By Eric Vandenbroeck and co-workers

Predicting The World By Geopolitical Forecasting

It is commonly assumed that the world is unpredictable. The reason for this belief is the assumption that history is made according to the will of political leaders and that, to a great extent, they make their decisions freely. If that is true, then history has no inherent order. This is simply untrue. 

Nations comprise millions and sometimes even billions of people, all born, living, and dying in perpetual motion. But the sheer size of the universe of a nation and the necessities imposed by nature and other countries embed them in a matrix that can, in general, be forecast. We explain this in the multi-part laying out of evidence below.

The nation-state, the foundation of the current international system, operates on two principles. The first is that it is located in a particular place with borders. Over time these borders might change, but at any moment, it is geographically defined. The second principle is citizenship. With some exceptions, all those living for an extended time within the confines of the state are citizens and, as such, have obligations and rights to the nation-state. In very general terms, the citizens of a nation share specific characteristics, such as language and culture, and they have a common interest in the state securing its interests and security. This is a vastly insufficient definition of a nation-state, which is never culturally, religiously, ethnically, or demographically uniform. Even so, being aware of these distinctions and the importance of migration and non-state actors and many other things, this definition of the nation-state is helpful as the basis for forecasting.

 

Nations Have Interests

Nations have interests, the most important of which rests in three core dimensions. First, we call imperatives what a country must have to remain secure. The second is constraints or the limits imposed on nations. The third is power, or the means at their disposal to secure their imperatives and overcome their limitations. Power is multifaceted but can generally be grouped into economic, military, and political. 

This is easier to see through a real-world example. Consider Japanese-American relations before World War II.

The United States achieved its imperative to dominate North America and exclude any threats to the continent, insulating itself from invasion or dangers to its trade. Implementing this imperative required it to become the most powerful naval force in the Atlantic and Pacific oceans. It seized Spain’s holdings in the Pacific (the Philippines, Guam, and other islands) and the Hawaiian Islands. Its North American imperative may have been secured, but it rested largely on this Pacific framework. If an Asian power challenged the U.S. there, it could undo the whole experiment. Since the only power that could do so was Japan, Japan became Washington’s primary foreign policy issue. 

Japan was an isolated, non-industrial island when the U.S. and European powers began considering occupation. Japan’s imperative was to remain independent. From this imperative grew the need to develop the industry to ward off enemies. Its constraint was that it lacked almost all the minerals needed to operate the enterprise. Thus, Tokyo began to extend its political power to secure those minerals and developed a significant naval force.

The U.S. imperative was to prevent any power from dominating the Pacific. The American and Japanese imperative collided as the constraints imposed by each other grew. The U.S. sought to use economic power to force a political settlement with Japan. Japan understood this to be an attempt to force it into submission, which the U.S. needed to control Japan in the Pacific. The result was war.

This appears to be a simplistic explanation — and to some extent, it is — but this is built on extracting the essential and ignoring the peripheral. This requires more detail to explain the process geopolitically, but the point is that the U.S.-Japanese war was predictable and was predicted on both sides. The imperatives of each, and the constraints on other actions, created two powers incapable of agreeing to a political solution.

On the one hand, the application of the methodology is mechanical. Core elements of nations must be laid out next to those of others to predict their behavior. On the other hand, it must be more sophisticated, considering everything from domestic political imperatives to cultural constraints. But without a framework for understanding this, all the other dimensions become incomprehensible. Only then are we able to forecast.

 

3. The Global Model

The world is divided into two hemispheres: Northern and Southern. The Northern Hemisphere is dominated by two continents: North America and Eurasia. While the Northern Hemisphere contains about 67 percent of the globe’s landmass, it is home to 90 percent of the human population. As a result, actors in the Northern Hemisphere almost always drive geopolitical developments, while the Southern Hemisphere plays a more peripheral role.

 

4. The Northern Hemisphere

Northern Hemisphere Eurasia is the largest of these islands, stretching from Western Europe to China. The size of the isle segments it not only by nations but by civilizations. The eastern portion is dominated by China, and the western by a fragmented mass of Christian nations that have constantly waged war against each other. Between these two centers are somewhat isolated entities: Russia, India, and others. War and trade between the west and the east are difficult. They meet in the area south of the European grasslands, from Iran west to the Mediterranean. Eurasia — primarily western Eurasia, which dominated the Atlantic — invaded North America, South America, and Africa. 

North America is separated from Eurasia by the Atlantic and Pacific and South America by an isthmus. North America is unique in that it is somewhat compact, with minimal barriers blocking movement in all directions. The European invaders were, therefore, able to move rapidly westward. The key nation today, the United States, faces no challenges from within the island, making it unique. Also unique is America’s domination of the Atlantic and Pacific oceans, creating a barrier to attack Eurasia.                                   

Northern Hemisphere Eurasia is the largest of these islands, stretching from Western Europe to China. The size of the isle segments it not only by nations but by civilizations. The eastern portion is dominated by China, the western by a fragmented mass of Christian nations that have constantly waged war against each other. Between these two centers are somewhat isolated entities: Russia, India, and others. War and trade between the west and east is difficult. They meet in the area south of the European grasslands, from Iran west to the Mediterranean. Eurasia — primarily western Eurasia, which dominated the Atlantic — invaded North America, South America, and Africa. North America is separated from Eurasia by the Atlantic and Pacific and South America by an isthmus. North America is unique in that it is somewhat compact, with minimal barriers blocking movement in all directions. The European invaders were, therefore, able to move rapidly westward. The key nation today, the United States, faces no challenges from within the island, making it unique. Also unique is America’s domination of both the Atlantic and Pacific oceans, creating a barrier to attack from Eurasia.

 

5. The Southern Hemisphere

The Southern Hemisphere South America was invaded by Iberian powers, which destroyed the major Native American empires but faced enormous land barriers, such as the Amazon rainforest and the Andes. Like Eurasia, South America has land barriers that make unification and extensive combat difficult. South America cannot, therefore, project significant force outside of the continent. Africa is an island with deep geographic barriers, including deserts, rainforests, and grassland. It has never been able to unite under one power. Even when it was invaded and controlled mainly by the Europeans, much of it was fragmented between European and Arab powers to the north.

 

6. Contemporary Analysis

World War II redefined the global system. First, it deprived Europe of its control of the African island. Second and more important, it cost Europe major influence in the Atlantic and Pacific. Britain was forced out of its dominant role in the Atlantic, and Japan, an archipelago off the Eurasian coast, lost its role in the Pacific. The United States, secure on land, emerged from World War II with dominant control of both oceans. So as the United States retains this position in the oceans, it is invulnerable to attack and can control primarily maritime trading patterns. Eurasia seeks to limit the conflicts that cost it the oceans by integration (as in Europe) or by the emergence of powerful land empires (as with China). We are still working on this. The southern reaches of Eurasia, the area from Iran to the Mediterranean, are in the usual disarray that comes from being caught between the force field of Eurasia, west, and east. India remains isolated — and, in that sense, secure — by geography. The dominance of the oceans is key to national security and prosperity. At this moment, this power is in the hands of North America, and North America is in the hands of the United States. All of the models that follow pivot on this decisive fact.

Each element of time is nested in the last time element. The higher elements define the lower ones. The lower factors affect our personal lives more clearly than the higher levels, but the higher ones shape everything beneath. Thus, in forecasting, we must distinguish between a relatively minor pivot and a more distant era. We must look for the shift in the period, which comes far less frequently but is far more important than the constant bustles of pivots and even more important than the mere noise that permeates everything.

Time and place come together in something called the net assessment. The net assessment is a concept borrowed from Andrew Marshall, who headed the Office of Net Assessment at the Pentagon for decades. He focused on creating a net assessment of military forces by aggregating information of all types to arrive at a conclusion containing critical dimensions that must be considered and, more importantly, on the resulting strategy and outcomes. This method has been extended to all dimensions of the nation-state (political, economic, and military) to determine the imperatives driving them and to define relative power and strategies. For our purposes, net assessments will include countries and regions that are strong enough and geographically positioned to influence events.

Space constraints action and generates imperatives. Imperatives are what we must do. Constraints are what we are unable to do. The net assessment examines place and time and the imperatives and regulations that are the realities within which nations (and all of us) live. When we cannot do what we must, we fail. When we can, we succeed. If constraints and imperatives are understood and measured against time and place, we can grasp the core of the nation and its future. Hence the term, net assessment.

 

 

7. Regional Models

 

North America

Protected by the Atlantic and Pacific oceans, North America consists of Canada, the United States, Mexico — the three most considerable powers — and Central America and the Caribbean. The U.S. dominates the region thanks to its abundant natural resources and geographic advantages, making it less constrained than its immediate neighbors. (Canada’s climate, for example, prevents population spread throughout its territory, and Mexico’s fractious geography makes unified governance difficult.) This enabled the U.S. to develop a strong navy charged with protecting maritime approaches, which was critical for gaining and maintaining control of the Caribbean and Central America amid nearby European holdings. It was later expanded to include blue-water capabilities that enabled power projection abroad. The United States is the primary architect and chief beneficiary of the current world order.

 

Europe

Europe lacks impermeable geopolitical barriers but harbors various hostile nationalities, so European geopolitics is primarily an internal affair. Of course, there are significant exceptions, most notably Great Britain, which had the English Channel, and the Iberian Peninsula, which had the Pyrenees. The Iberians and British used naval power to circumvent Europe, focusing on the southern islands and the Asian periphery. Each was drawn into European conflicts that ultimately broke their power. Europe is no longer the imperial power it once was. Still, collectively it remains as politically, eco- comically, and militarily influential as ever, thanks in part to the European Union, an unprecedented experiment in geopolitical integration. Yet the fault lines that divide Europe never went away. Germany and France compete for the political leadership of the EU as they push divergent visions for the bloc’s political, security, and economic goals. Economic divisions pit southern states against northern ones, and there is a division between Eastern European members and Western members over Russia. Nationalism is rising as the EU fails to deliver on its promise of universal prosperity. 

 

Russia

At the heart of Eurasia is Russia, which is a land bridge connecting the Eurasia landmass from east to west. Russia is the dominant power in Eurasia, but it is susceptible to potential threats to its stability. Constantly drawn into peninsular wars and affairs, Russia historically sought alternative venues to power. Since Russia had limited territory east of the Urals, its interests were drawn southward. But, constrained by the maritime chokepoints that made its navy hostage to other powers, Russia has always had to shift its focus back to its west. Despite its apparent strength, the weakness motivated Russia to extend its influence throughout the region and thus insulate itself from outside threats. This strategy puts the area in a state of near-constant instability. It, therefore, strives to increase control over territories inside Russia and in its near abroad to pacify hotbeds of instability, strengthen the borders and increase military presence in buffer states.

 

Central Asia

Central Asia is a highly strategic location vulnerable to invasion. Its position in Eurasia makes it a crossroads for comparatively more powerful actors. As a result, developments outside the region are the primary force shaping Central Asia. What happens in the area can have spillover effects in Russia, western China, Afghanistan, and even the Middle East. Centuries of invasions and foreign rule contributed to the emergence of weak states with deep internal vulnerabilities. Central Asia’s modern-day borders were artificially drawn by the Soviets and did not strictly reflect ethnic or national divisions, so it is sewn with internal ethnic tensions. Geography and Soviet-era infrastructure contribute to ongoing tensions among the five Central Asian states. Competition over scarce resources, especially water, is at the core of the tension. Central Asia’s stability is now in question; the U.S. military has withdrawn from Afghanistan, and remittances from migrant laborers have declined as borders have become more difficult to cross during the pandemic. Russia leads the region’s stabilization efforts and appears to have contained significant security threats from Afghanistan for now.

 

The Middle East

This area is east of the Mediterranean and Red seas, south of the Caucasus, and north and west of the Arabian Sea. It is surrounded by deserts that are reasonably permeable. It is, therefore, the only other central global region that matches Europe in its ability to generate conflict between and within nation-states. Its rich history, however, is more recently overshadowed by colonial oppression, violence, and instability. No one power dominates the region. This generates competition among potential regional leaders (Turkey, Israel, Saudi Arabia, and Iran) and dynamic alliance systems. But as with all things Middle Eastern, nothing is static. Whereas the region once was broadly aligned between Israel and Arab countries, there is now an emerging Arab-Israeli alliance to confront Iran and Turkey. With efforts to diversify its economy and collaborate with Israel on regional trade and technological developments, the UAE is starting to cast a shadow over the Gulf’s de facto leader, Saudi Arabia, and position itself as the Gulf’s primary power. Competition over energy sources and maritime rights in the Eastern Mediterranean is beginning to define Middle East alliances, with Israel and southern European and Gulf countries coming together to counter Turkish assertiveness. 

 

South Asia

South Asia is its geopolitical microverse: a densely populated region home to India — one of the world’s fastest-growing consumer markets and its largest democracy — a variety of militant movements, religious nationalism, abundant natural resources, and prized access to the oceans’ busiest sea lanes. Mod- ern India is the center of gravity in South Asia. The country is both a nation-state and a confederation of hostile regions forged by British imperialism. It is insulated from foreign land threats but constantly manages internal stresses. It, therefore, gives comparatively less attention to foreign threats, save for Pakistan and the Indian Ocean Basin. (Pakistan, like India, is a nuclear power, and the two hate each other.) India fears being encircled by China, mainly if it involves improving ties with Pakistan. The country has several latent geographic advantages, owing largely to its position astride the world’s busiest sea lanes. It is trying to focus more on projecting power in the maritime realm.

 

East Asia

The most populous region on the planet is now also the most geopolitical-ly dynamic, thanks to decades of rapid economic growth and to an alliance network that helps give the U.S. control of the Pacific Ocean. China is the center of gravity in this region. It is a confederation with a single dominant majority from which it draws power. Modern China is secure from attack from Eurasia but vulnerable to at- tack from the sea. It has never had naval interests but has never been as dependent on the sea for trade as it is now. China’s rapid rise brought to the fore persistent vulnerabilities. The central government faces regional threats often aggravated by domestic economic disparities. China’s ability to weaponize regional dependencies on its economy, as well as the U.S. withdrawal from regional trade frameworks and mixed signals on military commitments, is generating strategic paralysis among China’s neighbors. Secondary regional powers are slowly developing security and trade frameworks to curb Chinese leverage.

 

South America

South America is peripheral to the global system because it is physically far removed from major trade routes in the Northern Hemisphere. Prominent geographic barriers keep intrastate warfare at bay, so security threats are primarily internal. The geographic barriers and long-term impact of colonial governance on political systems and economic development have made it difficult for a country or the region to amass enough political and economic weight to project power beyond its borders. Brazil has the most potential to be a regional power thanks to the size of its territory, population, and natural resource deposits. But internal economic disparities and no direct access to the Pacific leave the country constrained. Further constraining the region is the fact that the Western Hemisphere has dominated the United States since the start of the 20th century. South America thus has little influence in global events, even though it often feels its consequences. 

 

Sub-Saharan Africa

With its countless ethnic groups, tribes, languages, and nations, sub-Saharan Africa is immeasurably diverse. But the countries here share a history of foreign exploitation and thus a legacy of endemic poverty, corruption, and stifled political development that often prevents them from capitalizing on their economic potential. (The one thing African nations tend to agree on is that they should not be colonial subjects again.) And because outside powers will always be drawn to the promise of the region’s resources, sub-Saharan Africa will be defined by the competition between these powers. Each one competes differently. China, for example, offers more economic benefits than, say, Russia. The Horn of Africa is currently the most relevant part of sub-Sahara Africa to the global system, thanks to its proximity to the Strait of Hormuz. Ethiopia is the dominant country in the region but still working to overcome domestic constraints and, thus, not entirely throwing its weight around.

Against this backdrop, we can formulate current net assessments for individual countries within their respective systems/regions, particularly nations with some potential global effect.

The U.S. political system is under severe stress, with the country deeply divided over socio-economic issues. Dealing with these issues will absorb much of the government’s time but not wholly constrain it from interacting with the rest of the world. (Historically, the U.S. has shown an ability to maintain consistent foreign policy even when faced with the internal disorder.) Europe is divided and weak, but Russia cannot dominate Europe. Therefore, the U.S.’s main focus in foreign policy rests on countering China and preventing China from breaking out of the Pacific. To accomplish this, the U.S. must rely on participation from allies, even as it continues to use economic power over military warfare, draw down forces from the Middle East and work to contain Russia.

Mexico’s political system suffers from an internal power struggle emerging be- tween some state governments and the federal government. The division is more than partisan politics; it falls along geographic lines between more developed states in the north and less developed states in the south. Though the government continues to grapple with limited financial resources, a high debt-to-GDP ratio, pension reform, and some degree of energy self-sufficiency, its economy remains locked in with the United States. Domestic insecurity is still a problem. Mexico City relies on the military again for security operations as vigilante groups exercise their will in specific locations. From the south, Mexico faces periodic waves of Central American migrants seeking passage to the US as they try to leave harsh economic and security conditions in their home countries.

Located in the center of Europe, Germany is the economic engine of the European Union and arguably its political leader. It is politically stable but, in recent years, has been worried about immigration. Germany currently faces no military threat, so maintaining its free trade zone is paramount since growth depends mainly on exports. But Berlin finds it more challenging to strengthen trade ties inside and outside the EU when business activity declines. Trade relations outside of Europe with places such as China, Iran, and Russia are hindered by the threat of U.S. sanctions, but the need to supplement other markets is essential for Germany. 

The U.K. is preparing for life after Brexit. There is yet to be an actual settlement. The Northern Ireland question is largely re- solved, but questions about implementation remain. Farther afield, London is focused on economic alternatives to Europe. A handful of trade deals are in place (Japan, Canada) essentially to preserve relationships the U.K. had as an EU member state, with several others in the pipeline. The U.K. is attempting to strike a free trade agreement with the U.S. (as well as with Australia and New Zealand) in exchange for alignment with U.S. security activities around the world. Complementarily, the U.K. is starting to realign its military capabilities. 

Poland, an emerging power in its own right, is sandwiched between two much stronger powers: Germany and Russia. This forces the government in Warsaw to maintain relations with another great power able to reinforce Poland, at least if worse comes to worst. Poland is, therefore, deeply engaged with the U.S., which has increased its presence on Polish territory. Poland is generally not satisfied with EU policy, especially plans to link funding distribution with democratic standards set by the bloc, but is economically and financially dependent on Europe. Poland sees instability in Belarus and Ukraine as an opportunity to contain Russia, and so begins its slow emergence as a leader in Eastern Europe.

Northern, central, and southern Italy differ economically, so the COVID-19-induced slowdown is affecting the coun- try unevenly. For example, south Italy, characterized by high unemployment and a large informal sector, is at high risk of growing poverty. Italy has one of Europe’s most indebted governments; its financial sector remains volatile and rescuing banks during an economic slowdown is exceptionally challenging. Generally speaking, Rome is split over economic and financial measures. It wants more financial flexibility but cannot dictate terms to the EU. The financial inequity, a scramble over funds, and delays in EU financial allocations have created cross-party frustration with the EU. Eurosceptic movements in Italy exist, but they haven’t gained much momentum; instead, Italy is taking a more assertive role in the EU by leading disgruntled southern/Mediterranean members in opposing the northern bloc.

Russia’s economy, which relies heavily on oil and natural gas, is in trouble. So long as the oil market is unstable, Russia’s economy will be as well. The state has had to intensify spending on social benefits and stimulus as economic hardships mount, but it still has significant cash reserves. Even so, with poverty growing and the standard of living deteriorating, the population will soon begin to question why the government continues to spend on campaigns abroad when things are bad at home — if it hasn’t done so. Moscow, however, believes it has little choice in this regard. Its buffer zones (which now include the Arctic) are too important to ignore, hence the frozen conflict in Donbas, the support of Belarusian President Alexander Lukashenko, the growing threat to central Asia from Afghanistan, and the deployment of troops to the South Caucasus. These moves fulfill Russian security needs but bring Moscow into direct conflict with Turkish interests. (This is also true of Chinese goods in Central Asia.)

The Communist Party of China is grap- pling with some of the most intense political and economic pressures it’s faced since 1989. There have been very few signs of persistent discontent among the masses since it succeeded in containing COVID-19 at home, and little ability for dissidents to mobilize amid Beijing’s lockdown measures. There also have been very few signs of a significant power struggle at senior levels, despite President Xi Jinping’s moving aggressively to consolidate power ahead of the next Party Congress and launching ambitious regulatory offensives against tech and other sectors. China’s quick eco- nomic rebound bolstered the CPC’s narrative at home, as did Western countries’ comparatively more significant difficulties managing the pandemic. But China has not proved immune to external forces, with global supply chain and inflationary pressures threatening to derail the domestic economic recovery. Moreover, Beijing’s aggressive moves to reform the property sector has put the country on the brink of a nightmare-scenario financial crisis. 

The fallout from the pandemic has intensified trade tension with the U.S. but has also limited the ability of either side to use economic weapons to hurt the other. The focus of U.S. financial pressure has shifted from trade to emerging technologies and finance. Nonetheless, the pair remain locked in a volatile economic marriage, while strategic tension between China, the U.S., and its allies have only intensified. To sustain support from the People’s Liberation Army, the party machinery, and the public amid these pressures, Xi’s government has been forced to lean more heavily on nationalist shows of strength in its periphery. This includes intensified operations around Taiwan aimed at making Taipei think reunification is a fait accompli. But it also has more than mere rhetoric. China is building a defensive, anti-access/area denial buffer in its periphery. This shows China is betting on asymmetric capabilities and next-generation technologies to offset its conventional military shortcomings. China is also activating forces in disputed waters to force weaker neighbors to negotiate on its terms, even as it tries to build a network of naval bases throughout the Indo-Pacific.

This past year Australia faced punitive economic measures from China, such as import bans and cutting off investments and students. The country is politically stable but deeply internally divided over how aggressively to confront China. It’s laying the groundwork for more robust cooperation with Quad partners and others in the West — as illustrated by the landmark AUKUS deal with the U.S. and the U.K. — and it’s more aggressively pushing back on Chinese influence in the South Pacific. Australia is also reorienting its military forces to more aggressively contest chokepoints on the southern end of the first and second island chains and probe deep into the South China Sea.

Japan was falling into a recession even before the pandemic. Now it’s grappling with an array of economic pressures: the loss of export demand, spats with South Korea and China, demographic pressures, etc. Japanese high-tech industries are also losing competitiveness to South Korea, China, and Taiwan. Even so, Japan remains politically stable. It managed a generational transition of power without much drama. Political pressures from Japanese nationalists and pacifists continue complicating Japanese decision-making, as do Japan’s rising fiscal constraints. This is seen in the slow but steady pace of Japan’s development of power projection capabilities. Since it needs to do more to look out for its vital sea lanes, Japan is becoming increasingly active in Southeast Asia and with Quad partners. Its primary focus is keeping the U.S. close.

The pandemic has shattered India’s economy and prevented it from taking full advantage of the modest shift in global manufacturing away from China. The Modi administration attempts to modernize the nation by consolidating control over the Hindu core. India remains beset by persistent low-level chaos resulting from its deep internal schisms and socio-economic pressures. Deep-seated federalism tends to impede needed economic and legal reform. India is trying but mostly failing to shift its focus away from land-based threats to its more vital sea lanes. (This is compelling its crackdown in Kashmir, as it tries to secure that particular frontier.) To that end, it’s deepening its military cooperation with other maritime powers, particularly Quad and littoral states in Southeast Asia, East Africa, and the Red Sea. It’s also accelerating work on critical basing infrastructure near maritime chokepoints.

Turkey is trying to reclaim influence in areas formerly under the Ottoman Empire and to become a commercial power again. However, the long-term economic crisis and associated political opposition undermine its campaigns in the Caucasus, the Levant, North Africa, and the Eastern Mediterranean. The government in Ankara is thus narrowing its interests, straying from Libya, northwest Syria and the Horn of Africa while keeping a steady foothold in the Eastern Mediterranean.

With mountainous terrain and limited access to the Indian Ocean, Iran has difficulty reaching its periphery. The narrowness of the Strait of Hormuz and the proximity to Gulf rivals prevent Tehran from being a true naval power. Iran, therefore, resolved to build influence westward into the Eastern Mediterranean to become a maritime power. With a weak economy and second-rate conventional military capabilities, Iran projects influence through Shiite proxy networks and asymmetric warfare, building a campaign that extends from Iraq to Lebanon, Syria, and the Palestinian territories. It’s a fragile network that butts up against a hostile power in Isra- el. And while it seeks to create instability abroad, Iran endeavors to maintain stability at home, even if that means cracking down on opposition forces.

Israel is starting to adjust its foreign policy to focus on tactical challenges instead of existential threats. Foremost among them is Iran, which has carried out a campaign in the Levant to counter Iran-backed militias. Its budding regional alliance with Arab nations gives it even more leverage and allows Israel to assert more excellent leadership in the Middle East. Emerging Gulf-Israeli peace also shifts regional attention from the Israeli-Palestinian dispute to the Israeli-Arab front against Iran. 

Brazil’s economy was poorly positioned to withstand the pandemic. Inflation and interest rates are rising while the middle class is shrinking. The country had to postpone several structural economic reforms planned for this year. Politically, the population remains divided on opposite ends of the spectrum, even though small efforts are being made to establish a political coalition closer to the center. Trade and outside investment, which are increasingly difficult to come by, remain key pillars of economic recovery, so relationships with other Latin American countries have primarily taken a back seat. (Brazil must deal with its neighbors but no longer sees them as a means for pursuing Brazilian interests.) Brazil is more directly engaged with balancing its relationship between the U.S. and China. Ties with Europe have soured recently over the management of Amazon, and this has slowed trade and business ties.

 

Global Tensions

Tensions and conflict can arise between geopolitical systems and within geopolitical systems when the players involved act to satisfy their competing needs.

The central actor in the global system is the United States, the dominant North American power and the only one native to both oceans. The U.S. can preempt threats in the Eastern Hemisphere or defend the oceans as it sees fit. Its core interest is controlling the sea lanes, so it adopted a strategy focusing on the littoral of Asia and the European Peninsula. The position between the two oceans protects the continent and prioritizes naval power.

This past year two issues have defined Europe’s behavior. One is maintaining internal cohesion while avoiding the large-scale conflicts it has succumbed to many times throughout history. The current solution is the European Union, which primarily fosters economic cohesion. The second issue is Russia, which is more or less threatening depending on a country’s proximity to and economic dependence on it. This divides Europe and opens the door to the conflict it wants to avoid.

In its turn, these past few years, Russia has been trying to maintain its balance between internal economic pressures, low-level threats from the European Peninsula, and the United States. Russia’s diverse population and its geopolitical imperatives instilled in Moscow a fear of outside forces that would seek to destabilize it. Hence, Russia preserves a buffer zone around its borders at vulnerable points (Eastern Europe, the Caucasus, etc.). Maintaining relations with China is secondary since the two are already widely separated geographically by grasslands and Siberia. China’s potential value for Russia lies in its ability to serve as a significant consumer of Russian energy, especially as some European countries rethink their supply lines. Russia still wields more influence in Central Asia than other countries and is therefore looking for an accommodation with some peninsular powers to balance its economy.

China has been trying to solve its historical problems: how to sustain trade with Europe over land and develop a more efficient sea route under its control. Through the centuries, China solved the problem by transferring goods to intermediaries via ground and limiting its sea operations. Today, it is exploring both possibilities, which brings it up against the U.S. Navy. The efforts have historically been preempted by internal conflicts that China is now suppressing.

India has been exploring opportunities created by U.S.-China tensions. India remains beset by, but also relatively at ease with, constant low-level chaos resulting from its deep internal schisms and socio-economic pressures. The dependency on federalism to manage its affairs impedes needed economic and legal reforms. It cannot allow internal divisions to be exploited by external powers and seeks to alleviate social pressures through economic growth and development. Its economy is less export-oriented than China’s and has room to grow. It is strategically secure, thanks to its geography and the comparative weakness of Pakistan. Facing a limited threat from China, India is exploring developing military cooperation in the Pacific with the American alliance while maintaining relations with Russia.

The Middle East is built on non-strategic competition. National and subnational groups interact based on tactical needs and sometimes even narrower considerations—ethnic or affiliation, political persuasion, familial links, etc. The major regional powers are Israel, Turkey, and to a lesser extent, Saudi Arabia and the UAE. Neither Israel nor Turkey has the appetite to make the region coherent beyond aligning with special regional powers. Turkey — situated between Europe, Asia, the Mediterranean, and the Black Sea — is compelled to manage competing forces in its periphery. It has rivals in all directions and an imperative to retain control over the Bosporus Straits. Israel must maintain relations with at least one militarily significant power for its security. Hence, it has a military edge in the Middle East and can keep Russia as a cooperative regional power.

 

Update 2 August 2022: Tunisia’s President Tightens His Grip On Power

In July 2021, Tunisian President Kais Saied staged a presidential coup, fired Prime Minister Hisham Mchichi, suspended the parliament and ruled by decree, arrogating broad legislative and executive powers. He ordered the army to surround the parliament, stopped paying the parliamentary deputies' salaries and rescinded their immunity from prosecution before jailing a few of them, claiming they had attacked police officers. Saied accused them of launching a coup when, in defiance of his suspension of the parliament, they held an online session. He put them under investigation, saying there was no turning back to anarchy.

Two months later, Saied appointed Najla Bouden, a geologist and educator, to the office of prime minister without seeking the parliament's support as mandated by the constitution. Bouden was the first woman to reach such a high-level office in traditionally male-dominated Arab polities. Saied chose most of her Cabinet members and instructed them to submit their reports directly to him.

Saied based his political doctrine on the notion that people should rule themselves by themselves, adopting policies similar to former Libyan dictator Moammar Gadhafi, whose regime collapsed disastrously, leading to the country's disintegration. Saied did away with Tunisia's nascent democracy, reinstated the autocratic rule of former Presidents Habib Bourguiba and Zine El Abidine Ben Ali, and announced his intention to draft a new constitution to replace the one adopted in 2014. Saied justified his drastic move by saying it was necessary to salvage politically crippled and economically stagnant Tunisia.

 

Saied's Policies

The Tunisian people expected the overthrow of Ben Ali in 2011 to remedy their economic woes and lead to democratization. Instead, they lost faith in the political system and started to yearn for the era of Bourguiba and Ben Ali. The new political class let them down and failed to govern, forming 13 governments between 2011 and 2020, further worsening the economic situation and compounding the political impasse.

 

 

Update 3 August, 2022: America, War, And The Atlantic

On Aug. 1, 1914, Germany declared war on Russia. Two days later, Germany declared war on France. The following day, Britain declared war on Germany, and then on Aug. 6, the Austro-Hungarian Empire declared war on Russia. Within a week, Britain would declare war on Austria-Hungary.

Germany unified in 1871, and in doing so emerged as an economic powerhouse. It rapidly outstripped France, and by the end of the century it was challenging Britain. With economic growth came power. Germany was aware of the anxiety it was creating in Europe, and it reasonably believed that a simultaneous attack by Britain, France and Russia would crush it. It chose to launch a preemptive war, assuming this would throw them off balance and set the stage for a negotiation guaranteeing Germany’s status. The Austro-Hungarian Empire saw value in its relationship with Germany and opportunities to expand into Russia. The British declared war on Austria-Hungary to give Russia a sense of being part of a powerful coalition and to prevent a Russian truce with Germany.

Which is all to say that the assassination of Archduke Franz Ferdinand didn’t trigger the war; the war had been well planned by all the parties over the years. The killing was simply occasion to begin the planned operations. The war was hardwired – like many wars, it was expected to be a short affair. It wasn’t. No one trusted the other enough to make concessions needed to wage peace, and as a result somewhere between 15 million and 20 million people died.

The United States got involved in 1917, after the Russian czar was overthrown. The Americans feared that Russia would abandon the war and that German troops would be massed in the west, with France overrun and Britain facing the German navy. Washington feared that a victorious Germany would come to dominate the Atlantic and threaten the United States. When German U-boats sank the Lusitania, American fears were confirmed. U.S. troops were sent to France, where some 100,000 were killed. The U.S. did not itself win the war, but it prevented the Anglo-French alliance from losing it. Afterward, the U.S. withdrew from Europe, assuming the defeat of Germany had ended the tale.

Of course, European tales do not end so neatly. In the 1930s, Germany rearmed, then conquered France and invaded Russia. The United States followed the World War I strategy, focused on retaining control of the Atlantic. It supplied Britain with the means to wage war in the Atlantic, in return for Britain leasing most of its bases in the Western Hemisphere to the United States and guaranteeing that, in the event of British defeat, the British fleet would sail to North American ports. Washington did not get involved in European operations until 1943, and not in decisive operations until 1944. For the United States, the European peninsula was a means to defend the Atlantic, which could shield it from foreign attacks, not in itself crucial to its national security. About 50 million people died in the war.

This time, the U.S. did not withdraw when the war was over. It saw a threat from Russia forming and, having lost confidence in the ability of the Europeans to defend themselves, saw itself as Europe’s security guarantor, not as an act of chivalry but as a means of maintaining primacy in the Atlantic. Most saw the Cold War as a potential land war against Russia. This misses the strategic point. Europe could not defend itself, and the full force needed to block a Russian attack couldn’t be stationed there. In the event of a Russian attack, the U.S. would send large convoys of men, equipment and supplies, and the convoys would continue to supply NATO forces throughout the war.

The primary Russian strategy would be to destroy or block U.S. shipping across the Atlantic. A submarine force and long-range, supersonic aircraft were deployed to carry out the mission. The U.S. prepared a force of aircraft carriers, anti-submarine systems and anti-air, anti-missile systems to protect the convoys. If the Russians closed the Atlantic, they would win the war. If they did not, they would lose it. The first significant battle would not be in Germany but off the Icelandic coast.

In each of the world wars and then in the Cold War, command of the Atlantic was critical, both to project forces to Europe and to block potential attacks on the American mainland. The fear was that a European power might defeat its enemies and take advantage of European technology and production to create a fleet that could challenge the U.S. in the Atlantic. It seems like a far-fetched threat now, but Woodrow Wilson, Franklin Roosevelt and every president who held office during the Cold War understood that the oceans were American essentials, even in a nuclear war.

The U.S. drew several conclusions from the two world wars. First, Europeans cannot be trusted to create a prudent defense – nor avoid devouring themselves. Second, it learned that in the end, Europe's irresponsibility would force the U.S. to become involved. Third, wars that appear to be short will turn out to be long. Fourth, the possibility of a threat to the Atlantic as a byproduct of continental war is real. Fifth, early intervention in wars will save American lives, while late interventions will cost them. And finally, in all wars there is a threat to the Atlantic and therefore to the homeland.

Once a European power becomes militarily aggressive, it is forced to become even more aggressive after a victory because the next danger is just over the mountain. Ultimately, the U.S. will be forced to be in Europe. Whether leaders see this I don’t know, but if they are acting only by habit in Ukraine, it flows from American grand strategy. Habit is a substitute for strategy when the rules don’t change.---

Update 28 December: In Cuba, Russia Explores Counter Thoughts in and around geopolitics.

Russia announced that President Vladimir Putin would have an important phone call later in the day without revealing whom he would talk to. To the surprise of many, it was Cuban President Miguel Diaz-Canel. The subject of their conversation was energy and industry. Though they may well have talked about both, the suspense Moscow built around the conversation suggests the call was more important than the buying and selling of crude.

I’ve written before about how important Cuba is to U.S. security. It’s why Washington has been obsessed with Cuba since Theodore Roosevelt and the Rough Riders and why the Cuban Missile Crisis was in Cuba and not elsewhere. Back then, the threat was over Russian nukes in Cuba. Today that is not a threat, as both sides have intercontinental ballistic missiles. But there is another threat. This time, the danger is blockading ports along the Gulf of Mexico – places such as Beaumont and New Orleans – that are utterly vital to U.S. trade.

