsider missile defense would be based on judgments about Iran, not about Russia -- and that any decision made in that context does not diminish "my commitment to making sure that Poland, the Czech Republic and other NATO members are fully enjoying the partnership, the alliance and U.S. support with respect to their security." One way to back up that principle is for the administration to make clear in public -- as it has in private -- that deployment of a U.S. Patriot missile defense battery to Poland, promised by the Bush administration, will go ahead regardless of what is ultimately decided about the larger missile defense system.
Such a statement might be somewhat out of sync with the honeymoonish tone of much of the public rhetoric between Moscow and Washington since Mr. Obama's inauguration. But as Mr. Medvedev made clear yesterday, so far there isn't much substance behind the cheery facade. He declared that Russia, which is about to complete a nuclear power plant for Iran and has repeatedly opposed tough sanctions, is "already working in close contact" with the United States on Iran. In other words, while Russia expects the new administration to "show common sense" on missile defense by proposing something that "would be acceptable to us," it shouldn't expect more help stopping an Iranian bomb. Perhaps the Kremlin leadership believes that "reset" is another way of saying "capitulate." If so, Ms. Clinton would do well to clarify the administration's policy when she meets Mr. Lavrov.
Tuesday, March 3, 2009
CSIS: NATO and France
NATO and France, by Manuel Lafont Rapnouil and Julianne Smith
CSIS, Mar 02, 2009
Q1: Why did France leave NATO’s integrated military structures in the first place and why has France decided to reintegrate into NATO this year?
A1: At General Charles de Gaulle’s urging, France left NATO’s integrated military structure in 1966 to maintain its own independent defense policy. Since then, however, France has continued to participate in NATO’s political structures and make sizeable and important contributions to NATO’s ongoing missions, particularly in Kosovo and Afghanistan. France has also committed itself to alliance transformation efforts such as the NATO Response Force (NRF).
In 1995, at the beginning of Jacques Chirac’s presidency, France contemplated reintegration into NATO’s military structures. But after two years of difficult negotiations over changes to NATO command structures and the arrival of Lionel Jospin as prime minister, the idea was taken off the table. Nevertheless, the French government had already started resuming its full presence in the NATO Military Committee.
Over the last two decades, NATO has changed significantly. Its membership and missions have expanded, and with it, so too have French contributions. Given France’s active role in NATO, President Nicolas Sarkozy’s administration may decide to match France’s formal status in the alliance with its actual contributions. Many of the original obstacles both inside France and among NATO members have been removed in recent years. Questions over NATO commands are far less contentious than in years past and concerns over France’s independence can be easily addressed. For example, no French troops will be under permanent allied command in peacetime. If desired, France could also remain outside of the Nuclear Planning Group, preserving the independence of its deterrent force.
Q2: What will this change mean for the United States and transatlantic relations?
A2: Some analysts in Washington predict that France’s full reintegration into NATO will translate into an alignment of U.S. and French policies. This will not necessarily be the case. Instead, Washington should expect that, on issues such as disarmament or enlargement, France will maintain its distinct positions, which are sometimes in direct contradiction with U.S. views. Paris may also try to maximize its influence within the alliance and seek to design a more deliberative decisionmaking process.
In Europe, some analysts there fear that Paris will soften its ambitions for—and dedicate fewer resources to—a stronger European Security and Defense Policy (ESDP) inside the European Union. On the contrary, Sarkozy’s team hopes that this move will ease suspicions about ESDP inside NATO and among NATO member states such as the United States and the United Kingdom. This new climate could lead to enhanced EU-NATO ties and enhance transatlantic relations more broadly.
Q3: What will NATO have to offer in exchange? Will this alter France’s influence in NATO?
A3: It is important to remember that France will make this decision on its own. The alliance is not trying to persuade the French to reintegrate. Therefore, NATO has not been asked to present a package of concessions in exchange for this French decision. However, France’s reintegration would certainly trigger discussions about high-level posts in NATO’s integrated command structures, which would be settled in the weeks and months ahead.
Ultimately, France’s influence inside NATO will be driven by its continuing contributions to NATO missions, its vision for NATO’s future role in global security, its input into the next Strategic Concept, and its contributions to ongoing NATO reform efforts.
Manuel Lafont Rapnouil is a French career diplomat and a visiting fellow with the Europe Program, and Julianne Smith is director of the Europe Program at the Center for Strategic and International Studies in Washington, D.C.
CSIS, Mar 02, 2009
Q1: Why did France leave NATO’s integrated military structures in the first place and why has France decided to reintegrate into NATO this year?
A1: At General Charles de Gaulle’s urging, France left NATO’s integrated military structure in 1966 to maintain its own independent defense policy. Since then, however, France has continued to participate in NATO’s political structures and make sizeable and important contributions to NATO’s ongoing missions, particularly in Kosovo and Afghanistan. France has also committed itself to alliance transformation efforts such as the NATO Response Force (NRF).
In 1995, at the beginning of Jacques Chirac’s presidency, France contemplated reintegration into NATO’s military structures. But after two years of difficult negotiations over changes to NATO command structures and the arrival of Lionel Jospin as prime minister, the idea was taken off the table. Nevertheless, the French government had already started resuming its full presence in the NATO Military Committee.
Over the last two decades, NATO has changed significantly. Its membership and missions have expanded, and with it, so too have French contributions. Given France’s active role in NATO, President Nicolas Sarkozy’s administration may decide to match France’s formal status in the alliance with its actual contributions. Many of the original obstacles both inside France and among NATO members have been removed in recent years. Questions over NATO commands are far less contentious than in years past and concerns over France’s independence can be easily addressed. For example, no French troops will be under permanent allied command in peacetime. If desired, France could also remain outside of the Nuclear Planning Group, preserving the independence of its deterrent force.
Q2: What will this change mean for the United States and transatlantic relations?
A2: Some analysts in Washington predict that France’s full reintegration into NATO will translate into an alignment of U.S. and French policies. This will not necessarily be the case. Instead, Washington should expect that, on issues such as disarmament or enlargement, France will maintain its distinct positions, which are sometimes in direct contradiction with U.S. views. Paris may also try to maximize its influence within the alliance and seek to design a more deliberative decisionmaking process.
In Europe, some analysts there fear that Paris will soften its ambitions for—and dedicate fewer resources to—a stronger European Security and Defense Policy (ESDP) inside the European Union. On the contrary, Sarkozy’s team hopes that this move will ease suspicions about ESDP inside NATO and among NATO member states such as the United States and the United Kingdom. This new climate could lead to enhanced EU-NATO ties and enhance transatlantic relations more broadly.
Q3: What will NATO have to offer in exchange? Will this alter France’s influence in NATO?
A3: It is important to remember that France will make this decision on its own. The alliance is not trying to persuade the French to reintegrate. Therefore, NATO has not been asked to present a package of concessions in exchange for this French decision. However, France’s reintegration would certainly trigger discussions about high-level posts in NATO’s integrated command structures, which would be settled in the weeks and months ahead.
Ultimately, France’s influence inside NATO will be driven by its continuing contributions to NATO missions, its vision for NATO’s future role in global security, its input into the next Strategic Concept, and its contributions to ongoing NATO reform efforts.
Manuel Lafont Rapnouil is a French career diplomat and a visiting fellow with the Europe Program, and Julianne Smith is director of the Europe Program at the Center for Strategic and International Studies in Washington, D.C.
Monday, March 2, 2009
The Obama–Brown White House Talks: The U.S.–U.K. Special Relationship Must Be Maintained
The Obama–Brown White House Talks: The U.S.–U.K. Special Relationship Must Be Maintained. By Nile Gardiner, Ph.D.
Heritage, March 1, 2009
WebMemo #2317
British Prime Minister Gordon Brown will be the first European leader to meet with President Barack Obama when he visits the White House on March 3. The two world leaders are expected to discuss a range of issues, including the war in Afghanistan, the Iranian nuclear threat, and the global financial crisis, as well as the upcoming G-20 talks in London and the NATO 60th anniversary summit in Strasbourg/Kehl.
In addition to meeting with the President, Brown will address a joint session of Congress on March 4, making him only the fifth British prime minister to be given the honor.
A Shift Away from Britain?
The Brown–Obama meeting will be overshadowed by growing concerns about a possible weakening of the U.S.–U.K. Special Relationship, tensions over strategy in the war in Afghanistan, and the threat of a renewed American protectionism.
The Anglo-American alliance is being eroded on several fronts, from falling levels of U.K. defense spending and the gutting of Britain's armed forces by the Labour government to the gradual erosion of British sovereignty in Europe and the rise of a European Union defense identity now being backed by Washington. It is also threatened by the new U.S. Administration's apathy and indifference toward the U.K.
President Obama's surprise decision to remove a bust of Sir Winston Churchill from the Oval Office and return it to the British government sent an early signal to London that the new Administration will adopt a far less robust approach toward the historic Anglo-American alliance. The White House is already recalibrating the alliance as a "special partnership," —not a "special relationship"—a subtle play on words indicating a potential shift away from a decades-long policy of according Britain a unique status as America's most important ally.
U.S. Overtures to Europe
The Obama White House is keen to significantly strengthen America's relationship with both France and Germany, continental Europe's biggest powers, as well as with Brussels, the institutional heart of the European Union. This approach is partly the product of a distinctly pro-European outlook on the part of the new Administration following transatlantic tensions during the Bush Administration. It is also based on a naive belief that major European allies will actually increase defense spending and reduce the burden on America and that the EU will play a more supportive role in world affairs alongside the United States.
Washington is already making major concessions to France in the NATO alliance, with French officers reportedly in line to take two senior NATO command positions: Allied Command Transformation (one of NATO's two supreme commands, based in Norfolk, Virginia) and Joint Command Lisbon (one of NATO's three main operations headquarters, which also commands the NATO Rapid Reaction Force).
The White House is also sending clear signals that it supports a greater military and defense role for the European Union. In his speech at the Munich Security Conference in early February, Vice President Joe Biden made it clear that the United States will "support the further strengthening of European defense, an increased role for the European Union in preserving peace and security, [and] a fundamentally stronger NATO–EU partnership."
Anglo-American Leadership Is Needed
Since the Second World War, there has scarcely been a more important period for joint U.S.–British leadership. The Anglo-American Special Relationship would be imperiled if the new U.S. Administration looks to Brussels instead of London for its most important strategic partnership. Jeopardizing this relationship would be a huge mistake. The EU is obsessed with challenging American global leadership rather than working with it, and the European Project is ultimately all about building a counterweight to American power.
The Obama–Brown White House meeting will be an important opportunity for the President and the Prime Minister to establish a stronger framework for Anglo-American cooperation on the world stage, particularly in regard to key issues such as Afghanistan, the future of NATO, and the Iranian nuclear crisis.The War in Afghanistan
Despite all the fashionable rhetoric in European capitals about Iraq being a distraction from the war against the Taliban, on the battlefields of Afghanistan almost two-thirds of the 47,000 troops currently serving as part of the 40-nation NATO-led International Security Assistance Force are from the English-speaking countries of the U.S., the U.K., Canada, and Australia. These nations have also taken roughly 85 percent of the casualties. Britain has nearly as many troops in the country as all the other major European Union powers combined, some of whom, like Germany, cower under dozens of "caveats" aimed at keeping their troops out of harm's way. The United States has pledged to send an additional 17,000 troops, and the U.K. is also considering the deployment of further forces to boost the nearly 9,000 British soldiers already serving in Helmand province.
President Obama and Prime Minister Brown should directly challenge European complacency and indifference over Afghanistan and issue a strong statement calling on European allies to pull their weight in the conflict by sending more combat troops to the south of the country. NATO is a war-fighting alliance, not a peacekeeping organization. The stakes are extremely high, and there is a danger that the brutal Taliban, backed by al-Qaeda, will reassert control over vast swathes of the country.
Europe's NATO members must make a no-strings attached commitment to step up to the plate and bear a bigger part of the burden. If this does not happen, the consequences for the future of the alliance will be dire. European apathy over Afghanistan threatens to tear NATO apart, and an institution that has for decades succeeded as the most effective international organization of its time could become irrelevant. It is time for French President Nicolas Sarkozy, German Chancellor Angela Merkel, and other European leaders to roll up their sleeves and commit their troops and resources to winning the war against the Taliban.
The Future of NATO
In the lead-up to the NATO 60th anniversary summit, both the United States and Great Britain must take a step back and launch a fundamental, wide-ranging review of the long-term implications of French demands for the future of the alliance.
It would be a huge strategic error of judgment by the new U.S. Administration and the British government to support French ambitions for restructuring Europe's security architecture. This would ultimately weaken the Anglo-American Special Relationship as the engine of the transatlantic alliance and pave the way for the development of a separate European Union defense identity, which will ultimately undermine NATO.
Washington and London must also commit to advancing the expansion of the NATO alliance—specifically the inclusion of Georgia and Ukraine in the Membership Action Plan. The new U.S. Administration, together with Britain, should send a clear signal to Moscow that NATO expansion is an internal matter for the alliance and not open to Russian veto. A firm commitment must also be made by the Obama Administration to establish a third site missile defense system in Eastern and Central Europe, a vital part of a global defense shield that is needed to protect the West from rogue regimes such as Iran.
The Iranian Nuclear Threat
President Obama and Prime Minister Brown should issue a strong statement calling for the strengthening of both U.N. Security Council and European sanctions against Tehran. The U.S. and British leaders must push for European countries to support a complete investment freeze—including a ban on investment in Iranian liquefied natural gas operations—and the possible use of military force as a last resort against Iran's nuclear facilities. They should reject the idea of direct negotiations with a tyranny that has threatened to wipe a key ally, Israel, off the face of the earth. This is a time for tough resolve in the face of an extremely dangerous foe—a rogue state close to nuclear capability ruled by fanatical Islamists that will have no qualms about using their power to dominate the Middle East or to arm a wide array of proxy international terrorist groups.
The EU has tried to negotiate with Tehran for several years under the guise of "constructive engagement," an approach that has resulted in an emboldened Iran that grows closer by the day to building a nuclear weapon. The EU's policy toward Iran has been all carrot and no stick—a futile exercise that has achieved nothing but failure.
Great Britain Is America's Most Reliable Friend
The Special Relationship is vital to American and British interests on many levels, from military, diplomatic, and intelligence cooperation to transatlantic trading ties. If President Obama does not invest in its preservation, the end result will be a weaker United States that is less able to stand up to terrorism and tyranny, and project power and influence on the world stage.
Whether waging war against the Taliban and al-Qaeda, standing up to the Russian bear, or halting Iran's nuclear ambitions, President Obama should maintain the Anglo-American Special Relationship as the centerpiece of the transatlantic alliance. As nearly every post-war President has found, when it comes to securing the free world, there is simply no alternative to U.S.–British leadership
Nile Gardiner is the Director of the Margaret Thatcher Center for Freedom at the Heritage Foundation. Erica Munkwitz assisted with research for this paper.
Heritage, March 1, 2009
WebMemo #2317
British Prime Minister Gordon Brown will be the first European leader to meet with President Barack Obama when he visits the White House on March 3. The two world leaders are expected to discuss a range of issues, including the war in Afghanistan, the Iranian nuclear threat, and the global financial crisis, as well as the upcoming G-20 talks in London and the NATO 60th anniversary summit in Strasbourg/Kehl.
In addition to meeting with the President, Brown will address a joint session of Congress on March 4, making him only the fifth British prime minister to be given the honor.
A Shift Away from Britain?
The Brown–Obama meeting will be overshadowed by growing concerns about a possible weakening of the U.S.–U.K. Special Relationship, tensions over strategy in the war in Afghanistan, and the threat of a renewed American protectionism.
The Anglo-American alliance is being eroded on several fronts, from falling levels of U.K. defense spending and the gutting of Britain's armed forces by the Labour government to the gradual erosion of British sovereignty in Europe and the rise of a European Union defense identity now being backed by Washington. It is also threatened by the new U.S. Administration's apathy and indifference toward the U.K.
President Obama's surprise decision to remove a bust of Sir Winston Churchill from the Oval Office and return it to the British government sent an early signal to London that the new Administration will adopt a far less robust approach toward the historic Anglo-American alliance. The White House is already recalibrating the alliance as a "special partnership," —not a "special relationship"—a subtle play on words indicating a potential shift away from a decades-long policy of according Britain a unique status as America's most important ally.
U.S. Overtures to Europe
The Obama White House is keen to significantly strengthen America's relationship with both France and Germany, continental Europe's biggest powers, as well as with Brussels, the institutional heart of the European Union. This approach is partly the product of a distinctly pro-European outlook on the part of the new Administration following transatlantic tensions during the Bush Administration. It is also based on a naive belief that major European allies will actually increase defense spending and reduce the burden on America and that the EU will play a more supportive role in world affairs alongside the United States.
Washington is already making major concessions to France in the NATO alliance, with French officers reportedly in line to take two senior NATO command positions: Allied Command Transformation (one of NATO's two supreme commands, based in Norfolk, Virginia) and Joint Command Lisbon (one of NATO's three main operations headquarters, which also commands the NATO Rapid Reaction Force).
The White House is also sending clear signals that it supports a greater military and defense role for the European Union. In his speech at the Munich Security Conference in early February, Vice President Joe Biden made it clear that the United States will "support the further strengthening of European defense, an increased role for the European Union in preserving peace and security, [and] a fundamentally stronger NATO–EU partnership."
Anglo-American Leadership Is Needed
Since the Second World War, there has scarcely been a more important period for joint U.S.–British leadership. The Anglo-American Special Relationship would be imperiled if the new U.S. Administration looks to Brussels instead of London for its most important strategic partnership. Jeopardizing this relationship would be a huge mistake. The EU is obsessed with challenging American global leadership rather than working with it, and the European Project is ultimately all about building a counterweight to American power.
The Obama–Brown White House meeting will be an important opportunity for the President and the Prime Minister to establish a stronger framework for Anglo-American cooperation on the world stage, particularly in regard to key issues such as Afghanistan, the future of NATO, and the Iranian nuclear crisis.The War in Afghanistan
Despite all the fashionable rhetoric in European capitals about Iraq being a distraction from the war against the Taliban, on the battlefields of Afghanistan almost two-thirds of the 47,000 troops currently serving as part of the 40-nation NATO-led International Security Assistance Force are from the English-speaking countries of the U.S., the U.K., Canada, and Australia. These nations have also taken roughly 85 percent of the casualties. Britain has nearly as many troops in the country as all the other major European Union powers combined, some of whom, like Germany, cower under dozens of "caveats" aimed at keeping their troops out of harm's way. The United States has pledged to send an additional 17,000 troops, and the U.K. is also considering the deployment of further forces to boost the nearly 9,000 British soldiers already serving in Helmand province.
President Obama and Prime Minister Brown should directly challenge European complacency and indifference over Afghanistan and issue a strong statement calling on European allies to pull their weight in the conflict by sending more combat troops to the south of the country. NATO is a war-fighting alliance, not a peacekeeping organization. The stakes are extremely high, and there is a danger that the brutal Taliban, backed by al-Qaeda, will reassert control over vast swathes of the country.
Europe's NATO members must make a no-strings attached commitment to step up to the plate and bear a bigger part of the burden. If this does not happen, the consequences for the future of the alliance will be dire. European apathy over Afghanistan threatens to tear NATO apart, and an institution that has for decades succeeded as the most effective international organization of its time could become irrelevant. It is time for French President Nicolas Sarkozy, German Chancellor Angela Merkel, and other European leaders to roll up their sleeves and commit their troops and resources to winning the war against the Taliban.
The Future of NATO
In the lead-up to the NATO 60th anniversary summit, both the United States and Great Britain must take a step back and launch a fundamental, wide-ranging review of the long-term implications of French demands for the future of the alliance.
It would be a huge strategic error of judgment by the new U.S. Administration and the British government to support French ambitions for restructuring Europe's security architecture. This would ultimately weaken the Anglo-American Special Relationship as the engine of the transatlantic alliance and pave the way for the development of a separate European Union defense identity, which will ultimately undermine NATO.
Washington and London must also commit to advancing the expansion of the NATO alliance—specifically the inclusion of Georgia and Ukraine in the Membership Action Plan. The new U.S. Administration, together with Britain, should send a clear signal to Moscow that NATO expansion is an internal matter for the alliance and not open to Russian veto. A firm commitment must also be made by the Obama Administration to establish a third site missile defense system in Eastern and Central Europe, a vital part of a global defense shield that is needed to protect the West from rogue regimes such as Iran.
The Iranian Nuclear Threat
President Obama and Prime Minister Brown should issue a strong statement calling for the strengthening of both U.N. Security Council and European sanctions against Tehran. The U.S. and British leaders must push for European countries to support a complete investment freeze—including a ban on investment in Iranian liquefied natural gas operations—and the possible use of military force as a last resort against Iran's nuclear facilities. They should reject the idea of direct negotiations with a tyranny that has threatened to wipe a key ally, Israel, off the face of the earth. This is a time for tough resolve in the face of an extremely dangerous foe—a rogue state close to nuclear capability ruled by fanatical Islamists that will have no qualms about using their power to dominate the Middle East or to arm a wide array of proxy international terrorist groups.
The EU has tried to negotiate with Tehran for several years under the guise of "constructive engagement," an approach that has resulted in an emboldened Iran that grows closer by the day to building a nuclear weapon. The EU's policy toward Iran has been all carrot and no stick—a futile exercise that has achieved nothing but failure.
Great Britain Is America's Most Reliable Friend
The Special Relationship is vital to American and British interests on many levels, from military, diplomatic, and intelligence cooperation to transatlantic trading ties. If President Obama does not invest in its preservation, the end result will be a weaker United States that is less able to stand up to terrorism and tyranny, and project power and influence on the world stage.
Whether waging war against the Taliban and al-Qaeda, standing up to the Russian bear, or halting Iran's nuclear ambitions, President Obama should maintain the Anglo-American Special Relationship as the centerpiece of the transatlantic alliance. As nearly every post-war President has found, when it comes to securing the free world, there is simply no alternative to U.S.–British leadership
Nile Gardiner is the Director of the Margaret Thatcher Center for Freedom at the Heritage Foundation. Erica Munkwitz assisted with research for this paper.
Thursday, February 26, 2009
Eastern Europe Needs Our Help - We can't risk losing 20 years worth of gains in the region
Eastern Europe Needs Our Help. By John Kerry
We can't risk losing 20 years worth of gains in the region.
Wall Street Journal Europe, Feb 27, 2009
Twenty years ago, the Berlin Wall and the repressive Communist regimes of Eastern Europe came crashing down to usher in a new era of political and economic freedom. Today, it is Eastern Europe's banks and economies that are threatening to crash. The Polish zloty is down 38% against the dollar in the last six months alone. Hungary's forint is down 32%. Ukraine posted a staggering 34% drop in January industrial output from a year earlier. While the entire world is reeling, right now the eye of the global financial storm has moved to Central and Eastern Europe.
If Western nations do not act quickly to address the snowballing financial crisis that is brewing from Latvia to Hungary, we risk replacing an era of promise and progress in Eastern Europe with one of soaring unemployment, instability and a weakening of the influence and ideals we have spent decades building.
While many Americans are rightly focused on our domestic troubles, we must also recognize the global dimensions of the current crisis. Last week, Latvia became the second government, after Iceland, to collapse as a result of a financial crisis that has already sparked riots in the Baltics and Greece and is likely to be a driving geopolitical force for a long time.
Eastern Europe's currencies are plummeting as investors instead seek the safety of the dollar and the euro. This means that Eastern European countries, companies and individuals face increasing challenges to pay back their large foreign-currency loans -- which only deepens the currency problems to create a vicious circle.
At first glance this may seem like a traditional emerging-markets crisis like those we saw in the late 1990s. But in fact it's far worse. This is a truly global financial crisis in a highly connected financial world, and Eastern Europe is feeling the brunt. Many of the region's banks are foreign-owned -- in the case of Hungary, more than 80% -- and many of those banks are now contemplating unprecedented protectionist steps, pulling back lending operations to their home countries. Meanwhile, as larger countries consume more of the world's capital in refinancing their own debt, emerging markets like those of Eastern Europe are likely to find the bank windows closed to them.
The result is that the economies of Eastern Europe are already falling faster and further than anyone expected. There is a real danger that, if every country affected by this crisis defines its interests narrowly, several strategically vital countries could fall through the cracks. For example, Ukraine's dire situation could trigger a domino effect, not only destabilizing Western Europe banks with large exposure to East European markets, but actually changing the geopolitical map as well.
America should support World Bank President Robert Zoellick's call for the EU to lead a coordinated global effort, alongside the IMF, World Bank and other development banks, to support the economies of Central and Eastern Europe. Austria, too, deserves credit for trying to focus Europe's attention on the plight not just of eastern member states such as the Baltics, but also of non-EU neighbors like Ukraine.
But Eastern Europe will not be the last financial fire the world will have to help put out in this crisis. Nor will our problems be confined to traditionally unstable corners of the globe. Our oldest European allies are also in deepening financial trouble, and three of our most important partners in the Muslim world, Turkey, Indonesia and Pakistan, today all face acute balance-of-payments crises.
We also need to ensure that the U.S. Treasury and State departments have the capacity to deal with these fast-moving crises in real time even as they turn our domestic economy around. That means the Senate must make clear its willingness to quickly confirm the Obama administration's nominees for posts vital to international economics and finance, such as the international staff at Treasury and the economic staff at the State Department, once the administration nominates them.
Our needs at home are urgent and great. We must put our own economic house in order and we will. But as we balance the domestic and global demands of this crisis, we should be warned that, in cutting corners today we risk incurring far greater costs down the road. A retreat into our domestic problems will not only leave us diminished on the world stage -- because our world is so economically and financially interconnected, it may well also worsen our own economic crisis.
Instead, as we restore confidence in our own markets, we will also need to find a strategy to project leadership, share burdens, build the capacity of institutions like the IMF and spread stability as this crisis continues to reverberate world-wide.
We have already lost a great deal in the last few months. But two decades of prosperity, democracy and institution-building in Eastern Europe is one investment that America must not allow to go up in smoke.
Mr. Kerry, a Democratic senator from Massachusetts, is chairman of the Senate Foreign Relations Committee.
We can't risk losing 20 years worth of gains in the region.
Wall Street Journal Europe, Feb 27, 2009
Twenty years ago, the Berlin Wall and the repressive Communist regimes of Eastern Europe came crashing down to usher in a new era of political and economic freedom. Today, it is Eastern Europe's banks and economies that are threatening to crash. The Polish zloty is down 38% against the dollar in the last six months alone. Hungary's forint is down 32%. Ukraine posted a staggering 34% drop in January industrial output from a year earlier. While the entire world is reeling, right now the eye of the global financial storm has moved to Central and Eastern Europe.
If Western nations do not act quickly to address the snowballing financial crisis that is brewing from Latvia to Hungary, we risk replacing an era of promise and progress in Eastern Europe with one of soaring unemployment, instability and a weakening of the influence and ideals we have spent decades building.
While many Americans are rightly focused on our domestic troubles, we must also recognize the global dimensions of the current crisis. Last week, Latvia became the second government, after Iceland, to collapse as a result of a financial crisis that has already sparked riots in the Baltics and Greece and is likely to be a driving geopolitical force for a long time.
Eastern Europe's currencies are plummeting as investors instead seek the safety of the dollar and the euro. This means that Eastern European countries, companies and individuals face increasing challenges to pay back their large foreign-currency loans -- which only deepens the currency problems to create a vicious circle.
At first glance this may seem like a traditional emerging-markets crisis like those we saw in the late 1990s. But in fact it's far worse. This is a truly global financial crisis in a highly connected financial world, and Eastern Europe is feeling the brunt. Many of the region's banks are foreign-owned -- in the case of Hungary, more than 80% -- and many of those banks are now contemplating unprecedented protectionist steps, pulling back lending operations to their home countries. Meanwhile, as larger countries consume more of the world's capital in refinancing their own debt, emerging markets like those of Eastern Europe are likely to find the bank windows closed to them.
The result is that the economies of Eastern Europe are already falling faster and further than anyone expected. There is a real danger that, if every country affected by this crisis defines its interests narrowly, several strategically vital countries could fall through the cracks. For example, Ukraine's dire situation could trigger a domino effect, not only destabilizing Western Europe banks with large exposure to East European markets, but actually changing the geopolitical map as well.
America should support World Bank President Robert Zoellick's call for the EU to lead a coordinated global effort, alongside the IMF, World Bank and other development banks, to support the economies of Central and Eastern Europe. Austria, too, deserves credit for trying to focus Europe's attention on the plight not just of eastern member states such as the Baltics, but also of non-EU neighbors like Ukraine.
But Eastern Europe will not be the last financial fire the world will have to help put out in this crisis. Nor will our problems be confined to traditionally unstable corners of the globe. Our oldest European allies are also in deepening financial trouble, and three of our most important partners in the Muslim world, Turkey, Indonesia and Pakistan, today all face acute balance-of-payments crises.
We also need to ensure that the U.S. Treasury and State departments have the capacity to deal with these fast-moving crises in real time even as they turn our domestic economy around. That means the Senate must make clear its willingness to quickly confirm the Obama administration's nominees for posts vital to international economics and finance, such as the international staff at Treasury and the economic staff at the State Department, once the administration nominates them.
Our needs at home are urgent and great. We must put our own economic house in order and we will. But as we balance the domestic and global demands of this crisis, we should be warned that, in cutting corners today we risk incurring far greater costs down the road. A retreat into our domestic problems will not only leave us diminished on the world stage -- because our world is so economically and financially interconnected, it may well also worsen our own economic crisis.
Instead, as we restore confidence in our own markets, we will also need to find a strategy to project leadership, share burdens, build the capacity of institutions like the IMF and spread stability as this crisis continues to reverberate world-wide.
We have already lost a great deal in the last few months. But two decades of prosperity, democracy and institution-building in Eastern Europe is one investment that America must not allow to go up in smoke.
Mr. Kerry, a Democratic senator from Massachusetts, is chairman of the Senate Foreign Relations Committee.
Tuesday, February 24, 2009
Report: Italy's crime is the nation’s No. 1 business
Italian Mob Revenue Surges to $167 Billion From 2007. By Flavia Krause-Jackson
Bloomberg, Jan. 30, 2009
Revenue raked in by Italy’s mob surged 40 percent last year, turning crime into the nation’s No. 1 business, Eurispes said in its annual report.
Income increased to 130 billion euros ($167 billion), up from about 90 billion euros in 2007, according to figures supplied by Eurispes and SOS Impresa, an association of businessmen to protest against extortion. Drug trafficking remains the primary source of revenue, bringing in about 59 billion euros, and the mob earned 5.8 billion euros from selling arms, the Rome-based Eurispes research group said today.
“During a crisis, people lower their guard,” Roberto Saviano, who wrote the bestseller “Gomorrah” about the Camorra crime bosses, said in an interview. “Studies show the criminal market never suffers during a crisis. I’m convinced that this crisis is bringing huge advantages to criminal syndicates.”
Organized crime groups siphon 92 billion euros, about 6 percent of Italy’s gross domestic product, from Italian businesses a year through protection payments, usurious interest rates on loans and other forms of extortion, Eurispes estimates. That works out to 250 million euros a day and 10 million euros an hour, Eurispes said. Italians are struggling to make mortgage payments and support their families as the worst recession since 1975 threatens jobs and makes banks more reluctant lenders.
“With people more desperate, loan sharks thrive,” Amedeo Vitagliano, an Italian crime expert at Eurispses, said in a telephone interview. “While the country is on its knees, the mob rejoices.”
Tide Turning?
There are signs that the tide could turn against the mob. Italy’s biggest employers’ group, Confindustria, a year ago took its strongest stance against organized crime in its 98-year history, announcing that any members found to have paid the Sicilian Cosa Nostra an extortion payment, known as the “pizzo,” would be expelled. Still, when the new rule was announced, only five members of the association admitted having received mob threats.
The country’s main criminal syndicates are the Mafia in Sicily, the Camorra based around Naples and the ‘Ndrangheta that operates from Calabria, the region located at Italy’s southern toe.
Eurispes estimates that the Italian authorities confiscated 5.2 billion euros in assets from the mob last year. The Camorra had 2.9 billion euros seized, the report says. The Sicilian Mafia had 1.4 billion euros sequestered and ‘Ndrangheta, 231 million euros, Eurispes said.
Bloomberg, Jan. 30, 2009
Revenue raked in by Italy’s mob surged 40 percent last year, turning crime into the nation’s No. 1 business, Eurispes said in its annual report.
Income increased to 130 billion euros ($167 billion), up from about 90 billion euros in 2007, according to figures supplied by Eurispes and SOS Impresa, an association of businessmen to protest against extortion. Drug trafficking remains the primary source of revenue, bringing in about 59 billion euros, and the mob earned 5.8 billion euros from selling arms, the Rome-based Eurispes research group said today.
“During a crisis, people lower their guard,” Roberto Saviano, who wrote the bestseller “Gomorrah” about the Camorra crime bosses, said in an interview. “Studies show the criminal market never suffers during a crisis. I’m convinced that this crisis is bringing huge advantages to criminal syndicates.”
Organized crime groups siphon 92 billion euros, about 6 percent of Italy’s gross domestic product, from Italian businesses a year through protection payments, usurious interest rates on loans and other forms of extortion, Eurispes estimates. That works out to 250 million euros a day and 10 million euros an hour, Eurispes said. Italians are struggling to make mortgage payments and support their families as the worst recession since 1975 threatens jobs and makes banks more reluctant lenders.
“With people more desperate, loan sharks thrive,” Amedeo Vitagliano, an Italian crime expert at Eurispses, said in a telephone interview. “While the country is on its knees, the mob rejoices.”
Tide Turning?
There are signs that the tide could turn against the mob. Italy’s biggest employers’ group, Confindustria, a year ago took its strongest stance against organized crime in its 98-year history, announcing that any members found to have paid the Sicilian Cosa Nostra an extortion payment, known as the “pizzo,” would be expelled. Still, when the new rule was announced, only five members of the association admitted having received mob threats.
The country’s main criminal syndicates are the Mafia in Sicily, the Camorra based around Naples and the ‘Ndrangheta that operates from Calabria, the region located at Italy’s southern toe.
Eurispes estimates that the Italian authorities confiscated 5.2 billion euros in assets from the mob last year. The Camorra had 2.9 billion euros seized, the report says. The Sicilian Mafia had 1.4 billion euros sequestered and ‘Ndrangheta, 231 million euros, Eurispes said.
Tuesday, February 17, 2009
U.S. Congratulates Kosovo on One Year of Independence
U.S. Congratulates Kosovo on One Year of Independence. By Gordon Duguid, Acting Deputy Department Spokesman, Office of the Spokesman
US State Dept, Public Affairs, Washington, DC, February 17, 2009
The United States congratulates the people of the Republic of Kosovo as they celebrate the first anniversary of Kosovo’s historic Declaration of Independence. One year ago today Kosovo became a sovereign and independent state.
Over the past year, Kosovo has moved quickly to build democratic institutions and to implement the principles of UN Special Envoy and Nobel Laureate Martti Ahtisaari’s Plan, including strong constitutional protections for minority rights and religious and cultural heritage. Fifty-four countries from every continent have recognized Kosovo, including an overwhelming majority of EU, NATO and OSCE members. As an independent state, Kosovo has welcomed and is coordinating effectively with the EU-led EULEX rule of law mission, NATO, the EU-led International Civilian Office and other representatives of the international community, to build a sound and sustainable economy, a single and transparent rule of law system, and other institutions of a modern, multi-ethnic, European democracy.
The United States commends the efforts of the people and Government of Kosovo to promote stability in the region and work cooperatively across ethnic and religious lines to develop a secure and prosperous future. The Secretary of State looks forward to welcoming the President and Prime Minister of Kosovo to the State Department on February 26 to reaffirm our pledge of friendship and support for Kosovo.
PRN: 133
US State Dept, Public Affairs, Washington, DC, February 17, 2009
The United States congratulates the people of the Republic of Kosovo as they celebrate the first anniversary of Kosovo’s historic Declaration of Independence. One year ago today Kosovo became a sovereign and independent state.
Over the past year, Kosovo has moved quickly to build democratic institutions and to implement the principles of UN Special Envoy and Nobel Laureate Martti Ahtisaari’s Plan, including strong constitutional protections for minority rights and religious and cultural heritage. Fifty-four countries from every continent have recognized Kosovo, including an overwhelming majority of EU, NATO and OSCE members. As an independent state, Kosovo has welcomed and is coordinating effectively with the EU-led EULEX rule of law mission, NATO, the EU-led International Civilian Office and other representatives of the international community, to build a sound and sustainable economy, a single and transparent rule of law system, and other institutions of a modern, multi-ethnic, European democracy.
The United States commends the efforts of the people and Government of Kosovo to promote stability in the region and work cooperatively across ethnic and religious lines to develop a secure and prosperous future. The Secretary of State looks forward to welcoming the President and Prime Minister of Kosovo to the State Department on February 26 to reaffirm our pledge of friendship and support for Kosovo.
PRN: 133
Saturday, February 14, 2009
Germany, Russia, and US foreign policy
The New Ostpolitik, by Melana K. Zyla
America's German problem.
The Weekly Standard, Feb 16, 2009, Volume 014, Issue 21
No sooner had Russia turned off the gas flowing through Ukrainian pipelines in the first days of the new year, sending tens of thousands of Europeans into a deep freeze, than German economy minister Michael Glos pointed out that "if we already had the Nord Stream pipeline," which would bypass Ukraine, flowing from Russia to Germany under the Baltic Sea, "then we in Germany, at least, would be a little more reassured."
The official desire to replace the current Russia-Ukraine pipeline with a Russia-Germany pipeline says a great deal about how Germany sees the gas dispute, and other global issues as well: Get the small fry--Balts, Poles, Ukrainians, and other former Russian suzerainties--out of the way and let Moscow and Berlin restore some Ordnung to things. In the January crisis, Russia cut off gas heading west to Ukrainian pipelines after Ukraine and Russia disagreed over what penalty Ukraine owes Russia for disputed late payment fees, and what the price of the gas should be now that global prices have fallen.
Glos's comment underscores to what degree Berlin has entered a new era of shared interests with Moscow and divergence from Washington. Incoming administration officials would be wise to recognize that on issues ranging from the gas dispute to Eastern Europe to Afghanistan and Iran, the Germany of today is not the partner the United States once had.
President Bush learned that lesson the hard way. His administration at first hailed Germany's Christian Democratic Union chancellor, Angela Merkel, as a foreign-policy soulmate, akin to France's Nicolas Sarkozy. But on issue after issue, she fell short of expectations.
Consider Bush's efforts to expand NATO. In the run-up to a NATO foreign ministers' meeting in Brussels in early December, Merkel publicly torpedoed Ukraine and Georgia's chances to proceed towards membership. Her government did the same last spring, ahead of the Bucharest NATO meeting. Both times, news of Germany's opposition coincided with Merkel's visits with Russian leaders, who vociferously oppose Ukraine and Georgia's inclusion in NATO.
Russia's influence "is unfortunate because all of us have said no third party gets a veto" in NATO matters, says Daniel Fata, deputy assistant secretary of defense for European and NATO policy during Bush's second term. As for Afghanistan, Germany in October announced the withdrawal of its only combat troops there--some 100 special operations soldiers. It plans to expand only its NATO peacekeeping force, to 4,500, and thereby add to the risk of creating what Defense Secretary Robert Gates has called a "two-tier alliance," in which only the United States and a few other NATO countries do the fighting. Germany's own soldiers don't think much of their restricted, noncombat missions, with Ger-many's top special operations general, Hans-Christoph Ammon, calling his country's training of an Afghan police force a "miserable failure" and adding that at Germany's current rate of effort and financing, "it would take 82 years to have a properly trained Afghan police force." Indeed, the United States has had to take over Germany's police-training mission.
Merkel supporters try to explain her weakness as a result of her sharing power with the left-leaning Social Democratic party. Yet Labour-led Britain has 8,050 troops in Afghanistan, many of them in combat roles.
Which raises the question: With German conservatives like these, who needs Socialist pacifists? In 2006, after a newly elected Merkel gave a tough speech on making the trans-Atlantic relationship her priority, "we had hoped that we would see a big change" from the anti-American politics of the outgoing Social Democratic chancellor, Gerhard Schröder, says Fata. Instead, "there was a lot of disappointment on our side."
And there's the prospect of more disappointment to come. Merkel is now in an election year in which she will face off against Frank-Walter Steinmeier, her foreign minister and vice-chancellor from the Social Democratic party. Until the September vote, she's likely to channel Steinmeier's views, particularly the pro-Moscow ones. That's because she wants "to avoid having Russia [be] a topic of the election campaign," says Joerg Himmelreich, transatlantic fellow at the German Marshall Fund of the United States.