Blockading these ports would deal a severe blow to the U.S. economy. Cuban waters between the United States and Mexico are relatively narrow waterways that could be closed by submarines, aircraft, and anti-ship missiles launched from multiple platforms. It is one of the most vulnerable and valuable chokepoints in North America. I suspect this is what Moscow secretly had in mind in the early 1960s.

Either way, Russia has been fixated on Cuba for decades. For Moscow, Cuba was the key to Latin America and, as necessary, a perpetual irritant to the United States. Today, the United States supports Ukraine, overseeing blockades on dollars and goods and holding a force on standby in the Mediterranean Sea. Russia desperately needs a counter. Using nuclear weapons against the United States would result in the near-immediate death of Russian leadership. Economic pain inflicted in Cuban waters may be just what Moscow is looking for.

None of this means a blockade would succeed, even if it were imposed, far from it. All the phone call means is that the U.S. would have to dust off old contingency plans – of the economic costs of Russian blockades, the risks involved in countering that blockade, and so on. Conversations may go from how to further damage Russia to how much damage Russia might be able to impose. It’s less than Russia needs to inflict, but the psychological impact of a Russian force off the U.S. coast could generate a shift in U.S. psychology. The Russian influence would be vulnerable to decimation by U.S. forces, but during that time, they could launch conventional weapons at the U.S. But even then, that would not be the goal; the goal would be to redefine the U.S. perception of the risks it’s running by antagonizing Russia.

Cuba, for its part, still reeling economically and feeling embattled by the U.S. as a matter of habit, would welcome Russia. Cuba mattered when the Russians were there, far less with Russia distant. For Havana, a battle pivoting around them is valuable. For Moscow, it would provide home ports. For Washington, it would provide targets.

I doubt the Russians will go this far, but they urgently need a tool to make the Americans see war with Russia as risky. Putin wanted to put this possibility on the table. Even if Russia and Cuba only talked about energy and industry, it might create a threat, and that was certainly worth a phone call.----

 

4 August 2022:

The global population is expected to reach 8 billion later this year.

Over the long term, demographics affect geopolitical trends and state behavior. Population size has implications for public pension systems, economic growth, food demand and more.

In November, the global population is expected to reach 8 billion, before climbing to 9.7 billion in 2050. India will also soon surpass China as the most populous country. Global population growth, however, is slowing. Two-thirds of the population shows lifetime fertility below the 2.1 mark per woman needed to support population growth. That said, longer life spans are also a notable contributor to global population growth. There are roughly 771 million people over the age of 65, triple the number in 1980. This figure is expected to grow in the years ahead, particularly in East Asia, Southeast Asia, Europe and North America.

It's also important to note differing trends around the world. The states of the Baltics and Balkans, as well as Japan, account for the 10 sharpest declines in population in coming years, ranging from 16 percent to 22 percent. Sub-Sahara Africa, on the other hand, will account for more than half the world’s anticipated population growth to 2050. The countries leading global growth include the Democratic Republic of Congo, Egypt, Ethiopia, India, Nigeria, Pakistan, the Philippines and Tanzania.---

 

 

Update 6 August 2022: Russia's New Maritime Strategy

On July 31, just before the start of a naval parade, President Vladimir Putin approved Russia’s new maritime doctrine, replacing one that had been in place since 2001 and amended in 2015. The new document states outright that America’s dominance of the world’s oceans is a primary threat to the Russian mainland, and more clearly outlines Russia’s economic and strategic interests with regard to the seas.

The timing is hardly coincidental. Sanctions imposed after Russia’s invasion of Ukraine have negatively affected value chains and have hindered Russian trade with traditional Western partners. (Cargo turnover in Russian seaports is expected to fall by as much as 50 percent, curbing the export of coal, grain, oil products, fertilizers and liquefied natural gas in a country whose budget depends heavily on exports.) The war, and in particular the destruction of its third largest warship in April, convinced Russia that it needs to decommission its older ships in favor of more modernized ones.

The increased presence of hostile forces would worry any country, of course, but Russia is particularly sensitive to these kinds of naval matters. In fact, it’s helpful to think of Russia as a landlocked country. Despite its long maritime border and proximity to the seas, Russia does not actually have direct access to the open oceans – hence why it is so active in the Black Sea. It lost a lot of its port infrastructure, and thus a lot of its entree to trade routes, when it lost its Soviet satellite states. Put simply, Russia requires a strong naval strategy to compensate for what it lacks in maritime access, which it correctly sees as a strategic vulnerability. For Russia, being able to unlock the ocean is a way to forestall the strangulation of its economy and the isolation of its people.

 

 

 

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Update 8 August 2022: The Fallout Over Taiwan

U.S. House Speaker Nancy Pelosi’s recent visit to Taiwan predictably sparked outrage in China, which responded by flexing its muscles through some not-at-all subtle military exercises. The two important questions here are why did Pelosi go to the island in the first place, and why does Beijing care enough to deploy its fleet?

The Pelosi aspect is far more interesting but much less important. We don’t know exactly why she visited Taiwan. Some claim she went because of her long-standing opposition to Chinese human rights violations, rooted in an increasingly Chinese electoral base in her district. Others claim that she felt there was nothing to lose if the Republicans take back the House in November. Some accounts say she went in defiance of the Biden administration, while others say she was an agent of the administration. One argument goes that the administration thought that a provocative visit by someone not technically in the administration, and therefore deniable, would move the Chinese in U.S.-Chinese negotiations, by showing that the U.S. was prepared to be assertive.

Whatever the case, her visit triggered a very loud but fairly insignificant response from China. A great many ships and planes fired a great deal of ordnance, none of which struck Taiwan or a hostile vessel. The response demonstrated that China does, in fact, have a navy, but it did not show how the balance of power might change if Beijing, for example, shot down an incoming missile while forcing a U.S. submarine to surface.

Beijing has issued repeated warnings on Taiwan, but over time such warnings lose their meaning. So they capitalized on Pelosi’s visit to increase the volume of the warning dramatically. The size of the force displayed and the expressions of China’s rage gave a sense of apocalypse, generating the specter of Chinese power and denoting Beijing’s intentions that such U.S. provocations may elicit. It also created a sense among Americans, reasonable or not, that China is a force that might not be contained. For Beijing, the stakes were low. If it failed to deliver any of these messages, little was lost.

More important is that China canceled several of the channels that were connecting China to the U.S., causing Washington to complain about their closure and thus making the administration appear to need them. This is no minor feat. Exports are the backbone of the Chinese economy. For all the tension between the United States and China, the United States purchases over 17 percent of Chinese exports, making it the largest purchaser of Chinese goods. China is going through a significant economic crisis, one that is accompanied by increasingly aggressive actions against officials who don’t toe the line, and it is enduring increasingly difficult efforts to find other customers. President Xi Jinping is facing questions about his stewardship, the future of which may be revealed at the all-important Party Congress in November.

Xi simply cannot risk a significant break with the United States right now. He has no lever with which to punish the United States economically. The United States, on the other hand, has at least two: cutting imports from China, and threatening its many dollar-denominated dealings. China is aware that the first line of any battle plan is the use of economic sanctions, and now would be a particularly bad time for them. It’s the last thing Xi needs before the November meeting.

Of course, it’s true that a war over Taiwan could distract the Chinese population from their economic woes. The Chinese are patriotic, and thus may be well prepared to accept war’s hardships. And it’s certainly possible they see Xi’s military drills as a sign of strength. The problem is there’s no guarantee China would win. China could invade Taiwan, face an American response, and win the first battle but lose the war. So far, the performance off Taiwan's shores has been measured and rehearsed, carefully calibrated not to trigger an American economic response. The U.S. has even canceled a planned missile test so as not to further anger China.

Pelosi has made her gesture, or the administration asked her to do it. China has made its counter gesture. But China going to war with the U.S. over Taiwan risks serious economic disruption and possible defeat, all to take an island that is a minor step for breaking out of the South China Sea. It could happen, but it does not seem that China’s appetite for danger is high. Nor is America’s.---

 

 

Update 9 August 2022: A New Phase In The Global Economic War

When Russia invaded Ukraine in February, it didn’t just start a ground war in Europe – it opened up what would become a worldwide economic war involving nearly every major power. The West responded to the invasion by imposing sanctions and using the international financial system against Russia, hoping to bleed Moscow enough economically to come to terms. Instead, Russia dug its heels in, doubling down on the decades-long strategy of weaponizing its energy sales to Europe while searching for new allies and buyers. Naturally, the removal of Russian energy sent shocks throughout the global economy.

Nearly six months later, the world has entered a new phase of the economic war. Even major powers are dealing with surging inflation, an ongoing pandemic, energy shortages and a potential food crisis. Extended high temperatures across Europe have raised energy demand for consumers trying to stay cool, as industry attempts to ramp up production as part of a long economic recovery. And that’s to say nothing of the upcoming winter, droughts in both hemispheres, pollution, supply chain disruptions, and continued ravages to fertile lands in Ukraine – all of which will compound global economic problems.

While inflation means higher prices for everyone, the consequences of the economic war go beyond price concerns. The shipping industry, for example, has been disproportionately affected. After the initial Russian invasion, the industry’s primary concern was to resolve war zone-related issues – for example, getting ships out of the northern shore of the Black Sea – before dealing with higher operational costs. The Russian shipping industry in particular is at all but a standstill. Though it accounts for just 1 percent of global shipping, Russians themselves account for nearly 11 percent of the seafaring workforce; Ukrainians account for nearly 5 percent, and so the war has created a labor shortage in the industry. Meanwhile, operators have developed audit procedures to make sure both shipment ownership and merchandise doesn’t come under sanctions – all of which is not only costly but time consuming, slowing down global supply chains while they are still under the impact of pandemic policies.

The insurance industry was next to adapt to the new business environment. The first challenge for insurers was to develop procedures that made it possible to audit institutional exposure to sanctions as they came (at an unprecedented pace, no less). Ensuring effective compliance in a rapidly evolving landscape is not only expensive but also risky, considering the potential for business losses. The pace of change that the implementation of the sanctions imposed has rendered companies unable to insure a sanctioned person or reinsure a sanctioned insurer, regardless of the type of business. Keeping tabs on sanctions, now business as usual, continues to increase operational costs and inflate the premiums paid by businesses worldwide, all of which are included in the final consumer price.

For all these reasons, rivalries will continue to grow as nations determine what is best for themselves. They will have to adapt their policies to the massive accumulation of minor and major shocks that result from the high uncertainty both producers and consumers are facing. These will include restricted exports, higher storage thresholds, measures supporting increased domestic production or even rationing. This will ultimately result in unintended, unpredictable consequences that will be harder to manage for all states, with some taking the hit more than others.

 

Case Study: France And Germany

France's nuclear power regulator announced on Aug. 8 that it had extended temporary waivers to allow five power stations to continue discharging hot water into rivers as the country faces one of the most severe droughts in decades. Cool water is essential for keeping reactors humming at nuclear power plants. But even if France is a major European nuclear energy producer and exporter, weather conditions have made it hard for it to continue operations. Last week, Electricite de France said it needs to decrease the nuclear energy production at two other plants because of weather conditions.

This is just as much a problem for Germany, which hoped to import some French electricity production to try to reduce its energy dependence on Russia. Faced with high inflation and expecting an energy shortage in the coming months, German lawmakers are exploring measures to save energy. German Chancellor Olaf Scholz acknowledged that the spiraling energy costs are a potential source of social distress and instability. Meanwhile, the same drought is affecting the German economy. Germany's transport minister said low water levels on the Rhine may cause shipping problems and called for an urgent dredging plan to keep the German economy safe. Put simply, nothing seems reassuring for Europe’s economic powerhouse. And if Russia decides to cut natural gas supplies, the situation will only get worse.

 

Case Study: Odesa

All these issues are also evident in the way the recently brokered grain export agreement has been implemented at the port of Odesa. The deal was supposed to ensure that Ukrainian grain could reach Africa and other parts of the world, averting a food crisis and bringing relief to global grain markets. Hours after the agreement was signed, however, two Russian missiles hit the port. Moreover, port operators, like the shipping industry, are facing a labor shortage. And legal questions abound over the application of sanctions; local sources mention issues with paperwork and approval processes.

Russia is a top exporter of most commodities, so naturally sanctions raise similar questions in ports around the world. Except for the U.S., which is largely self-sufficient, most of the world’s industrial producers – especially China – depend on imports of commodities. China is also dependent on the U.S. to buy its exports. Considering its mounting socio-economic troubles, Beijing will do all it can to avoid getting caught in the economic war between the West and Russia – unless events around Taiwan force it to do so. For the business world, this translates into higher operating expenses and more supply chain risks, all of which contributes to the accelerated adoption of onshoring or reshoring.

For Western firms, however, onshoring comes with its own risks – inflation, first and foremost. American firms must consider higher energy prices, but Europeans are dealing with uncertainty over the security of supply itself. Even if Russia doesn’t cut Europe’s gas supply, the Europeans will need to use rubles for the purchases, weakening the euro and driving inflation higher. At the same time the West, especially Europe, must help keep the Ukrainian economy afloat. All this uncertainty makes Europe a less attractive destination for business investment, let alone onshoring.

 

Russia’s Problems

The Kremlin’s challenges are similar, if not worse. Sanctions and supply chain havoc are reducing what gets to Russian producers, and when things get there, they’re more expensive than they used to be. The government has reassured the population about its anti-sanctions measures, but its businesses are feeling the heat. One measure requires Russian firms to sell a percentage of their foreign currency to the central bank for rubles, helping to prop up the national currency. This percentage has fallen significantly since the war began, but close financial monitoring continues, as does business uncertainty.

The Kremlin was aware of these risks before invading Ukraine but made a political calculation. Putin placed Russia’s security strategy above its prosperity, knowing the Western counter had strict limits. For starters, the prospect of a weak and unstable nuclear-armed Russia isn’t very appealing for Europe or the United States. Nevertheless, the Kremlin also knew that without Western technology, the Russian economy would struggle to maintain the previous pace of development. The sanctions have started eating into Russian energy production, and there are indications that broader manufacturing output is suffering. Even if Russia benefits from higher commodity prices, the technology restrictions in particular will start to bite and could turn into socio-economic problems.

The Kremlin believes Russians will endure these hardships so long as it can sell a plausible story that Russia is winning the war. As part of this effort, Moscow benefits from the opportunity to deliver positive news at home about new friends in Africa backing it against the West. Though it’s unclear how much African allies can help, for the Kremlin the moral support may be enough. At the same time, it’s unclear what affect the war is having on Russia’s labor force after the damage wrought by the pandemic.

War is the ultimate disruptor. The risk of global economic destabilization grows with each step, offensive or defensive, in the economic war, and as business executives’ decisions trickle through the supply chain. Together, this accelerates the fragmentation process that was already underway because of the pandemic.

Europe and Russia will be most affected first. A difficult winter is coming for both. Europe’s energy dependence on Russia is a massive challenge, especially during the Continent’s worst drought in decades. For Russia, even if it can find new markets to sell to, the stream of key technologies into the country is drying up. Things will get worse late in the year, especially if we factor in the uncertain labor market. Moscow’s insistence that things are going well is worrying. For both Russia and the global economy, they clearly aren’t.---

 

 

Update 10 August, 2022: The Ideological Division Between Hamas And Islamic Jihad

Israel's decisive triumph in the 1967 Six-Day War discredited pan-Arab nationalist movements and secular leaders. It gave impetus to state-oppressed religious groups, such as Egypt’s Muslim Brotherhood, which promoted political Islam to overcome Arab weaknesses and lead to victory. Israel's capture of the West Bank and Gaza in 1967 convinced many Palestinians to join the Brotherhood before deciding to organize their Islamic movements. Hamas and the Palestinian Islamic Jihad appeared in the occupied territories.

The two movements grew to overtake the national and secular Palestinian groups such as Fatah and the Popular Front for the Liberation of Palestine. But despite their staunch anti-Israel stance, fundamental ideological divisions separate Hamas from the PIJ, specifically about political activity and fighting Israel. Apart from their divisions, the two groups decided to manage their disagreements with the understanding that Hamas held the upper hand.

 

Rivalry, Accommodation And Domination

In 1981, Fathi Shiqaqi, who hailed from the Brotherhood, was dismayed by fellow Brotherhood member Sheikh Ahmad Yassin's reluctance to fight Israel. Shiqaqi decided to establish a separate movement, the PIJ, to undertake this endeavor. PIJ set up military wings in Gaza and the West Bank, renamed Saraya al-Quds in 1993, and carried out the first Palestinian suicide bombing shortly afterward. The Mossad assassinated Shiqaqi in Malta in 1995.

Shiqaqi developed his revolutionary war theory to establish the PIJ by blending jihad (holy war), more than 1,400 years' worth of Islamic wars, and the Palestinian people's opposition to the Jewish state since the 1920s. The PIJ inherited Fatah's fight against Israel, and it was not a coincidence it reorganized its military at roughly the same time as the signing of the Israeli-Palestinian Declaration of Principles in 1993, in which the Palestine Liberation Organization renounced violence and terrorism. Contrary to Hamas, which prefers calming down tensions with Israel, PIJ ideology rests on perpetual confrontation until the Jewish state disappears. It rejects any form of conciliation or interaction with Israelis because doing so violates the Koranic text.

The PIJ's military strategy emulated the concept of national liberation wars during the Anglo-French colonial era, especially since the 1950s. It believed that a protracted revolutionary war would not only end Israel's occupation of the West Bank but eventually lead to the withering away of Zionism and the Jewish state. The PIJ focuses its activity on preparing for military confrontation and avoids involvement in politics until the end of the occupation.

 

 

To that end, Iran is an important ally. Ramadan Shallah, secretary-general of the PIJ from 1995 to 2018, saw Ayatollah Khomeini's revolution in Iran as a model for Muslims, especially Palestinians. The PLO, which preferred to work with him instead of Hamas, connected Shallah with the Iranians, who immediately sponsored his military activities and supplied the PIJ with arms and cash. Shallah, who died in 2020, was publicly contemptuous of Hamas, saying that its dream of controlling the Palestinian national decision was “delusional” and that its commercial wheeling and dealing will not benefit our cause.” Shallah coordinated political and military matters with Qasem Soleimani, commander of the Quds Brigade of the Islamic Revolutionary Guard Corps, from 2012 until 2018.

PIJ officials argue that Hamas is not a jihadist movement and that it lacks a national liberation ideology. For its part, Hamas does not recognize the PIJ as a political player in Gaza, and it never involved it in Egyptian-mediated truce negotiations with Israel. Hamas is politically pragmatic and well-organized administratively, even though it lacks a clear political ideology. Hamas accuses the PIJ of conversion to Shiism, serving as a bridge for Iran's intrusion into the Arab region and alliance with the Palestinian leftist movements against it.

Unlike national and leftist organizations that immediately after the Six-Day War announced plans to fight Israel in occupied Arab territory, Hamas, whose formal appearance coincided with the first intifada in 1987, did not announce a military resistance strategy. It established its military component, Izz ad-Din al-Qassam Brigades, in 1993 to rival the PIJ's Saraya al-Quds.

For a while, Hamas and the PIJ learned to manage disagreements and build bridges over conflict lines. Their rivalry in Gaza's small geographic area of 152 square miles often led to friction, generating an ebb and flow relationship that they agreed to prevent from spinning out of control. The two groups put their differences temporarily aside after the formation of the Palestinian National Authority in Gaza and Jericho in 1994, pledging to fight Israeli occupation and to never recognize the Jewish state. Hamas followed the PIJ in establishing its headquarters in Damascus as they began coordinating their military activities in 1994, although they still did not trust each other. The PIJ competed with Hamas in providing public social services to attract community support. Hamas accused the PIJ of claiming for itself military operations it carried out against Israel. Eventually, Hamas’ dismissive treatment of the PIJ led the latter to violate cease-fire agreements and launch rockets at Israel to pressure Hamas to take it seriously.

Hamas views the Palestinian question as a secondary issue for the Muslim world, preferring to promote religious solidarity and further the spread of Islamic governments. Whereas Hamas focused on spreading its influence in the West Bank and Gaza to replace the Palestine Liberation Organization as the dominant political force, the PIJ eschewed politics and refrained from contesting the 2006 general elections. Instead, it sought to create a broad anti-Israel Islamic front. Hamas won the general election in the Palestinian territories. Still, the PLO refused to surrender power in Gaza, leading to a military confrontation that Hamas won and in which the PIJ maintained neutrality.

Today, Hamas is the de facto government in Gaza, and no one can do anything without its permission. In 2009, it crushed Jund Ansar Allah, a Salafi movement, killing its 22 members and leader inside a mosque. Hamas claimed that the group members committed suicide. In 2015, Amnesty International accused Hamas of waging a brutal campaign against Palestinian civilians after it extrajudicially executed 20 people.

The divisions between Hamas and the PIJ became public in 2019 when Israel assassinated PIJ military commander Baha Abu al-Ata after firing rockets near an election rally for then-Prime Minister Benjamin Netanyahu in Ashdod, based on coordinates provided by Hamas. When the PIJ sought to avenge his killing, Hamas responded mercilessly, arresting and torturing PIJ militants for hurling rockets at Israeli settlements.

The close security cooperation in Gaza between Israel and Hamas is easy to see. The latter's armed units are numerous and cover field control, national security and coast protection. These forces' primary function is to prevent staging raids or to lob rockets into Israel. Hamas's posts and border units are exposed to Israeli positions and do not indicate combat readiness but a relationship between two armies sharing responsibility for maintaining quiet.

Like officials in most Arab countries, Hamas leaders hold behind-the-scenes talks with Israelis to discuss security arrangements and the flow of goods into Gaza. Hamas condemns the Palestinian Authority's open coordination with the Israelis, which it carries out secretly. Hamas explained to the PIJ that it would not allow it to sabotage its agreements with Israel, be they direct or through Turkish and Qatari mediation, to keep Gaza calm. It prevented the PIJ from launching missiles at Israel to avenge the killing of three of its activists in the West Bank four months ago.

Israel's carrots-and-sticks policy succeeded in containing and taming Hamas. Isolated in the Arab region, partially abandoned by Turkey, and distrusted by Iran, Hamas's only lifeline comes from Qatar, which, with Israeli permission, transfers $30 million to its government in Gaza each month. Hamas's primary concern is to keep Gaza pacified, rule it with an iron fist, and extend its influence in the West Bank should the situation permit.

 

Hamas's Aspirations

In 2017, Hamas published a Document of General Principles and Policies that accepted establishing a Palestinian state on the borders of June 4, 1967, without relinquishing claim to all of Palestine. The PIJ angrily rejected the document. Hamas revisited a 1988 document that described itself as a religious movement affiliated with the Brotherhood and advocated creating a Palestinian state on the ruins of Israel. It replaced the conception of Palestine as a religious endowment belonging to all Muslims and deserving their sacrifice to a national territorial entity.

The revised document is political par excellence that indirectly renounces violence by claiming adherence to international laws, emphasizing compliance with international humanitarian law. It distanced Hamas from the Brotherhood, referring to it as a national liberation political movement. Since overhauling the 1988 document, Hamas has been trying to convince Arab countries and the international community that it is a credible and rational movement worthy of recognition.

The West Bank's Palestinian Authority is weaker than ever and has no control over political movements and paramilitary groups, while its popularity is plummeting. Fearing that Fatah, the backbone of the PLO, would lose them, PA head Mahmoud Abbas canceled last year's presidential and parliamentary elections. Israel has systematically weakened the PA by derailing the two-state solution, leading to an escalation in the confrontation with Palestinian factions such as the PIJ and al-Aqsa Brigades. The explosive West Bank situation points to a new intifada in the making, which would announce the demise of the PA, causing a severe power vacuum and the collapse of authority and security. Hamas is taking advantage of the PA's gradual disintegration and building its presence in the West Bank. In 2007, it ousted the PA from Gaza and now prepares for the day when it could apply the coup de grace to it in the West Bank.

The PLO's demise would free Israel from the two-state solution burden. Hamas's 25-year truce proposal for Gaza would become more appealing to Israel should it expand its grip on power to include the West Bank. Israel says Hamas has developed a military infrastructure in the West Bank, including arms caches. The Israeli army clamps down on belligerent Palestinian factions, although it has not clashed with Hamas activists or confiscated its arsenal. Israel is worried about the post-Abbas West Bank and readies itself for the eclipse of the PLO and the PA.

Hamas realizes that Trump's 2020 Peace Plan covers the West Bank and Gaza and wants to involve itself in it. Hamas is encouraged by Palestinian public opinion polls that consider it better qualified to administer the West Bank than the PA. It has already initiated an effort to stage a soft coup in the West Bank to win elections in universities and labor unions and to dominate civil society organizations. Hamas is undergoing a similar process to the PLO's transition in the early 1990s from a terrorist organization, as previously perceived in the West and Israel, into a peace partner. Hamas is not a friend of Israel, but, unlike the PIJ, it has concluded that it is futile to fight Israel and, obsessed with power, is willing to expand its self-rule in Gaza to include parts of the West Bank.----

 

 

Update 11 August 2022: Norway Adds To Europe's Energy Crunch

 

 

Norway is one of Europe’s most important alternatives to Russian energy supplies. In the wake of Russia’s invasion of Ukraine, EU countries sharply increased electricity and natural gas imports from the Nordic country. But despite its sizable reserves and electricity generation, Norway is proving not to be as stable as hoped. Facing low water levels for hydropower plants and fearing domestic power shortages, Oslo is considering reducing electricity supplies to Europe, which could lead to electricity rationing and higher prices in Europe this winter.

This would push up costs in Europe at a time when inflation is already elevated. However, if Norway can increase its electricity production by building gas-fired power plants, then the question will be whether Norwegian gas can substantially replace Russian gas in the European market. One way or another, a difficult winter lies ahead for Europe-----

 

 

Update 14 August, 2022: A Small Window For The US And Cuba

The war in Ukraine is a truly global conflict. Citizens of faraway regions may not themselves be in physical danger, but any country that is sensitive to fluctuations in food or oil prices, both of which have risen since the conflict started, have become its victims.

Such is the case with Cuba. Its economic problems are well-documented, as are the government’s limited means of solving them. But the war in Eastern Europe has amplified the situation, and any kind of reconciliation between Havana and Washington will depend to some degree on the outcome of broader global crises sparked by the war in Ukraine.

 

Hardships

Recent comments by Cuban officials show that Havana is feeling the pressure already. In mid-June, the state sugar company announced that the 2021-22 sugar crop produced only half the expected yield, marking the lowest harvest in a century. The following month, Energy Minister Livan Arronte Cruz said on state-run television that Cuba’s 20 power plants were largely obsolete, largely because of delayed maintenance and lack of funding. Days later, a member of Cuba’s national assembly publicly questioned the veracity of Economic Minister Alejandro Gil’s statements regarding the island’s economic health, saying the government was not, in fact, satisfying the population’s needs. In a country like Cuba, where official data is generally tightly controlled and criticizing the government is fairly rare, these kinds of statements stand out and suggest the government knows more trying times lie ahead.

Partly that’s because Cuba is highly reliant on imports for energy, and thanks to the war in Ukraine and the sanctions that followed, the rising cost of oil has made it impossible for cash-strapped Cuba to purchase sufficient supplies (the discounts it receives from Venezuela and Russia notwithstanding). Rising commodity prices have also curbed the island’s ability to import food and fertilizers. But perhaps more important, the war has deprived Cuba of the attention of its most important benefactor, Russia, which can provide only short-term relief that treats Cuba’s symptoms but not its problems.

The war has also undermined Cuba’s ability to remedy these problems. The government can no longer rely on its plan to leverage tourism for the influx of foreign currency it uses to buy imports. Indeed, the importance of tourism cannot be overstated. It accounts for roughly 10 percent of gross domestic product, employs half a million public workers, and is the second largest source of foreign currency for the government. In 2022, the government hoped to bring in $1.6 billion through tourism from roughly 2.5 million visitors. But by the end of June, only 682,297 tourists had visited the country. High inflation throughout the world reduced disposable income, and consumers have been forced to downgrade consumption habits, which includes vacations. Furthermore, strong sources of Cuban tourism – Russia and wealthy European countries – have been disproportionately affected by the conflict in Ukraine. Currently, Canadians and Cubans residing outside the island account for half of all tourism.

The government has taken steps to create alternative sources of foreign currency, but all of them come with some political costs. For example, the government intensified its policy of holding wages of foreign-employed workers, a practice meant to ensure equitable wages among private and public employees but one that ends up providing more money for the government at the expense of workers. Havana has also altered its relationship with the island’s thriving black market in an attempt to solve market shortages and collect foreign currency. It created special grocery stores where clients who pay in hard currency can purchase food products that are difficult or impossible to come by in regular shops. The problem is that foreign currency is not universally accessible, often reserved for families receiving remittances or with coveted jobs (often determined by the government) that provide access. Most recently, the government decided to embrace the black market by changing the official exchange rate to meet the black market value of 1:120. The move aimed to take foreign currency off the black market and place it under government control. The preferential rate is available only to hotels, banks and currency houses willing to sell, since buying foreign currency is not an option.

In addition to currency problems, the Cuban government appears to have reached its limit on what it can do about energy prices. The high cost of oil and the dilapidation of electricity generation plants present an immediate threat that can be met only by time and massive funding – two things the Cuban government does not have. Chronic power shortages became notably worse in recent months. The government canceled public celebrations to save energy, encourages the use of wood stoves for cooking, and had to introduce regular rolling blackouts across the island. In the second week of August, the daily electric deficit ranged from 650-950 megawatts, with peak shortages at night reaching 750-1071 megawatts, according to UNE.

 

 

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Update 15 August 2022: China And Russia’s Strategic Problem

The war in Ukraine, now about 6 months old, is strategically important for a variety of reasons. If Russia defeats Ukraine and takes control of the country, its forces will be on the border of Eastern Europe. A Russian presence on Europe’s border would transform the balance of power in the Atlantic, and would thus inevitably compel the U.S. to deploy forces in Europe’s defense.

What Russia's intentions were at the outset of the invasion matters little. Intentions change, and strategy must not be optimistic. So what is at stake in the Ukrainian war is the possible resurrection of the Cold War, with all the attendant risks. From the American point of view, engaging Russia through Ukrainian troops in Ukraine is far less risky than another Cold War.

The Cold War did not result in a full-scale war, only the fear of war. Western fears of Soviet intentions outstripped Soviet capabilities. Their fear, in turn, kept NATO together, much to the chagrin of the leaders in Moscow. Neither of their worst fears came to pass, and therefore the collapse of the Soviet Union had more to do with internal rot than external threat. It is not clear that any future Cold War would play out like the last one, but one thing is likely: Given the existence of nuclear weapons, the front line of a new Cold War would remain static, and the status quo on each side would remain intact so long as neither side fragmented. It would be a costly and dangerous outcome, since history need not repeat itself. But the collapse of Ukraine would pose threats that could be contained, however expensively and dangerously. The global pattern would remain intact.

China’s vulnerabilities, and its attempts to overcome them, are potentially more dangerous. As with Russia, the core issue is geography. For Russia, the problem is that the Ukrainian border is less than 300 miles from Moscow, and Russia has survived multiple invasions only by virtue of Moscow’s distance from invaders – a distance that the collapse of the Soviet Union closed. Russia’s obsession with Ukraine is intended to rectify that problem. China's geographic problem is that it has become an exporting powerhouse, and as such it depends on its access to the Pacific Ocean and adjacent waters. The United States sees free Chinese access to the Pacific as a potential threat to its own strategic depth, something fundamental to the United States since the end of World War II. Chinese access to the Pacific is blocked by a series of island states – Japan, Taiwan, the Philippines and Indonesia, indirectly supported by nearby powers such as Australia, India and Vietnam. Not all of them are American allies, but all have common interests against Chinese naval expansion. China wants to defend its strategic depth by seizing and controlling it. The United States wants to defend its strategic depth by defending it.

The geographic dimension is compounded by an economic dimension. China’s economy depends on exports, and the United States is its largest customer. Beijing also needs continued U.S. investment, as its financial system is under intense pressure.

Russia is attempting to reclaim strategic depth, and it went into it knowing full well the financial consequences it would create. In other words, it put up with financial damage in exchange for strategic security. So far, it has not gained strategic security and has absorbed significant financial damage while meting out some of its own to Europe.

China is searching for a strategic solution while avoiding the economic damage that further expansion would likely invite. Its primary adversary on both fronts would be the United States. So China is probing the U.S., trying to understand its potential responses. The response to House Speaker Nancy Pelosi’s visit pressed the limits of an invasion of Taiwan. What China learned about the U.S. military is unclear, but it learned that the trigger for American economic actions lies beyond the Chinese demonstration.

America’s goal in Ukraine, then, is to deny Russia the strategic depth it wants in order to limit the Russian threat to Europe. With China, its goal is to retain American strategic depth in order to prevent China from threatening the U.S. or obtaining global reach.

The issues are similar in principle, but the stakes for the United States are not. For Washington, the China question is much more important than the Russia question. A Russian victory in Ukraine would redraw unofficial boundaries and increase risks. A Chinese success would create a more global power that challenges the U.S. and its allies around the world.

The consequences of war are always significant. U.S. involvement adds economic costs to the equation. So far, Russia has absorbed the costs. China may not be able to, considering its economy is currently vulnerable. But nations live on economics and survive on safety. In that sense, it would appear that Russia is less interested in negotiations than China is.

Chinese President Xi Jinping and U.S. President Joe Biden are scheduled to meet in mid-November, at a conference in Indonesia or in Thailand. If the meeting takes place, it will be the first since their teleconference in May. Only informal and back-channel talks are happening between the U.S. and Russia. China reeds a stable economy now more than it needs command of the seas. Russia seems able to survive what it has been dealt economically, but it has not broken the back of Ukrainian forces. China is nearer an economic crisis than Russia, and is thus unwilling to risk war with the United States. It will speak, if not settle. Russia’s economic and military situation is murky in the long run. The United States is dealing with China and Russia at a fairly low price and can handle both right now. Russia and China must try to raise the cost to the U.S. but can’t afford to raise their own.

It is a dizzying equation but not an uncommon one. China needs to reach an understanding with the United States. Russia does not have that need. The U.S. is flexible.----

 

 

Update 16 August, 2022: The Scalable World War Ahead

U.S. House Speaker Nancy Pelosi’s visit to Taiwan begins a new era of confrontation between the U.S. and China and marks a new stage in the ongoing conflict over Eurasia, this unique landmass where world history takes place and world wars are fought. What distinguishes this episode from previous world wars is that this one is scalable – the existence of thermonuclear weapons greatly raises the stakes of escalation and demands each side to be circumspect before escalating. In a scalable clash, each side tries to force its interests through various domains of contemporary dependencies in a densely globalized world – a world that will be violently split open before our eyes.

Pelosi’s visit accelerates the process of sharp and violent deglobalization – the breaking, for geopolitical reasons, of all financial, trade, information, communication and human connections that resulted from Pax Americana over the past 30 years. It turns out that the great powers do not agree on the principles that define how the world operates and how they cooperate with each other. China, the U.S. and Russia believe the existing global order no longer serves their interests. Only Europe still wants everything to stay the same, naively thinking that the “old” ways will come back. Completely unprepared for the return of geopolitics, Europe is on course to become the subject of the game of the three aforementioned powers – a place of struggle and kinetic wars and not a main actor, with ambitions and strategic initiative.

 

The Shape Of The War To Come

Dangerous times lie ahead. Conflict will be a constant in many domains: trade, technology, finance, raw materials, currency markets, data and internet, and infrastructure. There will be kidnappings and assassinations, information warfare, fighting for oceans and lands, and fighting to control communication nodes, even in outer space. Finally, there will be hot proxy wars, coups, revolutions and government collapses, and probably a direct clash between China and the U.S. in the Western Pacific, or a war in Europe involving some NATO countries and Russia.