German voters don't like Vladimir Putin, says Himmelreich, a former policy-planning staffer at the German foreign ministry and banker in Moscow. But as Fata puts it, "Germany and Russia are always going to have a special relationship," not least because of Germany's dependency on Russian energy and large amounts of trade with Russia.
Of course, Germany's Christian Democrats often showed great solidarity with Washington, even in the face of solicitousness from Moscow, during the Cold War. But even if Merkel's party regains a majority in 2009, that tradition may be gone for good. For one thing, the party's base is German industry, which is now heavily invested in Russia and dependent on Russian gas. Germany gets one-third of its gas from Russia, and will be dependent on that source for years--even if it does develop alternatives. Moreover, German companies and the political class are heavily tied to the Nord Stream pipeline project, which is controlled by Russia's state-owned energy giant Gazprom.
Indeed, gas is the leading means through which Moscow manipulates Berlin. Gazprom's gas cutoffs this January, like those in 2006, prompted Germans and other West Europeans to see Ukraine as an unstable partner that gets in the way of their economic needs: Cut Ukraine out of the relationship, and things will be golden is the message from Moscow.
In Russia's gas politics with Germany, the most powerful connection of all is between Gazprom and former chancellor Schröder. He chairs the $16 billion Nord Stream project, which is 51 percent owned by Gazprom. Schröder's service to Gazprom may be the most disturbing illustration of Moscow's influence on German elites ("It has never happened in German history that a chancellor acts as an agent of a foreign company that doesn't always follow the interests of Germany," says Himmelreich), but it's hardly the only one. Himmelreich says Berlin's foreign policy think tanks are pressured by Moscow. Even the prestigious German Council on Foreign Relations, he says, has been pressed not to invite Putin critics or Russian opposition voices to its events.
The head of the Council's Russia program, Alexander Rahr, confirmed that there have been occasions when "official Russia criticized us," but added, "we never adjusted our themes and seminars to their wishes."
Beyond Russia, there's a gap between Germany's tough rhetoric and action on Iran as well. While Merkel and Steinmeier have been critical of Iran's nuclear ambitions and blocked Germany's biggest banks from doing business there, Germany's economic relations with Iran continue to grow. With annual trade between the two now over $7 billion, Germany is Iran's biggest EU trading partner.
Berlin's interests now diverge from Washington's on several key issues. The new administration's best chance to lead on issues of concern to Europe will therefore be to play Europeans off each other the way Moscow does, Himmelreich says. For example, "German policy towards Russia will be considerably weakened if the United States succeeds in getting Sarkozy onboard for a new Russia policy." The United States should support energy transport routes for Europe that bypass Russia, such as those that tap Central Asian energy, and be wary of Gazprom's efforts to gain control of gas interests in North Africa, which remain an alternative source for Western Europe. Himmelreich says the United States should also push Europeans to improve their military capabilities.
On NATO, the United States will need to continue to push to bring Georgia and Ukraine into the fold. Otherwise, Russia will control the issue, using Germany to represent its interests. How strongly Berlin will ultimately embrace Moscow isn't clear. But as the gas and NATO disputes show, the two are now more tightly linked than they have been in decades.
Melana K. Zyla is a reporter in Washington.
America's German problem.
The Weekly Standard, Feb 16, 2009, Volume 014, Issue 21
No sooner had Russia turned off the gas flowing through Ukrainian pipelines in the first days of the new year, sending tens of thousands of Europeans into a deep freeze, than German economy minister Michael Glos pointed out that "if we already had the Nord Stream pipeline," which would bypass Ukraine, flowing from Russia to Germany under the Baltic Sea, "then we in Germany, at least, would be a little more reassured."
The official desire to replace the current Russia-Ukraine pipeline with a Russia-Germany pipeline says a great deal about how Germany sees the gas dispute, and other global issues as well: Get the small fry--Balts, Poles, Ukrainians, and other former Russian suzerainties--out of the way and let Moscow and Berlin restore some Ordnung to things. In the January crisis, Russia cut off gas heading west to Ukrainian pipelines after Ukraine and Russia disagreed over what penalty Ukraine owes Russia for disputed late payment fees, and what the price of the gas should be now that global prices have fallen.
Glos's comment underscores to what degree Berlin has entered a new era of shared interests with Moscow and divergence from Washington. Incoming administration officials would be wise to recognize that on issues ranging from the gas dispute to Eastern Europe to Afghanistan and Iran, the Germany of today is not the partner the United States once had.
President Bush learned that lesson the hard way. His administration at first hailed Germany's Christian Democratic Union chancellor, Angela Merkel, as a foreign-policy soulmate, akin to France's Nicolas Sarkozy. But on issue after issue, she fell short of expectations.
Consider Bush's efforts to expand NATO. In the run-up to a NATO foreign ministers' meeting in Brussels in early December, Merkel publicly torpedoed Ukraine and Georgia's chances to proceed towards membership. Her government did the same last spring, ahead of the Bucharest NATO meeting. Both times, news of Germany's opposition coincided with Merkel's visits with Russian leaders, who vociferously oppose Ukraine and Georgia's inclusion in NATO.
Russia's influence "is unfortunate because all of us have said no third party gets a veto" in NATO matters, says Daniel Fata, deputy assistant secretary of defense for European and NATO policy during Bush's second term. As for Afghanistan, Germany in October announced the withdrawal of its only combat troops there--some 100 special operations soldiers. It plans to expand only its NATO peacekeeping force, to 4,500, and thereby add to the risk of creating what Defense Secretary Robert Gates has called a "two-tier alliance," in which only the United States and a few other NATO countries do the fighting. Germany's own soldiers don't think much of their restricted, noncombat missions, with Ger-many's top special operations general, Hans-Christoph Ammon, calling his country's training of an Afghan police force a "miserable failure" and adding that at Germany's current rate of effort and financing, "it would take 82 years to have a properly trained Afghan police force." Indeed, the United States has had to take over Germany's police-training mission.
Merkel supporters try to explain her weakness as a result of her sharing power with the left-leaning Social Democratic party. Yet Labour-led Britain has 8,050 troops in Afghanistan, many of them in combat roles.
Which raises the question: With German conservatives like these, who needs Socialist pacifists? In 2006, after a newly elected Merkel gave a tough speech on making the trans-Atlantic relationship her priority, "we had hoped that we would see a big change" from the anti-American politics of the outgoing Social Democratic chancellor, Gerhard Schröder, says Fata. Instead, "there was a lot of disappointment on our side."
And there's the prospect of more disappointment to come. Merkel is now in an election year in which she will face off against Frank-Walter Steinmeier, her foreign minister and vice-chancellor from the Social Democratic party. Until the September vote, she's likely to channel Steinmeier's views, particularly the pro-Moscow ones. That's because she wants "to avoid having Russia [be] a topic of the election campaign," says Joerg Himmelreich, transatlantic fellow at the German Marshall Fund of the United States.
German voters don't like Vladimir Putin, says Himmelreich, a former policy-planning staffer at the German foreign ministry and banker in Moscow. But as Fata puts it, "Germany and Russia are always going to have a special relationship," not least because of Germany's dependency on Russian energy and large amounts of trade with Russia.
Of course, Germany's Christian Democrats often showed great solidarity with Washington, even in the face of solicitousness from Moscow, during the Cold War. But even if Merkel's party regains a majority in 2009, that tradition may be gone for good. For one thing, the party's base is German industry, which is now heavily invested in Russia and dependent on Russian gas. Germany gets one-third of its gas from Russia, and will be dependent on that source for years--even if it does develop alternatives. Moreover, German companies and the political class are heavily tied to the Nord Stream pipeline project, which is controlled by Russia's state-owned energy giant Gazprom.
Indeed, gas is the leading means through which Moscow manipulates Berlin. Gazprom's gas cutoffs this January, like those in 2006, prompted Germans and other West Europeans to see Ukraine as an unstable partner that gets in the way of their economic needs: Cut Ukraine out of the relationship, and things will be golden is the message from Moscow.
In Russia's gas politics with Germany, the most powerful connection of all is between Gazprom and former chancellor Schröder. He chairs the $16 billion Nord Stream project, which is 51 percent owned by Gazprom. Schröder's service to Gazprom may be the most disturbing illustration of Moscow's influence on German elites ("It has never happened in German history that a chancellor acts as an agent of a foreign company that doesn't always follow the interests of Germany," says Himmelreich), but it's hardly the only one. Himmelreich says Berlin's foreign policy think tanks are pressured by Moscow. Even the prestigious German Council on Foreign Relations, he says, has been pressed not to invite Putin critics or Russian opposition voices to its events.
The head of the Council's Russia program, Alexander Rahr, confirmed that there have been occasions when "official Russia criticized us," but added, "we never adjusted our themes and seminars to their wishes."
Beyond Russia, there's a gap between Germany's tough rhetoric and action on Iran as well. While Merkel and Steinmeier have been critical of Iran's nuclear ambitions and blocked Germany's biggest banks from doing business there, Germany's economic relations with Iran continue to grow. With annual trade between the two now over $7 billion, Germany is Iran's biggest EU trading partner.
Berlin's interests now diverge from Washington's on several key issues. The new administration's best chance to lead on issues of concern to Europe will therefore be to play Europeans off each other the way Moscow does, Himmelreich says. For example, "German policy towards Russia will be considerably weakened if the United States succeeds in getting Sarkozy onboard for a new Russia policy." The United States should support energy transport routes for Europe that bypass Russia, such as those that tap Central Asian energy, and be wary of Gazprom's efforts to gain control of gas interests in North Africa, which remain an alternative source for Western Europe. Himmelreich says the United States should also push Europeans to improve their military capabilities.
On NATO, the United States will need to continue to push to bring Georgia and Ukraine into the fold. Otherwise, Russia will control the issue, using Germany to represent its interests. How strongly Berlin will ultimately embrace Moscow isn't clear. But as the gas and NATO disputes show, the two are now more tightly linked than they have been in decades.
Melana K. Zyla is a reporter in Washington.
Thursday, February 12, 2009
Taxing fuels, vehicles, and passengers: EEA’s vision of ’sustainable’ transport
Taxing fuels, vehicles, and passengers: EEA’s vision of ’sustainable’ transport. By Marlo Lewis
Master Resource, Feb 10, 2009
http://masterresource.org/?p=817
Europe taxes gasoline at $3-4 a gallon, imposes the world’s most stringent fuel economy standards, and mandates the blending of biofuels into the region’s motor fuel supply. Yet European Union (EU) transport-sector greenhouse gas (GHG) emissions increased by 26 percent from 1990 to 2006, according to “Beyond Transport Policy,” a recent European Environment Agency (EEA) report. Why have these policies failed to reduce GHG transport-sector emissions?
The EEA report spotlights the unheard-of fact that the “key drivers” of demand for transport services are “external” to the transport sector. So despite what you’ve been told, people don’t drive around just for the heck of it, buy airplane tickets for the sheer thrill of flying, ship products or order deliveries just to make work for truckers, sailors, and airmen. No, most people use transport vehicles to shop, work, educate their children, vacation, or supply products to customers. And—horrors—they do these things “without considering the consequences on transport demand and greenhouse gas emissions”!
What this implies, of course, is that we cannot have what the EEA calls a “sustainable transport system” until politicians and bureaucrats control those pesky “external drivers”—the other economic sectors that generate the demand for transport services.
The EEA report provides detailed case studies on how three external drivers—food production and consumption, short-haul air travel for business and leisure travel, and education—increase emissions by increasing the demand for transport. Each study reveals what every sober adult should already know. Work causes emissions. Play causes emissions. Wealth causes emissions. Trade causes emissions.
In short, life causes emissions, especially where people are prosperous and free to work and play.
Let’s begin with food. Do grapes cause global warming? According to the EEA, importing a kilogram of grapes from Chile to Austria emits 7,410.8 grams of carbon dioxide (CO2), compared to only 8.8 grams for grapes grown closer to home. So if you’re an Austrian and you eat Chilean grapes, your carbon foot print is 842 times bigger than if you eat locally-grown grapes. But Europeans like fresh produce, and they can afford to import it year-round. How decadent! Why can’t they live like their noble ancestors and eat canned fruit in the winter, or simply abstain?
To counter the fresh produce peril, the EEA calls for a labeling program alerting consumers to the transport-based carbon-intensity of the food they eat. However, that would hardly be enough to instill in Austrians, for example, an aversion to Chilean grapes, South African apples, Spanish strawberries, Dutch tomatoes, or Israeli peppers. The logical next step—which the EEA recommends—is to impose carbon taxes “to internalize the external costs of transport.” Such tariffs would also keep lots of developing country produce out of European markets. The EEA proposal is protectionism by another name.
The EEA also bemoans the vicious circle created by prosperity and air travel. As Europe becomes wealthier, more economically integrated, and more connected to the global economy, more Europeans want to fly for both business and pleasure. This has led to an expansion of aviation facilities and infrastructure, with airports functioning not only as transport hubs but also as retail centers, conference and meeting venues, and accommodation facilities. By making flying more convenient and useful, these developments further increase demand for air travel. When will the flying end!
To mitigate this dastardly trend (never mind that accelerating the movement of goods, persons, and ideas enhances wealth creation—the foundation of all environmental improvement), the EEA recommends new carbon-based aviation fuel taxes, passenger duties, and landing fees. Well, what else did you expect?
Education is the third and last “external driver” examined in the report. Here’s the gist. Millions of parents would rather drive their kids to safe, high-quality schools across town than make the children walk or bicycle to underperforming, bully-infested schools nearby. The EEA report offers several antidotes to this malady, including cycle lanes, car pooling, “walking buses,” car-free action days (or weeks), consumer information, and improvements in public transport. Well, I don’t know about you, but if my son can get beat up and have his lunch money stolen at a school with a “walking bus” program, then I’m definitely going to enroll him there rather than drive him to a good school a few miles further from home.
Although the report doesn’t specifically mention taxes in this context, it states that “revenues from a carbon-based tax can be used to cover costs of cycling and walking infrastructure,” and opines that “people may be more favorable if they are given adequate information about what would happen without the tax increase.” Sure they will! ‘Monsieur Blanc, please fork over an additional €1,000 in motor fuel taxes or the Greenland Ice Sheet will collapse.” That doesn’t sound like a winning sales pitch.
Here’s the bottom line the EEA doesn’t want to face. Until somebody mass produces electric vehicles or alternative fuels that outcompete combustion engines or petroleum-based fuels, transport-sector CO2 emissions will continue to increase along with demand for transport services.
Although transport demand comes from “external drivers” on which transport policies have had little impact, the EEA report tries but fails to go “beyond transport policy.” The EEA’s default solution to the alleged problem of too many people driving, flying, shipping, and importing is the most boringly familiar transport policy of all–increase taxes on fuels, goods, passengers, and vehicles.
Master Resource, Feb 10, 2009
http://masterresource.org/?p=817
Europe taxes gasoline at $3-4 a gallon, imposes the world’s most stringent fuel economy standards, and mandates the blending of biofuels into the region’s motor fuel supply. Yet European Union (EU) transport-sector greenhouse gas (GHG) emissions increased by 26 percent from 1990 to 2006, according to “Beyond Transport Policy,” a recent European Environment Agency (EEA) report. Why have these policies failed to reduce GHG transport-sector emissions?
The EEA report spotlights the unheard-of fact that the “key drivers” of demand for transport services are “external” to the transport sector. So despite what you’ve been told, people don’t drive around just for the heck of it, buy airplane tickets for the sheer thrill of flying, ship products or order deliveries just to make work for truckers, sailors, and airmen. No, most people use transport vehicles to shop, work, educate their children, vacation, or supply products to customers. And—horrors—they do these things “without considering the consequences on transport demand and greenhouse gas emissions”!
What this implies, of course, is that we cannot have what the EEA calls a “sustainable transport system” until politicians and bureaucrats control those pesky “external drivers”—the other economic sectors that generate the demand for transport services.
The EEA report provides detailed case studies on how three external drivers—food production and consumption, short-haul air travel for business and leisure travel, and education—increase emissions by increasing the demand for transport. Each study reveals what every sober adult should already know. Work causes emissions. Play causes emissions. Wealth causes emissions. Trade causes emissions.
In short, life causes emissions, especially where people are prosperous and free to work and play.
Let’s begin with food. Do grapes cause global warming? According to the EEA, importing a kilogram of grapes from Chile to Austria emits 7,410.8 grams of carbon dioxide (CO2), compared to only 8.8 grams for grapes grown closer to home. So if you’re an Austrian and you eat Chilean grapes, your carbon foot print is 842 times bigger than if you eat locally-grown grapes. But Europeans like fresh produce, and they can afford to import it year-round. How decadent! Why can’t they live like their noble ancestors and eat canned fruit in the winter, or simply abstain?
To counter the fresh produce peril, the EEA calls for a labeling program alerting consumers to the transport-based carbon-intensity of the food they eat. However, that would hardly be enough to instill in Austrians, for example, an aversion to Chilean grapes, South African apples, Spanish strawberries, Dutch tomatoes, or Israeli peppers. The logical next step—which the EEA recommends—is to impose carbon taxes “to internalize the external costs of transport.” Such tariffs would also keep lots of developing country produce out of European markets. The EEA proposal is protectionism by another name.
The EEA also bemoans the vicious circle created by prosperity and air travel. As Europe becomes wealthier, more economically integrated, and more connected to the global economy, more Europeans want to fly for both business and pleasure. This has led to an expansion of aviation facilities and infrastructure, with airports functioning not only as transport hubs but also as retail centers, conference and meeting venues, and accommodation facilities. By making flying more convenient and useful, these developments further increase demand for air travel. When will the flying end!
To mitigate this dastardly trend (never mind that accelerating the movement of goods, persons, and ideas enhances wealth creation—the foundation of all environmental improvement), the EEA recommends new carbon-based aviation fuel taxes, passenger duties, and landing fees. Well, what else did you expect?
Education is the third and last “external driver” examined in the report. Here’s the gist. Millions of parents would rather drive their kids to safe, high-quality schools across town than make the children walk or bicycle to underperforming, bully-infested schools nearby. The EEA report offers several antidotes to this malady, including cycle lanes, car pooling, “walking buses,” car-free action days (or weeks), consumer information, and improvements in public transport. Well, I don’t know about you, but if my son can get beat up and have his lunch money stolen at a school with a “walking bus” program, then I’m definitely going to enroll him there rather than drive him to a good school a few miles further from home.
Although the report doesn’t specifically mention taxes in this context, it states that “revenues from a carbon-based tax can be used to cover costs of cycling and walking infrastructure,” and opines that “people may be more favorable if they are given adequate information about what would happen without the tax increase.” Sure they will! ‘Monsieur Blanc, please fork over an additional €1,000 in motor fuel taxes or the Greenland Ice Sheet will collapse.” That doesn’t sound like a winning sales pitch.
Here’s the bottom line the EEA doesn’t want to face. Until somebody mass produces electric vehicles or alternative fuels that outcompete combustion engines or petroleum-based fuels, transport-sector CO2 emissions will continue to increase along with demand for transport services.
Although transport demand comes from “external drivers” on which transport policies have had little impact, the EEA report tries but fails to go “beyond transport policy.” The EEA’s default solution to the alleged problem of too many people driving, flying, shipping, and importing is the most boringly familiar transport policy of all–increase taxes on fuels, goods, passengers, and vehicles.
Wednesday, February 11, 2009
Conservative views: The U.S. and U.K. Must Oppose French Plans to Weaken NATO
The U.S. and U.K. Must Oppose French Plans to Weaken NATO. By Nile Gardiner, Ph.D., and Sally McNamara
Heritage, Feb 10, 2009
Full article w/references here.
The Obama Administration has announced it will back the full reintegration of France into the NATO command structure, with French officers reportedly in line to take two senior Alliance command positions: Allied Command Transformation (one of NATO's two supreme commands, based in Norfolk, Virginia) and Joint Command Lisbon (one of NATO's three main operations headquarters, which also commands the NATO Rapid Reaction Force).[1]
This is a highly significant development that would put France at the heart of NATO military planning and reform proposals and represents an ill-thought-out and risky concession by Washington to the Sarkozy administration.
In a major speech at the Munich Security Conference on February 7,[2] Vice President Joe Biden welcomed France's decision "to fully participate in NATO structures" and also made it clear that the United States will "support the further strengthening of European defense, an increased role for the European Union in preserving peace and security, [and] a fundamentally stronger NATO-EU partnership." Biden's remarks echoed the views of British Defence Secretary John Hutton, who recklessly backed French plans for a European Union army last October.[3]
Both the United States and Great Britain must take a step back and launch a fundamental, wide-ranging review of the long-term implications of French demands for the future of NATO. The U.S. Congress should hold hearings to assess the new Administration's strategy with regard to French reintegration in order to highlight any dangers posed to U.S. interests.