The main focus of this global conflict, however, will be the manipulation of strategic flows to influence the opponent’s stability and social contract. Examples include banning the sale to China of Taiwan's microprocessors necessary in a modern economy and, in response, China’s banning of exports of sand to Taiwan necessary for construction; or bans on capital investments in China and, in response, the expropriation of large U.S. companies with production in China.

In addition, there will be sanctions, blockades, embargoes on trade and raw materials, manipulation of energy transmission systems, attacks on infrastructure and military demonstrations intended to disrupt the enemy’s economy. A good example is the effective sea and air quarantine of Taiwan in the course of China’s sea-air exercises, or the unilateral ban on Russian flights over Lithuania or Poland, which may be broken one day if Moscow wants to contest Europe’s ability to limit where its planes fly.

 

Kinetic War

In this global struggle, a kinetic war between the U.S. and China in the Western Pacific becomes very likely, possibly sooner than later, given the irreconcilable structural differences of interest between the two powers. For a critical imbalance in the world system has already arisen that will be difficult, perhaps impossible, to correct in the foreseeable future without resorting to force, and such an escalation naturally leads to war. The situation around Taiwan in connection with Pelosi’s visit, and before that Russia’s ultimatum toward Ukraine, is clear proof of this.

Fortunately, the existence of thermonuclear weapons lowers the willingness of each side to enter into an uncontrolled conflict without reflection. It forces each side to be selective about what it seeks to obtain through the threat or use of violence, without stupidly starting a thermonuclear war. This makes the coming world war scalable, and this is what sets it apart from previous world wars.

At the start of the hot phase of past system wars, such as the Napoleonic wars or World War I or II, the attacking side immediately sent corps, fleets, infantry divisions, artillery, armored divisions and air assets, all that was necessary to defeat the enemy and conquer the capital by maneuvering to paralyze the decision-making and political system. For then there were no weapons that could destroy entire cities, states and nations. Strategic nuclear weapons obliterate the political goal of war, which is the loser’s submission to the victor’s will. (Tactical nuclear weapons may be a different matter, something we will learn to live with.) Above all, strategic thermonuclear weapons could trigger automatic retaliation.

None of this was present in previous world wars. There was no need to think about calibrated actions and the opponent’s potential responses on the multilevel escalation ladder, because both sides wanted immediately to take a dominant position in the application of violence. This was the way of the German Blitzkrieg, whose initial phenomenal operational efficiency diminished over time, leaving Hitler to look for a variety of Wunderwaffen (wonder weapons) at the end of the war.

This does not mean that nuclear weapons will not be used in the coming war. There are many indications, especially in Russian strategic and military literature, that it is possible to “disenchant” the use of nuclear weapons. However, even then the warring parties will always remember the risk of mutual annihilation, which hampers the decision-making process and emphasizes the management of the escalation ladder. This is already evident in Washington’s dealings with Ukraine and the Americans’ reservations about providing Kyiv with equipment that could be used to attack targets in Russia, which would be a step up the escalation ladder.

The existence of thermonuclear weapons, in other words, means the war must be scalable. Neither side can immediately reach (or threaten to reach) for the highest rung on the escalation ladder.

At the same time, the accumulation of mutual interactions between states is greater today than in the world wars of the past, meaning there are plenty of means of applying pressure. Likewise, there are more cases where violence can be used: destruction of transshipment terminals, attacks on U.S. natural gas terminals and Russian refineries, the kidnapping of decision-makers, destruction of satellites, acts of sabotage to cut off raw materials, and even terrorist attacks. Therefore, there will be more need to inoculate the state against manipulation of strategic flows, and less discussion of the number of soldiers compared with the 20th century. What matters is the military’s capabilities to wage modern war, often remotely, and the state’s resilience.

 

Europe In Denial

The scalable war has already begun. It is already changing the global system. As in the last world war, new methods and technologies will emerge. Innovation accelerates during war. This is the dark nature of man – militant and competitive. During World War II we saw the first German maneuvering and ballistic missiles. At the end, we saw the first primitive guided missiles, the jet engine, the technological miracle that was the American B-29 strategic bomber, and the Allied computer needed to constantly break the German Enigma. In this war, automation and robotics will certainly develop. Personally, I’m betting that artificial intelligence developed for war and human competition will change our civil lives beyond recognition before the war is over.

In all of this, Europe still refuses to accept that the war is already underway. Pelosi’s visit to Taiwan, the uproar it caused, and the imminent U.S. congressional elections will lead the U.S. to focus on the Pacific. Therefore, I believe that Pelosi’s visit to Taiwan was a mistake, very unfavorable for Poland, because it accelerates the Americans’ perspective of a war on two fronts in Eurasia, which must always be avoided. And it pushes China into helping Russia on the European front, even if this aid is or will be hidden for some time, just as Roosevelt’s decision to help the British was hidden from world opinion, made after the fall of Paris in 1940, and therefore long before America’s open entry into the war.

For Central and Eastern Europe this means being left with Russia, largely alone, with the only outside protection coming from other Europeans who lack significant military capabilities or excessive determination to confront Russia, apart from Finland, Sweden and Britain. As the war for Eurasia will be scalable, the wider European conflict does not have to be the same as with Ukraine. It can involve terrorism, destruction of infrastructure, kidnappings and killings, and destabilization. However, there can also be a full war like in Ukraine, depending on the capabilities of the Russians and the geopolitical situation, as well as on Europe’s own capabilities, resilience and preparations. The Russians will adjust their strategy to this. Russia wants to gain agency in Europe, and it will do this by pushing the Americans out of Europe and weakening Europe’s cohesion as part of the trans-Atlantic world.

What is happening in the Pacific is therefore of paramount importance for Europe. The world system has become unstable. A new equilibrium will arise after the war that seems inevitable today. Somewhat comfortingly, it seems to be a scalable war. In Poland’s case, located at the junction of the World Ocean and the Continent, it can be anything, including terrorist attacks, manipulating the supply of raw materials (which may end in rationing and the destruction of the Polish economy and competitiveness), kidnappings, destroying infrastructure and even conventional war – even with the use of tactical nuclear weapons.

The world has become more complex but no less deadly.---

 

 

Update 18 August, 2022: When Russia Prepared For The Inconceivable

It’s true that at the time of the invasion no one was threatening to attack Russia. But it’s also true that international relations are dynamic. The interests and powers of potential enemies may change over time, and the fact that a country is immune to attack right now doesn’t mean it is immune in perpetuity. As interests evolve, absurd fears can turn into dangerous realities. As balances of power shift, and as the unthinkable emerges, acting preemptively can become a national imperative. For Russia, ignoring the vulnerability of Moscow due to the short distance for a military drive from a now powerful Ukraine, equally afraid not of Russia’s current intent but its intent and power in the future, would have been irresponsible. I am American and I also have fears of a Russian victory that brings them to the border of NATO and forces us to assume the worst case and engage in a new Cold War. Neither fear is frivolous, even if it isn’t currently real. Anyone buying stocks is playing the future. Nations play for higher stakes, with each nation obsessed with its own fears, and both playing the future.

This is compounded by the nature of war. One of the rules of war promulgated by Clausewitz and universally acknowledged is the overriding advantage of surprise, particularly when initiating war with a powerful enemy. Surprise comes in three parts: the political goal of war, the vulnerability of the enemy, and the timing of the attack. The classic case of the surprise attack was Pearl Harbor. Japan had to secure the Western Pacific to import raw material that the U.S. had embargoed or sealed up. The Japanese understood they could not defeat the United States in a full-scale war but hoped to bring the U.S. to a negotiated settlement. That was the political goal. The attack on Pearl Harbor was intended to be psychologically stunning, and Japan had to initiate the war in order to generate American insecurity. U.S. officials assumed that if there was war it would start in the Philippines, astride Japan's trade routes. Therefore, the Japanese attacked a place the U.S. regarded as invulnerable, if only because of its sheer distance from Japan. The attack was a failure. It destroyed the Pacific fleet but did not force the United States to negotiate a settlement. Japanese fear crafted a desperate strategy that failed to understand that the loss for the U.S. of any part of the Pacific would open the door to invasion of the U.S. homeland, which, however it might have appeared, was too dangerous to risk. Japan drove into a war it could not win.

The attack on Pearl Harbor is instructive for a variety of reasons. First, an attack can come at any time and indeed will likely come in unexpected ways. Second, initiating a war without understanding the enemy’s imperatives can lead to disaster. Third, understanding an enemy’s military capabilities is essential.

For Russia, surprise is what they feared and what they achieved. The Russians did not anticipate a national imperative in Ukraine that created unity. And they did not understand the weapons that were being supplied to Ukraine and how those weapons would stymie the Russian advance. Russia fundamentally miscalculated Ukraine’s imperatives and thus failed to appreciate its military capability.

The argument I am making is that the Russian invasion of Ukraine flowed from its vulnerability in an uncertain future, as did the Ukrainian, European and American responses. If Russia isn’t doing this to defend itself, then it has merely done this because it is greedy or evil. Evil certainly exists in the world, but I have found that most people and nations do not on the whole regard themselves as evil. Nations tend to act militarily out of a fear that is not obvious to anyone else.

War yields the unexpected as well as a fear of the future. When there is too much of both, the results can be catastrophic.----

 

 

21 August, 2022: In Ukraine, Buying Time With Nuclear Concerns

Fighting has escalated over the past few weeks near Zaporizhzhia, home to a Ukrainian nuclear power plant that has effectively been converted into a Russian military base. It’s the largest nuclear plant on the Continent, and though only two of the six reactors are functioning, the International Atomic Energy Agency appealed for maximum military restraint in the area and has requested the safe passage of IAEA technicians to conduct safety, security and safeguards operations at the site.

On Aug. 19, French President Emmanuel Macron spoke with Russian President Vladimir Putin on the phone to discuss the situation, after which Putin reportedly agreed to send IAEA experts, albeit through Ukrainian territory, not Russian. Turkish President Recep Tayyip Erdogan, having already spoke to Ukrainian President Volodymyr Zelenskyy and U.N. Secretary-General Antonio Guterres, pledged to discuss Zaporizhzhia with Putin as well. It seems everyone is rightly worried about the chance of a nuclear accident.

Ukraine and Russia have accused each other of compromising the nuclear power plant. In a press release, Putin accused the Ukrainian military of "systematic shelling" of the facility and said the attacks created the “danger of a large-scale catastrophe that could lead to radiation contamination of vast territories.” Ukraine blames Moscow for deploying heavy weaponry on site.

Regardless of who is responsible, there is a broad understanding that the situation should not be taken lightly. On Aug. 19, Russia reportedly told workers at the plant not to show up to work – without specifying when they can return. Earlier in the week, Romania sent more than a million potassium iodide pills to Moldova to pre-empt possible radiation poisoning. In addition to Moldova, reports suggest Romania, Poland, Bulgaria and Hungary could all be in the path of radioactive fallout.

 

Indeed, the consequences of an accident could be severe. Though Zaporizhzhia’s two functioning reactors are well protected and, as such, are unlikely to be bombed directly, attacks on fuel storage sites or other infrastructure could release radioactive material which, according to expert reports, could travel several hundred miles, depending on the material's quality and density and on the vagaries of the wind. In other words, the fallout could stretch well beyond Ukraine.

The concern is real, but the timing is odd. Reports about intensified fighting in the area near Zaporizhzhia came after reports of mysterious explosions Aug. 9 at the Saki air base in Crimea, which could mark a major shift in the war. Satellite imagery shows that at least nine planes were destroyed in the explosions, and though Russia claimed it to be accidental, many believe it was an attack by Ukrainian forces. (The government in Kyiv has yet to confirm as much.) If Kyiv was indeed responsible, that means it is able to strike targets some 200 kilometers (125 miles) behind the front line – something Moscow had not expected. Material damage aside, the attacks – if it was an attack – would devastate Russian morale and contravene Russian propaganda. Notably, the explosions came one day after the United States promised to supply Ukraine with $1 billion worth of weapons.

As interesting, the reporting around Saki and Zaporizhzhia came as the war was more or less at a standstill. After capturing Luhansk, the Russian army hasn’t gained more than 7 miles of ground along the 620-mile front between Kharkiv and Kherson in nearly a month and a half. The Ukrainian counteroffensive to retake Kherson, meanwhile, has been going on for two months but has yet to retake the city.

U.S. weaponry, particularly the M142 High Mobility Artillery Rocket Systems (HIMARS), seems to have played a role in halting Russian operations. Moscow has had to totally restructure its logistics to supply the men in the field, which has slowed its advances. But Moscow had plenty of logistical problems before the HIMARS appeared, so it’s unclear whether its army will be able to resume its advance after it rebuilds its lines – or how effective it will be if it does – especially with even more U.S. weapons flooding into Ukraine.

Still, U.S. hardware can take Ukraine only so fair. Kyiv doesn’t quite have enough weaponry to retake areas such as Kherson, and even if it did, it doesn’t have the training or expertise to optimize the weapons it receives. For example, Kyiv may have received long-range, high-precision missile systems from the U.S. and Great Britain in recent weeks, but it could manage only to incapacitate the major bridges over the Dnipro River near Kherson, forcing Russia to resort to ferries to transport its equipment. For Ukraine, this is better than nothing, but it’s a far cry from being able to assault, subdue and control a city like Kherson.

All this means that, though both have been constrained in how much they can do for now, they are less limited in the long term – Ukraine with its new weapons and Russia with its reformed logistics and supply lines. With no sign of a peace agreement in the works, both sides are unhappy with the status quo, and both would thus welcome disrupting the current stalemate in their favor. This will result in one of two possibilities: a frozen conflict, which is bad for both sides, or an escalation, which neither wants right now, preferring instead to regroup and reorganize.

A nuclear accident – or the sheer prospect of one – would certainly give them the pause they are looking for. Allowing nuclear experts to inspect the facilities at Zaporizhzhia wouldn’t advance the cause of long-term peace – if anything, it would only help Russia and Ukraine take a beat before gearing up for a subsequent round of fighting. Of course, there’s no guarantee that the presence of third-party inspectors – if they manage to get in at all – will halt hostilities entirely. But both Russia and Ukraine have an interest in buying time, and both understand how catastrophic a nuclear accident could be. But that’s no comfort to them or to nearby residents who realize the obvious: that armed conflict around a nuclear power plant necessarily increases the chances that an accident will occur, no matter how sincere the belligerents are in avoiding one.-----

 

Update 23 August, 2022: Russia’s Buffer Zone May Have To Wait

As the military adage goes, no plan survives contact with the enemy. No one is more cognizant of this fact right now than Russia, which has faced multiple setbacks in its offensive against Ukraine. Six months in, the situation on the ground is constantly changing, often in ways that the Kremlin didn’t expect or intend. Russia invaded Ukraine with the goal of reestablishing much-needed strategic depth on its western borders. However, as the fighting wears on, new challenges are forcing Moscow to limit its focus to securing sufficient defensive depth around core regions and chokepoints rather than seizing all of Ukraine.

Russia’s objectives in Ukraine are intertwined with its security and military concerns, which are themselves part of a broader grand strategy. Russia’s grand strategy entails achieving strategic depth along vulnerable borders. In this case, Ukraine helps fulfill the Russian need to create a larger buffer zone between itself and the West, particularly NATO states. In 2014, Moscow made a first attempt at gaining Ukrainian territory and succeeded in holding Crimea as well as establishing a strong presence in Donbas. This time around, Moscow believed that those Ukrainians who for decades voted for pro-Russian political parties would lend their support to the Russian initiative. This did not happen.

Since late February, the battleground and its realities have been forcing Russia to rethink its immediate strategic goals. The fighting has gone on longer than anticipated, and Ukraine has demonstrated it plans to continue fighting and is not yet interested in a peace agreement. With time, Ukraine will complete its training on Western-donated weapons and equipment. Russia’s most significant concern in this regard is the versatile short- and medium-range rockets that Ukraine possesses or will possess in the near future. Over the past few weeks, Ukraine has demonstrated the capability to use these rockets to strike deep into the rear of Russian forces on the offensive, including hitting weapons depots and air defense systems. This, then, compels the Russians to drive deeper into Ukrainian territory to build even more strategic depth and provide the distance for its air defense systems to react.

Additionally, Russia's challenges will only multiply and intensify with time. First, there's the West's economic and military support for Ukraine, which helps Kyiv to prolong the fighting and do so with increasingly advanced weaponry. Ukraine's asymmetric attacks with weapons like the High Mobility Artillery Rocket System, better known as HIMARS, have proved particularly problematic for Russia. On the economic front, Western sanctions against Russia led Moscow to start restricting trade and economic relationships. They also overburdened the Russian economy and resulted in the political decision to repress domestic unrest. Lastly, Russia does not appear to have overcome its logistical challenges and continues to struggle to deliver military supplies and defend its rear. All of these factors together make taking the whole of Ukraine a less feasible, more costly move.

Russia, therefore, recalculated its military strategy toward Ukraine. First, the new strategy needed to account for Ukraine’s Western allies. Russia knew the West would side with Ukraine but miscalculated the degree to which the West would provide military and financial support and its ability to collectively engage in economic warfare. In particular, Moscow remains vigilant of U.S. and British contributions to the Ukraine war effort, particularly with the delivery of cutting-edge military hardware. At the same time, the West’s collective response made Moscow more cautious about bringing its forces right up to NATO lines. Russia does not want to engage directly with NATO, and efforts to occupy all of Ukraine would bring it dangerously close to NATO’s border, leaving little room for error. Lastly, Moscow seeks to use lessons from the war in Donbas between 2014 and 2015 to account for Ukraine’s military capability (particularly with regard to missiles) to target Russian military assets by establishing greater depth around chokepoints of strategic importance.

Russia’s new strategy entails a new list of military objectives in Ukraine. First, Russia must secure the separatist Donbas republics from the reach of Ukrainian artillery and rockets, up to 150 to 200 kilometers (roughly 90 to 125 miles). This requires establishing total control of the area from Donetsk to the city of Pavlograd near the Dnieper River. Farther south, Russia must secure the northern Crimean water canal system in the Kherson region from Ukrainian artillery and prevent the reclamation of these areas by the Ukrainian army. Russia's distance calculations here are premised on the missile range of Ukrainian and Western-provided weapons, and will thus adjust with Ukrainian capabilities.

To achieve these goals, Russia again must conduct an offensive operation and reach the line of Kryvyi Rih and Nova Odesa, and take Mykolayiv city. It is an almost impossible task for Russia currently. Relatedly, Russian forces need to control the Crimean Bridge given its essential role as an economic and military supply route to the peninsula and the Russian forces in southern Ukraine. This also means guaranteeing security over all of Crimea and keeping it free from military incidents. Currently, the closest Russian bases in Crimea are no less than 200 kilometers from areas under Ukrainian control. And finally, Russia will set its sights on the longer-term goal of securing a greater buffer zone along Ukraine’s northern regions of Sumy and Chernihiv, which are just 450 kilometers from Moscow. These regions are close to many cities that are part of the Russian ethnic heartland – like Kursk, Belgorod, Oryol and Voronezh – where Moscow does not want to lose any influence. The problem with this particular objective is that, in order to gain more than a 100-kilometer buffer zone, Moscow has to go almost to the outskirts of Kyiv, on the left bank of the Dnieper, which as the early phase of the war proved would come at a high cost.

Russia is trapped in a classic geopolitical dilemma, where mounting constraints prevent it from effectively pursuing its ultimate goal of gaining strategic depth along its western border. Moscow’s current solution is to go marginally deeper into Ukrainian territory to secure depth against missiles in strategic occupied territory, without making a play for all of Ukraine. Such an approach will leave the question of its buffer zone open-ended. But it may also provide Russia with the opportunity to consolidate the progress it has made during this round, free up resources to focus on mounting economic problems and live to fight another day. It’s only a matter of time before Russia steps up overtures for a negotiated settlement in the conflict.-----

 

 

Update 30 August, 2022

 

Update 24 August 2023: In Iraq’s Political Stalemate, Muqtada Al-Sadr Is No Kingmaker:

 

Iraq’s political impasse shows no signs of ending. Following elections last October, a bloc led by influential Shiite cleric Muqtada al-Sadr emerged as the largest parliamentary faction, winning 73 of 329 seats in the country’s national assembly and setting the stage to form a new government with its allies. Meanwhile, the Iranian-backed Coordination Framework, which performed poorly in the elections, insisted that a national unity government be formed to accommodate all significant political forces. Al-Sadr rejected the plan and forged a coalition called the Save the Homeland Alliance with the Sunni Sovereignty Coalition and the Kurdistan Democratic Party. The fierce rivalry between the Sadrist movement’s camp and the Framework escalated as the latter blocked parliament from convening and prevented al-Sadr and his Sunni allies from forming a government without them.

Last month, al-Sadr’s followers held a five-day sit-in at the parliament building to support the cleric and protest against rival attempts to nominate a prime minister. Earlier this week, they held another brief rally at the Supreme Judicial Council. Iraqi politicians have warned that this escalating crisis could trigger an intra-Shiite civil war. Though the current political turmoil is more intense than in the past, it’s unlikely to lead to serious unrest. Al-Sadr is a populist leader whose opposition to Iran and its Iraqi allies is part of a ploy to gain popular legitimacy, but he will not cross Iran’s red lines.

 

The Making Of The Crisis

After the outcome of the 2021 elections was announced, the Framework warned that proceeding with the results would undermine peace in Iraq. The Fatah Alliance, an umbrella group consisting of 17 Shiite movements, was a big loser in the election, winning just 16 seats after coming in second place in the 2018 vote with 48 seats. The Federal Supreme Court ruled that two-thirds of the members of parliament, or 210 deputies, needed to be present for a parliamentary session to nominate a new president – a prerequisite for forming a government. But after members of the Framework boycotted parliamentary meetings, lawmakers could not elect an official to the post. Al-Sadr angrily threatened the Iranian-backed factions with further escalation and publicly criticized the judiciary, accusing it of colluding with the parliamentary minority to block the legislative branch of government. The Framework denounced al-Sadr’s questioning of the court, describing his comments as dangerous. They urged him and his allies to curtail their efforts to form a majority government, prioritize the national interest and stop trying to monopolize power.

 

 

Al-Sadr rejects the Lebanese-style sectarian quota system of forming a government, which has been used in Iraq since the 2005 general elections and led to Hezbollah’s increasingly influential role in Lebanese politics. He criticized the system for allowing one-third of deputies, who represent political parties that lack popular legitimacy, to prevent a new government from forming. His supporters even released the names and addresses of Iranian-backed militia leaders, hinting they would be targeted soon.

The Framework says al-Sadr went too far this time. The policy of containment has failed, as al-Sadr now sees himself as a kingmaker who can get away with anything. The Framework issued a stern warning, saying they were “patient with him for a long time” but that “this stage is over, and he will see a different approach from us in the coming days.” In what appears to be a threat to ignite a Shiite civil war, a Framework militia leader also warned al-Sadr’s militia against choosing armed confrontation.

 

Unpredictable Politician

Al-Sadr’s political biography is complicated and full of contradictions. He supports uprisings and then turns against them. He enters contradictory alliances but never loses popularity among poor Shiites. He promotes himself as the voice of dispossessed Shiites against the ruling elite’s corruption, but his representatives control lucrative Cabinet portfolios, amassing great personal wealth. He calls for the disarmament of militias but runs one of the largest and most important Shiite armed factions, Saraya al-Salam.

Al-Sadr has changed alliances many times throughout his political career. In 2003, he established the Mahdi Army, a militia that, between 2006 and 2008, cooperated with Iran to become its functionary in attacking American troops in Iraq. He also established the death squads that assassinated Sunni officers in the now-defunct armed forces, specifically air force pilots. In 2006, al-Sadr helped his former opponent, Nouri al-Maliki, become a prime minister before al-Maliki turned against him in the 2008 Battle of Basra, after which al-Sadr laid down his arms, demobilized the Mahdi Army and left for Iran. Al-Sadr nonetheless helped al-Maliki secure a second term but joined ranks with Grand Ayatollah Ali Sistani in 2014 to prevent al-Maliki from winning again.

After the October 2019 uprising against rampant corruption, al-Sadr cooperated with Shiite militias to force Prime Minister Adil Abdul-Mahdi to resign, despite promoting his candidacy in 2018. In the massive demonstrations, al-Sadr said he backed the people’s demands, sending his supporters to join the protesters, setting up tents in central Baghdad, and providing the protesters with food and medical supplies. But the demonstrators, primarily middle-class youth, questioned his intentions. They set up separate protest camps and did not allow al-Sadr’s followers to join them. By the end of the year, al-Sadr changed his position on the uprising after meeting Qassem Soleimani, the commander of the Quds Brigade of Iran’s Islamic Revolutionary Guard Corps, whom the U.S. assassinated in January 2020. Al-Sadr’s militiamen attacked the demonstrators’ tents, killing and wounding hundreds of them.

After years of following a strict Shiite policy line and cooperating with Iran, al-Sadr is beginning to give the impression that he is independent of Tehran’s influence and trying to liquidate the political role of its local proxies. He shifted from supporting pan-Shiism to Iraqi Arab nationalism as he explored domestic and regional alliances. In 2018, al-Sadr formed Sairun Alliance to promote far-reaching political reforms. The cross-sectarian and nationalist alliance comprised Shiites, Sunnis, Kurds, and six political parties, including the Iraqi Communist Party.

 

Frustrated Leader

Al-Sadr hails from a prominent religious family that formed Iraq’s most significant Shiite movement with millions of loyal followers. He inherited the group's leadership from his father, Grand Ayatollah Muhammad Sadiq al-Sadr, who sparked an uprising against Saddam Hussein’s regime in 1991 and was assassinated in 1999. His father-in-law, Ayatollah Muhammad Baqir al-Sadr, cofounded the Islamic Dawa Party in 1957 and was killed by the Baathist regime in 1980.

Known as the city of the poor, Sadr City in east Baghdad is where Muqtada al-Sadr gained influence after 2003. Despite his family background and popularity, al-Sadr failed to achieve his objective of leading Iraq. Although he is a prominent spiritual leader, al-Sadr has not yet attained the status of a mujtahid, or jurist, at the bottom of the hierarchy leading to the title of ayatollah. He is a frustrated ally of Iran, having worked closely with the Iranians until they began recruiting his men to form new militias to contest his control over Shiites. Tehran now turns a blind eye to his reckless rhetoric because it doesn’t represent any real threat to Iran's dominance of Iraq. He objects to the idea of Shiite unity promoted by Iran because it would undermine his power and influence.

Al-Sadr was accused of killing Shiite cleric Abdul-Majid al-Khoei, who was close to the U.S. after arriving in Najaf immediately following the fall of Saddam’s regime. Al-Khoei’s father, Grand Ayatollah Abu al-Qasim al-Khoei, was the leader of the Shiite seminary in Najaf until his death in 1992. Were it not for his murder, Abdul-Majid al-Khoei would have become the uncontested leader of Iraqi Shiites, and al-Sadr would not have appeared on the country’s political map. Al-Sadr’s visit to Saudi Arabia and the United Arab Emirates in 2017 raised suspicions in Iran. However, they soon faded because the rulers of the two Arab countries didn’t take him seriously. After Soleimani’s assassination, al-Sadr expected Iran to back him to become its unofficial regent in Iraq. Still, they remained at odds, partly because of the Iranians’ lack of confidence in al-Sadr’s changing moods and partly because he felt they didn’t appreciate his political importance.

Iran tolerates al-Sadr’s criticism because it doesn’t see him as a threat to its influence in Iraq. He serves Iranian interests by preventing Shiites in Iraq from joining secular political parties and ensuring they remain split between the Sadrist movement and the pro-Tehran factions organized under the Framework. Iran prefers that Iraqi Shiites disillusioned with the Framework join the Sadrist movement, which it can quickly rein in, as opposed to the secularist and nationalist Iraqi groups over which it has no influence. The Iranians remember how Shiite activist cleric Muhammad Baqir al-Sadr cofounded the Islamic Dawa Party and pulled young Shiites away from the Iraqi Communist Party, which threatened to marginalize the Najaf-based clerical establishment.

Al-Sadr’s campaign against rampant corruption in Iraq is a facade to promote his political career. While he presents himself as a staunch opponent of Iran’s presence in Iraq, he takes refuge in Iran whenever he feels threatened at home. The Iranians, meanwhile, view him as a useful adversary because of his appeal to poor Shiites, whom he can readily control.------

 

Update 28 August 2022: Balkan States Reconsider Their Alliances

A new theater in the global economic war has opened in the Balkans, the mountainous region in southeastern Europe stretching from the Adriatic to the Black Sea. Though the area is highly dependent on Russian energy and thus vulnerable to Russian political influence, it relies on the European Union for the rest of its political and economic well-being. Most Balkan states are already EU and NATO members, and those that aren’t are trying to be. They were chronically economically fragile even before the war in Ukraine, which has only compounded the ethnic and political tensions endemic to the region. Still, the war's energy crisis has worried these countries even more about their future. This concern has compelled them to reconsider their political and economic alignments, even if forces will shape their futures mainly outside their control.

 

Changing Course

At the heart of the matter is the energy sector. Since most Balkan states (save Romania and Greece) depend on Russia for most of their energy, the way they choose to shape their relationships with Moscow is telling about their strategies within the context of the global economic war.

In Bulgaria, Energy Minister Rosen Hristov said the government would inevitably renew negotiations with Russia over gas supplies, which Moscow unilaterally stopped at the end of April when Bulgaria refused to pay Russia in rubles. Paying in rubles at that time would have violated Western sanctions, so Sofia opted to work with Romania on an interconnector that shipped Romanian gas to Bulgaria and with Greece on an interconnector that shipped U.S. liquified natural gas, come what may from Russia.

However, the government has calculated that rerouted LNG from Greece is about 50 percent more expensive than gas from Russia. That may or may not be true – the vagaries of an unstable energy market and the existence of sanctions make it difficult to verify – but even if it were, Bulgaria is signaling that it would be willing to violate sanctions to protect its economic interests, especially since Russia has a history of lowering prices for political benefits. Prices aside, Bulgaria’s decision would likely have an impact, however small, on EU political unity, which is essential if Brussels wants to diminish its overall dependency on Russian energy.

Meanwhile, when Russia cut supplies to Bulgaria in April, Serbia and Hungary worried that their deliveries, which share a pipeline network with Bulgaria, would be affected. Belgrade has been working to diversify its gas supply options to hedge its bets. On Aug. 22, after a call between Azerbaijani President Ilham Aliyev and Serbian President Aleksandar Vucic, it was confirmed that Serbia would receive energy from Azerbaijan on “favorable terms,” per a memorandum of understanding signed in June. For that to happen, an interconnector must be built between Serbia and Bulgaria. The project is already underway but won’t be ready until next year.

In the meantime, Belgrade has also tried to secure LNG from terminals in Greece and Croatia, most of which is coming from the U.S. at similar prices to what Bulgaria and other European countries are buying. In addition, Serbia announced at the end of July that it would form a working group on the energy crisis and joint strategic projects with North Macedonia and Albania and is looking to expedite the construction of the interconnector with Romania. The buildup of interconnectors takes time, but they are long-term solutions to strategic problems that will bring Belgrade closer to the West and the EU.

 

Non-Starter

The prospect of Serbia becoming more energy-diverse has prompted the government to declare that it will stop importing Russian crude on Nov. 1, effectively joining the Western sanctions regime. Interestingly, the statement came after a comment made at the beginning of the month by Russia’s ambassador to Serbia that Moscow was interested in opening a military base there. It created a lot of anxiety in Serbia, with the president saying that Serbia doesn’t need “anyone’s military bases.”

With no response coming from Moscow, tensions between Moscow and Belgrade have only grown. On Aug. 23, Serbia’s deputy prime minister said that while Serbia had decided not to join sanctions in February, it has “clearly decided against the war in Ukraine,” calling on Russia's foreign minister to respect its position and no longer describe Serbia as supporting the conflict. The Serbian media widely carried out the statements for a good reason: It is the first time that the Serbian government has openly criticized Russia’s position there.

Serbia’s multi-vector foreign policy is a function of its geopolitical imperative to balance between the great powers. Belgrade has thus maintained good relations with Russia and the EU and has engaged with China while keeping a safe distance from the U.S., which the public still regards as the aggressor in the NATO intervention in the 1990s. However, seeing the diminishing power and the economic problems that Russia, China, and, to a lesser extent, the EU are facing, Serbia has had to warm up to the U.S.

The war in Ukraine seems to have validated Serbia’s strategy. This is why Belgrade is betting on the West, as its relationship with Russia becomes toxic. Belgrade can’t support Russia in asking for the independence of Donetsk and Luhansk – there are too many similarities between that territory’s fate and Kosovo’s. Keeping Russia in Ukraine would be tantamount to supporting Kosovo’s independence, a non-starter for Belgrade. At the same time, Serbia’s economy mainly depends on the EU, which pushes Belgrade to prioritize its relationship with the West.

Perhaps more important – and what best explains Belgrade’s reaction to Russia’s proposal for a military base – is that Serbia understands Russia could choose to use the Balkans to flank the West. The Balkans would create another critical line of attack for the Kremlin, forcing the dispersal of defensive forces and creating new opportunities for attack. But it would also be dangerous for European stability in the long run. And this is something Moscow and Washington understand as well as Belgrade does. The U.S. and the EU have been active diplomatically in the region, either by facilitating discussions between the Kosovars and the Serbs to reach an agreement over issues such as government-issued IDs and license plates in northern Kosovo, talking about how they can help support the local economies or monitoring for potential new instability.

However, it is the way the global economic war is pressing the Balkan states and the way the kinetic war is evolving in Ukraine that will define the region’s future. The decision of a major power to open a new flank, or to block the opening of a new flank in the Balkans, dramatically influences regional stability. This is why seemingly passive statements like those made by Russia’s ambassador have to be taken seriously. As Europe enters another and more complex stage of the war, such statements have the power to drive strategic realignments.-----

 

Update August 29, 2022: The German Weapons Shortage

Germany’s foreign minister suggested that Germany cannot send more of its weapons to Ukraine because it has deficient supplies. If this story is true, it means that Germany, with the largest economy in Europe, does not have the facilities to rapidly produce more weapons – despite pledging money for the production of weapons for Ukraine. The money matters, but only to an extent. The capacity of other NATO countries to provide weapons to Ukraine also has production limits. Although the German problem was anticipated from almost the beginning of the war in Ukraine, and Germany has provided cash in place of weapons, there are several considerations.

First, as is widely known, Europe and Germany are facing a freezing winter as Russian energy exports decline. It’s possible that the German weapons “deficit” is a concession to Russia. Still, it’s doubtful: Berlin could not do this without it being widely known in NATO, where member states' weapons capacities are known, and production is tracked. This would get out to the Ukrainians, Poles, and Americans. We would have heard about this by now.

More important is what this tells us about NATO. NATO is supposedly the guarantor of Europe’s national sovereignties. Germany, Europe’s premier economy, had enough weapons to provide a small degree of support to Ukraine. But the hard truth is that the Ukraine war is a relatively minor, if tragic, conflict in the overall European picture. If Russia were to take Ukraine, including its far western border, it would theoretically be able to move farther west into NATO countries. The United States, the United Kingdom, Poland, and potentially France have significant force capabilities, but the United States would shoulder, by treaty, the main burden. If this situation came to pass, another Cold War and potentially another U.S.-confrontation would follow. Therefore, Germany’s failure to create a defense industry commensurate to the size of its economy is inappropriate and raises questions about the rest of Europe’s production capacity.

This problem arose from the European myth that war is obsolete and that the primary purpose of Europe is to build perpetual prosperity. The EU motto, after all, is peace and prosperity. The former was regarded as evidence, and the latter followed. Europe compounded this myth by constructing a quasi-state, in the form of the European Union, that was solely focused on economic well-being, with the added purpose of creating a European identity. Military affairs were left to individual states. Since the United States was a member of NATO and, as such, anchored Europe’s military security, Washington became the de facto guarantor of European security.

Germany’s weapons deficit reveals as much. Given its position as the largest European economy and as a NATO member, it is reasonable to have expected Germany to maintain or build weapons production facilities out of a sense of responsibility. It could have also led the EU writ large in creating weapons production capacity or fostering the growth of a European military. Since the EU’s annual gross domestic product is roughly the same as America’s, that would have allowed the Europeans to absorb the risk of waging a Ukrainian war with European weapons and forces.

Since a war in Europe was farfetched when the EU got rolling, no one wanted to fund such an undertaking, leaving it to NATO and, therefore, the United States – a most cost-effective measure. But the underlying truth is that the EU consists of members who distrust each other much. The command structure of a European military would be hotly contested, and the growing power of some countries would indeed be discussed.

It is dangerous to be rich and weak. Such nations are frequently seen as a tasty meal. That is how Europe appears to be a global predator. The United States, rich and robust, has to defend Europe because the wealth, technology, and knowledge in the hands of other states might imperil the United States. The Europeans have for centuries mastered the art of using weakness effectively.

I do not regard the German production shortfall as a cause for genuine concern. But in the long run, the European belief that the Continent faces no threats or that the U.S. will assume the risk and cost of defending Europe from whatever risks exist can last only so long. Europe should remain militarily weak. History shows that a well-armed, divided continent is savage beyond imagination. Armament and disarmament are both troubling. Something that is not an issue now always becomes a frightening issue in Europe eventually.

 

Update 30 August 2022: Making Sense Of Russia’s Pause In Ukraine

Its Ukraine offensive having ground to a halt, Russia’s military on Sept. 1 will start drills in an unlikely location: the Far East. Taking place at the Russian Eastern Military District’s training grounds, the Sea of Okhotsk and the Sea of Japan, Vostok 2022 will involve more than 50,000 personnel and more than 5,000 weapons and pieces of equipment, including 140 aircraft and 60 vessels. With the Ukraine war dragging on longer than anticipated, the apparent slowdown in Russian operations – beginning a few weeks ago around the Zaporizhzhia nuclear power plant – may be deliberate. The Kremlin may be pausing for a strategic rethink.

A state of Russia’s size, with Russia’s diverse set of neighbors, is bound to be pulled in multiple directions from time to time. Starting east and moving clockwise, Moscow faces China’s rise, terrorism and general instability in Central Asia and the Middle East, the chronic war in the Caucasus, Turkey’s rise, the war in Ukraine, instability in the Balkans, and NATO’s reawakening and likely enlargement. Russia’s war in Ukraine presents opportunities for the Kremlin’s enemies and dissatisfied regional actors to upset the status quo in other parts of Russia’s periphery.

 

Caucasus

The first region bordering Russia to destabilize since the start of the war was the Caucasus, a critical intersection between the Black and Caspian seas and between Russia and the Middle East. Soon after the war began, Armenian and Azerbaijani representatives started making more frequent trips to Brussels, which saw an opportunity to seize the initiative from a distracted Moscow and mediate in a long-standing territorial dispute. Ultimately, though, Western activity in the region remains a distraction, and Russia still has peacekeepers and plenty of other leverage. The other day Moscow ensured a three-way agreement between itself, Armenia and Azerbaijan was fulfilled. The deal saw Azerbaijani forces assume control from Russian peacekeepers of the city of Lachin in Nagorno-Karabakh and two villages in the Lachin region.

 

Middle East

In the Middle East, all eyes are on Iran, where attempts are underway to revive the Joint Comprehensive Plan of Action. Many senior U.S. and European officials say a deal is close and could be weeks away. This is bad news for Russian officials, for whom energy scarcity is a key leverage. It would be bad news if Iranian oil and natural gas were to flood the market while the West is trying to choke off Russian energy exports.

Syria is another problem spot. Following recent rocket attacks on American bases in the country, the U.S. launched airstrikes on pro-Iranian paramilitary positions in Deir el-Zour province. Israel also occasionally conducts airstrikes in Syria. And NATO member Turkey has for months threatened another military operation in northern Syria. For Russia, Syria is an essential gateway to the Mediterranean and the extension of Russian influence to Africa and more remote parts of the Middle East. Still, there’s only so much it can do while simultaneously at war in Ukraine.

 

Balkans

In the Balkans, Russia, a close ally of Serbia, has watched anxiously as the West tries to sideline it. At the end of July, relations deteriorated again between Kosovo and Serbia after Pristina said it would issue entry and exit documents to Serbs at the border. The U.S. and EU stepped in to defuse the situation temporarily. The West has also scaled up weapons deliveries to Kosovo, with the U.K. sending more than 50 Javelin and NLAW anti-tank systems and announcing plans to train Kosovo soldiers on the weapons. Moreover, Western sanctions on Russian oil tanker deliveries will prevent Serbia from receiving Russian oil beginning on Nov. 1.

 

Central Asia

Central Asia is not as important to the U.S. and Europe as other areas, but the U.S. can still cause problems in the region for Russia. For example, Kyrgyzstan has warned that Afghan terrorist groups could, in the next few months, launch attacks in the area, particularly in Tajikistan. The Taliban regime is a tool for the U.S. to destabilize Central Asia, it said. Meanwhile, the Tajik government reported a tripling of drug trafficking through its territory over the past year. It said terrorist groups gathering in Badakhshan, northeast Afghanistan, threaten itself and the region.

Russia’s concern is that the U.S. may try to step in and present itself as an alternative leader and mediator in the region. It’s a sore spot for the Kremlin, which has seen China and Turkey erode its economic and social influence, leaving it with only its military power – Moscow operates bases in Tajikistan and Kyrgyzstan – to comfortably fall back on. And already, there are early signs of Western encroachment. The U.S. has significantly stepped up its cooperation with Central Asia since February. Especially concerning Moscow was August’s Regional Cooperation 2022 exercises involving the U.S., Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan. Separately, Uzbekistan’s National Guard announced expanded military cooperation with the U.S., including training Uzbek military specialists.

Therefore, we should expect the Kremlin to prioritize Central Asia ties via diplomacy, joint exercises, and joint initiatives. Central Asia is a large market for Russian goods and a transit hub to bypass Western sanctions, but Russia needs significant influence in the region to benefit. This is why Russian authorities spent last week at the Shanghai Cooperation Organization meeting drawing attention to the problem. Defense Minister Sergei Shoigu said Moscow is increasing its combat readiness at bases in Kyrgyzstan and Tajikistan due to the state of affairs in Afghanistan. He also announced an SCO counterterrorism exercise, Peace Mission 2023, to be held next year in Russia. He reaffirmed plans for Collective Security Treaty Organization drills in Kazakhstan, Kyrgyzstan, and Tajikistan in the fall.

 

Conclusion

Moscow didn’t expect to be tied down for so long in Ukraine, so, naturally, it might pause its operations to deal with peripheral threats. The war is seriously exhausting Russia, draining ammunition and wearing down weapons it would need to react to, for example, terrorism in Central Asia. But having learned the lessons of history, the Kremlin is making sure not to throw all its forces and attention in one direction. Russia will need to save some of its strength for the long struggle that seems to lie ahead.-----

 

Update 1 September 2022; The Dilemma Of Resolving The Syrian Conflict

The Syrian conflict has largely disappeared from the headlines as the country’s political situation has reached a stalemate. But the protracted war often garners more attention when major events abroad involve one or more of its key players. Such is the war in Ukraine's effect on the Syrian crisis. Prospects for ending the conflict are bleak, considering the regime’s disinterest in a settlement and the country’s fragmented population. Given the region's emerging order, peace in Syria would also require foreign actors to reach an agreement, which is unlikely because of their conflicting interests.

 

No End In Sight

The Syrian conflict has no end in sight. The essential dilemma is that none of the peace initiatives proposed since 2011 has explicitly addressed Bashar Assad’s role in the transition period and his political fate in postwar Syria. It’s the only Arab country whose uprising did not lead to the head of state’s fall, resulting in a protracted conflict causing incalculable human loss, demographic dislocation, and material destruction. Many Arab political systems are autocratic and repressive. Still, in Syria, where the Alawite minority has ruled since Hafez Assad took power in 1971, the level of repression at its peak probably exceeded even the oppression under Saddam Hussein’s regime in Iraq.

The fall of Hosni Mubarak’s government in Egypt inspired the Syrian uprising, which initially did not demand the regime’s collapse. Peaceful demonstrators presented moderate demands for freedom and combating corruption, but the army attempted to nip the protests in the bud. Syrians still hopeful that Assad would lead Syria’s reform process were disappointed by his speech on March 30, 2011, in which he described the protests as a seditious conspiracy orchestrated by foreign powers and pledged to defeat them before proceeding with reforms. Understandably, most Syrians today would prefer that Assad be removed from national politics altogether. More than a decade after the uprising that turned into a bloody civil war, he hasn’t delivered his promises of reform, reconstruction, and repatriation of refugees.

For Assad, a monopoly of power guarantees that the existential threat to him and the Alawite sect will be eradicated. His supporters destroyed the country to protect his presidency, and he has ignored all attempts at making peace. In August 2011, U.S. President Obama said Assad must introduce fundamental reforms or step down. In 2012, the Arab League announced an initiative that involved Assad giving up his powers and relying on his deputy, Farouk al-Shara, to lead a transitional phase that would end with genuine reforms. But the regime in Damascus categorically rejected it, and since then, al-Shara has disappeared from the political scene. Also in 2012, former U.N. Secretary-General Kofi Annan presented a peace plan that did not explicitly refer to Assad’s departure but emphasized the need for a political solution that would meet the aspirations of the Syrian people, hinting that a fundamental change in the regime’s structure would not allow for Assad’s continued rule. Then came the Geneva Conference, which resulted in a plan for a political solution unanimously adopted by the U.N. Security Council in Resolution 2254 in December 2015.

The Geneva plan also didn’t explicitly require Assad’s removal from power. It provided a roadmap to an acceptable settlement for the countries that agreed to it, primarily the U.S. and Russia. The document discussed the formation of a transitional governing body comprising the regime, the opposition, and civil society representatives, with full executive powers that would eventually lead to a democratic government. It also stipulated that the body would be formed by consensus, considered by observers as a positive ambiguity as it gave veto power to both the opposition and the regime. Still, opposition forces believed that Assad would have to be excluded from the country’s future as a prerequisite for reaching a political solution. Most countries that participated in the Geneva Conference also agreed that Assad had no place in Syria’s future – save for Russia, which upheld Assad’s right to be part of the transition and to run for the presidency again.

With Moscow’s intervention beginning in September 2015, the peace process took a different path. The Astana and Sochi talks supplanted the Geneva document. Accompanying these developments were the growing disputes between the opposition’s supporters. The Russians regained the upper hand on the ground, eventually luring Turkey to the Astana process. Russia’s approach to ending the fighting involved two components. The first focused on establishing a durable cease-fire and four de-escalation zones, which meant the destruction of opposition-controlled areas and the relocation of rebel fighters to the northwestern province of Idlib. In the second component, Russia prioritized forming a committee to amend the 2012 constitution or draft a new one. More than seven years after the Astana process began, the constitution remains unchanged.

This approach contradicts U.N. Resolution 2254, which called for a transitional government followed by a constitutional process leading to parliamentary and presidential elections. But the international parties that supported the opposition did not take a stand against Russia’s undermining of the Geneva document. Some countries even quietly advised the opposition to participate in the Astana process due to the lack of viable alternatives. The issue of Assad’s exit from politics was no longer a priority for diplomatic efforts. In 2021, Assad ran for a fourth presidential term and won seven more years in office.

 

The Challenge Of Reconstruction

U.S. sanctions, imposed under the 2020 Caesar act, prevented Assad from turning his military victory into a political one by linking Syria’s reconstruction process to a political solution. The lack of progress on several fronts hampers reconstruction efforts. The peace process is stalled. A quarter of Syria’s 22 million people have fled, and another quarter has been internally displaced. The economy and infrastructure are in tatters. Illiteracy has risen, with no more than 37 percent of children having access to primary education. More than 90 percent of Syrians live in poverty, and 60 percent suffer from food insecurity. Most strategic resources, such as hydroelectric dams, oil fields, and phosphate mines, are out of the regime’s control.

The only real stick that countries opposing Assad have used are unilateral sanctions, which have allowed his principal backers in Iran, Russia, and China to continue to prop up his regime unimpeded. Assad bypassed the sanctions, leaving his people to bear the burden. The cost of rebuilding Syria exceeds $1 trillion, and even if the antagonists could find a solution to the conflict, it’s unlikely that investors would want to play a role in the country’s rehabilitation, with the business environment still unstable and corruption rampant.

 

De Facto Partitioning

Since Russia’s war in Ukraine began, the Astana process has become less effective. The last meeting of the Astana group – consisting of Russia, Iran, and Turkey – was held in Tehran less than two months ago with no tangible results. Syria seems at risk of partitioning, with influential countries concluding that resolution of the conflict is futile and containment is the best possible scenario.

A political settlement would be disastrous for Assad because any reconciliation arrangement would eventually lead to his ouster. Syrians, including many Alawites, are tired of living under his control. Less than a third of residents in areas under his rule support him, while two-thirds of residents want to emigrate. Sanctions are not strong enough of a deterrent to force Assad to accept a genuine settlement.

Syria’s fate is ambiguous because the presence of foreign militaries does not allow any parties to the conflict to decide the country’s future. It seems partitioning is the only possible way out of the predicament. The government has already de facto partitioned, with national, religious, sectarian, and political factions having developed self-administrations to manage their civil affairs. The regime, meanwhile, seems to have bet that Syria’s return to the Arab League, if it happens, will end the crisis on its terms.

The French destroyed the Arab Kingdom of Syria in 1920 and controlled it until 1943, creating an artificial state without foundations. The Syrian state brought together an amalgam of disharmonious people since France built it on a sectarian and ethnic fault line. It was only a matter of time before it disintegrated, and reconstituting it is implausible.-----

 

Update 2 September 2022: Pipeline Networks In Southeastern Europe

 

Europe has seen record prices for natural gas and electricity in recent months mainly due to the invasion of Ukraine by Russia, a major energy supplier to the Continent. Southeastern Europe is particularly vulnerable to the socio-economic implications of these rising costs, considering the region’s political and economic fragility and its reliance on energy supplies from Russia. Hungary is highly dependent on Russian energy and recently signed another deal with Moscow for more gas. Bulgaria, Serbia, Bosnia and Herzegovina, and North Macedonia rely heavily on Russian supplies. Meanwhile, electricity infrastructure in many parts of the region needs repair and investment, which will become increasingly important as countries look for alternative energy sources.

The current pipeline system is focused on Russian supplies flowing through the Trans-Balkan pipeline and gas from Azerbaijan through the Trans-Anatolian pipeline. The BRUA network links Bulgaria, Romania, Hungary, and Austria to these supplies through interconnectors. Now countries are considering ways to tap into other sources. Serbia, for instance, is looking to build interconnectors with Romania, Bulgaria, and North Macedonia to access gas from Azerbaijan and Romania. But such projects take years to construct, meaning countries in Southeastern Europe will remain dependent on Russian energy for the time being. The situation is somewhat different regarding liquified natural gas since it can be supplied by road from major terminals. But many heating systems are made to work on natural gas rather than LNG, meaning these systems will also require replacement or adaptation and, therefore, more investment.----

 

Update 6 September 2022: Japan: An Empire Reawakened?

 

Understanding Japan’s Background As A Great Power

As Professor Jared Diamond argues, the uniqueness of Japan is determined by its geography. Although the Japanese archipelago belongs to the Far East, it is substantially separated from the Asian mainland (South Korea, its closest neighbor, is more than 1,000 kilometers away). This paradoxical sense of simultaneous closeness and remoteness is noticeable in several traits that have historically shaped Japanese society's characteristic Asianness, including the Japanese language's unique profile. Furthermore, Japan has located in an area peripheral to the Eurasian landmass referred to as the rimland in the theoretical geopolitical thinking of Nicholas Spykman. Therefore, such a position means that the natural expansionism of continental powers such as China and Russia often threatens Japanese national security. In other words, Japan’s situation is somewhat analogous to that of Britain in Europe. This maritime condition offers a direct and dynamic gateway to interact with the broader world in trade, diplomacy, and military matters. On the other hand, Japan’s terrain is very rugged, a reality that often influences the development of clannish, homogeneous, conservative societies that are wary of outsiders.

As a result of its fateful exposure to prosperous and powerful sea-faring Western empires that had reached the Orient in the Meiji era, Japan decided to embark on the path of industrial development, economic modernization, and technological progress. This course of action was also inspired by the ideas of both classical mercantilism and the economic nationalism of thinkers like Friedrich List, according to which the parallel pursuit of wealth, power, and security is complementary. However, Japan did not embrace Western liberalism. The rising prosperity of the Japanese economy gave birth to an oligopolistic structure in which the Zaibatsu ‒ large business clans whose nerve centers were run by dynastic families, were involved in multiple activities across several economic sectors through a constellation of subsidiaries and integrated with their sources of funding and financial services ‒ were organically connected to the state. The profits made by these groups of companies were instrumental in increasing the overall prosperity of Japanese society and, in turn, the state fostered their growth through contracts, access to new consumer markets for the manufactured goods they produced ‒ as well as to the supply of raw materials ‒ and the implementation of a foreign policy that favored their corporate interests. Likewise, the advanced capabilities of these firms were also useful in enhancing the hardware of the Japanese military.

Unsurprisingly, the meteoric rise of Japanese power increased the ambition of the Japanese empire. In this context, Japanese statecraft abandoned the isolation that had lasted for centuries to assume an increasingly assertive and aggressive role in the geopolitics of the Pacific. Japanese forces conquered Korea, Taiwan, and Manchuria. Moreover, emboldened by its victory over China and later Russia, the Japanese state adopted an expansionist grand strategy to establish a “Greater East Asia Co-Prosperity Sphere” under Tokyo’s hegemony. This imperial project contemplated the direct control of much of Southeast Asia ‒ including pivotal strategic positions such as Singapore, the Philippine Archipelago, and the Strait of Malacca ‒ much of China’s coastline and territories held by the Soviet Union in the Far East, but it went even further because its subsequent steps (if the Axis powers managed to achieve victory) sought the subjugation of Australia, New Zealand, the Southern tip of the Indian subcontinent and even Alaska and the American West Coast as either satellites or vassals. Such quest for Lebensraum entailed the eviction of Western powers from Asia and the acquisition of natural resources (including oil, minerals, rubber, and fertile soil suitable for growing cash crops) that were needed to sustain Japan’s status as a major force to be reckoned with on a global scale because of their applications in the production of machinery, logistical infrastructure, vehicles, and weaponry. Once regarded as a Spanish lake, the Pacific basin would become a space under exclusive Japanese suzerainty. In this new Asian order, harmony would supposedly prevail thanks to shared common denominators regarding cultural affinities.

This revisionist plan threatened to undermine the condition the United States had reached as a Pacific heavyweight based on the naval strategies formulated by Admiral Alfred Thayer Mahan. The Americans decided to fight back and engage Japanese forces in response to the said challenge. This intervention, combined with the proliferation of local resistance that emerged as a natural reaction against the atrocities committed by Japanese invaders, stopped the completion of Tokyo’s grandiose imperial schemes. After several significant battles, the fierce wave of Japanese expansionism was decisively repelled and reversed. Even after Germany surrendered, the Japanese kept fighting even though their position was pretty much hopeless. Tokyo finally capitulated shortly after the US dropped nuclear weapons on two Japanese cities. Washington resorted to such weapons of mass destruction because it wanted to avoid the costs of a ground invasion, prevent Japan's partition, and send a strong message to the Soviet Union as the configuration of a bipolar balance of power was already on the horizon.

 

Japan Reinvents Itself During The Cold War

When Japan was vanquished, an intense geopolitical confrontation was already emerging. In this rising strategic competition between the United States ‒ the world’s leading sea power ‒ and the Soviet Union ‒ the world’s top telluric power ‒ for global hegemony, both superpowers sought to gain footholds in pivotal regions. As a maritime power from the so-called “outer crescent,” the American leviathan pursued a policy of containment to keep in check the reach of Soviet power in Europe, an imperative that was accomplished through the establishment of NATO. However, from Washington’s perspective, a “cordon sanitaire” was also needed in the Far East because the People’s Republic of China was repositioning itself as the Kremlin’s junior partner. Likewise, the Americans needed to prevent the potential expansion of Soviet naval power through the port of Vladivostok. These circumstances provided a window of opportunity for the Japanese state. Otherwise, its fate would have surely been quite different. Thus, the Japanese were offered a deal they could not reject. In exchange for access to the American consumer markets, the availability of credit for reconstruction and the reactivation of economic dynamism, the unrestricted ability to engage in international trade, and ‒ above all ‒ the protection of Washington’s security guarantees, Tokyo had to accept the strategic, geopolitical and military tutelage of the Americans as a junior partner. The decision was a no-brainer. Thus, during much of the Cold War, Japan operated as an anchor of American influence and a potential spearhead against the Soviet Union and China. Without Japan, the position of the US as an Asiatic power would have been compromised. Although tensions remained frozen in Europe, the eruption of military hostilities in both the Korean peninsula and Indochina vividly demonstrated that the Asia-Pacific region was an important front of the Cold War.

Although unsaid, an additional tacit purpose of Japan’s subordinate position as an American beachhead was to prevent the resurgence of Japanese military aggressiveness. Since its defense was essentially outsourced to the US ‒ a reality detrimental in terms of national sovereignty ‒ Tokyo had no choice but to curtail its ambitions and exercise restraint, even though Japan never fully eschewed its former dreams of imperial glory. In this context, the Japanese reinvented the nature of their national power. Following a policy inspired by the theoretical principles of “mercantile realism” (an intellectual prism that remodels the concepts of national security, Realpolitik, diplomacy, and grand strategy following economic, industrial, commercial, and financial criteria), Tokyo became a mercurial geoeconomic heavyweight.

Thus, the Japanese managed to revitalize the international competitiveness of their industrial companies, increase their market power in productive sectors whose outputs entail a high degree of added value, forge profitable trade partnerships, and nurture the development of comparative advantages in the domain of advanced technologies. Keiretsu ‒ financially integrated and heavily interwoven business structures that represent the spiritual successors of the old zaibatsu ‒ such as Mitsubishi, Toyota, Toshiba, and Nissan acted as the galleons that filled the coffers of the Japanese state. “Japan, Inc.” was no longer interested in invading foreign nations, but its corporate vectors could conquer overseas markets through expansion, commerce, and investments. In this field, Japanese firms had the chance to engage and even outperform their American and European counterparts. The Japanese wanted to overtake the West regarding economic and technological superiority. In summary, after abandoning its traditional warrior ethos, Japan had become a nation of merchant princelings, professional technocrats, engineers, and salarymen.

Interestingly, even though the Japanese yen became an important reserve currency, Tokyo supported the dollar’s monetary hegemony. Japan accumulated massive amounts of holdings denominated in greenbacks thanks to its exports. Such a decision was mainly motivated not only by economic considerations but also based on strategic calculations. In this period, as Robert Gilpin and other scholars of political economy have highlighted, Japanese developmental capitalism was notorious for its managerial excellence, the proliferation of skillful technocracies, an emphasis on the collective harmony of Japanese society, export-led growth, a penchant for innovative R&D programs, a synergic collaboration between the private sector and governmental agencies, the cooperative implementation of industrial policies, informal networks of mutual trust in the higher echelons of corporate governance systems, the assertive use of market intelligence as a strategic tool and the outstanding quality of its manufactured goods. In a nutshell, the Japanese became masterful practitioners of economic statecraft.

Nevertheless, the balance of power changed as a result of the Soviet Union’s economic and technological stagnation, Moscow’s counterproductive military intervention in Afghanistan, the Saudi-American pact to bring down oil prices, boiling turmoil in the Warsaw Pact states of Eastern Europe, the reproaching between the US and the People’s Republic of China and the growing process of European integration. In the late Cold War, some American geopolitical forecasters anticipated that the US and Japan would eventually collide again in the coming decades. In turn, Japanese business and political elites started flirting with the idea of adopting closer ties to Asia and mitigating overreliance on the US, a course of action that would be convenient to harness the regional presence of Japanese firms strategically, generate mutually complementary economic partnerships and leverage cutting-edge Japanese advantages in a quest to attain regional leadership.

Finally, another distinctive trait of this era is an active effort to strengthen Japanese “soft power.” This pursuit responds to the need to minimize the shadow of militaristic aggression that still tarnishes Japan’s international reputation, increase business opportunities for Japanese firms in foreign consumer markets and bolster the Japanese state's international prestige, attractiveness, and influence. Hence, Japan has projected its cultural influence through figurative elements of its traditional cuisine and beverages, martial arts, anime, classical and contemporary literature, poetry, films, music, videogames, ceremonial items, decorative handicrafts, mysticism, and iconic characters of Japanese history (samurais, ninjas, geishas). Likewise, the sophistication of Japanese technology, the allure of Japanese luxury items, the entrepreneurial prowess, and the world-class prominence of Japanese firms have also made Japan look cool.

 

The Samurai Returns?

In the post-Cold War era, Japan’s strategic environment changed dramatically. The rise of China as a great power that harbors far-reaching geopolitical and geoeconomic ambitions, the emergence of India as a regional heavyweight, the increasingly complex strategic competition between Beijing and Washington, the efforts undertaken by the Middle Kingdom to upgrade its naval capabilities, the confrontation between Russia and the West over Ukraine and North Korea’s intermittent acts of nuclear saber-rattling are all game changers that entail tectonic impacts for Tokyo. Likewise, the prospect of conflict over Taiwan, a potential Korean reunification, and eventual geopolitical realignments in the Asia-Pacific region ‒ an area that is becoming a global center of gravity in terms of both high politics and economic dynamism ‒ would be problematic too. So far, it seems that Japan is firmly anchored to the orbit of the United States, particularly in the security domain. The Americans classify Japan as a major non-NATO ally, and the East Asian country hosts a significant American military presence, including air bases, naval facilities, and arsenals. Tokyo has privileged access to purchase sophisticated American-made weapons, including fighter jets such as F-35s. Additionally, there are collaborative ties between Japan and the Five Eyes, a comprehensive intelligence-sharing alliance headed by the US that includes the UK, Canada, Australia, and New Zealand. Notably, Japan has also joined the so-called “Quad” (an alliance that also consists of the US, Australia, and India that intends to operate as an Asian equivalent of NATO) whose purpose is to contain the influence of China, an understandable move if one considers that Tokyo does not have what it takes to face the challenge of an increasingly powerful and assertive Middle Kingdom on its own.

Furthermore, Japan belongs to the G7, a group controlled by Atlanticist powers. Japanese elites have been co-opted through their participation in secretive networks of power brokers, strategic thinkers, and business moguls such as the Trilateral Commission. On the other hand, Japan is seemingly preparing to challenge the Belt and Road Initiative, a Chinese project launched to create an axis of geoeconomic interconnectedness that would cover much of the Eurasian landmass through transnational infrastructure networks. Tokyo seeks to take care of that through the development of alternative multilateral frameworks and interfaces ‒ which would involve logistical corridors, energy, digital telecom platforms, trade, rules, and the flow of investments – with Washington and Brussels as a conduit to bypass and counterbalance the schemes designed by Beijing.

Nevertheless, subtle signs suggest that Japan’s pro-Western strategic orientation must not be perpetually taken for granted. Siding with the US military against China in a direct clash would bring dangerous risks (i.e., heavy retaliation) for Tokyo, and its political and material preparedness to deal with such an outcome is unclear. Relying on the protection of the American nuclear umbrella for defensive purposes is one thing but joining a campaign of expeditionary warfare is entirely different. Alternatively, the decline of US hegemony or a reluctance to engage due to the influence of isolationist political sentiments in DC would naturally force Japan to reassess its position to strengthen its independence and seek a favorable balance of power. Another paradox is that even though Japan proactively joined the Western campaign of economic warfare against Russia through sanctions, the East Asian nation is still an importer of Russian fossil fuels, including oil, natural gas, and coal. Tellingly, the Japanese private firm JERA ‒ the country’s largest electricity generator ‒ has recently renewed contracts for the long-term delivery of Russian energy from the LNG plant located in Sakhalin-2, despite the atmosphere of mutual hostility between the Kremlin and the West and the fallout derived of the Ukraine War. How this ambivalence towards Moscow will be handled in the foreseeable future is unknown.

Geopolitical thinkers have formulated some intriguing predictions that augur a Japanese strategic realignment. For instance, General Karl Haushofer believed that, in the long run, the Japanese state would eventually join the bloc of pan-Eurasian powers against their Atlanticist counterparts, adding as a suggestive precedent that, as imperial states, both China and Japan had co-existed symbiotically for centuries, a reality that could be feasible once more in a multipolar world. This would require overcoming historical animosities and unsettled territorial disputes, as well as the shared willingness to foster collaborative ties to promote some accommodation, most likely through a geoeconomic arrangement. Interestingly, Indian thinker Parag Khanna holds that Japan will be gradually attracted by the economic, cultural, identitarian, and civilizational gravitational pull of an emerging ‒ and pluralistic ‒ Asian world order as one of its pillars, not as a mere satellite. Based on the assumption that the Middle Kingdom’s power will decline rather than continue its ascending trajectory, American analyst George Friedman goes even further. He contends that the national interests of Japan and the US will clash in both the Pacific Basin and outer space in the coming decades, a collision that might very well lead to an actual kinetic war. Although these predictions are heterogenous, they all agree that the march of history will convince Japan to become a key protagonist in what is to come in one way or another.

An important factor that needs to be kept in mind is that Japan’s national power has been underutilized. That might change if the Japanese state decides that it is time to assume a more assertive and independent role. After all, Japan has the world’s third largest GDP (according to Harvard’s Atlas of Economic Complexity, Japan is the most sophisticated economy in the entire world), its military-industrial complex manufactures state-of-the-art weaponry (the ongoing development of the Mitsubishi F-X as a sixth-generation stealth fighter is an impressive reminder of that), it has a blue water navy with regional power projection capabilities and ‒ thanks to a pool of formidable scientific cadres ‒ is well positioned to harness the strategic, military and commercial benefits of the “Fourth Industrial Revolution,” Likewise, Japan has the technical expertise that would be needed to develop its nuclear weapons program. In an uncertain world in which the weaponization of complex interdependence, financial volatility and the incidence of systemic economic disruptions have become commonplace, the autonomous preservation of reliable access to international consumer markets and the supply of natural resources is a vital priority for Japanese national security. Its satisfaction cannot be placed purely in the hands of foreigners.

Flowery rhetoric aside, Japan does not honestly share the abstract principles of the so-called Western model of liberal world order or the cosmopolitan worldview held by the so-called “open societies.” Instead, the fact that Tokyo has been clever and pragmatic enough to instrumentally harvest the concrete benefits provided by “Pax Americana” ‒ such as the US nuclear umbrella and the availability of open waterways in the Indo-Pacific ‒ projects that illusion. Certain factions within the Japanese political class are staunchly convinced that reviving the Japanese imperial tradition is the wisest course of action so that this country can play an assertive role within the international system. The late Shinzo Abe was a political representative of this view. The hawkish ideology that encouraged Japan to walk the path of war in the 20th century never vanished. Hardline Japanese nationalism remained dormant, waiting to be reawakened. The current circumstances offer a window of opportunity to pursue such an agenda. A telling indicator that likely points in said direction is the reactivation of the Japanese military, the proliferation of military cooperation with strategic partners, and the rise of defense expenditures.

 

Concluding Remarks

Japan could afford to adopt a comfortable policy of benign neglect during the Cold War and focus on business instead. However, the circumstances that favored preserving the status quo in the Indo-Pacific ‒ underpinned by the strong presence of the Americans in the said area ‒ are withering away. Regional stability and the redefinition of the global balance of power are now at stake. In addition, implementing ambitious revisionist projects is already underway in several corners of the world. Therefore, the Japanese can no longer rely on inertia in an increasingly uncertain, dangerous, hostile, and confrontational international system in which several expressions of conflict proliferate in multiple domains. These Darwinian conditions, the push of impersonal geopolitical forces, the legendary strength of the Japanese national character, and the imperative to determine its fate are reawakening a great power that had been watching the behavior of global affairs from the sidelines. Now that history is unfrozen, the return of Japan to the arena of high politics as a significant and self-confident stakeholder is a matter of time, but how its performance on such a ruthless chessboard will ultimately unfold is still unknown.----

 

Update 6 September 2022: Russia’s Objectives In Iran

Roughly six months in, the Russian economy has thus far managed to withstand the pressure of Western sanctions imposed due to the invasion of Ukraine. This is primarily due to earnings from energy exports, which contribute substantially to Russia’s federal budget and national wealth fund. But Moscow also needs to consider how it can weather the storm in the long term, mainly because it could face more severe sanctions in the future. It’s dependent on several imported goods, most notably high-tech products, to which its access is now limited, and it’s aware that even tougher sanctions could threaten its economic and political well-being. There are several ways to mitigate the effects: introducing import substitution initiatives, finding ways to skirt the sanctions, finding alternative suppliers of key imports, keeping energy exports flowing as leverage against the West, and participating in regional cooperation initiatives.

Iran can play an essential role in each of these options. This explains why Moscow has been edging closer to Iran in recent months. From January to June, trade turnover between Moscow and Tehran was approximately $2.7 billion, 42.5 percent higher than in the same period a year ago. In his last meeting with his Iranian counterpart, Russian Foreign Minister Sergei Lavrov said relations with Iran were “reaching a new qualitative level,” which could culminate in a major bilateral agreement already in the final stages of completion. Tehran is facing tough Western sanctions and sees an opportunity to gain access to several technologies and the fairly large Russian market. With their short-term economic interests seemingly compatible, Russia sees a chance to pursue its broader objectives in the region, however difficult it may be.

 

Russia’s Goals

Russia has long maintained a cautious policy toward Iran, but sanctions have incentivized broader cooperation. To an extent, Moscow can learn from how Tehran has dealt with the sanctions imposed on it by the West. The restrictions on its banking and industrial sectors are similar to those applied to Russia, so Moscow may look to the Iranian example as it charts a path forward.

Moscow is searching for a partner to provide otherwise inaccessible goods and buy some Russian-made products that now lack markets. Iran has been able to help fill both of these gaps. For example, in mid-March, when the European Union banned steel imports from Russia and capped imports of several other metals, Iran immediately expressed a desire to import zinc and aluminum and to buy steel in exchange for Russia’s purchase of auto parts and gas turbines. Iran also suggested importing more grain from Russia after becoming its second-largest grain buyer in the 2021/2022 agricultural year. In July, Iran agreed to supply aircraft components to Moscow and to provide maintenance and repairs for Russian airliners. Russia is likely interested in Iranian-made electronic control units and airbags. With Iran’s participation in the Russian MIR payment system expected soon, such transactions will only increase.

There are also benefits in the energy sector. In July, Russia’s Gazprom and Iran’s NIOC signed a memorandum of understanding on oil and gas projects worth $40 billion. Russian firms have also agreed to offer investment and technology for Iranian oil and gas projects or to participate as contractors. The Kremlin believes this might offset Russian losses if more onerous sanctions are imposed or if European countries purchase energy from other suppliers. Even if Western sanctions on Iran are lifted, and European investors reenter the Iranian market, Russia will have already established itself as a key partner for the Iranian energy industry, making Russian companies highly competitive with European ones.