It would be a huge strategic error of judgment by the new U.S. Administration and the British government to continue supporting French ambitions for restructuring Europe's security architecture. Such acquiescence would hand Paris an extraordinary degree of power and influence within NATO--power and influence well out of proportion to France's actual military role in Alliance operations.
Providing France with such influence would also ultimately weaken the Anglo-American Special Relationship, shifting power away from Washington and London and toward continental Europe while paving the way for the development of a separate European Union defense identity--all of which will undermine NATO.
French Reintegration into NATO
When President Sarkozy first floated the idea of French reintegration into NATO's military command in June 2007, he outlined two preconditions: guaranteed senior command posts for French officers within the Alliance, and American endorsement of an increased EU defense identity (the latter of which he emphasized as the more important of the two).[4] To formally establish the principle of reintegration, Sarkozy commissioned an influential "White Paper on Defense and National Security," which was published in March 2008.
Designed to promote an independent European defense identity, the French White Paper on Defense and National Security clearly states:
The European ambition stands as a priority. Making the European Union a major player in crisis management and international security is one of the central tenets of our security policy. France wants Europe to be equipped with the corresponding military and civilian capability.[5]
The paper endorses several key principles:
In June 2008, President Sarkozy circulated an additional document outlining Paris's policy initiatives for European military integration. It presents the major elements of what an EU defense identity will entail, including:
America Has Little to Gain--and a Lot to Lose
It is likely that the Obama Administration will regard France's reintegration into NATO as a diplomatic masterstroke. The Administration will claim that it has rebuilt the Franco-American relationship in a mutually beneficial way, and Sarkozy will in turn claim that it tangibly demonstrates France's commitment to standing alongside America.
However, the Administration must ask itself what the U.S. actually gains from such a quid pro quo. Such reintegration may extract a few hundred additional French troops for eastern Afghanistan and generate stronger French public support for the Afghan mission. But President Obama will find that he has rescued the furniture only to give away the house. Not only is France already able to commit as many troops as it wishes to NATO missions (as it proved last year when 700 additional French troops were sent to Afghanistan), but 10 years of EU security initiatives have actually seen a decrease in European defense spending.
Washington continues to argue that supporting the European Security and Defense Policy is a means toward improving European defense spending and military capabilities. But after 10 years, such improvement has yet to occur and is not reflected in the projected defense budgets of any major European power. Since the EU and NATO operate in the same areas both militarily and geographically, the competition for resources will become fiercer, and Washington is likely to see its requests for military help increasingly rebuffed as France demands European commitments to EU missions.[7] Once the United States gives its blessing to the creation of a separate European defense structure, it will have no grounds to compel Europe to choose NATO over EU requests in the future.
A Parisian Power Play
Rather than genuinely attempting to increase Europe's contribution to defense on the international stage, France is seeking to expand both Paris's and the EU's power base. Sarkozy's proposal is largely political, not military. In practice, France is already involved with almost all of NATO's structures and operations, including all political bodies and the NATO Response Force. It also partakes in joint training exercises.
French reintegration into NATO command structures offers little additional value to Washington but gives immense momentum to French ambitions for an autonomous EU foreign and defense policy. When French presidents talk about European foreign policy, they more often than not mean French foreign policy. Equally, when Sarkozy talks about increasing European security capabilities, he means decreasing American involvement in Europe.
For instance, in January 2007 the EU established a military operations center in Brussels, which later that year conducted "a nine-day exercise involving the virtual deployment of 2,000 European soldiers to deal with a crisis in the fictional country of Alisia."[8] The operational center is without doubt a fledgling EU military headquarters that duplicates and will eventually compete with the NATO command.
The French proposal for an independent European defense structure will build upon the foundations laid by this new EU military headquarters. If the United States agrees to the French plan, it will represent yet another reversal of the Berlin Plus arrangements and a further erosion of the supremacy of NATO in Europe.
No Quid Pro Quo with France
If the Obama Administration agrees to support an independent EU defense structure as part of the French plan for rejoining NATO's command, such backing would represent a major transformation in U.S. strategic thinking that would have a dramatic, negative impact on the future of the alliance. It would shift the political balance of power within NATO away from Washington and London toward the main centers of power within the European Union: Paris, Berlin, and Brussels. Far from encouraging European countries to spend more on defense, it would foster an even greater dependency culture within continental Europe upon NATO resources. Such a shift would also lead to a duplication of the NATO command structure without a doubling of manpower or materiel.
It is vital that both the U.S. and U.K. reject any French proposal predicated on American and British support for an independent European defense organization. Paris should be welcomed back into NATO's leadership club only on terms that are acceptable to all NATO members, and without the doling out of powerful command positions to a country that is at best a half-hearted member of the alliance.
Simply Unacceptable
It is difficult to see how a greater EU defense capability will actually strengthen the NATO mission or the broader transatlantic alliance. Indeed, encouraging a bigger military role for the EU can only make NATO's task more complicated.
NATO has been the most successful post-war multilateral organization precisely because it is a truly transatlantic defense and security alliance of independent nation-states with a single command. The French proposal to build up a separate EU defense structure--i.e., a competitor to NATO sucking up valuable NATO resources--is simply unacceptable and should be firmly rejected.
Nile Gardiner Ph.D. is the Director of, and Sally McNamara is Senior Policy Analyst in European Affairs in, the Margaret Thatcher Center for Freedom at the Heritage Foundation. Erica Munkwitz assisted with research for this paper.
Heritage, Feb 10, 2009
Full article w/references here.
The Obama Administration has announced it will back the full reintegration of France into the NATO command structure, with French officers reportedly in line to take two senior Alliance command positions: Allied Command Transformation (one of NATO's two supreme commands, based in Norfolk, Virginia) and Joint Command Lisbon (one of NATO's three main operations headquarters, which also commands the NATO Rapid Reaction Force).[1]
This is a highly significant development that would put France at the heart of NATO military planning and reform proposals and represents an ill-thought-out and risky concession by Washington to the Sarkozy administration.
In a major speech at the Munich Security Conference on February 7,[2] Vice President Joe Biden welcomed France's decision "to fully participate in NATO structures" and also made it clear that the United States will "support the further strengthening of European defense, an increased role for the European Union in preserving peace and security, [and] a fundamentally stronger NATO-EU partnership." Biden's remarks echoed the views of British Defence Secretary John Hutton, who recklessly backed French plans for a European Union army last October.[3]
Both the United States and Great Britain must take a step back and launch a fundamental, wide-ranging review of the long-term implications of French demands for the future of NATO. The U.S. Congress should hold hearings to assess the new Administration's strategy with regard to French reintegration in order to highlight any dangers posed to U.S. interests.
It would be a huge strategic error of judgment by the new U.S. Administration and the British government to continue supporting French ambitions for restructuring Europe's security architecture. Such acquiescence would hand Paris an extraordinary degree of power and influence within NATO--power and influence well out of proportion to France's actual military role in Alliance operations.
Providing France with such influence would also ultimately weaken the Anglo-American Special Relationship, shifting power away from Washington and London and toward continental Europe while paving the way for the development of a separate European Union defense identity--all of which will undermine NATO.
French Reintegration into NATO
When President Sarkozy first floated the idea of French reintegration into NATO's military command in June 2007, he outlined two preconditions: guaranteed senior command posts for French officers within the Alliance, and American endorsement of an increased EU defense identity (the latter of which he emphasized as the more important of the two).[4] To formally establish the principle of reintegration, Sarkozy commissioned an influential "White Paper on Defense and National Security," which was published in March 2008.
Designed to promote an independent European defense identity, the French White Paper on Defense and National Security clearly states:
The European ambition stands as a priority. Making the European Union a major player in crisis management and international security is one of the central tenets of our security policy. France wants Europe to be equipped with the corresponding military and civilian capability.[5]
The paper endorses several key principles:
- Redefinition of responsibility-sharing between America and Europe;
- An explicit rejection of the idea that the EU act as a civilian complement to NATO; and
- A strong preference for buying European defense technologies.
In June 2008, President Sarkozy circulated an additional document outlining Paris's policy initiatives for European military integration. It presents the major elements of what an EU defense identity will entail, including:
- A permanent operation headquarters in Brussels;
- Common EU funding for military operations; and
- European exchange programs for military personnel.[6]
America Has Little to Gain--and a Lot to Lose
It is likely that the Obama Administration will regard France's reintegration into NATO as a diplomatic masterstroke. The Administration will claim that it has rebuilt the Franco-American relationship in a mutually beneficial way, and Sarkozy will in turn claim that it tangibly demonstrates France's commitment to standing alongside America.
However, the Administration must ask itself what the U.S. actually gains from such a quid pro quo. Such reintegration may extract a few hundred additional French troops for eastern Afghanistan and generate stronger French public support for the Afghan mission. But President Obama will find that he has rescued the furniture only to give away the house. Not only is France already able to commit as many troops as it wishes to NATO missions (as it proved last year when 700 additional French troops were sent to Afghanistan), but 10 years of EU security initiatives have actually seen a decrease in European defense spending.
Washington continues to argue that supporting the European Security and Defense Policy is a means toward improving European defense spending and military capabilities. But after 10 years, such improvement has yet to occur and is not reflected in the projected defense budgets of any major European power. Since the EU and NATO operate in the same areas both militarily and geographically, the competition for resources will become fiercer, and Washington is likely to see its requests for military help increasingly rebuffed as France demands European commitments to EU missions.[7] Once the United States gives its blessing to the creation of a separate European defense structure, it will have no grounds to compel Europe to choose NATO over EU requests in the future.
A Parisian Power Play
Rather than genuinely attempting to increase Europe's contribution to defense on the international stage, France is seeking to expand both Paris's and the EU's power base. Sarkozy's proposal is largely political, not military. In practice, France is already involved with almost all of NATO's structures and operations, including all political bodies and the NATO Response Force. It also partakes in joint training exercises.
French reintegration into NATO command structures offers little additional value to Washington but gives immense momentum to French ambitions for an autonomous EU foreign and defense policy. When French presidents talk about European foreign policy, they more often than not mean French foreign policy. Equally, when Sarkozy talks about increasing European security capabilities, he means decreasing American involvement in Europe.
For instance, in January 2007 the EU established a military operations center in Brussels, which later that year conducted "a nine-day exercise involving the virtual deployment of 2,000 European soldiers to deal with a crisis in the fictional country of Alisia."[8] The operational center is without doubt a fledgling EU military headquarters that duplicates and will eventually compete with the NATO command.
The French proposal for an independent European defense structure will build upon the foundations laid by this new EU military headquarters. If the United States agrees to the French plan, it will represent yet another reversal of the Berlin Plus arrangements and a further erosion of the supremacy of NATO in Europe.
No Quid Pro Quo with France
If the Obama Administration agrees to support an independent EU defense structure as part of the French plan for rejoining NATO's command, such backing would represent a major transformation in U.S. strategic thinking that would have a dramatic, negative impact on the future of the alliance. It would shift the political balance of power within NATO away from Washington and London toward the main centers of power within the European Union: Paris, Berlin, and Brussels. Far from encouraging European countries to spend more on defense, it would foster an even greater dependency culture within continental Europe upon NATO resources. Such a shift would also lead to a duplication of the NATO command structure without a doubling of manpower or materiel.
It is vital that both the U.S. and U.K. reject any French proposal predicated on American and British support for an independent European defense organization. Paris should be welcomed back into NATO's leadership club only on terms that are acceptable to all NATO members, and without the doling out of powerful command positions to a country that is at best a half-hearted member of the alliance.
Simply Unacceptable
It is difficult to see how a greater EU defense capability will actually strengthen the NATO mission or the broader transatlantic alliance. Indeed, encouraging a bigger military role for the EU can only make NATO's task more complicated.
NATO has been the most successful post-war multilateral organization precisely because it is a truly transatlantic defense and security alliance of independent nation-states with a single command. The French proposal to build up a separate EU defense structure--i.e., a competitor to NATO sucking up valuable NATO resources--is simply unacceptable and should be firmly rejected.
Nile Gardiner Ph.D. is the Director of, and Sally McNamara is Senior Policy Analyst in European Affairs in, the Margaret Thatcher Center for Freedom at the Heritage Foundation. Erica Munkwitz assisted with research for this paper.
State Sec: The Czech Republic and the United States Share a Strong Commitment to Defense, Development, and Human Rights
The Czech Republic and the United States Share a Strong Commitment to Defense, Development, and Human Rights. By Hillary Rodham Clinton, Secretary of State
Remarks With Czech Republic Foreign Minister Karel Schwarzenberg After Their Meeting
Treaty room, Washington, DC, February 10, 2009
SECRETARY CLINTON: I am delighted today to welcome Foreign Minister Schwarzenberg to the Department of State. The minister and I just had a wide-ranging, good discussion about global, European, and bilateral issues. The Czech Republic is an important ally of the United States and, of course, our two nations share a strong commitment to defense, development, and human rights. And we are dedicated to strengthening our transatlantic alliance.
I also welcomed the foreign minister in his current European Union presidency role. The U.S. and Europe have great responsibilities in the world, especially at this time of global challenges and opportunities. And the United States appreciates Czech leadership on such key issues as Afghanistan, energy security, and the Middle East.
It was also a pleasure for me to particularly thank the Czech Republic for being at the forefront of the NATO-led International Security Assistance Force in Afghanistan, with a commitment of 500 troops and leadership of the Logar Provincial Reconstruction Team. Europe and the United States, the Czech Republic and the United States, we have a big, important agenda before us. And I’m confident, as I told the minister, that our shared values, our common objectives, our commitment to freedom will continue to strengthen and deepen our partnership. So it’s a great personal pleasure for me to welcome the foreign minister here today.
FOREIGN MINISTER SCHWARZENBERG: Well, I would like to say that this is, for me, great honor and pleasure to be one of the first visits to Secretary Clinton. I do think we have a certain luck because it coincides that the new Administration started vigorously its work, and the Czech presidency of the European Union is at its beginning.
And the fact that at one side, the Czech Republic is probably the country that Americans have the most sympathies in all of Europe, and we are staunch allies of the United States on one side, as is American – your Administration changed not only America, but the world. It is an important start – motivation to work together to rejuvenate the process of (inaudible), which, after all – I mean, there are – NATO becomes 60 years old, we all became older, and we sometimes stuck too much to the routine. And now, there’s a change, a chance to make a real change, to rejuvenate the relation, to invigorate it, and to start together to tackle the enormous problems we have in the world. Some were mentioned by Secretary Clinton.
And of one thing – I’m sure that if we stick together, if the cooperation between the United States and the European Union goes with a new attitude (inaudible), we can really achieve something in the world to make it and to change it to the better. Thank you so much.
SECRETARY CLINTON: Thank you, Minister.
QUESTION: Thank you, Madame Secretary, and Mr. Minister, if you want to jump in as well. On the Israeli elections, you’ve said you’re looking forward to working with the new government, but certainly some of the candidates would make it easier to advance some of the goals that you’ve been talking about on a deal with Israeli and Palestinians. Could you talk about what’s at stake at this election, in terms of U.S. and European foreign policy?
And on Iran, there does – there definitely seems to be an interesting dance going on between the U.S. and Iran. Last night, after President Obama’s comments about engaging Iran, President Ahmadinejad said that Iran would hold talks based on mutual respect. Your review notwithstanding, what do you think is going on here, and are you heartened by the Iranian messages that they’ve been trying to send to the U.S.?
Thank you.
SECRETARY CLINTON: Well, as to the Israeli elections, I’m going to wait to find out what the people of Israel have decided.
As to Iran, we have been very clear that, as the Vice President discussed in Munich over the weekend, as the President said again last night, there is an opportunity for the Iranian Government to demonstrate a willingness to unclench their fist and to begin a serious and responsible discussion about a range of matters.
We still persist in our view that Iran should not obtain nuclear weapons, that it would be a very unfortunate course for them to pursue. And we hope that there will be opportunities in the future for us to develop a better understanding of one another and to work out a way of talking that would produce positive results for the people of Iran.
QUESTION: Czech television. Madame Secretary, this is a question about missile defense. Does your Administration have a, kind of like, plan to be presented – a clear plan, including timeframe, to be presented at NATO summit?
And on both of you, is there still an option to abandon this project if there would be a kind of diplomatic agreement with Iran or with Russia?
SECRETARY CLINTON: Well, as the Vice President also said in Munich, we are first and foremost very grateful to the Czech Republic, to the government and the people, for working with us to try to deter the threat from Iran. If we are able to deter that threat, it will be, in some measure, due to the courage of the Czech people in stepping up and being a partner to provide a strong defense in Europe against Iranian aggression that would certainly be present were they to obtain nuclear weapons.
There are technical issues concerning missile defense that you – that you know well. We had a very good discussion about our hopes to work together – the European Union and the United States – in dissuading the Iranians from pursuing nuclear weapons. But if the Iranians continue on this path, certainly one of the options for free countries like the Czech Republic, other Europeans, and the United States, is to defend ourselves. So this is one of those issues that really will rest with the decisions made by the Iranian Government.
QUESTION: Madame Secretary, there is a prospect looming on the Korean Peninsula of possible military clashes between the two Koreas, as a result of some actions that the North has taken in the past couple of weeks. And there are some reports that Chinese fishing boats are being pulled out of the area in case something happens. You’re going to Asia next week.
Can you tell us what can you do to make sure that such a situation doesn’t occur? And more broadly, what is your expectation on that trip? What do you hope to – what message do you hope to convey to not only the government, but the people of Asia?
SECRETARY CLINTON: Well, I am going to Asia to reassert our commitment to our allies and partners in Asia, to work on a range of issues with Japan and South Korea, China, and Indonesia, as well as reaching out to the rest of East Asia.
And clearly, with respect to North Korea, our position remains the same. We intend to pursue the Six-Party Talks. We expect that -- with our partners in those talks to continue a policy that would lead to the denuclearization of North Korea and the end of any proliferating activities by North Korea.
We are hopeful that some of the behavior that we have seen coming from North Korea in the last few weeks is, you know, not a precursor of any action that would up the ante, or threaten the stability and peace and security of the neighbors in the region.
But again, North Korea has to understand that all of the countries in East Asia have made it clear that its behavior is viewed as unacceptable. And there are opportunities for the government and people of North Korea were they to begin, once again, to engage through the Six-Party Talks, through other bilateral and multilateral forums. And we’re hopeful that we’ll see that in the weeks and months ahead. But I know of the continuing concern on the part of the other members of the Six-Party Talks with respect to North Korea’s attitude in the last weeks, and I’ll be talking with our counterparts to determine the most effective way forward. Thank you.
Last question?
QUESTION: Czech daily newspaper. Madame Secretary, do you think that the current financial crisis could anyhow delay the plans for development and deployment of the missile defense systems?
SECRETARY CLINTON: Well, our concerns about missile defense are primarily technical. There may be some economic factors. But we’ve always seen this as primarily a technical challenge. Obviously, we expect any system that we deploy to be able to operate effectively to achieve the goals that are set. And as I have said earlier, our concern, the concern of other nations within the broad geographic area that could be affected by an Iranian missile, you know, are looking for ways to deter and end that behavior.
But you know, we have to be realistic, you know. Our slogan can be “hope for the best, but plan for the worst.” I think that’s a realistic approach that we should be taking, and that’s why I admire the Czech Government. I know that that was a difficult decision. I understand that. But the Czech people won their freedom and do not want to be intimidated by the specter of, you know, nuclear weapons in the hands of unfriendly regimes. So I think that what the Czech Government and the Polish Government did in saying, you know, we want to be prepared in the event that we are unable to persuade, dissuade, deter, the Iranians from pursuing nuclear weapons makes a great deal of sense.
Now, the timing and the, you know, actual deployment, those are largely technical matters. And as the Vice President said, which I underscore, if we are able to see a change in behavior on the part of the Iranians with respect to what we believe to be their pursuit of nuclear weapons, you know, then – you know, we will reconsider where we stand. But we are a long, long way from seeing such evidence of any behavior change.
Mr. Minister, do you want to add anything?
FOREIGN MINISTER SCHWARZENBERG: No. I’d have to agree with what you have said. And I think the most necessary thing is that as with Iran, as to other dangers in this world, we need to stick together and we can rely on each other.
And just I would like to add one thing. It was a special pleasure for me – the meeting today with Secretary Clinton, whom I had the honor and pleasure to meet before already in Prague when she visit my former chief, President Havel. And I already was impressed by her great energy. Now to see her as Secretary of State of the United States is a special pleasure.
SECRETARY CLINTON: Thank you. Thank you all very much. Thank you.
FOREIGN MINISTER SCHWARZENBERG: Thank you so much.
Remarks With Czech Republic Foreign Minister Karel Schwarzenberg After Their Meeting
Treaty room, Washington, DC, February 10, 2009
SECRETARY CLINTON: I am delighted today to welcome Foreign Minister Schwarzenberg to the Department of State. The minister and I just had a wide-ranging, good discussion about global, European, and bilateral issues. The Czech Republic is an important ally of the United States and, of course, our two nations share a strong commitment to defense, development, and human rights. And we are dedicated to strengthening our transatlantic alliance.
I also welcomed the foreign minister in his current European Union presidency role. The U.S. and Europe have great responsibilities in the world, especially at this time of global challenges and opportunities. And the United States appreciates Czech leadership on such key issues as Afghanistan, energy security, and the Middle East.
It was also a pleasure for me to particularly thank the Czech Republic for being at the forefront of the NATO-led International Security Assistance Force in Afghanistan, with a commitment of 500 troops and leadership of the Logar Provincial Reconstruction Team. Europe and the United States, the Czech Republic and the United States, we have a big, important agenda before us. And I’m confident, as I told the minister, that our shared values, our common objectives, our commitment to freedom will continue to strengthen and deepen our partnership. So it’s a great personal pleasure for me to welcome the foreign minister here today.
FOREIGN MINISTER SCHWARZENBERG: Well, I would like to say that this is, for me, great honor and pleasure to be one of the first visits to Secretary Clinton. I do think we have a certain luck because it coincides that the new Administration started vigorously its work, and the Czech presidency of the European Union is at its beginning.
And the fact that at one side, the Czech Republic is probably the country that Americans have the most sympathies in all of Europe, and we are staunch allies of the United States on one side, as is American – your Administration changed not only America, but the world. It is an important start – motivation to work together to rejuvenate the process of (inaudible), which, after all – I mean, there are – NATO becomes 60 years old, we all became older, and we sometimes stuck too much to the routine. And now, there’s a change, a chance to make a real change, to rejuvenate the relation, to invigorate it, and to start together to tackle the enormous problems we have in the world. Some were mentioned by Secretary Clinton.
And of one thing – I’m sure that if we stick together, if the cooperation between the United States and the European Union goes with a new attitude (inaudible), we can really achieve something in the world to make it and to change it to the better. Thank you so much.
SECRETARY CLINTON: Thank you, Minister.
QUESTION: Thank you, Madame Secretary, and Mr. Minister, if you want to jump in as well. On the Israeli elections, you’ve said you’re looking forward to working with the new government, but certainly some of the candidates would make it easier to advance some of the goals that you’ve been talking about on a deal with Israeli and Palestinians. Could you talk about what’s at stake at this election, in terms of U.S. and European foreign policy?
And on Iran, there does – there definitely seems to be an interesting dance going on between the U.S. and Iran. Last night, after President Obama’s comments about engaging Iran, President Ahmadinejad said that Iran would hold talks based on mutual respect. Your review notwithstanding, what do you think is going on here, and are you heartened by the Iranian messages that they’ve been trying to send to the U.S.?
Thank you.
SECRETARY CLINTON: Well, as to the Israeli elections, I’m going to wait to find out what the people of Israel have decided.
As to Iran, we have been very clear that, as the Vice President discussed in Munich over the weekend, as the President said again last night, there is an opportunity for the Iranian Government to demonstrate a willingness to unclench their fist and to begin a serious and responsible discussion about a range of matters.
We still persist in our view that Iran should not obtain nuclear weapons, that it would be a very unfortunate course for them to pursue. And we hope that there will be opportunities in the future for us to develop a better understanding of one another and to work out a way of talking that would produce positive results for the people of Iran.
QUESTION: Czech television. Madame Secretary, this is a question about missile defense. Does your Administration have a, kind of like, plan to be presented – a clear plan, including timeframe, to be presented at NATO summit?
And on both of you, is there still an option to abandon this project if there would be a kind of diplomatic agreement with Iran or with Russia?
SECRETARY CLINTON: Well, as the Vice President also said in Munich, we are first and foremost very grateful to the Czech Republic, to the government and the people, for working with us to try to deter the threat from Iran. If we are able to deter that threat, it will be, in some measure, due to the courage of the Czech people in stepping up and being a partner to provide a strong defense in Europe against Iranian aggression that would certainly be present were they to obtain nuclear weapons.
There are technical issues concerning missile defense that you – that you know well. We had a very good discussion about our hopes to work together – the European Union and the United States – in dissuading the Iranians from pursuing nuclear weapons. But if the Iranians continue on this path, certainly one of the options for free countries like the Czech Republic, other Europeans, and the United States, is to defend ourselves. So this is one of those issues that really will rest with the decisions made by the Iranian Government.
QUESTION: Madame Secretary, there is a prospect looming on the Korean Peninsula of possible military clashes between the two Koreas, as a result of some actions that the North has taken in the past couple of weeks. And there are some reports that Chinese fishing boats are being pulled out of the area in case something happens. You’re going to Asia next week.
Can you tell us what can you do to make sure that such a situation doesn’t occur? And more broadly, what is your expectation on that trip? What do you hope to – what message do you hope to convey to not only the government, but the people of Asia?
SECRETARY CLINTON: Well, I am going to Asia to reassert our commitment to our allies and partners in Asia, to work on a range of issues with Japan and South Korea, China, and Indonesia, as well as reaching out to the rest of East Asia.
And clearly, with respect to North Korea, our position remains the same. We intend to pursue the Six-Party Talks. We expect that -- with our partners in those talks to continue a policy that would lead to the denuclearization of North Korea and the end of any proliferating activities by North Korea.
We are hopeful that some of the behavior that we have seen coming from North Korea in the last few weeks is, you know, not a precursor of any action that would up the ante, or threaten the stability and peace and security of the neighbors in the region.
But again, North Korea has to understand that all of the countries in East Asia have made it clear that its behavior is viewed as unacceptable. And there are opportunities for the government and people of North Korea were they to begin, once again, to engage through the Six-Party Talks, through other bilateral and multilateral forums. And we’re hopeful that we’ll see that in the weeks and months ahead. But I know of the continuing concern on the part of the other members of the Six-Party Talks with respect to North Korea’s attitude in the last weeks, and I’ll be talking with our counterparts to determine the most effective way forward. Thank you.
Last question?
QUESTION: Czech daily newspaper. Madame Secretary, do you think that the current financial crisis could anyhow delay the plans for development and deployment of the missile defense systems?
SECRETARY CLINTON: Well, our concerns about missile defense are primarily technical. There may be some economic factors. But we’ve always seen this as primarily a technical challenge. Obviously, we expect any system that we deploy to be able to operate effectively to achieve the goals that are set. And as I have said earlier, our concern, the concern of other nations within the broad geographic area that could be affected by an Iranian missile, you know, are looking for ways to deter and end that behavior.
But you know, we have to be realistic, you know. Our slogan can be “hope for the best, but plan for the worst.” I think that’s a realistic approach that we should be taking, and that’s why I admire the Czech Government. I know that that was a difficult decision. I understand that. But the Czech people won their freedom and do not want to be intimidated by the specter of, you know, nuclear weapons in the hands of unfriendly regimes. So I think that what the Czech Government and the Polish Government did in saying, you know, we want to be prepared in the event that we are unable to persuade, dissuade, deter, the Iranians from pursuing nuclear weapons makes a great deal of sense.
Now, the timing and the, you know, actual deployment, those are largely technical matters. And as the Vice President said, which I underscore, if we are able to see a change in behavior on the part of the Iranians with respect to what we believe to be their pursuit of nuclear weapons, you know, then – you know, we will reconsider where we stand. But we are a long, long way from seeing such evidence of any behavior change.
Mr. Minister, do you want to add anything?
FOREIGN MINISTER SCHWARZENBERG: No. I’d have to agree with what you have said. And I think the most necessary thing is that as with Iran, as to other dangers in this world, we need to stick together and we can rely on each other.
And just I would like to add one thing. It was a special pleasure for me – the meeting today with Secretary Clinton, whom I had the honor and pleasure to meet before already in Prague when she visit my former chief, President Havel. And I already was impressed by her great energy. Now to see her as Secretary of State of the United States is a special pleasure.
SECRETARY CLINTON: Thank you. Thank you all very much. Thank you.
FOREIGN MINISTER SCHWARZENBERG: Thank you so much.
Czech views: Russia Shouldn't Have a Veto on Missile Defense
Russia Shouldn't Have a Veto on Missile Defense, by Milan Vodicka
European leaders relied on U.S. commitments.
WSJ, Feb 11, 2009
Prague
If the United States builds a radar system in the Czech Republic as part of the missile defense program developed by the Bush administration, it's likely that the Russians will target the Czech Republic with their tactical nuclear missiles. But many Czechs are fearful of an even greater danger than Russia: The possibility that the U.S. may decide not to deploy the defense system. Unfortunately, Vice President Joseph Biden suggested this prospect last week in Munich when he said, "We will wait for what the experts say and then we will see."
Czech politicians and their Polish counterparts have invested a lot of political capital in the missile defense project. If the Obama administration doesn't follow through, supporters of the missile shield would feel abandoned by the U.S.
What's worse, Czech and Polish leaders would lose credibility among their opponents and, most importantly, Russia. Moscow would see the failure to build the radar system as proof of its influence over Central Europe, and as recognition of its veto power over European security policy.
Mr. Biden doesn't seem to appreciate that the missile defense project isn't just about American interests. It's about the Czechs and the Poles, too.
The Americans wanted the radar and the interceptors, and they wanted them within the borders of our countries. Our leaders went to great lengths to meet Washington's requests. They stood firm in the face of passionate protests at home and intimidation from Russia. Recently, Moscow backed down from its threat to deploy Iskander missiles in Kaliningrad, but it stands ready to follow through if missile defense becomes a reality.
It's beginning to look as though the Americans were taking us for a ride. Now that there's a new driver in the White House, they think they can just drop us off at the curb.
Even if the Obama administration wants to backtrack on missile defense, doing so won't return relations with Russia to the status quo ante. This is because Russia has transformed the issue of the missile defense system in the Czech Republic and Poland into evidence of its growing influence. Russia has turned this into a question of its power beyond its borders.
If it weren't for Russia, there would be little difficulty in Washington's change of heart. Yet Russia's involvement makes the game a different one entirely. While several interceptors in Poland can stop individual missiles, they can't prevent a massive strike by a nuclear power like Russia. This is because the system is aimed at Iran, not Russia.
Moscow's rigid position has hardened the resolve of Prague and Warsaw, which fear that the Kremlin is attempting to dictate the limits of Czech and Polish sovereignty and foreign policy. We have experienced this before.
This, at least, is how the situation appears from the Czech point of view. I can already anticipate the Obama administration's conclusion: that missile defense is an expensive diversion with uncertain benefits and unpleasant side effects. Such an outcome is all the more likely given the global economic crisis and the difficult fiscal situation in the U.S.
There's no doubt that Russia would profit from a scenario in which the U.S. put the missile defense project on hold. Just consider the situation in Georgia last summer.
During the conflict in South Ossetia, it was alarming how many observers in the U.S. press implied that NATO enlargement was a mistake. The tone of these articles strongly suggested that expansion of the Atlantic alliance only caused the U.S. more trouble with Russia. They also implied that the U.S. and other Western powers were less than fully committed to their new eastern partners.
In this light, it's clear that American retreat on the missile defense program would hand Moscow a huge victory. Washington can't afford to leave the Czechs out in the cold.
Mr. Vodicka is senior writer for the Czech newspaper Mladá Fronta Dnes.
European leaders relied on U.S. commitments.
WSJ, Feb 11, 2009
Prague
If the United States builds a radar system in the Czech Republic as part of the missile defense program developed by the Bush administration, it's likely that the Russians will target the Czech Republic with their tactical nuclear missiles. But many Czechs are fearful of an even greater danger than Russia: The possibility that the U.S. may decide not to deploy the defense system. Unfortunately, Vice President Joseph Biden suggested this prospect last week in Munich when he said, "We will wait for what the experts say and then we will see."
Czech politicians and their Polish counterparts have invested a lot of political capital in the missile defense project. If the Obama administration doesn't follow through, supporters of the missile shield would feel abandoned by the U.S.
What's worse, Czech and Polish leaders would lose credibility among their opponents and, most importantly, Russia. Moscow would see the failure to build the radar system as proof of its influence over Central Europe, and as recognition of its veto power over European security policy.
Mr. Biden doesn't seem to appreciate that the missile defense project isn't just about American interests. It's about the Czechs and the Poles, too.
The Americans wanted the radar and the interceptors, and they wanted them within the borders of our countries. Our leaders went to great lengths to meet Washington's requests. They stood firm in the face of passionate protests at home and intimidation from Russia. Recently, Moscow backed down from its threat to deploy Iskander missiles in Kaliningrad, but it stands ready to follow through if missile defense becomes a reality.
It's beginning to look as though the Americans were taking us for a ride. Now that there's a new driver in the White House, they think they can just drop us off at the curb.
Even if the Obama administration wants to backtrack on missile defense, doing so won't return relations with Russia to the status quo ante. This is because Russia has transformed the issue of the missile defense system in the Czech Republic and Poland into evidence of its growing influence. Russia has turned this into a question of its power beyond its borders.
If it weren't for Russia, there would be little difficulty in Washington's change of heart. Yet Russia's involvement makes the game a different one entirely. While several interceptors in Poland can stop individual missiles, they can't prevent a massive strike by a nuclear power like Russia. This is because the system is aimed at Iran, not Russia.
Moscow's rigid position has hardened the resolve of Prague and Warsaw, which fear that the Kremlin is attempting to dictate the limits of Czech and Polish sovereignty and foreign policy. We have experienced this before.
This, at least, is how the situation appears from the Czech point of view. I can already anticipate the Obama administration's conclusion: that missile defense is an expensive diversion with uncertain benefits and unpleasant side effects. Such an outcome is all the more likely given the global economic crisis and the difficult fiscal situation in the U.S.
There's no doubt that Russia would profit from a scenario in which the U.S. put the missile defense project on hold. Just consider the situation in Georgia last summer.
During the conflict in South Ossetia, it was alarming how many observers in the U.S. press implied that NATO enlargement was a mistake. The tone of these articles strongly suggested that expansion of the Atlantic alliance only caused the U.S. more trouble with Russia. They also implied that the U.S. and other Western powers were less than fully committed to their new eastern partners.
In this light, it's clear that American retreat on the missile defense program would hand Moscow a huge victory. Washington can't afford to leave the Czechs out in the cold.
Mr. Vodicka is senior writer for the Czech newspaper Mladá Fronta Dnes.
Tuesday, February 3, 2009
NATO in Afghanistan: Lazy Allies
Lazy Allies, by Ted Galen Carpenter
The National Interest, February 2, 2009
Media reports indicate that President Obama may abandon his plan to ask America’s NATO partners to provide more combat troops for the mission in Afghanistan. Given how militarily useless many of the existing European deployments have been, that may not prove to be a big loss. But the feckless conduct of some of the European members of NATO in Afghanistan is indicative of a larger problem. The reality is that Washington’s much-touted alliances now involve more symbolism and tokenism than any meaningful addition to America’s military power. Immediately following the terrorist attacks on 9/11, NATO governments invoked Article V—which states that an attack on one member is an attack on all—for the first time in the alliance’s history. American leaders welcomed the European pledges of support, and the U.S.-led military campaign in Afghanistan soon had a significant NATO component.
But early on, doubts arose about how serious the European allies were about their military commitments. Indeed, most of the NATO governments seemed to view their troop deployments as personnel for humanitarian relief and nation-building tasks rather than for combat operations. The military heavy lifting was by and large left to U.S. forces and those of a few other countries, primarily Canada, Britain and the Netherlands.
Most NATO members have placed various caveats on the use of their military personnel. Some are prohibited from night operations (which are inherently more dangerous). Others are prohibited from being deployed in certain areas of the country—specifically, those areas where significant combat is occurring and additional troops might actually prove useful.
Germany is one of the worst offenders in that regard. Berlin has restricted its troops to the northern regions of Afghanistan, where virtually no fighting is taking place. Despite Washington’s repeated requests, the German government has refused to lift that restriction. That might be just as well. A December 2008 German parliamentary report concluded that the country’s troops in Afghanistan spent most of their time lounging around and drinking beer, and that many were now too fat and out of condition to be of any use in combat operations.
The desire of U.S. allies to keep their troops out of harm’s way is not confined to the Afghanistan theater—or for that matter to the NATO allies. A similar pattern emerged with the deployments of both South Korean and Japanese forces in Iraq. Seoul insisted that its troops be stationed only in Iraqi Kurdistan, by far the safest area of the country. But the South Korean government was a profile in courage compared to the Japanese government. Although Tokyo sent units of its Self-Defense Force (SDF) to Iraq, it insisted that those forces must be confined to noncombat roles. Indeed, the SDF units had to be protected by the troops of other coalition countries. Thus, from a military standpoint, the Japanese contribution was not an asset to the occupation effort—it was a liability.
Such episodes indicate that many of America’s supposed military partners are more interested in engaging in tokenism and security symbolism than they are with playing a meaningful military role. The governments of those countries want to show that they are good allies and willing participants in U.S.-led missions, while incurring few, if any, battlefield risks. That sort of conduct may salve the consciences of political leaders in allied capitals, and it may appeal to U.S. policymakers for whom symbolism is more important than substance. It may even gull an otherwise suspicious American public. But it provides little useful addition to America’s own military power.
One wonders at times if U.S. leaders believe that this country should have allies for the sake of having allies, even if those military partners bring little of value to the table. Why else would American officials tolerate the tokenism evident with the allied contributions in both Iraq and Afghanistan? And why would those same officials be so enthusiastic about the addition of tiny, militarily insignificant members to the NATO alliance?
The last round of NATO expansion brought on board such military powerhouses as Estonia, Latvia, Lithuania and Slovenia. According to the 2008 edition of the widely respected publication The Military Balance, Estonia’s annual defense budget is $386 million, and the country fields 4,100 active-duty troops. The figures for Latvia are $471 million and 5,996 troops; Lithuania, $470 million and 13,850 troops; and Slovenia, $750 million and 5,973 troops. At NATO’s summit last year in Bucharest, alliance leaders gave the green light to membership for Croatia and Albania. Croatia’s accession would add $875 million and 17,660 troops, while Albania’s would add $208 million and 11,020 military personnel.
Collectively, such members spend less on their militaries in a year than the United States spends in Iraq in two weeks. How adding such military pygmies to NATO is supposed to enhance the security of the United States is a mystery. Indeed, since several of those countries have serious tensions with their neighbors, they are not just militarily irrelevant, but are outright security liabilities that could drag the United States into needless conflicts.
U.S. policymakers ought to be far more realistic about the utility of alliances. Allies are neither good nor bad, per se. But American officials should not pretend that allies are making meaningful military contributions when the evidence indicates otherwise. Security symbolism and tokenism is of little practical use, yet that is the level of assistance that has become all too common from America’s alliance partners.
The National Interest, February 2, 2009
Media reports indicate that President Obama may abandon his plan to ask America’s NATO partners to provide more combat troops for the mission in Afghanistan. Given how militarily useless many of the existing European deployments have been, that may not prove to be a big loss. But the feckless conduct of some of the European members of NATO in Afghanistan is indicative of a larger problem. The reality is that Washington’s much-touted alliances now involve more symbolism and tokenism than any meaningful addition to America’s military power. Immediately following the terrorist attacks on 9/11, NATO governments invoked Article V—which states that an attack on one member is an attack on all—for the first time in the alliance’s history. American leaders welcomed the European pledges of support, and the U.S.-led military campaign in Afghanistan soon had a significant NATO component.
But early on, doubts arose about how serious the European allies were about their military commitments. Indeed, most of the NATO governments seemed to view their troop deployments as personnel for humanitarian relief and nation-building tasks rather than for combat operations. The military heavy lifting was by and large left to U.S. forces and those of a few other countries, primarily Canada, Britain and the Netherlands.
Most NATO members have placed various caveats on the use of their military personnel. Some are prohibited from night operations (which are inherently more dangerous). Others are prohibited from being deployed in certain areas of the country—specifically, those areas where significant combat is occurring and additional troops might actually prove useful.