Another target for Russia is the Iranian IT sector. Russia has a fairly developed IT sector but needs more expertise in tech security, especially as cyberattacks on critical infrastructure increase. Iran has experience in this field, considering it has been the target of several cyberattacks since 2010, making it an essential player in cybersecurity technologies that help protect nuclear, military, and economic facilities. The country has invested heavily in this area since the 2010 Stuxnet attack that disabled its nuclear power program. This presents an exciting opportunity for Russia because its military campaign in Ukraine is increasingly turning into a tech war. In the past six months, the number of cyberattacks on critical Russian infrastructure has grown by 50 percent and on energy and financial industries by 70 percent compared to last year. The number of data leaks has increased by almost 50 percent.

In Iran, Russia also sees an opportunity to access new markets. The International North-South Transport Corridor – which connects Russia to India through Iran but bypasses the Suez Canal and seas in which NATO has a presence – is already in operation. The corridor is becoming one of the main routes for delivering goods from Mumbai to St. Petersburg. It comprises sea, river, and rail transport, making it possible to halve the time required to deliver goods between India and Russia. (The transit time along the traditional route through the Suez Canal is between 30 and 45 days, while it takes just 15 to 24 days using the new corridor.)

 

Challenges

Despite these potential opportunities, the relationship between Russia and Iran is not as close as it may seem. Several factors will complicate attempts to strengthen relations between them. The two countries have conflicting interests in strategically important nearby regions – namely the South Caucasus, Central Asia, the Caspian, and the Middle East – which have long been a springboard for confrontation between regional powers. For instance, they have competing claims to resources in the Caspian Sea. Though the 2018 Convention on the Legal Status of the Caspian Sea was meant to resolve the dispute, Iran is the only country of the five states that initially signed the deal that has yet to ratify it.

In addition, Iran is trying to restore the 2015 Joint Comprehensive Plan of Action, and Russia is wary of allying with a country that could be a competitor for energy buyers at a time when its energy exports are the target of sanctions. Suppose Iran’s relationship with the West improves. In that case, Moscow risks losing leverage in the energy market because Iran could become an alternative for European countries that want to avoid buying Russian fuel. This would limit Russian leverage over Europe as the Ukraine war continues and, in the long term, threatens to reduce Russian influence if Iran can develop a more stable economy that no longer requires Russian cooperation or support.

Negotiations on reviving the Iran nuclear deal have resumed at an inconvenient time for Moscow. Russia, which is a signatory of the JCPOA, now finds itself in a precarious spot: On the one hand, it can’t abandon the JCPOA and risk damaging its carefully cultivated relations with Iran, and on the other hand, it can’t allow Iran to be opened for Western investment, especially in the energy industry. If a deal is reached, Iran will likely resume oil exports to the West, bringing an additional 1 million barrels of oil per day to the global market and help reduce the price of energy. The Kremlin wants to convince Iran that a deal will eventually be reached so Iranian negotiators don’t rush to sign a less-than-favorable agreement. Russian Foreign Minister Sergei Lavrov said the deal must be restored to its original terms, hoping the Iranians will propose amendments to the text that would again stall the talks.

It’s certainly true that the economic interests of Russia and Iran overlap more now than before the Ukraine war. Iran sees Russia as a promising market for its manufactured goods, and Russia sees Iran as a source of much-needed equipment and semi-finished products for its industries that have been cut off from their traditional suppliers. For Moscow, cooperation with Iran and participation in joint projects can also have political benefits, possibly expanding its regional influence. Under the current circumstances, it’s a mutually beneficial relationship. But the level of trust between the two remains low; in the long run, their interests are bound to collide.----

 

Update 7 September 2022: Political Apathy In Lebanon

Political apathy is a universal problem, but its causes and intensity vary from one country to another. In a democracy, apathy is attributable mainly to a lack of interest in public affairs, political inertia, distrust of politicians or thinking that voting is a waste of time. In a dictatorship, apathy can result from opposition to the government or the expression of independent opinions can lead to retribution and sanction. In Lebanon, political stagnation has engendered a vast disconnect between the people and the government. The French created modern-day Lebanon in 1920 from religious sects that neither shared common interests nor held similar historical experiences. The country’s independence in 1943 brought together sectarian groups alien to one another, with mutual apprehensions and limited experience in political communication.

The impact of regional and international powers on foreign policy and domestic ideological divisions undermined Lebanese sovereignty. Political limitations reduced the government’s role to merely allocating the political system’s spoils among the country’s sectarian leaders based on a complicated formula. The people who fell under the influence of foreign powers failed to promote civil society, displaying a preference for cults of personality. These practices inhibited the circulation of elites, leading to the rise of an unresponsive political system. Although Lebanese society displayed an entrepreneurial spirit and established a vibrant private sector, it failed to give rise to politically competent individuals, keeping the people vulnerable to the whims of self-serving sectarian politicians.

 

Foreign Intervention

For centuries, many Lebanese believed their well-being was tied to foreign interventions as they lacked faith in their rulers. Lebanon did not exist as a political entity with defined territorial borders before 1920. French involvement in the region goes back to 1249 when King Louis IX extended French protection to Maronite Christians who contributed to his Seventh Crusade. In 1649, Louis XIV reaffirmed the French sponsorship of Ottoman Maronites. During the 1860 civil war in Mount Lebanon, the British sided with the Druze but fell short of showing the same level of commitment to them as the French did for the Maronites, whom the French perceived as religiously and culturally close to themselves. Britain’s involvement in the sectarian dimension of Lebanese politics was driven by its competition with France over influence in the Near East rather than sectarian affinity or a desire to spread cultural values. Nevertheless, the Druze admired Britain, declaring that “after God [they had] no other protector but the British government.”

The Sunnis did not seek foreign protection because they were treated favorably by the Ottoman Empire. Only after Lebanon gained independence in 1943 they began to see themselves as a sect overshadowed by Maronite preeminence. Still, they found solace in living in a region dominated by Sunnis. In the 1950s and 1960s, they looked to Egypt for support, and in the 1970s, they welcomed the Palestine Liberation Organization’s armed presence in Lebanon. After the PLO’s eviction from the country in 1982, they turned to Saudi Arabia for political and financial support.

Unlike other significant sects affiliated with foreign protectors, the Shiites existed on the edge of politics and at the bottom of Lebanon’s socio-economic ladder. But Iran’s 1979 Islamic Revolution and its Arab domination policy made Lebanon central to Iranian regional ambitions – especially after Ayatollah Ruhollah Khomeini ordered the establishment of Hezbollah in 1985. Hezbollah emerged as the final arbiter in domestic politics, vetoing policies that conflicted with Iranian efforts to project regional power. Iran's influence over the government in Beirut immobilized Lebanese politics, transforming the country into an enemy of the Gulf states – the traditional benefactors of cash-strapped Lebanon – to the chagrin of non-Shiite sects.

 

Weak Civil Society

There are numerous nongovernmental associations in Lebanon, but they are small, ineffective, and lack connections to the parliament and Cabinet. The more significant associations, such as the Medical Association, Beirut Bar Association, Engineering Syndicate, and Workers Confederation, are controlled by political parties and have been coopted by the government. Most members of the parliament could be more approachable, and only a few municipalities perform their public responsibilities. Energy provider Electricity of Lebanon supplies subscribers with only one hour per day, forcing households to subscribe to private providers at exorbitant prices. Water scarcity has also forced people to rely on local providers. Uncollected garbage litters the streets, drugs for many chronic diseases are out of stock, and food safety is a severe problem.

Protests in 2019 failed to inspire change because the movement’s leaders could not form a broad opposition bloc. The Shiite Amal Movement and Hezbollah clamped down on them while the army restricted their activities. By mid-2020, the movement fizzled out as protesters realized the deep sectarian state, backed by the military and security forces, was impenetrable. The Lebanese people would not hold the government accountable for the deteriorating quality of life in the country, even though more than 90 percent of the population was living in poverty, barely making ends meet, and relying on remittances from family members working abroad.

 

Unresponsive Political System

Lebanon’s independence from France was achieved not because of the leadership of a national liberation movement but because of the pressure placed on France by the British after commonwealth soldiers freed Lebanon from the pro-Nazi Vichy forces. Since independence, a cartel of self-serving sectarian politicians has dominated Lebanese politics, paying little attention to public demands, especially in Muslim areas and regions on the periphery of the political system heavily concentrated in Beirut and Mount Lebanon. The aristocratic and business leaders left the country during the 1975-1989 civil war and were replaced by warlords from humble socio-economic backgrounds. The new elite took advantage of the lack of financial controls and accountability measures, accumulating substantial personal wealth and providing very little to their constituencies under Lebanon’s patron-client resource allocation system.

This system precluded the government from executing public works and providing services directly to the public. The government’s work became contingent on sectarian leaders’ willingness to expend resources allocated to them based on each sect’s size and the political significance of its leaders. There were no lines of communication between the people and the political system, leaving little room for the public’s participation and representation in Lebanese politics. This system failed to meet the people’s essential needs and led to the collapse of the Lebanese economy and the banking sector and the wholesale impoverishment of the people.

Lebanon’s sectarian system ruled out national political mobilization. It coerced the people to identify with their sectarian leaders, who wielded complete control over their communities, projecting an aura of absolute power that required unquestioning loyalty. A combination of cultural and political restraints made the public feel powerless over their leaders and the political environment.

Centuries of suppression by feudal leaders, an onerous taxation system, and an underdeveloped economy drove millions of Lebanese to immigrate to the Americas, Australia, West Africa, and, since the 1950s, the oil-rich Gulf countries in pursuit of a better life. There are five times more Lebanese living abroad than at home. The irony of Lebanese politics is that most people remain loyal to their sectarian leaders even though they distrust them. While they criticize them privately, they treat them with deference in public, seeing them as their line of defense against other sects.

 

Lack Of Elite Circulation

The lack of elite circulation is one of the most significant barriers to political reform. The leader of the Amal Movement, 84-year-old Nabih Berri, has been the parliament speaker since 1992. The government and parliament are controlled by civil war combatants, armed political movements, and former military commander Michel Aoun, president since 2016. They make it extremely difficult for independent candidates to compete in general elections. When independents win seats in parliament, the dominant blocs isolate them and make them politically irrelevant. This has led to an inherently corrupt spoils system in which nepotism and cronyism in political and administrative appointments are pervasive and generally accepted.

Holders of public office do not owe their allegiance to the people but to the politicians appointed to the job. Even if new members join the parliament or the Cabinet, they remain loyal to the party leader who supported their candidacy. It’s challenging for an independent candidate to win a parliamentary seat without joining an electoral list. The fundamental prerequisite, in addition to making a hefty payment, is compliance with the voting preference of the electoral list leader. One independent lawmaker who won a seat in parliament in 2018 accused the house speaker of discarding her proposals and mainstream deputies of isolating her. Nevertheless, she ran again in 2022 and returned to the parliament, fully aware that she would not achieve any better results this time.

Though Lebanon is the only Arab country that grants its people freedom of expression, its political system is closed and does not promote broad political participation. It shuns competition and allocates resources to sects according to an agreed-upon formula that prevents inter-sectarian conflict by shifting rivalries to intra-sectarian factions. The Lebanese people are extraneous to their country’s elitist political system, which gives the false impression that it represents the electorate. Lebanon is the only country in modern times to adopt a sectarian system of government. It gave sectarian leaders immunity from prosecution, enabling them to treat their constituencies with condescendence and denying them the right to question the elites’ authority.-----

 

Update 18 July 2018: The Geopolitics Of London: Or, How London Joined The World:

Were London a city-state, it would have the 20th-largest national economy in the world – more significant than the national economies of Saudi Arabia, Argentina, and South Africa. Were London a city-state, its national per capita gross domestic product would be greater than that of the United States. Were London a city-state, it would be the 15th most populous country in Europe, with an overall population bigger than that of Austria or Denmark and bigger than the combined populations of Scotland and Northern Ireland. And were London a city-state, it would have voted to remain in the European Union, and it would no doubt be criticizing neighboring England for voting to leave.

Alas, London is not a city-state, and for all its history, wealth, and power, it can never aspire to be one. For just under a millennium, London has been the capital of England; for more than three centuries, it has been the capital of the United Kingdom; for more than a century, it was the capital of the largest empire ever conquered. London embodies the paradox of all great cities. Great cities are the ultimate expressions of their national cultures, often serving as the seat of power for millions, even billions, of people who do not live there. But just as often, the interests of the cities diverge from those of the rest of the nation.

Such is the case for London, a city that is the very definition of cosmopolitan. The power it wields and the opportunities it offers have attracted people from all over the world. The town, once a tactical nicety for warring tribes, has become a strategic necessity for the country in which it resides. London's role in that strategy changes according to the necessities of the times, and it’s just as likely as not that its interests align with the United Kingdoms.

Consider Brexit. No part of the United Kingdom will feel the ramifications of the U.K.’s departure from the EU more deeply than London, which became a European financial and economic powerhouse by dint of strategic necessity. That is why Londoners voted with the Scots and the Northern Irish to “remain” – because London, not England, will bear the brunt of the future short-term disruptions. But London has transformed itself, and there’s no reason to believe it will be daunted this time. London would no doubt prefer to remain in the EU and continue enriching as Europe’s primary financial capital. Still, London has been and always will be a national capital. Its wealth and power are not its charity to the nation; they are a consequence of its position as the nation’s capital. However, the gap that has opened between England’s interests and London’s will narrow, but as it does, London will not lose its place among the world’s great cities. It will discover its place anew.

 

Bridging the Thames

London has fluctuated in size and relevance throughout the years. Still, there has nearly always been a vital population center at the head of the estuary of the River Thames, which is as dynamic as the city itself. In ancient times, the river was broader and shallower than it is today, stretching out some 3 miles (5 kilometers) north and south of where the present-day London Bridge is found. The marshy fen would, at high tide, become part of the sea. For continental European invaders landing at Kent, London was the point at which the narrow road between the Thames marshes and the Weald forest protruded at the head of the estuary. The heart of the earliest settlements in present-day London was based, as the city is today, on an angle of solid ground between these marshes and the roads that emerged.

The Thames, the United Kingdom’s second-largest river, flows through southern England for 215 miles. In ancient times, the river was a natural boundary between various kingdoms. The Romans were the first to bridge the Thames, but they would not be the last, and London’s prosperity rose and fell based on the existence and defense of a bridge that could connect the lands south and north of the river. London Bridge is not just a nursery rhyme or a historical artifact: London Bridge is the reason London exists and is why southern England became a coherent geographic entity.

In this sense, London, like most cities, is not a geographic eventuality but a manmade creation. One man provided the bridge, and London grew rapidly. Its core – the solid ground among the marshes – is where the first Roman settlement was based, and it is where “the City,” the financial district and beating heart of London, is today. Across the bridge on the southern bank of the Thames, smaller settlements appeared as far back as the first century in what is today known as Southwark. As London grew more populous and critical, it expanded, first to the west, where Westminster and the offices of the government stand today and where previous government offices had been based for many centuries.

Over time, London grew in all directions, surrounded by flat plains. On modern maps, London looks like a vast circle, with multiple ring roads encompassing more significant residential and suburban areas. The wealthiest areas are near the City and Westminster, especially north and northwest of these historic areas, still bursting with power and life. East of the city is the Port of London, which remains a massive transshipment hub, shipping British goods out to the world, moving imports up the Thames, and offloading them to land by a road network of which London is a primary component.

The poorer regions of London are in the northeast and the south, the parts of the city that grew not because London was a seat of government or trade but because London was home to an industrial boom in the 18th century. It is no coincidence that four of the five London council areas that voted to leave the EU (versus 28 that voted to remain) are located in south and east London. These areas have always been peripheral to London’s core, a stark reminder of the limits of London’s cosmopolitan reach and the true beginning of England. Even accepting these differences, London, and by extension, southeastern England, is essentially one vast, densely populated metropolitan area, tied together by London Bridge, without which there is no reason for London to exist.

 

Becoming Cosmopolitan

But how did this transformation occur, from small trading outpost to urban leviathan? London is the story of Great Britain’s joining the world. Great Britain, after all, is an island, and as such, it was removed from the comings and goings of Eurasia for much of antiquity. Eventually, Imperial Rome raped and pillaged its way to the end of the European Peninsula and, undeterred by the English Channel, sought conquest beyond the water’s edge. Rome would rule parts of what it would come to call Britannia for centuries, but the Roman conquests there did not unify what we now call the United Kingdom. (English, Scottish and Welsh nations would not congeal for centuries.) Indeed, Rome’s most lasting legacy was not Hadrian’s Wall or the Christian faith but rather the city of London itself.

That’s not a knock against the Roman Empire. Great Britain was simply hard to tame. Before the Romans crossed the channel, Great Britain was a vast island of warring tribes at the very edge of Eurasia, where most of history took place. The Celtic tribes that lived in Great Britain before Rome’s invasion occupied the territory of present-day London, and archaeological evidence suggests this area was at one time the focal point of a small Celtic empire. But although the area around present-day London had certain geographic advantages – among them centrality, fertile land, and defensible positions to the north, east, and southeast – it sat on a relatively flat plain between other small Celtic tribes. We now call London a prize to be sought and conquered, a British analog of the North European Plain, mainland Europe’s primary thoroughfare of conquest for time eternal.

The Romans, then, did not find London. But the very existence of a foreign invader like Rome forever changed the geopolitics of the British Isles and thus London’s role in them. The first recorded mention of London comes from the Roman historian Tacitus, who chronicled a revolt of one of the most powerful tribes of Britons against Roman rule in A.D. 61. The bulk of the four Roman legions in Britannia were stationed at Celtic strongholds near present-day Colchester and St. Albans, which the Romans called Camulodunum and Verulamium. The revolt began at Colchester and proceeded to Londinium, a small town on the River Thames that had become an important trading center. The warring Britons sacked the city and moved from there to St. Albans, which suffered a similar fate. Eventually, Rome’s superior military prevailed, and the marauding Britons were defeated in the field. The revolt destroyed at least three significant towns and left untold Roman soldiers dead, but it had been quelled. Rome had completed the first successful invasion of Great Britain.

Londinium would become the most important city in Roman Britannia. The Romans had initially deployed their forces where tribes had been most vital. Still, once the tribes in the south had been subdued and Roman rule was relatively secure, it became clear that Londinium was the key to maintaining Roman control over the new possessions. Londinium’s location on the River Thames meant that the city was not only directly accessible from Europe but also more defensible than a city built on the coast. Londinium’s central location in Great Britain also made it a logical place for a transportation hub, and indeed, all the major roads in Britannia ran through Londinium. The small trading post became Rome’s bridgehead into Britannia, and as a result, the city prospered.

What changed was the emergence of a new threat on the east coast: the Vikings. Like most of eastern Britain, London was at the mercy of Viking incursions and so fell out of Anglo-Saxon hands at various points in the seventh and eighth centuries. But the Vikings were either unable or unwilling to establish a long-term presence. If anything, their presence alone helped to create the conditions for their expulsion by uniting the Anglo-Saxon world under the banner of King Alfred the Great. (This is around the same time English became the common tongue on the island, so, likely, some of the differences that divided the kingdoms had naturally been resolved through generational decay.) Alfred brought together the mighty empires of Wessex and Mercia, slowly driving back the Viking invaders from the lands they had conquered. In 886, Alfred reconquered London, turning it into a formidable fortress to halt Viking advances up the Thames. The capital of Alfred’s kingdom remained at Winchester, but for 100 years, London had relative peace and security and began to grow and prosper.

And yet London was still not the center of gravity as we know it today. By the 10th century, the Anglo-Saxons and Vikings had gone to war once more, trading control of various holdings, including London, throughout the countryside. Across the English Channel, the famed Norman leader William the Conqueror took stock of the situation and, seeing that most of the Anglo-Saxon forces were in the north, battle-weary after a grueling fight against the Vikings, decided it was ripe for invasion. A full-frontal assault on London through the Thames was too risky, so William crossed the English Channel with his invasion force and landed at Pevensey in the southeast. After defeating the main Anglo-Saxon force a few weeks later at the Battle of Hastings, he marched on London and claimed his prize. There, he was crowned in 1066.

This is when London evolved from a regional town of tactical importance to a global city of strategic significance. For William, as for the Romans, London was the key to holding the island. But William was not just king of Britain; he controlled areas across the English Channel and needed a defensible city that allowed easy passage between his territorial holdings. Though London would not officially become the capital until nearly 90 years after his coronation, William rebuilt London Bridge and constructed the Tower of London and other important fortifications. Thus, William’s international ambitions led to increased trade between Britain and the European continent, from which London benefited more than any other city.

And so it was that London became England’s gateway to the world – and the world’s gateway to England. How – and how well – they would engage one another would change throughout the years. Still, after William’s conquest, London would never return to being another vital city to control in England. The country’s subsequent rulers knew that to protect England from being a constant object of foreign conquest, England had to control the entire island and, more importantly, act pre-emptively in the affairs of continental Europe – things only the control of London could accomplish.

That’s not to say William’s conquest brought only peace and tranquility. If anything, the opposite is true. William internationalized London, and therefore England, in irreversible ways. London itself would be pivotal in the many hotly contested royal successions, peasant revolts, and civil wars that would take place in the future. Writing about the English Civil War from 1642 to 1651, the great English philosopher Thomas Hobbes noted that “but for [London], Parliament could never have made the war, nor ever have murdered the King.”

The same is true in more modern times. One of the foremost experts on Great Britain’s geopolitics, Halford Mackinder, noted in 1902 that unlike those living in other parts of the country, Londoners were “hybrids of the most intricate ancestry.” According to the last U.K. census in 2011, 37 percent of London residents weren’t even born in the U.K. – for the rest of the U.K., that figure is only about 9 percent. In other words, London's interests differ from England's interests. After the Brexit vote in 2016, Londoners were shocked to find that they lived in a country that wanted to withdraw from the EU, but nothing is shocking about profoundly different world views between England and her capital city. That gap was hardwired into England’s emergence as a nation.

 

Bridgehead Revisited

For the first several centuries of Britain’s existence, much of the world used London as a bridgehead for invasion. But after the Industrial Revolution, when the British Empire reached the height of its power, London instead became a bridgehead for England to invade much of the world.

The city had grown only more potent since it became England’s capital. The majority of British wealth and power was concentrated in southern England and, to a lesser extent, the Midlands, Britain’s most fertile areas. The Greater London area was by far the richest and most populous simply because it was a trade hub for the country and, by extension, the rest of the world. By 1700, the city’s population had grown to approximately 500,000 people. (The next most significant city in Britain, Bristol, had about 30,000 people, and the northern towns were poor and sparsely populated, much how they always had been.)

But as Great Britain became the British Empire, London took on even more importance. In some ways, London was the British Empire. And its rise can be attributed to two main developments. The first was the Glorious Revolution in 1688 – a foreign power's last successful invasion of Great Britain. The installation of William III the following year brought political stability England had never seen. This stability enabled Great Britain to consolidate control over the British Isles. In 1707, Scotland and the Kingdom of England (comprising England and Wales, which the English conquered in 1284) were joined into the Kingdom of Great Britain. In 1801, fearing Irish collaboration with France, Ireland was brought into the new political entity: the United Kingdom of Great Britain and Ireland. With the establishment of English control over the whole of the British Isles, one of the significant weaknesses of Great Britain had at last been overcome, and the stage was set for Great Britain to project power rather than defend against it. Crucially, this meant London no longer had to fear the consequences of foreign conquest. More so than any other time in British history, it was secure.

But the far more significant development was incidental. Great Britain went from existing on the edge of human civilization to be perfectly placed between the Old World and the New – and London, being Great Britain’s main port, reaped the lion’s share of the benefits. It was buffered by water from threats in mainland Europe and the launching pad for forays into the unknown. It was thus able to invest its newfound wealth heavily into developing the best navy in the world, making its island fortress even harder to assail and giving the U.K. an immense advantage in the global competition for imperial power.

As all this was happening, an industrial revolution was happening inside Great Britain. Advances in agricultural technology enabled people around the world to live longer. The resultant population boom raised the demand for virtually all goods. The consequences were many. At first, English farmers who worked in cottage industries could not keep up with demand, so huge factories were created to keep pace. Farmers in southeast Britain began to leave their homes for the cities – at first, mainly London – to seek better-paying jobs. By 1801, London had a population of 960,000. By 1911, it had a population of 7 million. In short, London was at the vanguard of this economic revolution.

London became even more critical as Great Britain’s main port. Great Britain did not possess adequate raw materials to keep pace with surging demand. And so it began to import larger and larger amounts of raw materials from its imperial possessions. Even the imperial possessions it could not keep – namely, the United States – began trading with Great Britain on a massive scale. In 1784, the U.S. exported eight bags of cotton to England. (That is literally what the statistics say, without further clarification.) Within 15 years, the U.S. exported 40,000 bales of cotton to England each year, and by 1900, that figure had risen to 7 million. The story was much the same for other commodities like sugar and tobacco. British industrial power, centered in London, turned the country into an exporting powerhouse. By 1850, Britain produced two-thirds of the world’s coal and half its cotton textiles and iron, and London was its boom town.

London was not the only city to reap the benefits, of course. The internal landscape of Great Britain was revolutionized. By 1900, Glasgow, Manchester, and Liverpool all had populations of over 1 million people. Before a relative backwater, Northwestern England became Industrial England, and new nodes of political and economic power that had not existed before sprang into being, the effects of which became truly apparent only in the decades following World War II. But in the 19th century, none came close to rivaling London’s immense wealth and power. London, as during Roman times, was still Great Britain’s excellent transshipment center – all roads, rails, and sea lanes led to and departed from London. London was the principal seat of political power and had also become a center of commerce – no other British city contained the expertise or location necessary for such a role. And London was also the largest manufacturing town in the country that had been the vanguard of the Industrial Revolution.

For more than 200 years, the British Empire, with its headquarters in London, was the most dominant power in the world. But in 1871, a new power rose on the European continent, a force that would come to threaten the U.K.’s hegemony: Germany. World War I came to Europe not long after that, and with it came the slow decline of Britain’s once indomitable empire. But even on the eve of World War I, no city could rival London’s wealth, size, or power after Germany's rapid rise. In 1900, London was peerless. And yet just 50 years later, the British Empire was coming apart at the seams, and London was in the throes of an identity crisis.

 

From ‘Big Bang’ to Brexit

After World War II, London was a shell of its former self. Not only had it been subjected to bombings from German forces, but within ten years of the war’s conclusion, most of what was left of the British Empire was either awarded independence or claimed it. London went from being an imperial capital with global ambitions to just another first city of Europe, caught in the crossfire of two non-European heavyweights: the United States and the Soviet Union. The U.K. could no longer manage the mainland from across the channel. Strategy dictated that it become an integral part of the European project emerging from the ashes of the war.

The U.K. kept many of the trappings of imperial power, of course. It developed nuclear weapons, maintained a relatively impressive military, and held a permanent position on the U.N. Security Council. But in considerable measure, the U.K.’s fate became directly tied to Europe’s fate, and no region of the U.K. could coexist as easily as London could as both capital of England and the European hub. British power became metropolitan power, and London remade itself once again, as it had so many times in the past, to meet the challenges of the day. With all the ingenuity and cosmopolitanism it had acquired as an imperial capital, London built itself up at a dizzying pace and became Europe’s – and the world’s – pre-eminent financial center.

At first, London benefited primarily from inertia. It did not become a global financial center overnight, nor did it became one because of a policy decision made after World War II. It regained its place as a worldwide financial center precisely because London had been ground zero of the Industrial Revolution. Much of the infrastructure necessary for finance was already present in London. Compared to all other potential challengers, the regulatory framework was more predictable and friendly to investment in London than anywhere else in the world – including New York City, the financial capital of the new rising superpower. In relatively short order, it put its wealth of experience in global finance to work and so was able to recover from World War II more quickly than other European cities.

It wasn’t easy to get there – the U.K. was heavily indebted until the 1960s – but when it did, it arrived with authority. It became a global banking hub, boasting the largest foreign-exchange market in the world, and it was already one of the world’s oldest insurance markets. For the rest of the U.K., the sterling was used daily, but London profited from specializing in the trading of offshore currencies, especially dollars held outside of America.

Still, London would only grow into its role as a global financial center at the end of the 1980s. Many ascribe London’s ascent to the top of international finance to the “Big Bang” reforms of 1986, which altered the London Stock Exchange and turned the city into an innovative center of derivatives trading.

The Big Bang was undoubtedly helpful, but there is no doubt that London soared higher than ever because of the Maastricht Treaty, which created the European Union as we know it and paved the way for adopting the euro. The United Kingdom never adopted the euro, but that didn’t stop London from financially dominating the European Union. According to the House of Commons Library, financial and insurance services accounted for 7.2 percent (124.2 billion pounds or $177 billion) of the United Kingdom’s total gross value added in 2016 – a reasonably small proportion of the U.K.’s overall economy. London, however, accounted for 51 percent of that total. When you compare industrial variation in total gross value added of U.K. combined authorities, London presents a much different picture than the rest of England. Roughly 14 percent of London’s GVA came from the finance and insurance industry, while just 2.1 percent came from manufacturing. The opposite is true for every other U.K. combined authority.

Some 2.2 million jobs in the U.K. are related to financial and professional services. About 47 percent of those jobs are located in London and in the southeast, according to TheCityUK. No other region of the U.K. sports a percentage higher than 10 percent; Wales and Northern Ireland boast only 4 percent. Moreover, the jobs in London are generally geared toward international finance, whereas in other regions, they are focused more on British finance. The U.K.’s global value added per head has benefited from its position relative to the EU – but here again, London has experienced those gains to a far greater extent than the rest of the country.

But perhaps no statistic or chart can tell the story better than a simple table of the U.K.’s economic output by the industry as a percentage of total British economic activity. Since 1990, manufacturing output as a percentage of the British economy has declined slowly from 18 percent to 10 percent. The finance and insurance services sector reached a high of about 9 percent before the 2008 financial crisis – but it was 6 percent of the economy in 1990 and just 7 percent of the British economy in 2015, according to the latest ONS Quarterly National Accounts figures. What this means in practical terms is that while Londoners have been acquiring more wealth (and have been contributing more taxes than any other sector in the British economy), the manufacturing industry in the rest of the U.K., and particularly in England, has declined.

When London became the British Empire’s political capital, manufacturing powerhouse, financial center, and primary distribution node, there was a slight divergence between what was best for London and what was best for the rest of the United Kingdom. London was the United Kingdom, and a rising tide lifted all boats. But since 1990, there has been a divergence between what is best for London and what is best for the rest of the United Kingdom. Such was the case before the U.K. was an empire. Ironically, because of the Brexit issue, London’s interests are more aligned with Northern Ireland’s and Scotland’s than with the rest of England. Much of the tension surrounding the Brexit debate boils down to this issue.

 

A Sterling Reputation

London’s time as the undisputed king of European finance ended on June 23, 2016, when the United Kingdom voted to leave the European Union. There were many precursors to this change, but one was more important than all the others. Perhaps it is the most overlooked: the collapse of the Soviet Union and the reunification of East and West Germany. Just as German unification in 1871 defined European history for decades to come, so has Germany’s second unification in 1990 defined Europe’s future – a future that Britain could no longer control. Remaining in the EU would have meant subordinating British interests to German interests, and there would never be much of a future in that.

Since 1945, London has never aspired to be a European financial center. It fashioned itself as a global financial center, and London became one before the euro existed. There is little reason to think this will change once the U.K. leaves the EU. A recent Financial Times survey found that international banks are preparing to move only 4,600 jobs out of the U.K. as a result of Brexit – just 6 percent of the total workforce in the financial sector in London, or just 2 percent of the total workforce in the financial industry in the entire country. The annually released Global Financial Centers Index still rates London as the top financial center in the world. It places London as the most competitive area to do business in terms of the business environment, human capital, infrastructure, financial sector development, and reputation.

This last category is maddening to understand and that many dismiss out of hand, but it is, in many ways, London’s greatest asset. Reputation is not easy to quantify, but consider that last year in English commercial courts, a foreign party was involved in roughly 80 percent of the claims issued. In approximately 45 percent of all cases, all parties involved came from outside the U.K. That is a remarkable demonstration of foreign companies' trust in English common law. The top competitors to London as financial centers are cities like New York, Singapore, Hong Kong, and Tokyo, all of which pose more risk regarding local legal standards and government stability than London.

All of this puts London in a comfortable negotiating position. If the EU makes it difficult for its companies to conduct business with London during Brexit talks, the British government could alter its tax laws to make it worthwhile to remain in London. And then, free from the constraints of EU bureaucracy, London could reach out to Commonwealth nations for more than celebrations of shared cultural values and explore a wide range of partnerships currently blocked by Brussels regulations.

Even so, in a vacuum, London’s interests before the Brexit referendum pointed toward remaining in the EU. London is no longer a manufacturing city, its sterling no longer rules the world, and it no longer enjoys the perks of being the capital of a large and diverse imperial system. The EU was easy money. But London is not just a money-making machine for foreign capital. London is still the capital of England and the United Kingdom. Unlike in centuries past, while significant, London’s share of the U.K.’s total population is no longer as overwhelmingly dominant as it was when Britain still had its empire. The immediate result of the Brexit vote was a rude awakening for the 60 percent of Londoners who could not fathom that a majority of their countrymen would support the “leave” campaign. But London has faced far worse than continental Europe. Leaving it, in this context, is not so daunting.

The more daunting challenge across the channel is the reactivation of great power politics. The most disastrous periods in London’s history had come when Great Britain did not have the power to repel foreign invaders. Ironically, the U.K.’s decision to leave the EU underscores a far more significant threat to London than international banks leaving the city or brutal German negotiating tactics: the attendant conflicts and rivalries that have delegitimized the European Union, like forcing austerity upon Greece or Brussels-mandated refugee quotas. The EU is a heroic delusion. It has kept the continent from ripping itself apart for generations and is delusional because it believes this battle is already won.

Against these national forces, London is relatively powerless. Its fate rests in the hands of the nation it sustains, a nation that can protect London only by maintaining old allies such as the United States and developing new ones in Europe and beyond. Meanwhile, the fate of the U.K. depends on London’s ability to find new ways to create and share the wealth with future generations of British citizens.

London has been the U.K. or some iteration of it for more than a thousand years. Though the two see the world differently, they can afford to. The future will not be as kind, and when that comes, the nation's and city's interests will be joined once more.-----

 

Update 8 September 2022: 1991: False Dawn

Last February, Russia invaded Ukraine in what was merely the newest iteration of Russia’s timeless struggle for strategic depth. In doing so, it sparked a conflict that has implicated, however indirectly, much of the rest of the world. The U.S. and its allies are arming Ukraine, even as they impose severe sanctions on the Russian economy. The sanctions, in turn, have compounded energy and food insecurity in Europe and beyond. It’s not exactly a new Cold War, but history certainly has a way of rhyming. Meanwhile, China is rising despite its myriad internal problems, and all still feel the economic consequences of the COVID-19 pandemic. With that in mind, we republish the following essay, originally written a month before the Russian invasion, which brings home the fact that the more things change, the more they stay the same.

We do not usually think of 1991 as a defining year. We are aware of particular events that might have changed something, but we rarely think of 1991 as more than that. It was a year of global and intersecting change. It did not change the human condition, but it changed much about how humans lived and saw the world.

1991 was the year the Soviet Union collapsed and brought the Cold War to an end. The fear of nuclear war, which had haunted the world since the 1950s, subsided, as did the fear of a Soviet invasion of Western Europe. The Soviet Union broke into its parts, which is very real today.

1991 was the year 12 European heads of state signed the Maastricht Treaty. With this agreement, they tried to do what Europe had never done: create a single structure abolishing the history of Europe. This drew Europe away from the United States, but as the Soviet Union collapsed so had Europe’s urgent need for American power.

1991, an American-led coalition executed Operation Desert Storm, driving Iraq out of Kuwait, weakening Iraq, and enabling Iran to regain its balance after a brutal decade of war with Iraq. The most important thing that emerged from this was a powerful Islamist force, a major component of which was al-Qaida. The Islamists saw the American presence in the region as both sacrilege and a threat to regional autonomy. The Middle East was transformed, and with it, on 9/11, the United States.