Germany is one of the worst offenders in that regard. Berlin has restricted its troops to the northern regions of Afghanistan, where virtually no fighting is taking place. Despite Washington’s repeated requests, the German government has refused to lift that restriction. That might be just as well. A December 2008 German parliamentary report concluded that the country’s troops in Afghanistan spent most of their time lounging around and drinking beer, and that many were now too fat and out of condition to be of any use in combat operations.
The desire of U.S. allies to keep their troops out of harm’s way is not confined to the Afghanistan theater—or for that matter to the NATO allies. A similar pattern emerged with the deployments of both South Korean and Japanese forces in Iraq. Seoul insisted that its troops be stationed only in Iraqi Kurdistan, by far the safest area of the country. But the South Korean government was a profile in courage compared to the Japanese government. Although Tokyo sent units of its Self-Defense Force (SDF) to Iraq, it insisted that those forces must be confined to noncombat roles. Indeed, the SDF units had to be protected by the troops of other coalition countries. Thus, from a military standpoint, the Japanese contribution was not an asset to the occupation effort—it was a liability.
Such episodes indicate that many of America’s supposed military partners are more interested in engaging in tokenism and security symbolism than they are with playing a meaningful military role. The governments of those countries want to show that they are good allies and willing participants in U.S.-led missions, while incurring few, if any, battlefield risks. That sort of conduct may salve the consciences of political leaders in allied capitals, and it may appeal to U.S. policymakers for whom symbolism is more important than substance. It may even gull an otherwise suspicious American public. But it provides little useful addition to America’s own military power.
One wonders at times if U.S. leaders believe that this country should have allies for the sake of having allies, even if those military partners bring little of value to the table. Why else would American officials tolerate the tokenism evident with the allied contributions in both Iraq and Afghanistan? And why would those same officials be so enthusiastic about the addition of tiny, militarily insignificant members to the NATO alliance?
The last round of NATO expansion brought on board such military powerhouses as Estonia, Latvia, Lithuania and Slovenia. According to the 2008 edition of the widely respected publication The Military Balance, Estonia’s annual defense budget is $386 million, and the country fields 4,100 active-duty troops. The figures for Latvia are $471 million and 5,996 troops; Lithuania, $470 million and 13,850 troops; and Slovenia, $750 million and 5,973 troops. At NATO’s summit last year in Bucharest, alliance leaders gave the green light to membership for Croatia and Albania. Croatia’s accession would add $875 million and 17,660 troops, while Albania’s would add $208 million and 11,020 military personnel.
Collectively, such members spend less on their militaries in a year than the United States spends in Iraq in two weeks. How adding such military pygmies to NATO is supposed to enhance the security of the United States is a mystery. Indeed, since several of those countries have serious tensions with their neighbors, they are not just militarily irrelevant, but are outright security liabilities that could drag the United States into needless conflicts.
U.S. policymakers ought to be far more realistic about the utility of alliances. Allies are neither good nor bad, per se. But American officials should not pretend that allies are making meaningful military contributions when the evidence indicates otherwise. Security symbolism and tokenism is of little practical use, yet that is the level of assistance that has become all too common from America’s alliance partners.
Sunday, February 1, 2009
Russia's Drive for Global Economic Power: A Challenge for the Obama Administration
Russia's Drive for Global Economic Power: A Challenge for the Obama Administration. By Ariel Cohen, Ph.D., and Lajos F. Szaszdi, Ph.D.
Heritage, January 30, 2009
Full text w/references here
Until the recent global financial crisis, Russia's economic revival during the presidency of Vladimir Putin had helped to restore the country's standing as a major player in the world arena. Yet, prosperity has come with some unintended consequences. Russia's invasion of Georgia was fueled by Russia's economic growth and newfound wealth.
This economic comeback is largely the result of Russia's oil and natural gas exports, coupled with the high prices that other Russian commodities have enjoyed in world markets. With the seventh-largest oil reserves and the largest gas reserves in the world, and as the leading exporter of oil and gas, the Kremlin is using its energy exports, revenue from arms and metals sales, and investments abroad in the mining and energy sectors to extend Russia's influence worldwide.
The interruption of gas supply to Ukraine and the rest of Europe in January 2009 resulted in the worst energy crisis in Europe since the Arab Oil Embargo of 1973, and once again raised questions about Russia's reliability as an energy supplier.[1] In the recent past, Russia has already prevented Caspian oil and gas supplies from flowing freely to the European markets; has threatened to disrupt oil exports that pass through Georgian territory when it invaded Georgia last August; has acquired, and is in the process of acquiring, major European energy companies, as well as pipelines, refineries, and other assets in more than a dozen countries. Moscow is also targeting the strategic Middle Eastern oil sector and is displacing Western energy companies operating in OPEC founding member Venezuela.
Beyond that, Russia has dominant global positions in the strategic and precious metals sectors including titanium, platinum, and other precious metals used in aerospace industries, electronics, and military and automotive production. A major Kremlin-connected oligarch owns the world's largest aluminum company and has been accused of corrupt practices in the U.S., Germany, Nigeria, and Guinea, while the Russian banking sector is tied in with organized crime.
Moscow's expanding business interests have made Europe highly--and dangerously--dependent on Russian oil, gas, and raw materials. Russia currently supplies two-thirds of Europe's imported natural gas--42 percent of total European consumption; Central and Eastern European countries depend on Russian gas for more than 90 percent of their needs. By 2030, Europe will import 84 percent of its gas needs.[2] Europe has not developed alternative sources of gas, and has rejected nuclear power and coal. Since natural gas is supplied by pipelines controlled by Gazprom, the Russian state gas monopoly, these countries cannot easily turn to other suppliers. Thus, Europe has tied itself to dependence on a commodity supplier with a track record of geopolitical intimidation as opposed to a free-market relationship.
Severe repercussions for Europe's national security dependence on Russian energy are widely recognized by the European Union and individual countries. Europe has now "stepped up its attempts to reduce its exposure to potential Russian blackmail over energy supplies," reports Ian Traynor in The Guardian. The European Commission unveiled "an ambitious strategy aimed at weakening Russian giant Gazprom's domination of Europe's gas imports." "We must not sleepwalk into Europe's energy dependence crisis," said Jose Manuel Barroso, EU Commission President.[3] Russia is trying to replicate this model in other areas as well, such as electricity and raw-materials exports by state-owned corporations, as demonstrated below.
Russia also aims to become a major energy supplier and provider of raw materials to countries of the Asia-Pacific region, including China, Japan, South Korea, and the United States. Such a goal, if accomplished, will greatly enhance Russian leverage in the Pacific Rim.
Controlling Eurasia
Russia's war with Georgia was as much about Moscow's plans to annex South Ossetia and Abkhazia as it was to reassert economic domination of the Caucasus by force and prevent additional oil and gas pipelines from being built outside Russian control. Russia sent the signal by temporarily controlling the cargo port of Poti and Georgia's main highway and railway line and by threatening the safety--and thus the viability--of current and future oil and gas pipelines that bypass Russia.
The Russian invasion and partial occupation had the intended effect of persuading Kazakhstan to drop its investment plans for Georgia. The Kazakh state oil and gas company KazMunaiGas announced in September that it would abandon its plan to build an oil refinery in the Georgian port of Batumi, and not long before that, the Kazakh government also announced it would not build a grain-export terminal in the port of Poti. This terminal would have enabled Kazakhstan to export part of its grain production through an alternative route, bypassing Russia.[4]
For years, Russian energy policy was a crafty tool of power projection in Eurasia. Russian state-controlled entities like Gazprom used mysterious, economically useless affiliates to ensnare local political leaders in corruption, thus co-opting them. Examples include Rosukrenergo (with Ukraine) as well as Gazprom-Zeromax in Uzbekistan. Energy deals are used to entangle the local regimes, ensuring their political dependence on Moscow.
Moscow has not only used its resources and economic prowess to exert its influence in the former Soviet states of Eurasia. Russia's neo-corporatist state[5] is also pursuing an anti-American agenda and challenging the existing global economic system. It seeks control or influence of sectors that are of paramount importance to American and European security, such as special materials like platinum, titanium, and other rare metals; defense technologies, such as the European aircraft manufacturer EADS; and energy resources and infrastructure, such as U.S. Getty, Spain's Repsol, Germany's Ruhrgas, refineries, and a slew of companies in Germany, Hungary, Bulgaria, Poland, Serbia, Slovakia, and elsewhere. Russia seeks to establish platforms from which it can more easily conduct industrial and classic espionage, money laundering, and other covert activities, and increase political dependency through corruption. Moscow is also seeking influence in the developing world, as well as challenging the independence and security of Europe, including major powers like Germany and Italy, as well as Ukraine and Georgia, in which the United States has national security interests.
The Tools for Global Cooperation
The U.S. should cooperate with its friends and allies on combating excessive dependency (beyond 25-30 percent) on Russian strategic raw materials and energy exports, such as oil, gas, coal, and electricity. What is needed is a global security system for tracking investment activities by Russia and other anti-Western governments in industries and sectors with defense and security implications.
One of those tools is the Committee on Foreign Investment in the United States (CFIUS). CFIUS is an inter-agency committee of the United States government that reviews the national security implications of foreign investments in U.S. companies or operations. Chaired by the Secretary of the Treasury, CFIUS coordinates representatives from nine U.S. agencies including the Departments of Defense, State, Commerce, and Homeland Security.
The U.S. Treasury recently published final rules to strengthen security reviews of foreign investments in U.S. businesses. As the former Treasury Secretary Henry Paulson put it, the final regulations are intended to "strengthen the CFIUS process in a manner that reaffirms America's longstanding policy of openness to investment, consistent with the protection of our national security."[6] The regulations clarify that transactions in which a foreign entity acquires less than a 10 percent stake in a U.S. business are not automatically exempt from a CFIUS review. Under the new procedures, a foreign investor in a U.S. business considered "critical infrastructure" is encouraged to consult with the CFIUS panel before filing a formal notice. This is a wise step in improving oversight of investments in critical infrastructure, resources, and financial systems on which our nation and our alliances depend.
The U.S. should also increase cooperative effortsamong the international intelligence and law enforcement agencies and independent experts to keep track of how the Russian state and oligarchs may be laundering money and engaging in corruption and unfair competition. The Obama Administration should encourage, without dictating investment decisions,U.S. and other multinational companies to compete with Russian companies like Gazprom for pipeline and energy projects, as well as promote alternative market-based sources of energy and unconventional sources of fuels worldwide to counter any over-dependency on energy from countries such as Russia, Iran and Venezuela, which overtly seek to counter the West's economic and military strength.
Russia's Economic March
The geo-economic and geopolitical implications of Russia's economic power projection abroad cannot be overstated: As the Russian state's main source of revenues, and as a foreign policy arm, it enables the Kremlin to extend Russia's influence on a global scale. Moscow exercises economic--and political-- influence over countries that depend on its resources. Russian exports and investment projects are an instrument for establishing and developing strategic relationships through the export of commodities, arms, and nuclear technology.[7]
Since Vladimir Putin became president in spring of 2000, the Kremlin has backed the formation of "national champions" of the economy, state- or publicly owned corporate giants that are subservient to the government. Initially, the amalgamation of companies into big conglomerates was intended to help Russian companies compete successfully at home and abroad. But the massive corporations favored by the Kremlin soon became instruments of the Russian state's policy to dominate the national economy and to project its power abroad through a trade-based foreign economic policy.
These state and private corporate players are subject to the instructions of the government in both business and geopolitical priorities. So important are such strategic sectors like oil and gas or the military-industrial complex that, together with the big corporations that dominate these sectors-- Gazprom, Rosneft, LUKoil, and Rostekhnologii (Russian Technologies)--they constitute one of the pillars of the Russian state, along with the other pillars of power: the military, the intelligence services, the police and law-enforcement agencies, and the government bureaucracy.
Indeed, the Kremlin has been using energy exports as a tool of its foreign policy. The most notorious example of this practice is cutting off or threatening to cut off oil and gas exports to any country that adopts policies that go against Russia's national interests. A recent example was the September 1, 2008, announcement to reduce the flow of gas to the European Union, reportedly announced by the Russian gas monopoly Gazprom soon after the 27 EU member countries agreed to halt negotiations with Russia for a new partnership agreement. The EU measure came in response to Russia's war against Georgia in August.
In another example of the use of energy exports as a tool of foreign policy, Prime Minister Vladimir Putin, in a veiled threat to Europe, urged on the eve of the same EU meeting that the construction work on the East Siberia-Pacific Ocean (ESPO) oil pipeline, destined to export crude to the Asia-Pacific region markets, be accelerated.[8] The message was clear: If Europe does not want to buy Russian oil, Moscow can sell it to China, South Korea, and Japan. Currently, Europe imports from Russia a third of the oil and 40 percent of the natural gas it consumes.[9]
This is no coincidence, since Russia's global posture is directed by now-Prime Minister Putin and his associates--KGB veterans. As Putin's former economic adviser Andrey Illarionov described it, the Russian Federation is being run as a corporation.[10] Today, this "Russia Inc." operates essentially with a hierarchical structure in which Prime Minister Putin is the equivalent of the CEO and chairman of the board, with President Dmitry Medvedev as a member and chief operating officer. While President Medvedev is a civilian, Putin and many of his close allies are alumni of the Russian intelligence community. In a study conducted in 2006 by the Center for the Study of Elites at the Russian Academy of Sciences,of 1,016 senior government officials and elected members of Parliament, 26 percent belonged to the KGB or the post-Soviet intelligence agencies. That proportion grew to 78 percent when individuals with "unexplained gaps in résumés, unlikely career paths or service in organizations affiliated with the KGB" were included.[11]
More than five years ago it was suggested that up to 6,000 active duty and reserve members of the Russian intelligence community occupied positions of influence in the state.[12] It can be concluded that the alumni of the Russian intelligence apparatus control the state by controlling the government's civilian bureaucracy, the military, and the country's main economic sectors. As Daniel Treisman, professor of political science at the University of California, Los Angeles, pointed out, in Russia "the security forces' takeover of corporate boardrooms is coming to define Putin's regime,"[13] during his presidency and premierships.
Moscow business insider Oleg Shvartsman suggested that the goal of the members of the Russian intelligence services who occupy senior positions in the corporate world is to gain wealth for themselves in addition to global power for Russia through business expansion abroad. There have been revelations by a businessman managing the assets of members of the Presidential Administration from the so-called "siloviki" (men of power). These are officials with links to the FSB (the Federal Security Service and the main successor to the KGB) and SVR (the Foreign Intelligence Service, formerly the KGB's First Main Directorate) through the obscure Finansgroup company which claims assets worth around $3.2 billion.[14] Thus, huge amounts of money in the hands of the former members of the Russian intelligence apparatus could be employed for personal use, while vast state revenues can be directed to fund clandestine operations and other state activities.
Massive money laundering operations through the Bank of New York[15] and Republic Bank of New York are well documented and were the subject of congressional hearings.[16] According to publications in the Russian media, the Austrian Raiffeisen bank is reportedly involved in suspicious activities in the Russian gas sector and other questionable business transactions with ties to intelligence services.[17] Back in 2004, Czech counterintelligence sources revealed that the SVR invested "huge sums in local real estate, hotels, casinos, and entertainment complexes" in the Czech Republic, probably in order to obtain front companies for intelligence operations, to strengthen the SVR's (and the Russian state's) influence in the country, and possibly as alternative sources of funding outside of the regular control of the Russian leadership.[18]
It is little wonder that earlier last year U.S. Attorney General Michael Mukasey cited Russia and other Eurasian nations as places where "organized criminals control significant positions in the global energy and strategic-materials markets. They are expanding their holdings in those sectors, which corrupts the normal functioning of these markets and may have a destabilizing effect on U.S. geopolitical interests."[19]He revealed that the U.S. government has re-assembled its Organized Crime Council to combat a new "hybrid criminal problem" involving alliances between foreign intelligence agencies and criminal groups. Mr. Mukasey said law-enforcement officials have "grave concern" about "so-called "iron triangles' of corrupt business leaders, corrupt government officials and organized criminals."[20]
Beyond Personal Wealth
The Russian leadership's ambition surpassed the drive for self-enrichment a long time ago. Putin and then-Defense Minister Sergey Ivanov meant every word when they set the goal for Russia to become a world energy superpower. In 2006, Vladislav Surkov, Deputy Head of the Presidential Administration, aide to President Putin and ideological chief of Putin's regime, declared that "the idea of Russia as an energy superpower is…fully consistent" with the country becoming competitive economically.[21] Yet, ever cautious, at that year's Valdai Club meeting, President Putin rejected the idea that Russia wanted to become an "energy superpower," assuring the audience that his government wanted instead to provide stable energy supplies to world markets.[22]
A key instrument in the dream of Russia as an energy superpower is Gazprom, the world's largest gas company and Russia's state-owned gas monopoly. Gazprom was the Kremlin's principal tool in the two gas supply interruptions to Europe, which were triggered by the gas prices disputes between Moscow and Kyiv.[23] Gazprom is rated as the company with the highest capitalization in Russia.[24] It is intended to become the core of a gas counterpart to OPEC, and its close energy ties with Iran, which has the second-largest gas reserves on earth, threaten market access and competitiveness, especially in the liquefied natural gas (LNG) sector, and as a result, stability of the world economy.
The recent agreement between Russia, Iran, and Qatar to form a "Gas Troika" (in the works for at least a year and a half) that would meet several times a year, could lead to unfair business practices, such as "the exchange of information about prices, development schedules and investment plans."[25] Russia, Iran, and Qatar hold 56 percent of global gas reserves, and the Iranian oil minister declared in October of last year that the three countries have reached an agreement on the formation of a "gas OPEC."[26] Less than a week later, Alexei Miller, Gazprom's deputy chairman of the board of directors and chairman of the management committee, said that the Gas Troika could become a formal organization in November of 2008.[27] Later, Anatoly Yanovsky, deputy energy minister, disclosed that at a December 23 summit in Moscow, 16 gas-producing countries, including the host nation, plan to sign a charter establishing an "organization of gas exporting countries."[28]
A Perfect Storm.
The international financial crisis has seemingly put a stop to Russia's dynamic efforts to expand its economic interests worldwide. Prime Minister Putin wrongly blamed the U.S. exclusively for the meltdown, which since May has affected Russia's stock exchanges, the RTS and the MICEX, with Russia's indexes losing thus far as much as 70 percent of their value.[29]
Several observers pointed out that the Russian invasion of Georgia made the financial problem worse, triggering a further outflow of capital out of fear of instability. Other problems have combined to create a perfect financial storm against Russia: International banks called loans of powerful oligarchs who before the crisis and their loss in value used their company shares as collateral for foreign loans; and oil prices and those of other commodities fell, including metals, causing grave financial damage to Russian state financing.[30]
Russia's financial benefits accruing from foreign trade are altering its international behavior. In early August 2008, the Russian government's Reserve Fund and National Welfare Fund held the equivalent of $162 billion, while its hard currency and gold reserves summed their highest point on August 8--the day Russian forces invaded Georgia--with more than $597 billion, the third-largestreserves in the world after China and Japan.[31] By December 5, Russia's hard currency and gold reserves were down to $437 billion, yet they lost $31 billion in one week from October 17 to 24, and $17.9 billion in the week of December 5.[32] These reserves are expected to continue to decline as the Russian government uses them to rescue the national economy from the effects of the international financial crisis, and if oil prices remain below $70 a barrel.[33]
The effects of the financial crisis in Russia have left many Russian companies and banks unable to repay their foreign loans without state intervention. Thus, the Russian Central Bank has provided liquidity to Russia's state development bank, Vnesheconombank (VEB): $50 billion to help enterprises in financial trouble pay their foreign creditors. This situation is allowing the Russian government to take over failing banks and acquire stakes in struggling companies, strengthening the power and influence of the state.[34]
The crisis has also caused Russia's most powerful billionaire businessmen, with close links to the Kremlin, to incur combined losses of up to $230 billion. The one with the highest losses according to Forbes is Oleg Deripaska, who, until the crisis, was the wealthiest man in Russia and who had lost more than $16 billion by early October of an estimated $28 billion fortune before the crisis. Deripaska is the owner of RUSAL, the largest aluminum and alumina producer in the world.[35] Other examples include Roman Abramovich, who by the third week of October lost over $20 billion after his shares in steelmaker Evraz plummeted. The owner of steel producer Novolipetsk Steel (NLMK), Vladimir Lisin, lost $22 billion by early October, and the fortune of Severstal's Alexei Mordashov went down from $21.2 billion by March 2008 to $5.3 billion by early October.[36] LUKoil's owner Vagit Alekperov's value of his 20 percent stake in the oil company fell from $19.5 billion to $7.2 billion by early October.[37]
All these private-sector companies with close Kremlin ties are involved in international trade and investment activities, serving as sources of tax revenues and hard currency for the Russian state, and as tools of the Kremlin to expand Russia's influence worldwide. The Kremlin might use this opportunity as well to try to gain controlling stakes of private companies that are in financial trouble, thus expanding the state's commanding role in the national economy and in the long term give it further resources and power, enabling foreign adventurism.