1991 was the year the Japanese economic miracle ended in a massive financial crisis. Until then, Japan was seen as the economic challenger to the United States and quite likely the winner in the battle. Japan managed its crisis by spending a decade becoming a normal superpower and avoiding extremes in economics.

1991 was the year China accelerated its economic growth. The first growth period was interrupted by Tiananmen Square and sanctions from the U.S. and Europe. The sanctions were suspended in 1991. Like Japan before it, China surged, replacing Japan as an Asian powerhouse growing dramatically and imprudently.

1991 was the year President George H.W. Bush made a speech proclaiming the New World Order. He delivered the speech in the wake of Desert Storm and envisioned it as the model in which a united world would enforce peace and crush its violators. The speech replicated Europe's dream of abolishing conflict and having a shared vision of the future. It replicated a Russian goal of ending the barrier between Russia and the world and joining the family of liberal democracy and wealth. And the dream spoke to Japanese hubris and the world’s awe of Japan, reminding them that no one could surpass the United States, for the New World Order speech was about American greatness since it is evident that only the U.S. could manage a world united in a search for peace and prosperity. Even the response to Tiananmen Square and the outcome signaled the New World Order.

Bush’s speech was sincere in the belief that human history can be managed to global satisfaction and that it was the mission of America, as the only great power left, to manage this system. There have been moments like this, such as the Treaty of Westphalia or the founding of the United Nations. They all disappointed, as 1991 disappointed. Men love their nation more than the world because it is theirs and puts them above others. It also gives them a chance to define what is to happen. The world is vast, and if it is to be managed, it will be by a hegemon made of inhuman justice, who can measure China's needs against Japan's requirements and make remarkably wise decisions. Or we can have a committee. The Soviet Union was run by the committee after Stalin – and was horrid even while Stalin was there. The United States has many committees that allow us to pursue blatant self-interest. The center has been held for over 200 years. The European Union was intended to be a committee of leaders willing to care more about Europe than about their own countries. The creaking sound we hear is Maastricht tottering. Japan survived its near fall because it was a nation of Japanese with a common past and common fears. They shared the pain.

Sharing the pain of your countrymen is possible if not every day. Sharing it with strangers is much more complicated. Desert Storm was the opening not to a new world order but to a new threat to the world: radical Islam, a threat stretching from Xinjiang to lower Manhattan. But of course, those who believe in the truth of their version of Islam do not see themselves as threats but as liberators and teachers. And the Russians and Chinese know that if they don’t care for themselves, no one will. The New World Order proved as pitiless as the old.

1991 is not remembered by many as a decisive year. It was not a single event, like 1945, to be viewed as a moment. 1991 was a collection of smaller points that, when taken together, represent a moment when all things dreamt of by the enlightenment might be possible. The moment slipped away because it was never there. Humans will not overcome their humanity and become angels. The world is returning to what it once was. Ironically, we will soon see American and Russian officials sit in Geneva to decide the fate of nations. History does not tolerate optimism.----

 

Update 8 September 2022: Ukraine's Vulnerable Power Grid

Ukraine’s energy crisis differs dramatically from that of its European counterparts. In Europe, the problem is related to exorbitantly high prices. But in Ukraine, the crisis is shaped primarily by the battlefield, where energy infrastructure has been a primary site of the fighting. Since the beginning of Russia’s invasion in February, electricity demand in Ukraine has fallen by about 40 percent. This is primarily due to nuclear power plants being taken offline, damage to distribution infrastructure, displacement of people and industry, and the lack of funds to operate and maintain facilities.

Ukraine's energy sector's physical and financial destruction could also have long-term impacts. The damage caused to energy infrastructure and companies thus far will require billions of dollars and many years to repair. The fighting has also significantly reduced Ukraine’s efforts to integrate the sector with the EU and shift to renewables. Disruptions in the energy market will also limit the extent to which industry and other businesses can resume full operations.----

 

Update 11 September 2022: The Limits Of The Israeli-Chinese Partnership

Observers have pointed to an apparent strengthening of relations between Israel and China. A new center for research on Israeli-Chinese ties, called the Israel-China Policy Center, opened in Tel Aviv last month, and officials from both countries confirmed a trade deal is expected to be signed by the end of the year. The possibility of enhanced ties raises the question of what this could mean for Israel’s relationship with the United States, its most important security partner and an adversary of Beijing. Although Beijing can offer certain economic benefits, they are diminishing as the Chinese economy continues to struggle, and more importantly, they don’t compare to the value the U.S. can bring on the security front.

 

Israel And China

Strong relations between two states are built on shared interests and mutual benefits. In the case of Israel and China, Beijing has more to gain from the relationship than Israel. One of China’s top imperatives is to move away from an economy dependent on cheap exports to one that produces value-added goods. It wants to become a technology hub, producing high-tech products for itself and global markets, which requires establishing strategic relationships with other countries that can give Beijing access to advanced technology. This makes Israel, an established global tech leader, an attractive partner for China. Israel’s location in the Middle East and on the coast of the Eastern Mediterranean also has strategic advantages for Beijing, which is looking to expand its international presence to challenge the U.S. and improve access to global trade networks. Thus, Israel is uniquely positioned to contribute to China’s long-term economic strategy.

But China’s ability to contribute to Israel’s economic imperatives is less clear. When trade talks between them began in 2016, Israel sought to diversify its export markets and sources of investment. At the time, much of the world was pivoting to East Asia, particularly China, given the region’s overall growth and share in the global economy. Israel wanted investments for significant infrastructure projects, and China wanted more locations in which to expand its Belt and Road Initiative. It seemed like a good fit.

But recent shifts in the global economy and security environment have reduced China’s value to Israel. Since the COVID-19 pandemic, the Chinese economy has been precarious. According to Israel's Central Bureau of Statistics, consumer demand has fallen, and China’s purchases of Israeli goods have declined since 2018. At that time, Israel’s monthly exports to China peaked at roughly 1.7 billion shekels ($499 million). This year, the monthly high is just 1.3 billion shekels, and exports from May to July are down 16.5 percent annually.

Meanwhile, Israeli exports to other regions of the world remain strong. The U.S. is a major buyer of Israeli goods. The same can be said of the EU, whose import levels have rebounded since 2020, an unusually slow year for trade globally because of the pandemic. Between May and July, EU imports of Israeli goods increased by 24.6 percent compared to last year. Other markets, like the Middle East and Africa, have also shown strong growth over the past two years.

In the tech sector, Chinese investment can be counterproductive because it feeds into the tendency of Israeli entrepreneurs to sell their businesses rather than develop them into larger firms that can create jobs, produce exports and invest in future capacity. China’s interest in acquiring Israeli firms may be attractive for business owners, but it doesn’t bode well for Israel’s overall economic health. In addition, Israel is looking for investors to help upgrade its transportation infrastructure, but Chinese investment doesn’t seem to be rising, having peaked in 2018. This can be attributed partly to competing demand for funding at home, drawing Chinese spending away from overseas projects.

The fallout from the pandemic and the recent use of economic warfare between East and West further deter enhanced cooperation between Israel and China. The collapse of global trade during the pandemic made it clear that countries must align their economic needs with national security objectives. Governments were forced to consider how their choice of suppliers, logistical systems, and gaps in domestic production could affect their national security outlook. The war in Ukraine reinforced the point through the EU’s energy crisis that resulted from its dependence on Russian natural gas.

 

Israel And The U.S.

The emphasis on aligning economic and security concerns is a crucial reason Chinese involvement in the Israeli economy has triggered alarm bells in Washington. Much of China’s investment in Israel is in the tech sector, which could have national security implications. Chinese companies have invested in cybersecurity firms like Jerusalem Venture Partners. In 2018, the China-Israel Innovation Hub was established to promote scientific cooperation between the two countries. It also granted China access to over 200 pieces of intellectual property. China has also increased its involvement in critical and sensitive infrastructure in Israel. In 2021, the Shanghai International Port Group opened a new commercial shipping facility in Haifa, which still maintains a presence. Chinese state-owned enterprises have also worked on transportation, electricity, agriculture, and mineral projects, which have opened access for China to valuable technologies.

Washington views Beijing’s increased presence in Israel as a security risk, especially given the closeness of the U.S. and Israeli security establishments. Joint ventures and cooperation in the tech sector open the door for China to access sensitive technologies, many of which can have dual civilian and military applications. China’s participation in infrastructure projects raises questions over cybersecurity, data privacy, and espionage. There are also concerns regarding military assets. China’s presence in Haifa, a port where the Israeli navy has a base also used by the U.S. Navy, could jeopardize naval cooperation between the U.S. and Israel.

Top U.S. officials from both the Biden and Trump administrations have warned Israel against accepting Chinese investment in infrastructure and high-tech projects. They noted that China’s involvement in these sectors could be used to further its military objectives and thus hinder U.S.-Israeli cooperation. That said, the U.S. has learned from other allies the dangers in viewing foreign relations as a zero-sum game. Washington has said it doesn’t have an issue with Israeli-Chinese trade provided it doesn’t impact sensitive areas like high-tech. Nevertheless, the U.S. government has in a number of ways pushed Israel to curb its coordination with China.

The U.S. is by far Israel’s most valuable ally and essential to its existence as a state. Any advancement of ties with China that could jeopardize its relationship with the U.S. would force Israel to consider whether Beijing could ever replace Washington as its top security benefactor. The answer is a resounding no. China and Israel differ on critical regional issues, including the Iran nuclear talks on which Beijing has sided with Tehran. Beijing sees Tehran as another anti-U.S. ally and potential energy supplier.

On the other hand, Israel views Iran as a threat to its existence. China and Israel are also at odds on the Palestinian question and the status of the Uyghurs. Moreover, cybersecurity firms FireEye and Cybereason have documented Chinese espionage efforts against Israeli targets.

Israel has slowly started to scrutinize Chinese business partnerships. In 2020, Israel established an advisory board to evaluate the national security implications of certain foreign investments. Though the board’s decisions are non-binding, its recommendations are taken seriously by the business community. Since its launch, there has been a decline in the number of tenders awarded to China for construction projects (notably, China no longer participates in building cellular networks in Israel), and none have been awarded for operations programs. In addition, the Israel-China Policy Center will be run by the Institute for National Security Studies, a Tel Aviv-based think tank with close ties to the Israeli military and government. The INSS also maintains close working relationships with the Center for a New American Security and the Foundation for the Defense of Democracies.

Israel has also started cooperating more closely with the U.S. on security concerns related to doing business with China. Last year, Israel and the U.S. agreed to establish joint working teams on 5G technologies, a clear move against Chinese tech giant Huawei. More recently, during President Joe Biden’s trip to Israel in July, the two countries launched strategic bilateral dialogue to increase coordination on managing tech risks and to address geostrategic challenges. The dialogue, headed by both countries’ national security councils, will conduct research and development efforts in artificial intelligence, transpiration optimization, climate change response, renewable energy technologies, and quantum computing. These areas resemble the Israeli government’s stated priorities for research and development that will help propel economic growth. The two countries also plan to increase cooperation on research security, investment screening, export controls, technology investment, and protection strategies for critical and emerging technologies.

Israel’s need to maintain its security relationship with the U.S. overshadows any promise of economic gains from China. Any trade deal between Israel and China will likely not include strategic or sensitive goods, limiting its scope to more benign areas, such as agriculture and non-tech public health issues.----

 

Update 12 September 2022: The War

During World War II, one needed to say only “the war” for others to know what was being discussed. We have reached the same point with the Russo-Ukrainian war. This is not what the Russians expected to happen. They expected the war to be over quickly because they regarded their military superior to what the Ukrainians would put on the field. Few nations start a war assuming they will lose. They start wars with the same expectation: Hit hard, and be home for Christmas. But the history of the world is filled with stories of great armies and warriors fighting long and desperate battles. And the history of warfare is filled with examples of confidence meeting reality.

It is still being determined what the outcome will be. The initial Russian offensive failed, less because of Ukrainian forces, brave. However, they might have been because of a poorly developed Russian strategy, leading to supply shortages and command failures. The Russians regrouped, focused on more modest advances in the expectation that over time they would break the Ukrainian forces and occupy, if not all of Ukraine, then at least a substantial amount of it.

The Ukrainians didn’t break. Soldiers fight wars, but they are also fought with weapons and intelligence. Even brave soldiers would fail without these and other materials. This is where the Russians experienced their intelligence failure. They knew the U.S. could deploy world-class weapons but believed it would take time. So it had to be a short war, and when they failed to gain a quick victory, the Ukrainians were armed with an extraordinary array of state-of-the-art weapons, delivered in expanding type and number, with losses replaced.

The United States bought time for the Ukrainian army to evolve from the light infantry force that started the war in a military resembling, in many ways, a great power. Anti-air systems forced the Russians to exercise caution, anti-armor procedures caused them to focus on infantry movement, and American artillery meant the Ukrainians could win artillery duels. Russian President Vladimir Putin, on several occasions, said that the war was not against Ukraine but against the United States. In a real sense, he was right, even though he meant it only as propaganda.

All of this is both true and misleading. Although recent advances are significant, the war is not over, and Ukraine has not won. No one would have believed that Ukraine could survive the Russian onslaught in the first months. But it did. The Russians reorganized their command structure, introduced superior armor, and imposed harsh discipline on their troops. They paid a staggering price, but they redefined the war in time.

They must now regain their balance. On the one hand, they are in far better condition than in 1941. Outright defeat is very unlikely, and they can choose the time and place to attack from an extensive menu. On the other hand, they are in much worse shape. They are not in a life-or-death struggle against a monstrous enemy. The troops are not defending their wives and parents from unspeakable fates. The soldiers are not consigned to their deaths. But it can sometimes destroy an army to fight for ends that are not personal to the soldiers. Throwing away their rifles is not an affront to their families.

The Russians are nevertheless fighting with all of this in mind. They are not simply fighting to postpone the inevitable because the longer a war lasts, the greater the price leaders pay. Putin cannot afford to lose this war, nor can the many others who helped plan it. So before celebrating, the Ukrainians and Americans must calculate their next move, assuming that Russia’s next move is to collapse or capitulate, both of which are unlikely.

The Russians may be counting on a very cold winter in Europe, which could lead to a European capitulation. But at this stage of the war, that doesn’t matter much. Europe’s support is heartening but has minimal military meaning. The U.S. and Ukraine will not stop fighting to keep Europe in the war.

Another strategy the Russians might attempt is to ask China for help. But they are already allied with China, and China has made no move to help. China could support only a small contingent in Ukraine, which they would have to supply because of Russian limits. China is also aware of the economic war the U.S. is waging against Russia, and given its financial condition, China does not want to face that.

A third strategy might be to negotiate peace. But the Russians cannot return to the Russian border with anything but dead soldiers to show for it. The Ukrainians will not cede part of their country, viewing any settlement as temporary. A negotiation on either side would now be a capitulation.

The fourth strategy is the only one that is a real possibility. One side must defeat the other. Neither side can afford the cost of failing such an attack. The Russian advantage is manpower. There are reports from multiple sources, including American ones, of large numbers of Russian troops training in the Russian Far East. The Russians need more soldiers, so these reports are believable. Russia will not defeat an army armed with American weapons with the number of forces it has deployed thus far. The Russians face a choice of attacking with overwhelming force or losing the war. They will choose the former.

The Russians are protected by political and military reality. The U.S. is not interested in hitting Russia directly with conventional or nuclear weapons. Russia can hit back. Neither side wants a direct Russo-American war. Reinforcements can be hit upon crossing into Ukraine, but the Russians will send many trainees because heavy casualties at every stage are inevitable.

So long as Putin is president, every effort will be made to win because he cannot afford anything less than victory. And I don’t see any other possible strategies except the manpower one, which I assume will happen very soon or after the winter. It does not seem to me that the current forces deployed by Russia can do more than hold on to some areas. There needs to be reinforcement. Putin may have other strategies, but they are hard to envision.----

 

Update 13 September 2022: Armenian-Azerbaijani Clashes: Evaluating The Ukraine Factor

Major clashes erupted between Armenia and Azerbaijan along their shared border late Monday night. Both countries accused the other of instigating the fighting. Shortly after it began, Armenian Prime Minister Nikol Pashinyan spoke with Russian President Vladimir Putin, reached out to the United Nations, and called for a response from the international community. He said that since Baku had attacked territory internationally recognized as part of Armenia, Yerevan would invoke the Russian-led Collective Security Treaty Organization’s Article 4 collective security clause. Under the article, CSTO member states must come to the aid of another member who is under attack. In January, Kazakh President Kassym-Jomart Tokayev invoked the same clause, calling on Russia for military assistance after anti-government riots broke out in the country. In the Armenian-Azerbaijani clashes, Moscow hasn’t sent military support but did say on Tuesday that it had brokered a cease-fire (which hasn’t yet been confirmed by the two sides). The U.S. and EU, meanwhile, have called for de-escalation, while Turkey, Azerbaijan’s ally, said it supported Baku.

The clashes are the latest bout of fighting in a long-running conflict between Azerbaijan and Armenia. In 2020, they fought the Second Nagorno-Karabakh War, which ended in a Moscow-mediated cease-fire and the deployment of Russian peacekeepers. Since then, there have been sporadic border clashes, sparking fears of a larger confrontation. For the past six months – soon after the beginning of the war in Ukraine – hostilities have been escalating in and around the breakaway region of Nagorno-Karabakh, which is populated mainly by ethnic Armenians. The South Caucasus is an important buffer zone for Russia, where Russian, Turkish, U.S., and Iranian interests collide. Hence, there’s always potential that a conflict here could draw in regional powers or destabilize Russia’s southern flank.----

The roots of the conflict stretch back decades. In 1988, ethnic Armenians living in an Armenian-majority enclave in the Azerbaijan Soviet Socialist Republic called Nagorno-Karabakh Autonomous Oblast (NKAO) demanded that the territory be transferred to Armenia. But three years later, the Soviet Union collapsed before resolving the issue. In 1994, the First Nagorno-Karabakh War ended in a Russian-sponsored cease-fire, with Armenian forces in control of NKAO, which took possession of seven Azerbaijani territories to the west, south, and east and declared independence. The status quo held until the Second Nagorno-Karabakh War began in September 2020, ending with another cease-fire negotiated by Moscow. Azerbaijan took control of part of Nagorno-Karabakh, including Shusha and Hadrut and the seven adjacent territories it had lost to Armenia in 1994. Armenian troops withdrew, but Russian peacekeepers deployed to the region to patrol the parts of the former NKAO that remained in the hands of ethnic Armenians.

In the early days of the war in Ukraine, officials in Yerevan and Nagorno-Karabakh’s de facto capital of Stepanakert feared that Azerbaijan would take advantage of Russia’s and the West’s preoccupation to recapture more land in the breakaway region. Azerbaijan sees the whole territory as its own and has no interest in negotiating Nagorno-Karabakh’s status or that of the ethnic Armenians living there.

The clashes that broke out in March resulted in Azerbaijan gaining control of Farukh, a village in an Armenian-populated district of Nagorno-Karabakh. Russian forces successfully pressed both sides to end the fighting at the time. The territory’s troops left the area under Russian monitoring toward the end of the month, but Azerbaijani forces remained. Baku refused calls from the U.S., EU, France, and Russia to pull its troops back to their previous positions. This led to deploying Russian peacekeepers to Farukh to prevent any further advances by Azerbaijani troops.

The timing of this week’s clashes is notable. As it became clear the war in Ukraine wasn’t ending any time soon, Azerbaijan found itself in a unique position. Not only could it provide Europe with a much-needed alternative source of natural gas, but Turkey, its main ally in the region, also saw an opportunity to enhance its position as a potential mediator between Russia and the West. While European and American delegations visited Azerbaijan for energy talks, Baku maintained cordial relations with Moscow. It didn’t condemn the Russian invasion outright, but neither has it recognized the independence of the separatist regions of Donetsk and Luhansk. It instead continued to work with Turkey and pursued different opportunities in line with its national interests.

The current flareup began just a day after reports indicated that a counteroffensive launched by Ukrainian forces in eastern Ukraine was successful. Though it’s difficult to gauge the accuracy of these reports, given that most of the information about the operation is coming out of Kyiv, it seems clear that the morale of the Russian military has suffered greatly in recent months and may have reached its limit. If the Russian military has indeed suffered the kind of losses reported by most Western media, it needs to consider a new strategy. One option is to engage in another region where it has the upper hand. In Nagorno-Karabakh, Russia mainly plays the role of peacemaker rather than aggressor, seeing this as the best way to maintain its influence in the region. However, Moscow reportedly no longer has a full contingent of peacekeepers deployed to Nagorno-Karabakh, so it’s unclear whether it would be able to keep the peace there anyway.

This may be why Azerbaijan saw an opportunity to attack Armenia when Russia could not help. We’ll know if this is the case in the next few days. If the cease-fire isn’t confirmed, fighting doesn’t stop, and Russia doesn’t come to Armenia’s aid, Moscow’s influence in the South Caucasus could diminish. Failing to intervene during a crisis would further weaken Russia’s position while presenting opportunities – and headaches – for the West.---

 

Update 14 September 2022: The Resurgence Of Tribalism In Saudi Arabia

Last January, a Saudi sociology professor said he wished decision-makers – referring to the king and crown prince – would encourage intermarriage between people of different tribes, sects, and faiths to help integrate society. He added that the tribe’s role as a supporter of the state’s existence has ended and that the Saudi people no longer see the origins of their compatriots as crucial because their focus has shifted from tribal identification to nation-building. The backlash was intense. Critics argued that the tribe is a red line in Saudi society and shouldn’t be excluded from public life. They accused the professor of trying to stir up sedition and demanded that he be disciplined. The outrage prompted a government adviser on security affairs to urge him to stop provoking Saudi society in its most crucial component.

Although the Saudis have promoted, as part of their Vision 2030 national transformation project, a national identity that transcends the tribe, there’s no reason to believe that the Saudi royals want to eradicate tribalism from society. They believed that its abolition could lead to calls for political reform and even the end of the Al Sauds’ rule. For them, the tribes are a helpful force, dividing society into rival factions competing for a more significant share of the government’s resources. As long as the tribes remain focused on each other, the Al Sauds are confident they won’t turn on them.

 

Manipulation Of The Tribes

Saudi Arabia originated in desert settlements before sweeping into urban areas in Hejaz, Al Ahsa, and Asir regions. It’s the only country where the tribes had a central military role in its establishment. Ibn Saud founded the Kingdom of Saudi Arabia in 1932 based on three pillars: Wahhabism, the Saudi household, and the Najdi tribes in central Arabia. The Wahhabi doctrine contributed to the religious cover used to mobilize the tribes and articulate the kingdom’s ideological framework. The Al Sauds provided the political leadership that commanded the tribal forces and the army, eradicating other, more mature political entities in Arabia, specifically the Hashemite Kingdom in Hejaz.

Ibn Saud created his state in the parts of the Arabian Peninsula that did not impinge on Britain’s protectorates in the Persian Gulf or its presence in Iraq and Trans-Jordan. When Ikhwan Wahhabists raided British-held territory and sacked the Shiite city of Karbala in Iraq, Ibn Saud decided to destroy them in the 1929 Battle of Sibilla, the last tribal uprising. Ibn Saud used religion to split the tribes’ ranks and cloak his geographical expansion in ideology. He decided to tame them by ensuring they would continue seeing each other as rivals. Some tribal groups adopted the Saudi project and fought among themselves, which weakened them after Ibn Saud consolidated the foundations of his rule. The Al Sauds designated select people as sheiks, leading to the disappearance of historical tribal households. They also engaged in arranged marriages to bind their family with prominent tribes in Najd. In addition, the government allocated monthly stipends to placate tribal leaders after confiscating their territory, making them dependent on state largesse. Thus, Saudi Arabia is no longer a country of tribal alliances. The only tribe in Saudi Arabia that practices politics today is the Al Sauds, who spent the past century transforming from family to tribe.

 

Failure Of The Reform Movement

Saudis visit Dubai for many reasons, the most important of which is to see how their country should have been. When broad-minded Saudis compare their leaders with those of modern societies, they conclude that they live in a politically medieval world dominated by illiterate or semi-educated rulers. Some highly educated Saudis and liberal clerics do not accept the political reality of the kingdom controlled by a tribe-based patrimonial leadership. They resent the royal family’s dominance because it demands people’s unquestioning loyalty and obedience.

The Iraqi army’s occupation of Kuwait in 1990 and the subsequent arrival of U.S. troops to the kingdom triggered the Saudi reform movement. The government reacted violently, arresting reformers and imprisoning them for many years, eventually suppressing all demands for change. In the early 1990s, religious scholars and intellectuals proposed a series of changes in two documents, the Letter of Demands and the Memorandum of Advice. Still, they failed to convince King Fahd to introduce reforms. This invited government retribution peaked in the early 21st century with a crackdown on the Islamo-liberal reformist movement. The government was concerned about the appeal of opposition leader Saad al-Faqih, who led the Movement for Islamic Reform in Arabia, and other notable religious intellectuals (namely Salman al-Ouda), fearing they could unite Saudi tribes against the regime.

The failure of the reform movement triggered a tribal resurgence. Since 2005, the tribes have been demanding to play a role in Saudi society and politics. The communications revolution allowed tribe members to voice their views and concerns via Twitter and Facebook and set up online forums to share their social and political thoughts. Saudi tribes have branches across the Arabian Peninsula, Syria, Iraq, Jordan, and North Africa. A number of them became indirectly involved in the civil wars in Iraq and Syria and the Saudi-led blockade of Qatar that began in 2017. The Arab uprisings of the past decade didn’t spread to Saudi Arabia. Still, they did trigger the intensification of tribal identity as the authorities prevented the emergence of cross-tribal civil society organizations and rejected the idea of political reform. In fact, since 2015, Crown Prince Mohammed bin Salman has made a concerted effort to centralize all powers in his hands.

Most nomadic Bedouins have become sedentary, having relocated to Saudi cities and towns. In recent years, they have exhibited strong tribal tendencies due largely to their economic and social deprivation relative to other urbanized groups. Accurate data on the number of disenfranchised Saudis don’t exist. Official statistics indicate the country’s population totals slightly more than 34 million people, of which 22 million are nationals – though the crown prince told The Atlantic last April that his country had just 14 million citizens. Whatever the case, there is a significant number of marginalized people living in Saudi Arabia. Many young Saudis from well-known tribes, such as Al Maliki, Al Dawasir, and Al Shammari, who migrated from the countryside to urban areas, feel disenfranchised because the government does not treat them as citizens. They also accuse the Al Sauds of stealing the country’s riches, controlling 60 percent of its land and 30 percent of its lucrative oil revenues.

But Saudi tribes don’t publicly support political or economic reform, afraid that it would disrupt the country’s fragile balance. They especially resist reform when it challenges their authority over land and followers, fearing they could lose their role and status relative to other tribes. The government hasn’t attempted to curtail the resurgence of tribes, despite having concerns about independent tribal organizations and their rising social influence. Tribespeople constitutes a large percentage of Saudi troops, and some tribes have tried to establish charitable funds to support their debt-burdened members. But the Council of Senior Scholars has prohibited them from competing with the state as a welfare provider.

Tribes have begun to identify themselves using a three-digit number, which their followers display in shop windows, on the fronts of houses, and in car windows. Some young people even invented words to define their affiliations, which increased tribal strife and contributed to the Bedouinization and ruralization of Saudi society. Higher education and migration to cities have failed to weaken tribal bonds. The government has also done little to discourage Saudis from emphasizing their tribal identity and even issued ID cards with tribe names printed on them.

 

The Tribe As A Destructive Force

There’s no reason to believe the tribes will rise against the regime. Saudi tribes have separate social, economic, and cultural identities but are apolitical. But they will continue to have a damaging impact on society. Saudi tribalism exhibits racist tendencies, does not value work, and treats public property with disregard. It’s characterized by a culture of suspicion and mistrust, intolerance toward differing opinions and religious plurality, and the domination of authoritarian male personalities in family relations.

Most Saudis' most important affiliation is their family blood ties, followed by their tribal areas of origin rather than their place of residence. They refuse to interact with Saudis with no tribal lineage. The Najdis view the residents of Hejaz as descendants of pilgrims who came to the holy places in Mecca and Medina to perform a religious obligation and chose to stay there. They also distrust the people of the Eastern Province, viewing them as Shiites who rejected the true Islamic faith.

The tribes challenge Saudi Arabia’s Vision 2030 project, which aims, among other things, to promote hard work, encourage citizens to serve the country, and provide job opportunities for all. But hard work is not valued in the Saudi tribal way of life, where a high standard of living is expected but not earned. The tribes are a liability to the kingdom’s national transformation, but to avoid destabilizing the country, the Saudi royals won’t confront them.-----

 

Update 16 September 2022: Tactical Nuclear Weapons.

There has been endless speculation that Russia might use nuclear weapons in Ukraine. That concern is justified because Russian President Vladimir Putin has repeatedly mentioned their use. Since mentioning something can indicate intent or be a bluff, there is a reason for scrutiny. Either way, a discussion of nuclear weapons is in order.

The first task is to define the two essential classes of nuclear weapons: the strategic and the tactical. They differ in size, of course, although this is not as significant as it might appear. There are tactical nuclear weapons with power greater than the bomb dropped on Hiroshima. There are others whose yield is not much greater than a large artillery round.

The real distinction is the mission. Strategic weapons are designed to render the opposing nation unable or unwilling to resist by destroying its critical infrastructure and at least significant elements of its population. Tactical nuclear weapons are designed to add additional force to battles limited in scope and being fought for limited intents. A strategic nuclear attack on Ukraine would involve nuclear strikes on major cities, production facilities, and transport. Its intent would be to render Ukraine unable to function rapidly. A tactical nuclear attack would destroy Ukrainian forces engaged in battle with conventional Russian forces. Both tactical and strategic nuclear weapons are intended to defeat the enemy. Still, strategic weapons intend definitive destruction of the enemy nation, while tactical weapons intend to defeat more limited forces and hope to compel capitulation on a particular battlefield. The size of the nuclear weapon required for this could vary and might be larger than the Hiroshima bomb, yet it still could be considered a tactical nuclear weapon. Again, it is not the weapon’s size but its mission that draws the line.

The United States developed tactical nuclear weapons in the 1960s. They aimed to deter or defeat a potential Soviet armored thrust into West Germany. The theory was that U.S. forces would withdraw from the front for several miles, and then the large-scale Soviet thrust would be annihilated by a tactical nuke. Since tactical nuclear weapons were expected to have limited fallout, U.S. armor could move through the gap(s).

Of course, massed artillery at the same distance could achieve the same end. The problem that the tactical nuclear weapon was intended to solve was the inevitable inaccuracy of conventional weapons. An artillery piece had to know the precise location of its target as it fired and then be able to hit it. This is difficult enough on its own, but the time between firing and impact complicated the mission, as the target could avoid the strike simply in the context of normal maneuvering. Moreover, Soviet counter-battery fire would likely descend, requiring rapid redeployment and making a second round impossible.

Tactical nuclear weapons overcame this problem by having a wider radius of destruction, though not too large, or it would put the firing platform at risk. Other shortcomings include the blinding effect of a nuclear detonation on both sides, the (limited) radiation zone, and the coming world of hurt as enemy aircraft destroy the nuclear launcher. In solving one problem, tactical nuclear weapons would paint a target for the Soviets.

The development of precision-guided munitions (PGMs) made the tactical nuclear weapon even less useful. During Desert Storm, a Tomahawk cruise missile fired from a U.S. ship could hit a Baghdad building’s third floor, the second building from the right. (This happened.) Initial guidance came from GPS, then TERCOM (or terrain contour matching). A picture of the ground and terminal point would be fed into the missile’s computer along with directional instructions, allowing it to eliminate the accuracy problems that tactical nukes were trying to solve and to do so without necessarily creating a threat to its troops.

PGMs, both in artillery shells and longer-range missiles, meant that fire could be laid down as needed without a saturation attack. And the range they could achieve meant that the launch mechanism was not necessarily in danger after firing. In Ukraine, PGMs of various sorts are being used by both sides. In the early part of the war, anti-tank missiles destroyed Russian tanks. The Ukrainians were more widely dispersed, and even a tactical nuclear weapon would have had minimal effect. As that is now changing, the use of tactical nuclear weapons is conceivable, but the Russians have other means to achieve similar outcomes.

I feel at this point like the guy who relaxed and learned to love nuclear weapons. I plead not guilty. But the need for an area kill weapon has made the tactical nuke, with frequent collateral damage on its side, much less compelling. It has never been used in many wars since the tactical nuclear weapon was introduced. This is due not to sentiment but to utility. The utility of large strategic nuclear weapons seems to be intact, but there are more effective ways to destroy targets without saturating the area. Of course, there is also the psychological effect of using them. But the tactical use of nuclear weapons always has political costs and raises questions about how the United States, always unpredictable, would react.---

 

 

Update 15 September 2022:

Europe is bearing the brunt of the economic war between Russia and the West. On the whole, European economies grew in the year's second quarter, driven by household consumption and government spending. However, the countries closest to the Russia-Ukraine war, such as Poland and the Baltic states, saw their economies shrink for various reasons.

The Continent's growth prospects for the remainder of the year are significantly worse. In Q3, an energy crunch combined with high temperatures and drought – which disrupted power generation – has driven up electricity costs, hindering industrial activity. As temperatures fall later in the year, demand for natural gas will rise, potentially pushing prices even higher. The European Union and national governments are discussing countermeasures, such as mandatory cuts to electricity consumption and price caps for natural gas. Still, it's far from clear that they will succeed.---

 

Update 18 September 2022: Winning Friends And Influence At China’s National Congress

The immediate future of China’s economy rests on the rapidly approaching 20th National Congress of the Chinese Communist Party. Unlike other recent congresses, where most major decisions were made ahead of time, the Oct. 16 meetup is uncertain. A beleaguered economy has created discord between party leadership and civil society. Most notably, an influential party faction is pushing an economic recovery plan whose priorities starkly contrast with the strategy of President Xi Jinping’s government. Despite its best efforts, the Xi government has not managed to win over these critics or fully rein in social unrest before the congress. Though Xi is likely to win out, it’s important to watch the event for revisions to China’s short-term economic strategy and indications of regime instability.

 

A True Opposition

Held every five years in Beijing, the National Congress is where party elites elect members of China’s top political body, the Central Committee, which then approves the membership of the party’s most powerful decision-making organ, the 25-member Politburo, and its seven-member Standing Committee. In other words, it's where China chooses its leadership and strategy for the next half-decade. The Standing Committee presides over all congress sessions and sets the agenda, the routing of legislation, and the nominations for offices. Any major strategy or government initiative goes through the committee. The most important choice is who should be president – the person with the greatest influence over the Standing Committee and other powerful bodies.

On paper, China has a multiparty system for cooperation and consultation, meaning there has always been an “opposition” in the country’s political framework. In practice, that opposition has been primarily symbolic. Minor democratic parties operate under the watchful eye of the Communist Party of China (CPC) and have influence only over insignificant social and environmental issues. This year’s congress is different. The most vigorous opposition comes from within the government itself, in the Politburo, and its point of disagreement concerns the country’s economic recovery plan, not some trivial peripheral issue.

The political factions vying for control have made no secret of their dispute and intentions in the months leading up to the Congress. This, too is unusual. China’s political system leaves little room for competition over policy, so proceedings at a National Congress are typically a formality. Major decisions and appointments have already been made, and congress is where they’re announced to the public. There is no agreed-upon, comprehensive list of “pre-appointments” this time around, even with the gathering less than a month away. There may be other reasons for this, but the obvious explanation is that the party hasn’t been able to agree.

 

Wide Base Of Resistance

Xi’s opponents aren’t only people already in the halls of power. The CPC’s sometimes peculiar employment of COVID-19 containment measures suggests a deliberate effort to suppress potential widespread unrest that Xi’s rivals in government could exploit. Since late August, Beijing has put millions of people in several cities under partial or full lockdown in response to even the slightest hint of a viral outbreak. A handful of asymptomatic cases have been enough to trigger lockdowns in large districts. The poor quality of China’s COVID-19 vaccines and rollout difficulties, as well as the government’s early emphasis on the complete suppression of cases as indicative of its systemic superiority over the Western model, undoubtedly play a role in its heavy-handedness. But given the larger context, the primary cause of Beijing’s disproportionate public health response is probably political.

Conspicuously, the regions under the strictest public health scrutiny are the same areas that make up the economic base of Xi’s rivals. These include Shenzhen, Chengdu, and Dalian. All three cities are major technology and manufacturing hubs and thus host large firms and banks that support those sectors. These industries rely heavily on foreign trade and are thus hypercritical of lockdowns – in addition to Xi’s crackdown on their sectors and China’s increasingly strained commercial ties with the West.

Another example is Shanghai. The leading figure of the opposition in the Politburo is Han Zheng, the former mayor of Shanghai, who is still closely connected to the city’s financial and trading activities. It was notable, then, that Beijing indefinitely postponed the finance-focused, Shanghai-based Lujiazui Forum a day before it was supposed to start. Han, along with other senior Chinese officials and economists, had openly criticized Xi’s handling of the economy, and the forum was likely to feature a critical evaluation of the government.

Xi’s economic and foreign policies are a real threat to the dominant actors in these outward-looking cities. They want Beijing to curb China’s substantial debt and further support tech and manufacturing. Given their ties to international markets, they also advocate cooperation with foreign actors to resolve China’s most pressing economic issues: an unsustainably large real estate bubble and a liquidity crisis in the banking sector. Their strong preference is for a strategy that favors coastal economies and requires a less confrontational approach toward the West.

The Xi government sees the country’s challenges differently. Its focus is on redistributing wealth (under the rubric of “common prosperity”), where growth drivers are government management and domestic consumption. To the extent possible, it wants to sideline international actors. It calls for transferring the coastal provinces’ immense wealth to the much poorer interior in the name of social cohesion (read: to avoid a peasant revolt). Xi’s crackdown on big tech and big finance, ongoing since 2020, is a major part of this plan.

 

Tale Of The Tape

How this political battle plays out will determine what happens at the National Congress. The opposition’s main strength is in its ability to capitalize on social unrest from lockdowns and another social repression. Already fatigued from years of such measures, the public will have little appetite for tolerating new ones. In cities like Shenzhen and Chengdu, where government interests align with those of the Politburo’s opposition faction, there’s a risk that local leaders would allow citizens to express their discontent if it’s politically expedient for them to do so.

This is unacceptable for the president. The Xi camp must continue its repressive measures to prevent the opposition from drawing on this social support. Since addressing the root problems of the opposition is a non-starter, it’s the only option the government has. Beijing adopted the COVID-19 strategy because it allows the national government to enact social and security measures outside the purview of local authorities. (Normally, local governments are responsible for maintaining law and order.) This wouldn’t dissolve the opposition of course, but it will at least make it think twice before acting, giving Xi and his loyalists time if nothing else. Xi will meanwhile use his control over state media to downplay public protest, even if his ability to do so appears to be waning. He was unable, for example, to prevent national media from covering the Henan banking protests and the Wuhan lockdown protests.

Xi’s camp has an inherent advantage over its adversaries because it starts from a position of strength. The president has purged the government of potential threats since 2012, using his economic agenda to help support his camp’s political agenda, most notably in the tech and real estate sectors. Most of his targets were affiliated with wealthy cities aligned with the Politburo opposition. But there are limits even to these crackdowns. And though they’ve claimed many victims, they have yet to capture members of the Central Committee and Politburo, such as Vice Premiers Han Zheng and Hu Chunhua.

The opposition, then, comes from a position of relative weakness. Yes, it can incite local populations to action, but it is not powerful or organized enough to challenge Xi head-on at the congress. Some high-ranking opposition figures have enough political capital to keep their positions, but there’s a limit to how outspoken they can be. And perhaps most important, it has yet to rally behind a single leader. Han and Hu play a role, as do local government officials throughout the country, but it’s hardly an organized network capable of creating and sustaining a viable alternative movement. CPC tradition dictates that presidential candidates present themselves at least six months before congress to solidify their national strategies within the party and publicize them. If a new presidential candidate presented himself now, he would not have much support in the party.

Who walks away with the vice premier posts will signal which political faction did well at the congress and, consequently, which national economic strategy will be pursued. There are currently four premiers, three of which are 68 years old or older – the retirement age established by party regulations. There have been exceptions to the rule, of course, as when older members resist surrendering their seats to a younger replacement whose views don’t align with theirs. Such may be the case this year. Two vice premiers, Liu He and Sun Chunlan, both in Xi’s circle, are set to retire, but there has been no indication of who will replace them. How these posts are divided among the factions will indicate the relative strength of each camp. The Xi camp is expected to remain in power so that China will pursue its shared prosperity economic strategy. But with a good showing at the congress, the opposition could undermine such initiatives, thus weakening the party. And as history has shown, a weak central government in Beijing can often lead to crisis.----

 

Update 19 September 2022: Russian Options

The nature of tactical nuclear weapons is that they are built for tactical effect, not strategic effect. Strategic nuclear weapons, such as the ones dropped on Hiroshima and Nagasaki, can devastate a large area, with both the blast and the nuclear fallout. The blast area would be devastated, and the fallout would increase the lethality and carry it a significant distance downwind. However, it must be remembered that regardless of casualties, neither city was abandoned entirely, and both were populated and functioning at a reasonable level about a year after the bombs were detonated. The power of tactical nuclear weapons (depending on the type) is less than 1 percent of the Hiroshima blast, and as important, they yield little nuclear fallout.

Tactical nuclear weapons can determine the outcome of a battle, not a war, and would not make the land unlivable. Therefore, Russia’s other nuclear option is strategic: to destroy Ukrainian cities with a Hiroshima-type weapon. This option has two weaknesses. The winds in Ukraine are variable; in eastern Ukraine, for example, blow to the northeast. A strategic nuclear detonation would send fallout into Russia and, in this example, toward Voronezh, a strategic Russian city. Any use of a strategic nuclear weapon would likely affect Russian territory.

A second risk, however unlikely, concerns the Western response. The United States, the United Kingdom, and France all possess strategic nuclear weapons. Any of them might take a Russian strike on Ukraine as a potential threat to themselves, triggering an exchange. This may be farfetched, and none of the three might imagine it, but in a command center, fears are magnified. Given the limited value of tactical nukes and the potential disaster of strategic nukes, Russian nuclear threats are excellent psychological warfare (unless a Russian enemy takes the threat seriously) but cannot solve Russia’s military problem.

Its problem consists of four parts. The first is that the Russians were deployed in Ukraine as they began the war, on salients vulnerable to flank attacks, which happened. A retreat into more defensible formations would make sense. Still, it would also have serious political consequences, indicating another retreat after the one in the north earlier in the war. A second problem appears to be insufficient, poorly trained, and unmotivated forces with which to mount a counterattack sufficient to force a major Ukrainian retreat. A third problem is the long-standing Russian/Soviet problem: logistics. To mount a vengeance, the Russians must have not only initial supplies but also massive additional supplies arriving reliably where they are needed. This leads to their fourth problem. U.S. satellites provide accurate intelligence on all forces, including logistical movements. In addition, U.S. artillery of various sorts can cut the Russian line of supply, leaving an offensive paralyzed. And finally, Ukrainian forces are sufficiently dispersed that a last-ditch tactical nuclear strike would likely impact the Russian offensive.

It would seem that Russia has been forced into a permanently defensive posture. If this were World War II, Russia would be able to rebound. But Russia has not fought a multidivisional war for 77 years. We saw the Russians open the war with three armored thrusts, largely unable to cope with logistical problems and anti-tank weapons. In effect, they were forced to retreat from offensive missions, regroup and wind up in the position they were in. They are fighting an enemy in the same position, but one that does not have a logistical problem thanks to the U.S., which has also had its share of failures, but the most robust capability is logistics.

The Russians must obviously change the dynamic of the war if they are not going to be forced into a political settlement. The key is to pose threats to the Ukrainians from multiple directions, tactically and strategically. Indeed, their primary need is to diffuse U.S. logistics by creating a serious military threat to another American ally or directly attacking one. It is unclear if the U.S. could not supply two fronts, but it might unbalance the U.S. and force it to reduce support for Ukraine, possibly opening opportunities for Russia.

Geography provides few options for this, but the most likely ones are Moldova and Romania, two countries connected. It could not be an overland offensive but would have to take advantage of the Black Sea, landing significant forces in Romania, a NATO member and host to an American naval force. To achieve this, the Russians would have first to use missiles to eliminate Ukrainian anti-ship missiles like those that sank the Moskva. Having done this, they would have to achieve and maintain air or missile superiority over the Black Sea and then land and lodge sufficient force to compel Romanian forces into combat with substantial American forces. Given that there are American naval forces outside the Bosporus and that NATO’s mandate or sheer necessity would force the Bosporus to shut, this would pose a serious threat to the Russians. Add to this an air attack on Russian forces, and this operation would likely fail.

There are other viable diversionary actions of sufficient significance to compel the United States to divert its forces. Still, all of them would be built on land movements at a time when Russia is hard-pressed. An attack on the Baltics would bring a significant Polish attack on Russia’s flank, and mounting an attack on Finland, for example, would be detected and anticipated. The same is true with Romania, but with somewhat lower opportunity.

Of course, the Romanian gambit is highly dubious, but here we are assuming that Russia has been forced to the defense and is unwilling to abandon the war. Few options are attractive, but the political cost of leaving the war is enormous. If they must continue and the Russians can’t regain the initiative, then a Hail Mary is the only option.

A final option would be to mass forces in the east and attack Ukraine with new details. That remains the most likely solution for Russia, assuming it can mass, train and motivate a large force. If not, Russia might achieve a poor draw, but it cannot impose its will on Ukraine.---

 

Update 20 September 2022: Russia Hits Europe In The Bread Basket.

It’s autumn in Europe, which for European farmers means it’s time to start placing orders for fertilizer for the spring. Of course, prices have been much higher recently. World nitrogen prices have increased significantly since the start of 2021, driven by elevated demand for agricultural produce and pandemic-related supply disruptions. European costs of natural gas – a factor in nitrogen-based fertilizer production – since the second half of 2021 have shot up by even more. And the elevated price of nitrogen fertilizers has already pushed purchasers toward phosphorus or potash fertilizers, bringing their prices to multiyear highs. Then, in February 2022, Russia’s invasion of Ukraine was added to the mix.

Higher energy and fertilizer prices mean higher food prices without a fanciful surge in output or state intervention. This will increase the risk of social unrest in Europe, a primary concern for European governments and the European Union. Europe must do something, but the most important factors in the soaring costs are the war in Ukraine and – indirectly, in the case of fertilizers – Western sanctions against Russia. For Moscow, one of the world’s largest producers of natural gas and nitrogen fertilizers, this is crucial leverage, which it will use to try to extract significant concessions on sanctions. Europe’s next best alternative — finding supplies elsewhere in the next few months – is unlikely to pan out, and it may eventually have to give the Kremlin some of its wants.

 

Disruptions, Real And Imagined

Put a large market with lots of manufacturing capacity next to a treasure trove of natural resources, and you get interdependence. Over the years, infrastructure and commercial linkages have tied the European and Russian markets together, made possible by proximity and circumstance. In addition to being a massive natural gas exporter, Russia supplies approximately 45 percent of the world’s ammonia nitrate fertilizers, 20 percent of potash fertilizers, and just under 15 percent of phosphate fertilizers. Most of this production goes to Europe. Russia receives a constant influx of foreign currency, reinforcing the regime’s stability. Most of the time, Europe gets a cheap, steady flow of critical inputs: About 40 percent of its gas imports and, for example, about a third of its ammonium for producing fertilizers. Roughly a quarter of Europe’s fertilizers are imported from Russia, and Belarus, a Russian ally, provides more than half of Europe’s potash fertilizers.

 

Since December 2021, the Kremlin has had quotas on nitrogen and compound nitrogen fertilizers exports to states outside the Eurasian Economic Union. Still, those quotas have been gradually relaxed without spurring a significant increase in Russian fertilizer exports to Europe. Western sanctions do contribute, but not directly. Some sanctions target individuals who run Russian fertilizer companies, but no measures target the fertilizers themselves. The European Union adopted a quota on importing Russian potassium fertilizers for one year, but the quota limit is very close to typical trade volumes. Instead, the effect of Western sanctions is mainly transmitted through logistics and finance.

Regarding logistics, Baltic ports that usually receive shipments have become less accessible to Russian producers. Buyers have encountered difficulties chartering large bulk carriers, forcing them to rely on smaller vessels and raising transport costs and delivery times. Financially, some Russian banks are blocked from using SWIFT, the dominant messaging system for interbank transactions. As a result, payments are more complicated, and some potential buyers avoid Russia entirely for fear of blowback. Nearly 300,000 tons of fertilizers are reportedly blocked from European ports and can’t reach buyers.

Concerning ammonia specifically, the war in Ukraine is a direct obstacle to the delivery of supplies. The 2,500-kilometer (1,550-mile) Togliatti-Gorlovka-Odesa pipeline can transport 2.5 million tons of ammonia annually from Russia’s Volga region to the Ukrainian Black Sea port of Yuzhny, near Odesa. But it also happens to traverse the parts of Ukraine witnessing the most intense fighting, including Kharkiv. And since ammonia is highly toxic and corrosive, war is a problem.

 

Europe’s Options

An additional problem for Europe is the lack of alternative suppliers. Domestically, the nearly 30 percent increase in natural gas prices damaged Europe’s fertilizer production. As much as 15 million tons of European ammonia capacity has been shuttered or is at risk of it, equivalent to almost a third of Europe’s annual output. Producers of nitrogen fertilizers face significant competition for scarce natural gas from other industries and households. And Europe cannot significantly raise the production of other types of fertilizers. Ideally, Europe would try to develop homegrown resources –preferably not nitrogen, whose processing for fertilizers requires lots of natural gas. Mines in east Germany have started test-drilling for potassium, but it would take time to spin those up to meaningful production levels.

European buyers have contacted other gas and fertilizer producers in the Middle East, North Africa, and Canada. The bloc is discussing natural gas with Algeria and fertilizer with Morocco, which already provides 40 percent of Europe’s phosphate imports and contains more than 75 percent of proven world reserves of phosphorite. But Europe faces obstacles here as well. Gas-producing countries are already taking advantage of their access to a cheaper gas and running fertilizer plants producing nitrogen at near full capacity. Quickly raising the production of other fertilizers is even more difficult. Lastly, importing more fertilizers does nothing to help domestic fertilizer firms stay afloat.

Then there are the long lead times. Although fertilizer is usually applied a couple of months before planting season (February-March), farmers usually order fertilizer between September and November. The European Union is working on a strategy to increase domestic fertilizer production, protect and create jobs, and diversify supplies. Still, such a reform will take more time than Europe has – and possibly more unity too.

This leaves Europe with two options: muddle through, or compromise with Russia. Already, there are indications that Europe is investigating the latter. According to U.N. Secretary-General Antonio Guterres, the West is discussing increasing ammonia nitrate supplies through the pipeline in Ukraine. Ukrainian President Volodymyr Zelenskyy has already given his support to the idea. And the United Nations proposed that gaseous ammonia owned by Russian fertilizer maker Uralchem be piped to the border with Ukraine, where U.S.-based trader Trammo would buy it.

 

Compromised

But Russia is aware that Europe has few options, so Moscow is in no hurry to respond to appeals to use the Togliatti-Gorlovka-Odesa pipeline better. The Kremlin intends to squeeze Europe to, for instance, ease restrictions on logistics or payment for Russian goods. Russian President Vladimir Putin recently called on Europe to ease restrictions on port access for fertilizer shipments bound not just for Europe but for non-European markets. Several ports, including Rotterdam and Finland’s Kotka, have responded positively to proposals to make exceptions for Russian fertilizers. However, Brussels is nervous that simplifying logistics or otherwise easing pressure will restore maritime or rail connections and give Russia more access to foreign currency and trade.

Given the likely shortages of fertilizers for the spring, Europe’s 2023 harvest prospects are murky but downbeat. Moscow can use the situation to promote its interests and seek favorable contract terms. It will delay the restoration of pipeline supplies for as long as possible under various pretexts, from unexpected repairs to retribution for refusal to pay in rubles. Therefore, food prices are unlikely to stabilize by next summer, and prices in the EU will remain elevated, heaping more pressure on the bloc.----

 

Update 21 September 2022: Ukraine And The Shifting Geopolitics Of The Heartland

As the Ukraine conflict has now passed the six-month mark, fears of a brutal war of attrition along an immovable front have now evolved into a series of successful counteroffensives by Ukrainian forces of towns held by Russia since the beginning of the war. It is now possible to imagine a Ukrainian victory sooner than many in the West had expected, with immense geopolitical consequences for Europe and the wider world. As a frontier state, Ukraine may be guided by the hands of neighboring powers, but those within its borders are increasingly shaping its destiny. The possibility of a fully liberated Ukraine in charge of its strategic destiny calls for an assessment of Ukraine’s place in the history of geopolitical theory. Russia’s ability to manage relationships and project power across its sphere of influence in the heartland of Eurasia is waning. As such, over thirty years since its independence from the Soviet Union, Ukraine’s fight marks a dividing line of the post-Soviet era in one of the most geopolitically significant regions of the globe.

 

Ukraine’s History From Geopolitical Perspective

The geographer and founder of modern geopolitics Halford Mackinder famously posited in his Heartland Theory that whoever ‘rules East Europe commands the Heartland; Who rules the Heartland commands the World-Island; Who rules the World-Island commands the World.’ Since Mackinder’s article was published in 1904, Eastern Europe has largely fallen under a Western orientation, with the notable exception of Belarus as a Eurasian-leaning Russian appendage, and Ukraine and Moldova progressing towards the West but still existing in a state of geopolitical limbo. Ukraine’s security guarantees are more iron-clad than Moldova’s, which remains at risk of Russian provocations in Transnistria, combined with steady support for the pro-Kremlin aligned Socialist Party of former President Igor Dodon.

In addition, over a hundred years after the publication of Mackinder’s book Democratic Ideals and Reality, the conflict between Germany and Russia, and thus Central Europe and Russia, has become more managed to benefit both nations, but arguably to the hindrance of heartland nations like Ukraine. Germany still faces a ‘Russia problem’ in the words of John Lough, which favors continental security over antagonism with Moscow. It emphasizes the role Russia has played in defining Germany’s role within Europe. Six months on, the real ‘Zeitenwende’, or turning point as announced by Chancellor Scholz, is occurring in the heartland much closer to the recently recaptured city of Izium than it is in the corridors of power in Berlin. Germany still has major targets to meet as it engages in a dramatic overhaul of its security and defense policy, and Ukraine's counteroffensive successes may finally force Berlin to act.

The Ukraine conflict has also revealed Eurasia's perennial significance to rival powers' ambitions. Jeffrey Mankoff in his book Empires of Eurasia argues that Post-Cold War Eurasia is a continent ‘less of states than of regions,’ where ‘large, powerful polities’ and outside powers like the EU and US battle for influence over the smaller states that rest between them. This heartland is a renewed great game of conquest, with the sovereignty of states existing on a ‘limited and conditional’ level, according to Mankoff, as witnessed in Putin’s conception of Ukraine. Well over a century ago, the historian Henry Adams’ assessment that the core problem of Europe was Russia still rings true, and efforts to firmly shape Russia’s strategic destiny as either Euro-Atlantic or Eurasian have failed to materialize. Putin has shown a much greater interest in reintegrating the imperial borderlands of Europe from the old Kyivan Rus that have long formed the heart of Russian culture and identity rather than merging the Central Asian states to counterbalance the EU.

The Eurasian Economic Union, often seen as Putin’s response to the EU, is more of a practical economic arrangement amongst long-allied states rather than an ideological mainstay or legacy-shaping project for the Kremlin. The most critical change from Mackinder’s day is the role of China in Eurasia, with Russia playing the role of junior partner on almost all matters of importance, led by Beijing despite being engaged in a relationship with ‘no limits.’ Similarly, Russia’s role as a security guarantor in the Caucasus, a key region at the crossroads of many former empires, is also being tested because of its actions in Ukraine. The ability of Russia to use its leading role in collective security organizations across its sphere of influence, like the CSTO, is waning, causing other powers from China to Turkey and the US to make inroads.

In Eastern Europe, Russia’s influence remains strong from a cultural and identity-driven perspective but weak in terms of prospects for alliance building and economic development when compared with the EU. This is the case in Serbia, a longstanding ally of Russia with Slavic roots, pursuing a multi-vector foreign policy as it seeks investment from China and membership in the EU. In Ukraine, despite having many ethnic Russians with longstanding connections to Moscow, broad popular support exists across regions from the Polish border to the Donbas for European integration and strategic outlook. As such, Ukraine may exist physically in the contested space of the heartland, but it is now ever-closer ideologically, militarily, and strategically to its neighbors in the West. Putin’s war in Ukraine has only accelerated this trend, causing the threats he imagined over NATO expansion to come to fruition as Sweden and Finland are now set to join the alliance. Thus, the heartland is likely to become not just uncontested but treaty-bound to Western-led institutions that Putin perceives to be existential threats to the survival of Russia.

For Poland and the Baltic states, Ukraine remains the heartland of Europe as a contested space between two competing blocs, the EU and Russia, crucial to each opposing side’s strength and the expression of its values. In contrast, France, Germany, and other Western European states still regard Ukraine as a peripheral state existing in the next wave of enlargement to Europe, one whose integration is not critical to their success and prosperity but rather solely to Ukraine as the state seeking membership. Ukraine remains an expendable security issue for states like France, with ambitions to redefine the European core and engage in power projection in other areas like Africa and the Indo-Pacific. For France and Germany, Ukraine is not yet a ‘new Berlin’ standing on the frontlines of freedom but a prospective member of an integrated European core that still is open to including Russia as a major economic partner. The Baltic states and Poland view Ukraine differently as the last bastion of liberty by nature of its geography and heartland position; something also echoed by Finnish Prime Minister Sanna Marin in a recent address to the European Parliament. Ukraine’s Western-allied neighbors in the heartland rightly see Kyiv not as a pawn on the geopolitical chessboard devoid of agency but rather as a principal player deserving of its leading role.

 

Ukraine’s Future Orientation

In the over 100 years since Mackinder first posited his theory, Ukraine has gone from heartland to imperial periphery and borderland to frontline state. Unlike previous wars, the conquest of Ukrainian territory for material and political gain is less important than the defense of that territory and the stakes involved in projecting power and values in the 21st century. Ukraine is a gatekeeper to Europe, a key indicator of where the continent is going and how the established powers in Europe and those with imperial legacies will respond. Since Russia’s invasion on 24 February, Ukraine has proved itself to be a decisively European state fighting for European values and an orientation markedly different from that of Moscow. However, by nature of its geography, it will take time for Ukraine to be fully accepted as a modern European state that belongs firmly in the European family of nations.

Ukraine is not a scapegoat for the EU’s ills but a provider of moral clarity for the bloc and a reminder of the importance of enlargement for revitalizing its core mission. Few nations have been as pivotal as Ukraine to the strength of competing for neighboring powers in both the 20th and 21st centuries. As the conflict continues, it is also imperative for Ukraine’s development and future orientation that its territory no longer be framed as a borderland existing in the post-Soviet space. While that framework can be important in placing historical context for the present conflict, it continues to subject Ukraine to the post-imperial periphery that, according to Putin, is not fully sovereign but conditionally so as a member of a nebulous near abroad. Furthermore, the notion of being post-Soviet has many different interpretations and outlooks. Those in Moscow or the West often define it to serve their strategic calculations and national interests in a contested space. Ukraine can now reclaim and redefine what it means to be post-Soviet and to export its modernized conception of its heartland region to the other side of Europe as it engages with Brussels over EU membership.

As leading geopolitical thinkers have long recognized, Ukraine is too important and significant a heartland member to fail politically or strategically. As the past months have revealed, Ukraine shows no signs of failing. It is time for the West to consider the ramifications of a Ukrainian victory for the existing security order in Europe. Given the intractable strength of the Ukrainian project and its people, it is not unprecedented to think that Ukraine will, at some point, be driving debates over the future of Europe. Over a hundred years ago, what Mackinder did not factor in his original analysis was a Ukraine existing as a heartland state to a weakened and isolated Russia, with Ukrainian identity and will to fight being much stronger than that of its larger neighbor. This is the greatest geopolitical development in Ukraine’s favor, making Ukraine the heartland not just geographically but spiritually as the leader of a moral cause capable of redefining the core of Europe and reimagining relations in Eurasia.

 

Update 22 September 21, 2022: How To Fight A Nuclear War

Russian President Vladimir Putin’s occasional threat of nuclear war has achieved its desired goal: to create a sense of catastrophe if the West, particularly the United States, continues to support Ukraine. Moscow is having a hard time waging a conventional war, premised on the (faulty) assumption that Russia’s military would quickly and easily overpower Ukraine. Some suspect the opposite may now be true.

This has created problems for Russia at home and abroad. Though Putin’s authority is fairly intact, confidence in his judgment and in Russia’s future has declined. There are protests in the streets of Moscow and reports of conscripted men trying to flee the country.

Russia’s performance in the war has also quelled international fears of Moscow. Without fear, countries are free to disagree with Russia, aid Ukraine, or generally challenge Moscow elsewhere without risk of retribution. In Central Asia, for example, Russia’s authority has declined significantly. Since the region is in Russia’s backyard, its authority, or lack thereof, matters greatly.

Russia needs to demonstrate that it remains an overwhelmingly powerful nation. Its ideal strategy, of course, would be to beat the Ukrainian army decisively. For now, that appears unlikely. The longer that remains the case, the further the perception of Russian power declines.

By raising the threat of nuclear war, Putin is attempting to raise the perception that defeating Russia in Ukraine could have catastrophic consequences. To make the threat credible, Putin must appear indifferent to the potential counterattacks against Russia. It’s impossible to know what someone else is thinking, let alone a Russian autocrat, so it behooves us to take the threat seriously. What was incredible during the Cold War becomes possible in the Ukraine war, and the calculus of possibility relative to the dangers of nuclear reality starts to loom large. The threat is credible only if it involves a strategic intercontinental strike rather than a localized, tactical one. Putin has carefully avoided explaining what type of nuclear strike he is talking about, so the dread of Russian power surges despite the losses in the conventional war.

In gaming nuclear war in the 1950s and 1960s, it quickly became obvious that if a country were to launch a nuclear attack, it would have to be an entirely unanticipated first strike designed to eliminate the risk of retaliation by eliminating enemy missiles before launch. We never discovered if a successful first strike was possible because the chances of it failing to at least some degree would mean a strike on the attacker’s home. If a first strike was essential, the probability of failure was too high, so nobody tried it. Thus nuclear powers, particularly the Soviet Union and the United States, were painfully careful when confronting each other, taking every care not to alarm the other about the threat of a first strike. Such a danger might have triggered a first strike by the other side.

A first strike with even one nuclear weapon may well release the entire U.S. arsenal on Russia. But Putin is in a reclining position. His best option for forcing the U.S. to step back from Ukraine is to employ what was once called the crazy SOB strategy. It was meant to frighten your sane adversary into believing you had lost your mind, causing them to try to calm the threat by making concessions. According to this strategy, the defender must be convinced that the attacker has a credible capability and is prepared to accept a nuclear holocaust in his own country to gain the upper hand. It was essential to allow the defender to scare himself into making concessions without launching anything. The danger of this strategy is that the defender would believe that if a foreign leader is crazy enough to launch at all, then he is crazy enough to launch preemptively. The metaphysics of nuclear war was a great pastime in grad school, but it was never practical because it depended on alerting your adversary of the threat.

According to Herman Kahn’s “On Thermonuclear War,” the only real nuclear option is to launch without any warning at all enemy facilities, hoping that the surprise will cost defenders precious minutes before launching a retaliatory strike. In theory, all sides are on an instant trigger to respond. The goal is to make them wonder for a few minutes if the radars had had a failure – which could happen. Those minutes of confusion are what you are looking for.

I just wanted to let you know that you aren't going to give any hint of an impending attack. Nothing should interrupt the dogmatic belief that it’s just another dull day. The last thing a Soviet or American leader would do is mumble vague promises about global catastrophe. Doing that would get the adrenaline flowing in enemy command bunkers, which is not what you want, and your first strike could turn into a disastrous second strike.

The point is that if you think of using nuclear weapons, don’t threaten to use them. If you are going to discuss their use, you are simply trying to bluff the other side. Putin is many things that I won’t name, but he is not stupid. Russian grad students and KGB agents played the same nuclear theory games as we were. With Putin’s recent comments, the U.S. nuclear system has to dust off the cobwebs. A nuclear team has always been on standby but perhaps not always on full alert. Now it is. This is not an ideal way to start a nuclear war.

I am reminded of the movie: “Dr. Strangelove, or: How I Stopped Worrying and Learned to Love the Bomb.” But it was talking about the global nuclear war. That would change life as we know it. Tactical nukes won’t.---

 

Update 23 September 2022: The World's Biggest Military Spenders

The nature of military spending varies significantly among countries and regions, and raw numbers can't always be taken at face value. In the Americas, the United States dominates in terms of defense spending. Similarly, India and China account for most military spending in Asia.

Not all military spending is the same, either. In China and India, which have 2 million and 1.4 million active military personnel, many expenditures go toward meeting troops' basic needs. Both militaries also have major state-backed programs to increase the size of their domestic defense industries. The U.S. also has 1.4 million active personnel but spends nearly ten times as much as India, mostly on advanced weapons development. For Russia, military spending before the Ukraine conflict reflected a large-scale modernization drive. And in the United Kingdom, spending has ticked up following national defense reviews that urged a reprioritization toward emerging threats.----

 

Update 25 September 2022: Why Would Poland Spurn Germany?

“We were dependent on Russia, but today we are cutting this dependence,” Polish Prime Minister Mateusz Morawiecki said last week while inaugurating a new canal to the Baltic Sea. The canal’s contribution to this goal is dubious. Still, it will enable vessels to reach or depart the Polish port of Elblag without needing to traverse Russian territorial waters around Kaliningrad. Morawiecki’s following statement was more interesting: “We are cutting our dependence on both Russia and Germany.” This comes just a few weeks after Poland demanded $1.3 trillion in World War II reparations from Germany.

Warsaw’s reasons for distancing itself from Moscow – a hostile power with a proven history of invading its neighbors – are clear, but Berlin’s offenses are less noticeable. Germany is Central Europe’s strongest country, with a latent capability to dominate most of the Continent. The Western powers’ strategy toward Germany since World War II has been to smother it with friendship – integrating its military into a U.S.-dominated alliance with its neighbors and, beginning with the European Coal and Steel Community, giving its economy the keys to a market of more than 450 million consumers and their countries’ resources. In the face of Russia’s attack on the NATO-Russian buffer, Germany's docility today shows that the Western strategy was, if anything, too successful. Regarding the immediate threat to Poland, Berlin is a friend to Warsaw. Why is the head of Poland’s government trumpeting cryptic plans to reduce ties with Germany? The answer is domestic and, to a lesser extent, European politics.

 

The German Question

The roots of the European Union lie in predominantly U.S. efforts to find a way to unleash German economic potential while calming German anxieties about potential encirclement. For reasons concerning geography, climate, culture, history, and probably countless lesser factors, the Germans are experts at producing complex industrial goods – far more than the German population could consume. This raises two problems: First, the resources necessary to produce all these unparalleled goods exceed Germany’s resource pool. The German economy has to get them from somewhere else, whether via cheap trade and investment or conquest. Second, a population of approximately 80 million couldn’t possibly consume all the vehicles, machinery, etc., that German industry can produce. The German economy needs easy access to foreign consumers – again, through preferential trade arrangements or conquest – to offload the excess. The U.S. strategy, which Washington advanced through deft diplomacy, economic incentives, and security guarantees despite the reluctance of France and Britain, successfully resolved both German problems peacefully. The European common market was born, nestled in a political framework that had to grow with economic integration.

The resulting union is what Poland and other newly independent Soviet satellites and republics were desperate to join as the Soviet Union started to disintegrate. The EU all but guaranteed explosive economic growth and could open the door to NATO membership – that is, American military protection. Poland applied for EU membership in 1994 and joined in 2004 alongside nine of its neighbors. As expected, NATO invited Warsaw into its ranks in 1997, and the marriage was sealed less than two years later. The Polish economy saw 28 years of economic growth – even through the 2008 recession and Europe’s subsequent crisis – before shrinking briefly in 2020.

But while this was happening, the post-Cold War world was taking shape. Politically, economically and militarily peerless on the world stage, the United States scrambled to capitalize on its advantage. It pushed for a more globalized world, with more and stronger political and economic bindings. Militarily, it enlarged the trans-Atlantic alliance and, after the 9/11 terrorist attacks, embarked on an ill-fated campaign to spread democracy by force in the Muslim world. The shock of the 2008 Great Recession gravely wounded social cohesion, not only in the U.S., and raised serious questions about the attractiveness and viability of the U.S.-led economic order and leadership. At the same time, America’s disastrous wars in Iraq and Afghanistan and its chaotic interventions in Libya and elsewhere undermined domestic support for military adventurism. By 2022, after some three decades of U.S. preponderance, the world is riddled with crises, and Americans’ willingness to pay the cost of being the world’s policeman has receded. (By how much is an open question. U.S. assistance to Ukraine and sanctions on Russia suggest it’s still higher than some observers believed.)

 

The Sovereignty Question

Where do Polish-German relations fit into this well-known history? Just as the Americans had their phase of overexuberance after the Cold War, so did the Europeans, including the Poles and other newly independent peoples. EU enlargement wasn’t an especially difficult sell. Incorporating much poorer ex-Soviet satellites and vulnerable states would be expensive, but the potential payoff was irresistible. Western European investors could snatch cheap land, resources, and companies, yielding a healthy profit, while Eastern European workers could flood the EU with cheap labor. Bureaucrats in Brussels thought about how best to integrate the former communist states politically. It was not enough to make them see European integration in the same light as the founding members.

Many Europeans and Germans learned from the world wars that European nationalism must be contained in the name of peace. During the Cold War, the early members of the European Union got decades of practice trusting one another and cooperating for mutual benefit. But across the Iron Curtain, Moscow was stamping out European nationalism in its way: using brutal covert and overt repression. While Western Europeans were discussing deeper political, economic, and monetary integration in the late 1980s, the Soviets’ dire financial situation was depriving them of the ability to contain nationalism in Eastern Europe. By 1990, nationalism and democracy had won out in Central and Eastern Europe.

But democracy alone is not enough. Whereas Western Europe’s collective identity over decades had focused on multilateralism and compromise, its liberated neighbors to the east had been learning the value of cohesiveness, national pride, and sovereignty. Without those things, they would not have regained their autonomy. Where a West German saw the loss of some national sovereignty to Brussels as the price of prosperity and peace – and thus a net positive for Bonn’s independence overall – a Pole was mistrustful of any appeals to share decision-making power.

National identities form over generations, and changing them is hard. Poland’s current leadership, the Law and Justice Party (PiS), is particularly committed to Polish nationalism and conservative values. Its largest political opponents are pro-European liberals and centrists, closer to the prevailing politics in Western Europe, where the bulk of EU decision-making power lies. Drawing on their cultural and historical memory, Polish national conservatives are xenophobic, especially Islamophobic, and generally intolerant of social diversity. (The Western European experience, despite its imperfections, is different.) While reserving its most intense disdain for the Kremlin, the prevailing ideology in Poland is highly mistrustful of Germany’s relative social liberalism.