Despite the fact that it will be cancelling plans for more drilling and oil refining, private oil company LUKoil still intends to buy a 30 percent stake in Repsol, the Spanish national oil company, as well as a refinery in Sicily, and is putting together a $1 billion loan for that purpose.[38] It seems that the national corporate champions, such as LUKoil or Gazprom might see their expanding investment plans at home or abroad shelved due to lower oil prices, yet this is likely to be a temporary setback, depending on how quickly the international financial markets in general and foreign investor confidence in Russia in particular recover.
Yet, Russian businesses are feeling the brunt of the crisis. The abysmal loss of value of Russian banks and companies' shares has led Bloomberg to declare the stocks of Russian companies as the cheapest in the world. Indeed, there seem to be fears in Russian nationalist circles that the low value of Russian companies' stakes could lead to free-for-all acquisitions of Russian stocks by Western financial interests. To avoid this outcome, the Russian state, through its banks like VEB and institutions like the Deposit Insurance Agency, is providing the loans and guarantees needed by Russian banks and companies in distress. It is also using them to take control of failed banks.[39] But even the Russian state itself could go broke if the price of oil continues to fall.
Budgetary Woes
This petroleum windfall is also being used to win the loyalty of some European politicians. Such arrangements benefit Russian energy interests, as in Germany with regard to the Nord Stream gas pipeline consortium chaired by former chancellor Gerhard Schroeder for an annual compensation of 1,000,000 euros (about $1,270,000 in U.S. dollars).[40] Nord Stream also hired the Finnish prime minister as a consultant, triggering concerns in Europe about spreading corruption.[41] An extremely expensive project, the Nord Stream pipeline would reach from Russia along the Baltic Sea bottom to Germany, bypassing the Baltic states and Poland and denying them transit revenue, with spurs to the Netherlands and France. In Bulgaria, Hungary, Serbia, and Austria, the planned--and even more expensive--South Stream gas pipeline would stop the EU- and U.S.-backed Nabucco gas pipeline, which bypasses Russia. The cooperation of Schroeder and Hungarian Prime Minister Ferenc Gyurcsany is key in implementing Russian projects that undermine Europe's security of energy supply.
The anti-competitive practices of Russian companies are spreading in the West and are undermining the rule of law as well as sound economic practices and business ethics. Gazprom, Rosneft, and their subsidiaries negotiate and make energy deals with foreign energy companies.[42] Such opaque business partnerships are shrouded in secrecy, politicize the energy business, and are devoid of free and fair competition. Worse, the opaque nature of such agreements between state energy companies leaves an ample margin for corrupt practices that violate both the law and business ethics. One notorious example are the allegations made against the Austrian Raiffeisen bank, which has been accused by the Russian press of participating in a money laundering scheme that sent capital out of Russia and that involved senior Russian government officials with links to oil companies and ties to the FSB.[43]
What Russia Wants: "New World System"
Russia needs its oil price to be at least $70 a barrel in 2009 to avoid falling into budget deficits.[44] Its recent talks with OPEC may be directed at coordinating efforts to reduce oil production and thus raising the price of oil, a goal also pursued in earnest by OPEC members Iran and Venezuela, whose national budgets depend on $70 a barrel to balance their budgets.[45] The budget deficit may also constrain some foreign policy tools Russia uses.
Attending an OPEC meeting in Vienna in September 2008, Russian Deputy Prime Minister Igor Sechin, a friend of Putin's, said that "OPEC is one of Russia's key partners on the global oil market" and that "it is very important for us to create mechanisms of regular dialogue" with the oil exporting organization.[46]
With Russia and OPEC responsible for a combined total of 51 percent of the world's oil,[47] Moscow's cooperation with OPEC to coordinate oil prices and production quotas would be a requisite for the further expansion of Russia's influence in the world. Even though the idea of Russia joining OPEC has been rejected by Russian officials, one of LUKoil's vice presidents declared recently that Russian membership of OPEC "will be only good for Russia" for "the future of the Russian industry and [oil] price stability."[48] Cooperation with OPEC and the formation of a gas cartel are consistent with one of the objectives enunciated in the recent Foreign Policy Concept of the Russian Federation, which announced that Russia "strengthens strategic partnership with the leading producers of energy resources."[49]
Russia aims to challenge the current international financial system dominated by the U.S. and Western industrialized countries. At the St. Petersburg Economic Summit in 2007, President Putin called for a new world economic framework based on regional alliances, relegating Bretton Woods-era global institutions like the International Monetary Fund and the World Bank to the sidelines. He demanded that the new system reflect the rising power of emerging market economies like Russia, China, India, and Brazil, as well as the decline of the established powers: the United States, Japan, and Western European countries.[50]
Moscow is establishing "favorable political conditions for diversifying Russia's presence in the world markets through expanding the export range and geography of foreign economic and investment links of Russia."[51] At the same time, the Kremlin is promoting a multilateral, state-driven approach to the international economic and financial system to regulate the free markets globally, and using the ruble as the dominant currency in the Commonwealth of Independent States.
Speaking at the recent conference on the international financial crisis in Evian, France, Russian President Medvedev said that "the formation of new financial centers and strong regional currencies will act as new stability factors" in the face of the crisis. While suggesting that the current international U.S.-based "unipolar economic model" is inefficient, Medvedev alluded to the "multi-polar nature of the world and the complexity of globalization." Medvedev is proposing that "the global financial architecture be changed, the role of the current international institutions be reviewed, and new ones created to guarantee stability."[52] "It will take years to shape a new world system," Medvedev said.[53]
Another goal seems to be replacing the dollar in Russia's international trade transactions. Putin has proposed this goal to his Chinese counterpart Wen Jiabao for bilateral trade between Russia and China, which was estimated to reach $50 billion in 2008.[54]
Russia is following a multilateral approach to challenge the current international financial and trading system, as part of its overall strategy of pursuing a multilateral world system, through the Shanghai Cooperation Organization,[55] OPEC, a new gas OPEC, or new international financial bodies that would include China, India, EU member states, and challengers of the established international order such as Iran and Venezuela.
Influencing the international prices of oil and gas would be key for the economic recovery of the country as well as for funding military and industrial modernization and economic development programs at home.
Before the international financial crisis hit Russia, an increasing share of its resources had been directed at the rearming of the military with modern weapon systems, and at increases in funding of the Ministry of the Interior, and of the security and intelligence services, such as the FSB domestic security service, the SVR foreign intelligence service, the GRU military intelligence, and the Border Guards under FSB supervision. Before the crisis, the Kremlin planned to raise defense spending by 50 percent over three years, deploy an army rapid reaction force at a high level of operational readiness, and construct new nuclear-powered ballistic missile submarines.[56] It remains to be seen if the government's financial stabilization efforts at home will reduce spending in defense as well as activities of the Ministry of Foreign Affairs and of Russian government propaganda and information warfare.
Arms Exports Boost Russia's Power
Russia is also a major world weapons exporter. The Kremlin aims to forge long-lasting military relations and strategic partnerships with foreign countries through the export of arms. Russia's military exports extend to Europe, the Middle East, Central Asia, South Asia (primarily India), the Far East (mainly China), Southeast Asia, Africa, and Latin America. To further centralize government control over the production of the military-industrial complex, the Kremlin has created an industrial behemoth, Rostekhnologii (Russian Technologies), which agglomerates 426 state enterprises. These include the defense export enterprise Rosoboronexport, the aircraft manufacturing, non-ferrous metals, and shipbuilding conglomerates to name just a few. Russia's titanium exports corporation, VSMPO- Avisma, vital for Airbus and Boeing, is now controlled by Rostekhnologii, which is planning to develop it into one of the largest non-ferrous-metals companies in the world.[57] Rostekhnologii will centralize the planning and production of the various enterprises under its umbrella. It could also attempt to marshal together its various resources and coordinate its efforts to become a formidable competitor in the international market for arms, metals, and aerospace technology.
What the Obama Administration Should Do
If Russia were a friendly Euro-Atlantic power, the United States would be no more concerned about its economic activity than about that of France. Russia's use of state-dominated businesses to enhance its geopolitical posture and gain dominance over U.S. allies' energy supply, however, should raise deep concerns in the Obama Administration and in European capitals. Free-market competition is and should remain a fundamental principle of U.S. trade policy; but America and its allies have a duty to their citizens to monitor, and, where necessary, prevent, any country's anti-market, political, covert, or illicit efforts to undermine our markets or our security, which Russia increasingly is aiming to do.
For example, Russian's growing control of Eurasian energy resources and exports to Europe through non-market means is both strategically and economically burdensome, as well as dangerous. To better ensure that the U.S. and its allies have access to the energy that fuels their economies and their militaries, to prevent Russian domination in strategic sectors, and to counter corrupt and criminal activities of Russian corporations and tycoons, the Obama Administration should take early action to:
Conclusion: The Way Forward
Russia is being run as a corporation by the former senior members of the Russian intelligence community who strive to maximize profits and power, expanding global corporations for exports of raw materials and weapons. America's European allies and the newly independent states of Eurasia have already been subjected to Russia's heavy-handed policies and corrupt practices aimed at increasing their energy dependency, as well as a flurry of efforts to acquire critical infrastructure such as ports, pipelines, refineries, and energy distribution networks.
The Kremlin has made clear that it intends to diminish America's standing as a world leader by promoting a "multipolar" world, and using its military, economic, and "soft" power to re-establish Russia as America's near-peer competitor. The lower energy profits accruing to Moscow from the current global economic downturn can play a role in mitigating Russia's anti-status quo foreign policy, and slow down the growth and modernization of its armed forces. But the U.S. should not rely on these developments. The U.S. should develop comprehensive policies to handle Russia's economic power projection that is aimed at undermining American allies, power, and security interests, employing a mix of commercial, national security, intelligence, and diplomatic means.
Ariel Cohen, Ph.D., is Senior Research Fellow in Russian and Eurasian Studies and International Energy Security and Lajos F. Szaszdi, Ph.D., was a Consultant in the Douglas and Sarah Allison Center for Foreign Policy Studies, a division of the Kathryn and Shelby Cullom Davis Institute for International Studies, at The Heritage Foundation.
Heritage, January 30, 2009
Full text w/references here
Until the recent global financial crisis, Russia's economic revival during the presidency of Vladimir Putin had helped to restore the country's standing as a major player in the world arena. Yet, prosperity has come with some unintended consequences. Russia's invasion of Georgia was fueled by Russia's economic growth and newfound wealth.
This economic comeback is largely the result of Russia's oil and natural gas exports, coupled with the high prices that other Russian commodities have enjoyed in world markets. With the seventh-largest oil reserves and the largest gas reserves in the world, and as the leading exporter of oil and gas, the Kremlin is using its energy exports, revenue from arms and metals sales, and investments abroad in the mining and energy sectors to extend Russia's influence worldwide.
The interruption of gas supply to Ukraine and the rest of Europe in January 2009 resulted in the worst energy crisis in Europe since the Arab Oil Embargo of 1973, and once again raised questions about Russia's reliability as an energy supplier.[1] In the recent past, Russia has already prevented Caspian oil and gas supplies from flowing freely to the European markets; has threatened to disrupt oil exports that pass through Georgian territory when it invaded Georgia last August; has acquired, and is in the process of acquiring, major European energy companies, as well as pipelines, refineries, and other assets in more than a dozen countries. Moscow is also targeting the strategic Middle Eastern oil sector and is displacing Western energy companies operating in OPEC founding member Venezuela.
Beyond that, Russia has dominant global positions in the strategic and precious metals sectors including titanium, platinum, and other precious metals used in aerospace industries, electronics, and military and automotive production. A major Kremlin-connected oligarch owns the world's largest aluminum company and has been accused of corrupt practices in the U.S., Germany, Nigeria, and Guinea, while the Russian banking sector is tied in with organized crime.
Moscow's expanding business interests have made Europe highly--and dangerously--dependent on Russian oil, gas, and raw materials. Russia currently supplies two-thirds of Europe's imported natural gas--42 percent of total European consumption; Central and Eastern European countries depend on Russian gas for more than 90 percent of their needs. By 2030, Europe will import 84 percent of its gas needs.[2] Europe has not developed alternative sources of gas, and has rejected nuclear power and coal. Since natural gas is supplied by pipelines controlled by Gazprom, the Russian state gas monopoly, these countries cannot easily turn to other suppliers. Thus, Europe has tied itself to dependence on a commodity supplier with a track record of geopolitical intimidation as opposed to a free-market relationship.
Severe repercussions for Europe's national security dependence on Russian energy are widely recognized by the European Union and individual countries. Europe has now "stepped up its attempts to reduce its exposure to potential Russian blackmail over energy supplies," reports Ian Traynor in The Guardian. The European Commission unveiled "an ambitious strategy aimed at weakening Russian giant Gazprom's domination of Europe's gas imports." "We must not sleepwalk into Europe's energy dependence crisis," said Jose Manuel Barroso, EU Commission President.[3] Russia is trying to replicate this model in other areas as well, such as electricity and raw-materials exports by state-owned corporations, as demonstrated below.
Russia also aims to become a major energy supplier and provider of raw materials to countries of the Asia-Pacific region, including China, Japan, South Korea, and the United States. Such a goal, if accomplished, will greatly enhance Russian leverage in the Pacific Rim.
Controlling Eurasia
Russia's war with Georgia was as much about Moscow's plans to annex South Ossetia and Abkhazia as it was to reassert economic domination of the Caucasus by force and prevent additional oil and gas pipelines from being built outside Russian control. Russia sent the signal by temporarily controlling the cargo port of Poti and Georgia's main highway and railway line and by threatening the safety--and thus the viability--of current and future oil and gas pipelines that bypass Russia.
The Russian invasion and partial occupation had the intended effect of persuading Kazakhstan to drop its investment plans for Georgia. The Kazakh state oil and gas company KazMunaiGas announced in September that it would abandon its plan to build an oil refinery in the Georgian port of Batumi, and not long before that, the Kazakh government also announced it would not build a grain-export terminal in the port of Poti. This terminal would have enabled Kazakhstan to export part of its grain production through an alternative route, bypassing Russia.[4]
For years, Russian energy policy was a crafty tool of power projection in Eurasia. Russian state-controlled entities like Gazprom used mysterious, economically useless affiliates to ensnare local political leaders in corruption, thus co-opting them. Examples include Rosukrenergo (with Ukraine) as well as Gazprom-Zeromax in Uzbekistan. Energy deals are used to entangle the local regimes, ensuring their political dependence on Moscow.
Moscow has not only used its resources and economic prowess to exert its influence in the former Soviet states of Eurasia. Russia's neo-corporatist state[5] is also pursuing an anti-American agenda and challenging the existing global economic system. It seeks control or influence of sectors that are of paramount importance to American and European security, such as special materials like platinum, titanium, and other rare metals; defense technologies, such as the European aircraft manufacturer EADS; and energy resources and infrastructure, such as U.S. Getty, Spain's Repsol, Germany's Ruhrgas, refineries, and a slew of companies in Germany, Hungary, Bulgaria, Poland, Serbia, Slovakia, and elsewhere. Russia seeks to establish platforms from which it can more easily conduct industrial and classic espionage, money laundering, and other covert activities, and increase political dependency through corruption. Moscow is also seeking influence in the developing world, as well as challenging the independence and security of Europe, including major powers like Germany and Italy, as well as Ukraine and Georgia, in which the United States has national security interests.
The Tools for Global Cooperation
The U.S. should cooperate with its friends and allies on combating excessive dependency (beyond 25-30 percent) on Russian strategic raw materials and energy exports, such as oil, gas, coal, and electricity. What is needed is a global security system for tracking investment activities by Russia and other anti-Western governments in industries and sectors with defense and security implications.
One of those tools is the Committee on Foreign Investment in the United States (CFIUS). CFIUS is an inter-agency committee of the United States government that reviews the national security implications of foreign investments in U.S. companies or operations. Chaired by the Secretary of the Treasury, CFIUS coordinates representatives from nine U.S. agencies including the Departments of Defense, State, Commerce, and Homeland Security.
The U.S. Treasury recently published final rules to strengthen security reviews of foreign investments in U.S. businesses. As the former Treasury Secretary Henry Paulson put it, the final regulations are intended to "strengthen the CFIUS process in a manner that reaffirms America's longstanding policy of openness to investment, consistent with the protection of our national security."[6] The regulations clarify that transactions in which a foreign entity acquires less than a 10 percent stake in a U.S. business are not automatically exempt from a CFIUS review. Under the new procedures, a foreign investor in a U.S. business considered "critical infrastructure" is encouraged to consult with the CFIUS panel before filing a formal notice. This is a wise step in improving oversight of investments in critical infrastructure, resources, and financial systems on which our nation and our alliances depend.
The U.S. should also increase cooperative effortsamong the international intelligence and law enforcement agencies and independent experts to keep track of how the Russian state and oligarchs may be laundering money and engaging in corruption and unfair competition. The Obama Administration should encourage, without dictating investment decisions,U.S. and other multinational companies to compete with Russian companies like Gazprom for pipeline and energy projects, as well as promote alternative market-based sources of energy and unconventional sources of fuels worldwide to counter any over-dependency on energy from countries such as Russia, Iran and Venezuela, which overtly seek to counter the West's economic and military strength.
Russia's Economic March
The geo-economic and geopolitical implications of Russia's economic power projection abroad cannot be overstated: As the Russian state's main source of revenues, and as a foreign policy arm, it enables the Kremlin to extend Russia's influence on a global scale. Moscow exercises economic--and political-- influence over countries that depend on its resources. Russian exports and investment projects are an instrument for establishing and developing strategic relationships through the export of commodities, arms, and nuclear technology.[7]
Since Vladimir Putin became president in spring of 2000, the Kremlin has backed the formation of "national champions" of the economy, state- or publicly owned corporate giants that are subservient to the government. Initially, the amalgamation of companies into big conglomerates was intended to help Russian companies compete successfully at home and abroad. But the massive corporations favored by the Kremlin soon became instruments of the Russian state's policy to dominate the national economy and to project its power abroad through a trade-based foreign economic policy.
These state and private corporate players are subject to the instructions of the government in both business and geopolitical priorities. So important are such strategic sectors like oil and gas or the military-industrial complex that, together with the big corporations that dominate these sectors-- Gazprom, Rosneft, LUKoil, and Rostekhnologii (Russian Technologies)--they constitute one of the pillars of the Russian state, along with the other pillars of power: the military, the intelligence services, the police and law-enforcement agencies, and the government bureaucracy.
Indeed, the Kremlin has been using energy exports as a tool of its foreign policy. The most notorious example of this practice is cutting off or threatening to cut off oil and gas exports to any country that adopts policies that go against Russia's national interests. A recent example was the September 1, 2008, announcement to reduce the flow of gas to the European Union, reportedly announced by the Russian gas monopoly Gazprom soon after the 27 EU member countries agreed to halt negotiations with Russia for a new partnership agreement. The EU measure came in response to Russia's war against Georgia in August.
In another example of the use of energy exports as a tool of foreign policy, Prime Minister Vladimir Putin, in a veiled threat to Europe, urged on the eve of the same EU meeting that the construction work on the East Siberia-Pacific Ocean (ESPO) oil pipeline, destined to export crude to the Asia-Pacific region markets, be accelerated.[8] The message was clear: If Europe does not want to buy Russian oil, Moscow can sell it to China, South Korea, and Japan. Currently, Europe imports from Russia a third of the oil and 40 percent of the natural gas it consumes.[9]
This is no coincidence, since Russia's global posture is directed by now-Prime Minister Putin and his associates--KGB veterans. As Putin's former economic adviser Andrey Illarionov described it, the Russian Federation is being run as a corporation.[10] Today, this "Russia Inc." operates essentially with a hierarchical structure in which Prime Minister Putin is the equivalent of the CEO and chairman of the board, with President Dmitry Medvedev as a member and chief operating officer. While President Medvedev is a civilian, Putin and many of his close allies are alumni of the Russian intelligence community. In a study conducted in 2006 by the Center for the Study of Elites at the Russian Academy of Sciences,of 1,016 senior government officials and elected members of Parliament, 26 percent belonged to the KGB or the post-Soviet intelligence agencies. That proportion grew to 78 percent when individuals with "unexplained gaps in résumés, unlikely career paths or service in organizations affiliated with the KGB" were included.[11]
More than five years ago it was suggested that up to 6,000 active duty and reserve members of the Russian intelligence community occupied positions of influence in the state.[12] It can be concluded that the alumni of the Russian intelligence apparatus control the state by controlling the government's civilian bureaucracy, the military, and the country's main economic sectors. As Daniel Treisman, professor of political science at the University of California, Los Angeles, pointed out, in Russia "the security forces' takeover of corporate boardrooms is coming to define Putin's regime,"[13] during his presidency and premierships.
Moscow business insider Oleg Shvartsman suggested that the goal of the members of the Russian intelligence services who occupy senior positions in the corporate world is to gain wealth for themselves in addition to global power for Russia through business expansion abroad. There have been revelations by a businessman managing the assets of members of the Presidential Administration from the so-called "siloviki" (men of power). These are officials with links to the FSB (the Federal Security Service and the main successor to the KGB) and SVR (the Foreign Intelligence Service, formerly the KGB's First Main Directorate) through the obscure Finansgroup company which claims assets worth around $3.2 billion.[14] Thus, huge amounts of money in the hands of the former members of the Russian intelligence apparatus could be employed for personal use, while vast state revenues can be directed to fund clandestine operations and other state activities.
Massive money laundering operations through the Bank of New York[15] and Republic Bank of New York are well documented and were the subject of congressional hearings.[16] According to publications in the Russian media, the Austrian Raiffeisen bank is reportedly involved in suspicious activities in the Russian gas sector and other questionable business transactions with ties to intelligence services.[17] Back in 2004, Czech counterintelligence sources revealed that the SVR invested "huge sums in local real estate, hotels, casinos, and entertainment complexes" in the Czech Republic, probably in order to obtain front companies for intelligence operations, to strengthen the SVR's (and the Russian state's) influence in the country, and possibly as alternative sources of funding outside of the regular control of the Russian leadership.[18]
It is little wonder that earlier last year U.S. Attorney General Michael Mukasey cited Russia and other Eurasian nations as places where "organized criminals control significant positions in the global energy and strategic-materials markets. They are expanding their holdings in those sectors, which corrupts the normal functioning of these markets and may have a destabilizing effect on U.S. geopolitical interests."[19]He revealed that the U.S. government has re-assembled its Organized Crime Council to combat a new "hybrid criminal problem" involving alliances between foreign intelligence agencies and criminal groups. Mr. Mukasey said law-enforcement officials have "grave concern" about "so-called "iron triangles' of corrupt business leaders, corrupt government officials and organized criminals."[20]
Beyond Personal Wealth
The Russian leadership's ambition surpassed the drive for self-enrichment a long time ago. Putin and then-Defense Minister Sergey Ivanov meant every word when they set the goal for Russia to become a world energy superpower. In 2006, Vladislav Surkov, Deputy Head of the Presidential Administration, aide to President Putin and ideological chief of Putin's regime, declared that "the idea of Russia as an energy superpower is…fully consistent" with the country becoming competitive economically.[21] Yet, ever cautious, at that year's Valdai Club meeting, President Putin rejected the idea that Russia wanted to become an "energy superpower," assuring the audience that his government wanted instead to provide stable energy supplies to world markets.[22]
A key instrument in the dream of Russia as an energy superpower is Gazprom, the world's largest gas company and Russia's state-owned gas monopoly. Gazprom was the Kremlin's principal tool in the two gas supply interruptions to Europe, which were triggered by the gas prices disputes between Moscow and Kyiv.[23] Gazprom is rated as the company with the highest capitalization in Russia.[24] It is intended to become the core of a gas counterpart to OPEC, and its close energy ties with Iran, which has the second-largest gas reserves on earth, threaten market access and competitiveness, especially in the liquefied natural gas (LNG) sector, and as a result, stability of the world economy.
The recent agreement between Russia, Iran, and Qatar to form a "Gas Troika" (in the works for at least a year and a half) that would meet several times a year, could lead to unfair business practices, such as "the exchange of information about prices, development schedules and investment plans."[25] Russia, Iran, and Qatar hold 56 percent of global gas reserves, and the Iranian oil minister declared in October of last year that the three countries have reached an agreement on the formation of a "gas OPEC."[26] Less than a week later, Alexei Miller, Gazprom's deputy chairman of the board of directors and chairman of the management committee, said that the Gas Troika could become a formal organization in November of 2008.[27] Later, Anatoly Yanovsky, deputy energy minister, disclosed that at a December 23 summit in Moscow, 16 gas-producing countries, including the host nation, plan to sign a charter establishing an "organization of gas exporting countries."[28]
A Perfect Storm.
The international financial crisis has seemingly put a stop to Russia's dynamic efforts to expand its economic interests worldwide. Prime Minister Putin wrongly blamed the U.S. exclusively for the meltdown, which since May has affected Russia's stock exchanges, the RTS and the MICEX, with Russia's indexes losing thus far as much as 70 percent of their value.[29]
Several observers pointed out that the Russian invasion of Georgia made the financial problem worse, triggering a further outflow of capital out of fear of instability. Other problems have combined to create a perfect financial storm against Russia: International banks called loans of powerful oligarchs who before the crisis and their loss in value used their company shares as collateral for foreign loans; and oil prices and those of other commodities fell, including metals, causing grave financial damage to Russian state financing.[30]
Russia's financial benefits accruing from foreign trade are altering its international behavior. In early August 2008, the Russian government's Reserve Fund and National Welfare Fund held the equivalent of $162 billion, while its hard currency and gold reserves summed their highest point on August 8--the day Russian forces invaded Georgia--with more than $597 billion, the third-largestreserves in the world after China and Japan.[31] By December 5, Russia's hard currency and gold reserves were down to $437 billion, yet they lost $31 billion in one week from October 17 to 24, and $17.9 billion in the week of December 5.[32] These reserves are expected to continue to decline as the Russian government uses them to rescue the national economy from the effects of the international financial crisis, and if oil prices remain below $70 a barrel.[33]
The effects of the financial crisis in Russia have left many Russian companies and banks unable to repay their foreign loans without state intervention. Thus, the Russian Central Bank has provided liquidity to Russia's state development bank, Vnesheconombank (VEB): $50 billion to help enterprises in financial trouble pay their foreign creditors. This situation is allowing the Russian government to take over failing banks and acquire stakes in struggling companies, strengthening the power and influence of the state.[34]
The crisis has also caused Russia's most powerful billionaire businessmen, with close links to the Kremlin, to incur combined losses of up to $230 billion. The one with the highest losses according to Forbes is Oleg Deripaska, who, until the crisis, was the wealthiest man in Russia and who had lost more than $16 billion by early October of an estimated $28 billion fortune before the crisis. Deripaska is the owner of RUSAL, the largest aluminum and alumina producer in the world.[35] Other examples include Roman Abramovich, who by the third week of October lost over $20 billion after his shares in steelmaker Evraz plummeted. The owner of steel producer Novolipetsk Steel (NLMK), Vladimir Lisin, lost $22 billion by early October, and the fortune of Severstal's Alexei Mordashov went down from $21.2 billion by March 2008 to $5.3 billion by early October.[36] LUKoil's owner Vagit Alekperov's value of his 20 percent stake in the oil company fell from $19.5 billion to $7.2 billion by early October.[37]
All these private-sector companies with close Kremlin ties are involved in international trade and investment activities, serving as sources of tax revenues and hard currency for the Russian state, and as tools of the Kremlin to expand Russia's influence worldwide. The Kremlin might use this opportunity as well to try to gain controlling stakes of private companies that are in financial trouble, thus expanding the state's commanding role in the national economy and in the long term give it further resources and power, enabling foreign adventurism.
Despite the fact that it will be cancelling plans for more drilling and oil refining, private oil company LUKoil still intends to buy a 30 percent stake in Repsol, the Spanish national oil company, as well as a refinery in Sicily, and is putting together a $1 billion loan for that purpose.[38] It seems that the national corporate champions, such as LUKoil or Gazprom might see their expanding investment plans at home or abroad shelved due to lower oil prices, yet this is likely to be a temporary setback, depending on how quickly the international financial markets in general and foreign investor confidence in Russia in particular recover.
Yet, Russian businesses are feeling the brunt of the crisis. The abysmal loss of value of Russian banks and companies' shares has led Bloomberg to declare the stocks of Russian companies as the cheapest in the world. Indeed, there seem to be fears in Russian nationalist circles that the low value of Russian companies' stakes could lead to free-for-all acquisitions of Russian stocks by Western financial interests. To avoid this outcome, the Russian state, through its banks like VEB and institutions like the Deposit Insurance Agency, is providing the loans and guarantees needed by Russian banks and companies in distress. It is also using them to take control of failed banks.[39] But even the Russian state itself could go broke if the price of oil continues to fall.
Budgetary Woes
This petroleum windfall is also being used to win the loyalty of some European politicians. Such arrangements benefit Russian energy interests, as in Germany with regard to the Nord Stream gas pipeline consortium chaired by former chancellor Gerhard Schroeder for an annual compensation of 1,000,000 euros (about $1,270,000 in U.S. dollars).[40] Nord Stream also hired the Finnish prime minister as a consultant, triggering concerns in Europe about spreading corruption.[41] An extremely expensive project, the Nord Stream pipeline would reach from Russia along the Baltic Sea bottom to Germany, bypassing the Baltic states and Poland and denying them transit revenue, with spurs to the Netherlands and France. In Bulgaria, Hungary, Serbia, and Austria, the planned--and even more expensive--South Stream gas pipeline would stop the EU- and U.S.-backed Nabucco gas pipeline, which bypasses Russia. The cooperation of Schroeder and Hungarian Prime Minister Ferenc Gyurcsany is key in implementing Russian projects that undermine Europe's security of energy supply.
The anti-competitive practices of Russian companies are spreading in the West and are undermining the rule of law as well as sound economic practices and business ethics. Gazprom, Rosneft, and their subsidiaries negotiate and make energy deals with foreign energy companies.[42] Such opaque business partnerships are shrouded in secrecy, politicize the energy business, and are devoid of free and fair competition. Worse, the opaque nature of such agreements between state energy companies leaves an ample margin for corrupt practices that violate both the law and business ethics. One notorious example are the allegations made against the Austrian Raiffeisen bank, which has been accused by the Russian press of participating in a money laundering scheme that sent capital out of Russia and that involved senior Russian government officials with links to oil companies and ties to the FSB.[43]
What Russia Wants: "New World System"
Russia needs its oil price to be at least $70 a barrel in 2009 to avoid falling into budget deficits.[44] Its recent talks with OPEC may be directed at coordinating efforts to reduce oil production and thus raising the price of oil, a goal also pursued in earnest by OPEC members Iran and Venezuela, whose national budgets depend on $70 a barrel to balance their budgets.[45] The budget deficit may also constrain some foreign policy tools Russia uses.
Attending an OPEC meeting in Vienna in September 2008, Russian Deputy Prime Minister Igor Sechin, a friend of Putin's, said that "OPEC is one of Russia's key partners on the global oil market" and that "it is very important for us to create mechanisms of regular dialogue" with the oil exporting organization.[46]
With Russia and OPEC responsible for a combined total of 51 percent of the world's oil,[47] Moscow's cooperation with OPEC to coordinate oil prices and production quotas would be a requisite for the further expansion of Russia's influence in the world. Even though the idea of Russia joining OPEC has been rejected by Russian officials, one of LUKoil's vice presidents declared recently that Russian membership of OPEC "will be only good for Russia" for "the future of the Russian industry and [oil] price stability."[48] Cooperation with OPEC and the formation of a gas cartel are consistent with one of the objectives enunciated in the recent Foreign Policy Concept of the Russian Federation, which announced that Russia "strengthens strategic partnership with the leading producers of energy resources."[49]
Russia aims to challenge the current international financial system dominated by the U.S. and Western industrialized countries. At the St. Petersburg Economic Summit in 2007, President Putin called for a new world economic framework based on regional alliances, relegating Bretton Woods-era global institutions like the International Monetary Fund and the World Bank to the sidelines. He demanded that the new system reflect the rising power of emerging market economies like Russia, China, India, and Brazil, as well as the decline of the established powers: the United States, Japan, and Western European countries.[50]
Moscow is establishing "favorable political conditions for diversifying Russia's presence in the world markets through expanding the export range and geography of foreign economic and investment links of Russia."[51] At the same time, the Kremlin is promoting a multilateral, state-driven approach to the international economic and financial system to regulate the free markets globally, and using the ruble as the dominant currency in the Commonwealth of Independent States.
Speaking at the recent conference on the international financial crisis in Evian, France, Russian President Medvedev said that "the formation of new financial centers and strong regional currencies will act as new stability factors" in the face of the crisis. While suggesting that the current international U.S.-based "unipolar economic model" is inefficient, Medvedev alluded to the "multi-polar nature of the world and the complexity of globalization." Medvedev is proposing that "the global financial architecture be changed, the role of the current international institutions be reviewed, and new ones created to guarantee stability."[52] "It will take years to shape a new world system," Medvedev said.[53]
Another goal seems to be replacing the dollar in Russia's international trade transactions. Putin has proposed this goal to his Chinese counterpart Wen Jiabao for bilateral trade between Russia and China, which was estimated to reach $50 billion in 2008.[54]
Russia is following a multilateral approach to challenge the current international financial and trading system, as part of its overall strategy of pursuing a multilateral world system, through the Shanghai Cooperation Organization,[55] OPEC, a new gas OPEC, or new international financial bodies that would include China, India, EU member states, and challengers of the established international order such as Iran and Venezuela.
Influencing the international prices of oil and gas would be key for the economic recovery of the country as well as for funding military and industrial modernization and economic development programs at home.
Before the international financial crisis hit Russia, an increasing share of its resources had been directed at the rearming of the military with modern weapon systems, and at increases in funding of the Ministry of the Interior, and of the security and intelligence services, such as the FSB domestic security service, the SVR foreign intelligence service, the GRU military intelligence, and the Border Guards under FSB supervision. Before the crisis, the Kremlin planned to raise defense spending by 50 percent over three years, deploy an army rapid reaction force at a high level of operational readiness, and construct new nuclear-powered ballistic missile submarines.[56] It remains to be seen if the government's financial stabilization efforts at home will reduce spending in defense as well as activities of the Ministry of Foreign Affairs and of Russian government propaganda and information warfare.
Arms Exports Boost Russia's Power
Russia is also a major world weapons exporter. The Kremlin aims to forge long-lasting military relations and strategic partnerships with foreign countries through the export of arms. Russia's military exports extend to Europe, the Middle East, Central Asia, South Asia (primarily India), the Far East (mainly China), Southeast Asia, Africa, and Latin America. To further centralize government control over the production of the military-industrial complex, the Kremlin has created an industrial behemoth, Rostekhnologii (Russian Technologies), which agglomerates 426 state enterprises. These include the defense export enterprise Rosoboronexport, the aircraft manufacturing, non-ferrous metals, and shipbuilding conglomerates to name just a few. Russia's titanium exports corporation, VSMPO- Avisma, vital for Airbus and Boeing, is now controlled by Rostekhnologii, which is planning to develop it into one of the largest non-ferrous-metals companies in the world.[57] Rostekhnologii will centralize the planning and production of the various enterprises under its umbrella. It could also attempt to marshal together its various resources and coordinate its efforts to become a formidable competitor in the international market for arms, metals, and aerospace technology.
What the Obama Administration Should Do
If Russia were a friendly Euro-Atlantic power, the United States would be no more concerned about its economic activity than about that of France. Russia's use of state-dominated businesses to enhance its geopolitical posture and gain dominance over U.S. allies' energy supply, however, should raise deep concerns in the Obama Administration and in European capitals. Free-market competition is and should remain a fundamental principle of U.S. trade policy; but America and its allies have a duty to their citizens to monitor, and, where necessary, prevent, any country's anti-market, political, covert, or illicit efforts to undermine our markets or our security, which Russia increasingly is aiming to do.
For example, Russian's growing control of Eurasian energy resources and exports to Europe through non-market means is both strategically and economically burdensome, as well as dangerous. To better ensure that the U.S. and its allies have access to the energy that fuels their economies and their militaries, to prevent Russian domination in strategic sectors, and to counter corrupt and criminal activities of Russian corporations and tycoons, the Obama Administration should take early action to:
- Ensure that CFIUS has the resources and support it needs to conduct its investigations according to the law. The U.S. should urge its allies to develop similar institutions and processes to perform their own national security evaluations and screenings.
- Increase cooperation among U.S. and allied intelligence services, law enforcement agencies, and independent experts to track Russian state and oligarch money laundering activities, corruption, and unfair competition practices. The Obama Administration should make the collection of actionable intelligence on questionable Russian activities by U.S. and allied law enforcement agencies a priority. Such intelligence is critical in gathering evidence necessary for achieving convictions in courts of law. Such intelligence includes, for instance, Russian banks providing credit card support for child pornography Web sites. The U.S. should exercise leadership in expanding international cooperation among law enforcement agencies to prevent and stop complex trans-border crimes, such as money laundering, and those that involve current or former Russian government officials; oligarchs with close ties to Russia's political leaders; intelligence operatives; and persons with ties to organized crime. When U.S. laws--such as the Patriot Act (especially Section 312, proceeds of foreign corruption), the Foreign Investment and National Security Act of 2007 (FINSA), the Defense Production Act of 1950 (DPA), money laundering laws, the Foreign Corrupt Practices Act, G-8 anticorruption initiatives, and similar laws in allied jurisdictions--are violated by Russian entities, the U.S. and its allies should not hesitate to vigorously prosecute the offenders and confiscate, through appropriate court proceedings, illegally laundered funds and properties acquired with illegally procured funds, and aggressively deny visas to those government and business figures involved in the illicit activities.
- Encourage U.S. and other multinational companies to compete in economically viable energy and infrastructure projects overseas through free-trade, diplomatic and security support, and regulatory and tax policies that will enhance free competition without government-directed investment decisions. U.S. companies should be encouraged to compete for the Libyan and Trans-Saharan gas pipelines, Turkmenistan's gas fields, and other geopolitically significant ventures, which Russia is targeting in India, Southeast Asia, Africa, and Latin America.
- Promote market-viable alternative energy sources and unconventional sources of fuels worldwide to counter strategic dependency on Russian, Iranian, and Venezuelan oil. This should be accomplished through deregulation and trade and tax policies that encourage innovation and investment to develop, and through commercializing new sources of energy that best meet the needs of individual regions and nations. Western economies will be better off by expanding the supply of transportation fuels and reducing their Russian energy imports, thus reducing the influx of revenue into Kremlin coffers.
- Expand security cooperation with Russia's energy-exporting neighbors and other countries that Russia is targeting for energy cooperation, including train-and-equip programs for military and security forces protecting pipelines, and officer corps education in U.S. military colleges. The U.S. should make use of NATO's Partnership for Peace program.
Conclusion: The Way Forward
Russia is being run as a corporation by the former senior members of the Russian intelligence community who strive to maximize profits and power, expanding global corporations for exports of raw materials and weapons. America's European allies and the newly independent states of Eurasia have already been subjected to Russia's heavy-handed policies and corrupt practices aimed at increasing their energy dependency, as well as a flurry of efforts to acquire critical infrastructure such as ports, pipelines, refineries, and energy distribution networks.
The Kremlin has made clear that it intends to diminish America's standing as a world leader by promoting a "multipolar" world, and using its military, economic, and "soft" power to re-establish Russia as America's near-peer competitor. The lower energy profits accruing to Moscow from the current global economic downturn can play a role in mitigating Russia's anti-status quo foreign policy, and slow down the growth and modernization of its armed forces. But the U.S. should not rely on these developments. The U.S. should develop comprehensive policies to handle Russia's economic power projection that is aimed at undermining American allies, power, and security interests, employing a mix of commercial, national security, intelligence, and diplomatic means.
Ariel Cohen, Ph.D., is Senior Research Fellow in Russian and Eurasian Studies and International Energy Security and Lajos F. Szaszdi, Ph.D., was a Consultant in the Douglas and Sarah Allison Center for Foreign Policy Studies, a division of the Kathryn and Shelby Cullom Davis Institute for International Studies, at The Heritage Foundation.
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