More important, PiS wants to make fundamental changes to the Polish judicial system, but it has yet to convince most of the EU that its intentions are good and its concerns legitimate. Brussels and most Western European capitals suspect PiS is working to weaken or eradicate Polish political and social liberalism, a challenge to their regimes but also to the EU, which is founded on liberal ideas like compromise, diversity, civil rights, and the rule of law.

 

Germany Is The Rock, And Russia Is The Hard Place

The main battlefield between PiS and Brussels is the reversal of some Polish judicial reforms and the delivery of 35 billion euros ($34 billion) of EU money for Poland’s economic recovery from COVID-19. The European Commission set milestones for the reversal of PiS’ judicial reforms that it says Warsaw must meet before it transfers the funds. PiS wants to concede as little as possible, but the economic slowdown, rising interest rates, and the war next door are pressuring it to get the funds soon. Moreover, Poland is scheduled to hold parliamentary elections by November 2023. If it doesn’t receive the assistance before then, PiS will be gambling its electoral fortunes on an orderly end to the war in Ukraine and an economic rebound, ideally by the summer.

The Polish government’s rhetorical assault on Germany, therefore, is part of its power struggle with the EU, as well as a backup campaign strategy. Germany is the most influential member of the European Union, but it cannot single-handedly decide whether Poland will receive its 35 billion euros. Poland’s prime minister knows this. But Berlin is a popular object of antipathy for his party’s base – much better than targeting the EU, which is immensely popular with Poles. Anti-German rhetoric signals PiS’ resolve while leaving the EU room to maneuver. And if the EU calls PiS’ bluff, then as a last resort, it could go into the election blaming the Germans for allowing Russia to invade Ukraine, not doing enough to stop the war, and withholding needed financial assistance rightfully belonging to the Poles.

Whether this strategy will work depends on how the economic situation evolves in Poland and the political and social stresses in Europe as a whole. There’s little reason to expect a dramatically improved economic situation over the coming months. And EU institutions, with sufficient backing from the member states, do not seem to be in a compromising mood. The United States could try to intervene, but Washington usually steers clear of EU internal politics, and the Biden administration would likely prefer a more liberal government in Warsaw anyway. Most important, the U.S. does not want to risk widening any rifts in Europe at a time when its days of significant involvement on the Continent are ending. If the U.S. is going to reduce its trans-Atlantic commitments while leaving Europe intact and able to defend itself, then it will need the Germans to take the helm.

Poland is unlikely to make a full climbdown on its judicial reforms, but Brussels has most of the leverage. A cease-fire where the EU gets most of what it wants and PiS lives to fight another day – after next year’s elections – is probable. Most importantly, even a PiS-led Poland is unlikely to reduce its dependence on Germany. This would be tantamount to reducing ties to most of Europe, and with the Americans having one foot out the door to Poland’s west and the Russians knocking on the door to its east, that is not an option.----

 

 

Update 25 September 2022: Immigration, The Economy, And The Italian Election

Italy elected a hard-right party in parliamentary elections held over the weekend. The result indicates that Italians are unhappy with the country’s reality. Italy has the third-largest economy in the European Union, after Germany and France. Its economic and social realities are very different from the Continent’s other top-tier countries because its economy is less productive and generates more debt. Italians believe, for some reason, that the European Central Bank is pursuing monetary policies that benefit Germany, which wants to maintain the value of the euro as a net creditor. Italy favors a very different approach to cheap money, a reasonable preference considering it’s a net debtor. A single European bank can’t serve both interests, nor can it readily split the difference. But given Germany’s size, its economic performance is a massive component of Europe’s financial well-being, meaning the ECB must support the German position.

Logic dictates that Italy would elect a hard oppositional government that sees the ECB as threatening Italian prosperity. It has long been our position that the tension between Italy and Germany over monetary policy would represent the largest threat to the European Union, perhaps a lethal one. Given the coming winter, European politicians will be protecting the interests of their voters and therefore following divergent policies. The ECB will not be able to harmonize the economies of Europe, and if the Russian embargo persists, competition between nations will be intense. As its motto proclaims, the EU was created to ensure peace and prosperity. Peace is shaky, and prosperity is slipping away. The Italian election signals a crisis.

Meanwhile, another issue loomed over the election: illegal immigration. This issue had faced Europe since 2015 when massive numbers of Muslim migrants came to the Continent. At the time, relatively open immigration was the EU’s policy, but the opposition was substantial. Proponents of the policy believed that member states had a moral obligation to admit migrants. But opponents argued that member states were expected to let in too many migrants and that the bloc and its supporters, particularly those from wealthy countries, were strutting their moral superiority without footing the bill.

To understand these issues, I would insert my experience as a young immigrant to the United States, something I have done before. I’m an immigrant and certainly don’t oppose immigration. At the same time, I understand the stresses immigrants put on the system and the fear of immigration. That fear cannot be dismissed as simply racism. The cost of immigration is borne by groups that find the burden difficult to carry. However, the problem is not just financial. When immigrants arrive in a country, they do not live among the wealthy. Instead, they are channeled to live among the poorest of society, where an apartment might be barely affordable.

Immigrants are also foreigners and often don’t understand the host country. The parents often go off to work in menial jobs, and their children are left to fend for themselves. Lacking parental supervision, immigrants from the same country huddle together, and wars break out – between Jews and Puerto Ricans, Irish and Black people, Italians and Dominicans, to provide a sample of ethnic groups I grew up with. Crimes were committed, and residents were mugged and robbed in their apartments.

The point is that immigration is a harrowing experience for the young and an even more horrible influence on the residents who had settled there years before. It was mainly a nightmare for the elderly. Anyone who could flee. Anyone who couldn’t stay indoors. This was the experience of immigrants, and it was also the experience of the working class and retired. It was not the fault of anyone save those who championed the policy without understanding what large-scale immigration meant and did not attempt to mitigate the crisis it caused.

I noticed a pattern in New York that I see in Europe and elsewhere. The most passionate advocates of immigration do not live in the neighborhoods where immigrants settle, nor do they have any sense of what the collision of cultures will result in or what unsupervised teenagers do. If none of this happens in their neighborhoods, it’s not that they are indifferent to the chaos; it’s that they can’t fathom it.

The rise in hostility to immigrants in Europe will surge when the immigrants are sent to the poorest neighborhoods in the poorest countries. Do not mistake me for an opponent of immigration. I am here in America as an immigrant. But I am also aware that no memorial contains the names of those who paid for it.

The immigration issue exists in all countries. But in Europe, it’s more divisive. America is a nation of immigrants, and all of us have an ancestor who came here or was brought here, save for the Native Americans, who were the ones who paid for the first wave. But I understand the Italian position on immigration, which can be summarized as: “Let them all go to Germany.” And this is where the economic and immigration issues meet, creating a powerful new problem fueled by the contempt hurled at those who oppose immigration by the moral upper classes. These issues will tear the EU, and so will other countries.----

 

Update 27 September 2022: Russia’s Mobilization May Be A Game-Changer

The Russian military stopped the Ukrainian counteroffensive in the northeastern Kharkiv region at no small cost. Kyiv’s rapid success sent Moscow searching for an answer. Officially, it decided on a partial mobilization, though every piece of evidence says the mobilization is overwhelming and widespread. It looks like Moscow is preparing a considerable force to dominate the war’s front line fully. Russian President Vladimir Putin is signaling to Russians that the regime is ready to increase the tempo of the war and fight to the end and the West and NATO that Russia accepts their challenge of a prolonged conflict. Russia’s mobilization will keep its military options open and improve its position in Ukraine, particularly about effective control of the front lines, during any attempts at settling over the winter months.

 

The Logic And Pitfalls Of Mobilization

Putin and Defense Minister Sergei Shoigu announced the partial mobilization on Sept. 21. There are four critical aspects to highlight. First, in general, Russia is mobilizing against the West. Officially, it sees the war in Ukraine as against the “entire military machine” of NATO. Second, Moscow is anxious not to repeat the errors of previous Russian mobilizations; in 1905 and 1914, which ended in defeat and revolution. Moscow is trying to meticulously organize the process and avoid economic and political repercussions for the Russian state. Third, the decision called for the immediate mobilization of 300,000 troops, but there are no indications that this will be the limit. Russia is capable of mobilizing several million soldiers, according to Shoigu. Finally, the new troops will need several months of training, which means that mobilization is unlikely to shift the balance at the front line significantly in the short term.

Russia’s main tasks, for now, are to create a layered defense along the line of contact, reassert strict control of the occupied territories and control the Russian border. In addition, according to the Kremlin’s estimates, the mobilization will enable Russian combat units to focus on fulfilling the objectives of the war: to gain strategic depth by seizing Ukrainian territory. Russia had long since recognized that it needed more troops to defend occupied areas and overcome Ukrainian guerrilla warfare. Integration of the new troops could free up experienced Russian units – currently tied up with patrols and so forth – to launch offensive operations in the late winter and early spring.

But there are downsides as well. First, mobilization takes time. For new troops to pose a serious threat to the enemy, they need to be adequately trained, which requires several months at a minimum. Therefore, any mobilized fighters will not be combat-ready until after the winter. Currently, Russia is under intense pressure when Ukraine is conducting offensive operations in Donbas (along the Lyman-Oskil line). As a last resort, it could send untrained men to the battlefield. Indeed, anecdotal evidence suggests this is already happening.

Second, mobilization has provoked a social backlash that challenges Putin’s grip on power. In the days following the mobilization announcement, protests broke out in several cities across Russia, particularly in ethnically non-Russian regions. For example, in the North Caucasus, anti-war protests turned violent in recent days. The turmoil has not disrupted mobilization but could pose a formidable political threat with time. There are also many reports of hundreds of thousands of Russians leaving the country to avoid recruitment.

 

A potential advantage, however, is Russia's ability to mobilize new forces beyond its national borders and hybrid units. From the start of the war, Russia has used proxy forces from the breakaway Ukrainian republics along the front line. Mercenaries and convicts have also helped to plug gaps. This isn’t always a good thing. For example, one explanation for Russia’s shocking defeat in Kharkiv was its reliance on a concentrated proxy force of Ukrainian separatists. By contrast, the infamous Wagner Group mercenaries employed better supplies and weapons to take ground near Bakhmut in northern Donetsk. The Luhansk and Donetsk separatist forces have already announced an increase in their training efforts, and the Wagner Group has launched its recruitment drives in and around Russia. Moscow also intends to find recruits in soon-to-be annexed parts of Ukraine.

Moreover, anticipating further mobilization efforts later, Chechen leader Ramzan Kadyrov recently called on the heads of all 85 Russian regions to prepare at least 1,000-2,000 soldiers – in addition to those called up by Moscow – over the next several months. Separately, the Kremlin decided to recruit foreign soldiers with Slavic backgrounds, such as Ukrainians, Belarusians, and Moldovans. Some non-Slavic men will likely join Russia’s side in the war in hopes of acquiring Russian citizenship.

According to Russian estimates, a total of 500,000 to 600,000 troops should be added to the Russian army due to mobilization. This would triple the Russian force already in Ukraine and extend Russia’s numerical advantage.

 

The Belarus Factor

An additional card that Russia could play concerns Belarus. Given its location, Belarus could pose a major threat to Ukraine were it to enter the war. Belarusian forces could strike Ukraine’s rear and disrupt supplies of Western military aid. Belarusian President Alexander Lukashenko has been vocal about leaving his country’s options open. At the same time, he has repeatedly said Russia has enough men and materiel to defeat Ukraine without Minsk’s direct assistance and stressed Belarus’ contributions to the war by serving as the first line of defense to prevent NATO from “stabbing Russia in the back.”

Immediately after the Kremlin announced its mobilization, Lukashenko declared that mobilization was not on his government’s agenda and that Belarus was already prepared to respond in the event of a military threat. The secretary of the Belarusian Security Council added that the country was already mobilized and thus had no need to declare additional moves. (Belarus has conducted regular military exercises along its borders with Ukraine and Poland since the start of the war.)

There is also significant disagreement among experts about Belarus’ actual military power. The country has nearly 48,000 soldiers and officers, with an additional 20,000 people listed as military personnel. Reserves are in the vicinity of 290,000. In June, Ukraine’s General Staff said Belarus planned to increase its army to 80,000 troops. In other words, Minsk may be conducting a quiet mobilization.

Lukashenko’s priority is clearly to preserve his room to maneuver. Minsk has not even decided whether it will support Moscow’s annexation of four Ukrainian regions. But Putin is sure to increase pressure on Lukashenko over time, and it may eventually become too much to resist.

 

Ukraine’s Strategic Conundrum

Russia’s announced mobilization was not a surprise in Ukraine, but it created two major challenges for the Ukrainian armed forces. First, Kyiv must answer Russia’s move by commencing its next wave of mobilizations. Ukraine’s first mobilization concluded in midsummer and brought in more than 700,000 troops, who now reinforce Ukraine’s defensive lines. How successful an expanded mobilization effort would be is hard to predict. More so than Moscow, Kyiv is limited by the need to leave a large enough population to carry out daily economic activities. On the other hand, new Ukrainian forces are likely to be trained in NATO countries and will likely be better prepared for combat than their Russian counterparts who were rushed to the front lines.

Second, Kyiv urgently needs to demonstrate the ability to strike Russia in the south, in Kherson and Zaporizhzhia, and to continue the counteroffensive in Kharkiv. Despite Ukraine’s recent successes, Russia has managed to stem the bleeding. Compared to Russia, Ukraine has fewer reservists to draw upon. Moscow believes it is gaining momentum through sheer numbers, and Kyiv needs to find a way to thwart this momentum. There is a window of opportunity for Ukraine. Russia expects to need the fall and winter to train and coordinate its new personnel, so they are not expected to tip the scales until late winter or early spring. At this point, Russia may outnumber the Ukrainians along the line of contact, which would facilitate further Russian offensive operations.

A related dilemma for Kyiv is whether to press ahead with its counteroffensive to prevent Russia’s annexation of Luhansk, Donetsk, Kherson, and Zaporizhzhia or to hunker down for a long war. During the former calls for urgency, the latter entails the accumulation of manpower and Western weapons through the winter. The onset of winter will complicate offensive operations for both sides. Without foliage, it is difficult to move and hide from drones and artillery. Winter weather can also blind satellites, hurting the side that relies on them more. These conditions will naturally slow the pace of fighting and give Russia time to train its recruits. It may put a time limit on Ukraine’s ability to disrupt Russia’s strategic pivot.

Unwilling to accept the status quo, both sides are preparing to fight well into 2023. Western arms stockpiles are nearing their limits, while Russia is zeroing in on new gains before considering any settlement. But Russia must be careful of two potential pitfalls: the risk that it draws the West deeper into the conflict and that Putin’s regime becomes Russia’s latest to fall victim to defeat and revolution. Historically, when Russia mobilizes, it has had enormous implications for Europe and Russia. Today, a Russian mobilization once again threatens European peace.----

 

Update 25 September 2022: Italies New Face Of Euroscepticism

Italy’s first far-right government since the fall of Benito Mussolini during World War II is a significant event and galvanizing force for parties that have their roots in the unsavory legacies of fascism, Nazism, and other dangerous ideologies. Likewise, Ukraine’s successful counteroffensive and the victory of democracy over autocracy in Ukraine is also a galvanizing moment for the EU and the spread of its values to existing member states and those on the path to accession. Europe is at its best when it combines elements of the bureaucracy and centralism from Brussels that Meloni disdains with the subsidiarity, regionalism, and pragmatic, constructive solutions from individual leaders at the member state level. Over 65 years after the Treaty of Rome was signed to create the European Economic Community, the European project remains wildly ambitious and optimistic. Leaders like Meloni are vital to ensure the union stays relevant and accessible to the lives of everyday citizens who ultimately want more democracy and less overreach from a capital that feels divorced from their reality. When tempered by Eurosceptic leaders like Meloni, who ultimately seek solutions with the consent of Brussels, the EU can allow more of its citizens to feel like productive participants in a still fledgling continental experiment.---

 

Update 27 September 2023: The Nord Stream 1 And 2 Pipelines

The first thing to know about the Nord Stream 1 and 2 pipelines that started leaking natural gas into the Baltic Sea on Monday is that there are four pipelines. They’re made of steel and concrete, lie approximately 70 meters (230 feet) below the surface in the area affected, and run parallel, in two pairs, for more than 1,200 kilometers along the seabed. It’s extremely unlikely that natural causes led three of them to start spewing their contents at around the same time and at the same time and place as Swedish seismologists detected two distinct explosions. 

Before they blew up, each of Nord Stream 1’s lines could deliver 27.5 billion cubic meters of Russian gas per year to the beaches of Germany. Nord Stream 2’s pipes could do the same if they were operational – U.S. sanctions prevented an earlier launch, then Russia invaded Ukraine and Germany suspended the deal. Now only one of them can because the other line also blew up.

It’s a sensitive moment in Europe, so no one wants to speculate too loudly on who the culprits could be. Too much talk of sabotage could frighten markets or create excessive pressure on political leaders to retaliate. However, the German newsmagazine Der Spiegel reported that the CIA in June tipped off Berlin and others in Europe about possible attacks on the pipelines. Accusations and counteraccusations will be made, and disinformation will come to light, but the evidence points to Russia.

The key question is: Who else with the capability and opportunity to destroy these four pipelines would leave one intact? Of course, it’s possible that all four were meant to be destroyed, but the entire pipeline would be close to a damaged one (since they’re in pairs), and many hours elapsed before observers arrived. The first explosion(s) occurred around 2 a.m., but evidence of a leak wasn’t reported until the afternoon. The second blast(s) happened around 7 p.m. Time was not a major factor.

Russian state TV blamed the CIA, and indeed the U.S. is interested in severing Russia’s gas connections with Europe, depriving Russia of some of its gas leverage and ensuring that Moscow takes the fall for the attack. But such a sabotage operation against an ally’s multibillion-euro project would be extremely high risk for the United States. It would be much less risky for Russia, which owns the pipelines and whose officials have said that their country is indirectly at war with the West for months. More importantly, if the U.S., Ukraine, or another country interested in damaging Russia were to undertake such a high-risk operation, it would surely destroy all four connections. Only Russia stands to gain from the preservation of one link.

Why would Russia blow up its pipelines? To demonstrate to Europe that its sanctions aren’t working and that the Kremlin is serious about shifting its energy exports to Asia and dumping the European market – while, conveniently, leaving one connection open in case Europe changes course. To spook energy markets and drive up European prices, weakening the public’s resolve. (Dutch gas futures shot up by some 20 percent on Tuesday.) And to remind European governments that they have vulnerabilities Russia hasn’t even begun to exploit. Notably, a ten bcm Norway-to-Poland pipeline runs near the Danish island of Bornholm, near where the Nord Stream explosions occurred.

If the attacks are enough to change minds in Germany about the risk-reward of continuing to support Ukraine – which seems unlikely – then Russia still has one Baltic Sea connection available immediately. Repairing the others would probably take months – though it'll be a week or more before damage can be assessed, and the Germans doubt whether Nord Stream 1 can be patched – but the pipelines weren’t transmitting gas anyway. Russia suspended Nord Stream 1 in early September; before then, it was not running even close to full capacity. Russia also has other routes to send gas to Europe: through Belarus, Ukraine, and Turkey, in addition to a rapidly growing European capacity to import liquefied natural gas. Moreover, Russia’s military mobilization commits it to the war for another several months, so a delay would not cause Moscow harm that isn't already baked in.

The Europeans are unlikely to uncover a smoking gun, and given the stakes, they may not want to point fingers too definitively. Efforts to secure other undersea pipelines and cables will soar, which may increase the risk of accidents in the Baltic and North seas. (On Wednesday, Norway's prime minister warned that attacks on its offshore infrastructure would prompt an allied response.) The pipelines’ Russian operator may seek sanctions relief to repair the damage and mitigate the environmental impact – which is relatively limited. But the main thing is that, following its not-so-partial mobilization, Moscow is signaling again to the West that it is at least 75 percent serious about winning the war.----

 

Update: 28 September 2022: Iran’s Islamic Republic Is Fading But Not Ready To Fall

Violent protests erupted in Iran last week following the death of a 22-year-old woman who had been arrested by the morality police, officially known as the “Guidance Patrol,” for violating the country’s strict dress code. The protests were the largest since the 2019 demonstrations against rising fuel prices, which led to the death of more than 1,500 people. Last week’s unrest began in the Kurdish-majority northwestern region but spread to about 50 cities and towns across Iran, including Tehran, Mashhad, and Qazvin. The woman’s death followed the signing, less than two months ago, of a new law that strengthened the rules on wearing the hijab. Even before it took effect, the law sparked anger, with some female protesters burning their headscarves in defiance. This episode is another indication that the legitimacy of the Islamic Revolution on which the Iranian regime rests is waning.

It’s unlikely that the uprising will directly and immediately threaten the regime, whose forces have quelled all protests in recent years. Given the strength of its coercive capabilities and the fragmentation of the opposition, the regime is not on the verge of collapse, but the government is vulnerable and getting weaker. It’s doubtful that it can survive in its current form after the death of Supreme Leader Ayatollah Ali Khamenei.

 

Constant Opposition

The Iranian public has frequently expressed its opposition to the Islamic regime over the past quarter century. But the government was stunned by the latest bout of unrest, which involved demonstrators burning pictures of Khamenei, setting fire to stations and vehicles of the Basij internal security services, and attacking them with firearms and bladed weapons. The Iranian army warned that it would confront what it described as enemy plots and pledged to secure peace throughout the country. Its statement added that the protests were acts of desperation and part of the enemy’s strategy to weaken the Islamic political order. The Islamic Revolutionary Guard Corps called on the judiciary to expose and hold accountable those who spread rumors and lies and endanger society.

The most serious protests since the 1979 revolution occurred in 2009, soon after it was announced that opposition candidate Mir Hossein Mousavi had lost the presidential elections. When incumbent Mahmoud Ahmadinejad was declared the winner, the opposition mobilized nearly 5 million demonstrators to the streets of Tehran, chanting, “who stole my vote, you a dictator?” and accusing the authorities of rigging the vote. The security forces responded to the protests with severe repression, leading to hundreds of activist arrests, dozens of killings, and prominent opposition leaders' placement under house arrest.

These events highlighted the central authorities’ control under the direct leadership of the supreme leader. At the time, the IRGC’s assistant for political affairs said his forces would not allow any group to undermine the principles of the revolution. The Tehran police chief also threatened Mousavi’s supporters with punishment if they participated in unauthorized rallies.

In 2020, after the IRGC accidentally shot down a Ukrainian airliner over Tehran, mostly student demonstrators staged daily protests, chanting, “get out of our faces, clerics.” They also called for the removal of Khamenei, who has been in office since 1989. The protesters showed no fear by shouting slogans that challenged the sanctity of Khamenei and the ruling religious establishment. But in Iran, protests are seasonal, as the opposition waits for an event through which it can assess its influence and reassert itself. Over time, the opposition lost momentum and its ability to initiate challenges to the government. But the regime’s zero-tolerance policy toward dissent hasn’t prevented Iranians from taking their anger to the streets. Frustrated young people have for decades challenged the authority of both Khamenei and Iran’s first supreme leader, Ayatollah Ruhollah Khomeini, whose pictures they also burnt throughout the cities and towns of Iran.

 

Fight for Freedom

The failure of the 1905-1911 Persian Constitutional Revolution did not dissuade Iranians from pressuring the government for democratic reform and fair distribution of national wealth. The Pahlavi dynasty that ruled Iran from 1925 to 1979 focused on economic development, though it made little progress toward a democratic transition. The sweeping modernization projects of Reza Shah Pahlavi included building the University of Tehran, developing the country’s railroad system, road construction, launching industrial projects, setting up the state machinery, and emancipating women.

After returning to Iran following the 1953 coup and the overthrow of Prime Minister Mohammad Mosaddegh, Reza Shah’s son, Mohammad Reza Shah, continued his father’s development policy. In the 1960s, he launched the White Revolution, a series of economic reforms that included import substitution industrialization and capital-intensive projects. His policies triggered massive migration from the countryside to the cities. The modernization policy coincided with Shah’s decision to further centralize powers by establishing a one-party system in 1975. He clamped down on personal liberties, depending heavily on the SAVAK secret police to suppress opposition forces.

Khomeini eliminated nationalist and secular parties and dismantled their social and organizational apparatuses, ensuring they would never return to the political arena. The parliamentary elections in 1996 were an indication of the strength of the reformist movement, and the following year, a reformist, Mohammad Khatami, was elected president. Shifts in public opinion emboldened the voices calling for the separation of religion from politics. But after the Khatami era ended, the government pushed conservative Ahmadinejad to the presidency. It failed to recognize the transformations that had occurred in Iranian society and brutally suppressed dissenting voices, including during the 2009 protests.

Although the Pahlavis failed to promote democratic values, they improved the standard of living in Iran and executed major development projects. Conversely, the Islamic regime ruined the economy, impoverished the people, and suppressed social freedoms. Iran’s gross domestic product decreased from $599 billion in 2012 to $231 billion in 2020. Living standards have reached their lowest point in more than a century, and prices have skyrocketed, making essential goods, such as food and medicine, unaffordable for most Iranians.

 

Political Paralysis

The regime’s hierarchical structure renders it incapable of adapting to changing domestic and international conditions, resulting in chronic political failure. Because of the paralysis of state institutions, the political system cannot make consequential decisions.

This indecisiveness, however, has not prevented the government from applying extreme coercion measures. It mobilized its supporters to demonstrate against the recent riots. The Islamic Development Coordination Council organized official protests and called for public rallies supporting the headscarf. Tehran’s official Friday prayer leader warned the anti-government demonstrators, whom he accused of carrying out a foreign agenda, against continuing the protests. President Ebrahim Raisi said the pro-government demonstrations showed the strength of the Islamic Republic. But as the unrest spread, the government failed to adopt any measures to address the protesters’ demands, instead relying on its security forces to crush the protests and even employing the notoriously ruthless female security forces to disperse women demonstrators for the first time.

Iran appears to be gradually transforming from a theocratic state to a state dominated by the IRGC, which considers itself the custodian of the principles of the Islamic Revolution. Khamenei’s death could pave the way for a transition to a dual system of government centered on a religious leader with limited powers and a president from the ranks of the IRGC. Given the continuing erosion of the clerics’ standing, it’s unlikely that, in the long term, the IRGC will need a supreme leader to gain political legitimacy. Such a government could develop into an autocracy led by a military leader. Iran witnessed a similar process in the 1920s when Col. Reza Khan, who became prime minister in 1921, overthrew Ahmad Shah in 1925 and established the Pahlavi dynasty. History doesn’t repeat itself, but it often rhymes.----

 

Update 29 September 2023: The "Indian" Vs. "Native American" Debate, The Complexity Of Naming Things

The name “Indian” appears to have derived from a mistake made by Christopher Columbus, who accidentally touched down in the Americas when he was trying to reach the “Indies,” the generalized term in Europe for parts of the easternmost stretches of Asia. Thinking he was where he intended to be, he called the people he encountered “Indians.” The name caught on and entered common usage. Thus, when I use the term “Indian,” people will understand who I’m talking about. In that sense, it is as useful an identifier as any.

For many, the term “Native American” is superior. But at the risk of being semantic, this has rhetorical problems of its own. First, the term “American” was coined by a German cartographer, the first to map out North America. He used the term America to honor who he believed to be the discoverer of America, or at least North America, an Italian named Amerigo Vespucci. To be “Native American” is to be named after an Italian explorer. This hardly sheds the colonial baggage inherent to “Indian.”

The term “native” is also tricky. Native derives from the Latin concept of birth. I was born in Hungary, so I am a native Hungarian. No matter what else I do, that is my native country. Whoever was born in America – including all of the Americas – is Native American. Applying the term Native American to those Columbus referred to as Indian changes the meaning of the word.

I am writing this column in Montreal, where indigenous peoples are often called “First Nations.” This is meant to mean that these nations preceded European settlement. The problem with this is that it is highly unlikely that these were first “nations.” In the course of millennia of history, the first nations were almost certainly destroyed by enemy nations, enslaved or absorbed by newer tribes, just as all nations were. It can be said that they preceded European occupation. Still, calling them First Nations may not be entirely accurate because, while there might be a nation tracing its history to the crossing from Asia, the term cannot apply to all tribes.

Either way, the Indigenous peoples encountered by Europeans did not see themselves as belonging to a single race or nation. They were Comanche or Sioux, Inca or Aztec, and so on. Each person was a nation member, as in other continents, and they had names for the nations, geography, language, and religion. They knew what they were and what they were not.

The conquest of the Americas by Europeans isn’t incredibly unique. History from the Bible to Aristotle is filled with mentions of the occupation and annihilation of nations. These cannot be reversed. Today’s inhabitants of the ground formerly occupied by Babylonians are not the same nation.

The history of North America is as covered in war and annihilation as any other continent. Nations have been conquered and obliterated throughout history. European settlers committed these crimes, but so had the nations they discovered and conquered. No one is here without a crime in his history.

The real issue is challenging the legitimacy of European conquest by challenging the name European immigrants used. It’s unclear whether the challenge was issued by the heirs of Europeans seeking to delegitimize their history or the heirs of the nations that lived here and were conquered. Since any single word is as invalid as any other, it seems that the Indians, Native Americans, or First Nations alone have the right to name themselves something else, and I must use that name. We don’t think they would choose to call themselves after an Italian sailor.---

 

Update 30 September 2022: Global Food Insecurity

Widespread food insecurity is back on the table. War and organized violence are the main drivers of acute food insecurity, weather events, and post-pandemic economic disruption. For some places, this is a near-constant problem, but several new areas are experiencing difficulty. For instance, migration, organized crime, and abusive government policies have put food security at risk in the Americas. Ukraine stands out not only for its food issues but also for its role as a food provider for the rest of the world. In North Korea and Myanmar (and, to a lesser extent Sri Lanka), food insecurity could destabilize regimes and cause regional crises.

There is little reason to believe the global situation will improve anytime soon. A prolonged Russia-Ukraine war will have lasting effects on local production and grain export infrastructure that will take many months, if not years, to repair. And distortions in the fertilizer market and high prices will also affect crop prices in 2023.---

 

Update 3 October 2022: Not Even The Ukraine War Changes The Central Asian Equation

Russia may be losing its grip on Central Asia. Though the region's countries are generally thought of as Russian strategic partners – and especially thought of as such by Russia – they have been acting more on their own accord lately in ways that Moscow would rather not. The most prominent example is Kazakhstan and Uzbekistan’s refusal to use the MIR payment system, Russia’s version of SWIFT. Kazakhstan has also halted Belarusian and Russian trucks at the border, ostensibly for fear of violating Western sanctions. For years, the foreign policies of Central Asian states were constrained by the strength of Moscow and a lack of alternative partners. But since the Cold War, they have slowly reclaimed more of their sovereignty. And now that the war in Ukraine is weakening Russia’s position, they can reclaim even more.

It’s worth noting the peculiarity of Russian policy toward Central Asia. In the early part of the 20th century, certain aspects of international affairs, such as political economy, law, treaties, and so on, developed slowly and measuredly under the newly formed Soviet Union. Capitalist states implemented most international laws; the Soviet Union was not capitalist and had foundational and constitutional inconsistencies with certain international norms. However, that changed somewhat after World War II as Moscow's geographic reach expanded beyond its borders. To reconcile the differences, the Kremlin adopted a dualistic approach to international relations that recognized norms and international treaties, understanding that international law was meant to manage and regulate relations between two ideologically opposed superpowers. As importantly, Moscow operated under the assumption of a fraternal brotherhood among socialist states that presupposed cooperation and assistance. But, they had an obligation to help each other out.

The Soviet Union may be gone, but this curious foreign policy approach never went away. If anything, it has become more pronounced with the war in Ukraine. After Russia invaded, it assumed states over which it held influence in Central Asia and the Caucasus would go along with whatever it told them to do. The Kremlin banked on the idea that cooperation with the West was nothing more than a regular expression of the struggle between the two ideologies of the two powers that need to be regulated.

It wasn’t. Central Asian countries have far too many priorities now. They have different ethnic and ethnolinguistic groups, not just Russian Slavs. Central Asian borders are more artificial than most, so these states have to fight to keep what sovereignty they have, even as different cultural, historical, and linguistic groups lay claim to precious resources the state also wants ownership over. It’s no surprise that Central Asian nations value their (historically recent) independence and sovereignty. They have never been able to forsake Russia completely. Still, they are trying to take a more diverse position in world trade, acting independently and increasing investments, opening up more to the world and to international trade, and thus supporting an independent economy. For them, the key to independence is diversification. Being Russia’s lackey doesn’t fit the script.---

The script looks like this: If an activity deprives the nation of a benefit or profit, it is immediately dropped. If it generates the opposite, it is pursued. It’s a formula based on extreme rational self-interest, not fraternal ties.

Kazakhstan is a case in point. In light of new Western sanctions (and, indeed, in light of sanctions years ago during the Crimean crisis), many in Russia have criticized Kazakhstan’s behavior as anti-Russian. However, nothing it has done signifies the wholesale abandoning of Russia. To ensure its sovereignty, several years ago, Kazakhstan began to organize language patrols, increasing the spread of the Kazakh language and decreasing the broadcasting of Russian TV channels. The country's trade has shifted from an exclusively Russian focus to Chinese and global – today, there are American, European, and Asian companies in the country along with Russian ones. Regional countries have new opportunities to be alternative transport routes and investment destinations. Moreover, Kazakhstan opposes Russia’s military operations in Ukraine, does not recognize Crimea, and has refused to recognize the results of the referendums in the four Russian-occupied regions of Ukraine.

Still, Kazakhstan remains dependent on Russian trade and investment and needs goods such as cheap Russian grain. Russia’s role in the Collective Security Treaty Organization is also crucial to Kazakhstan. It was essential to ending the political protests in Astana in January, and it may prove crucial again for snap presidential elections in November.

In other words, Kazakhstan is managing a balancing act, one it hopes will allow it to maintain its sovereignty without participating in the struggle between the two powers. Kazakhstan understands that the West isn’t especially interested in the region otherwise. Under the circumstances, the country’s decision to avoid secondary Western sanctions is entirely understandable, especially since it hasn’t meant halting all trade with Russia anyway. Trade ties with Russia are more profitable now as other countries look for alternate ways into the Russian market.

Other Central Asian countries are behaving similarly. It would be a mistake to say that they will turn to Russia when times get tough. It would be a mistake to say they will turn their backs on Russia too. They need the money relationships with the West often come with, but in Ukraine, they also saw how far Russia would go to protect its interests. Central Asia can’t afford to alienate either side.

Add to this the fact that Central Asia’s understanding of the world is fundamentally different from Russia’s. Post-Soviet countries do not believe Soviet-era mindsets will serve their interests. For its part, Moscow won’t have much incentive to change its ways because Central Asia can’t be free of it, but even so, it seems to have tacitly acknowledged its mistake of assuming they would carry its water. This is why Russia is biding its time, making concessions to the region and standing pat when countries act in ways that don’t benefit Moscow.-----

 

Update 3 October 2022: What Is Russia Thinking?

The reason for Russia’s invasion of Ukraine was clear: Moscow wanted strategic depth. Nothing Russia has done since, however, has been clear. The military has suffered several reversals, but this alone is not unexpected. Reversals are part of the war, and prudent commanders anticipate and respond to them. Ideally, the responses will solve or mitigate the problem as the war continues. Moscow is behaving as if the challenges it faces are a surprise.

From the beginning, Russia assumed it would bring overwhelming force to bear on a much weaker military. The expectation was that the Ukrainian military would fragment and thus be unable to offer much resistance. Moscow thought Ukraine believed the same. That the Kremlin was wrong isn’t the fundamental problem. The fundamental problem is that the Russian command structure, starting at the top with Vladimir Putin, didn’t banish their confidence. An invading force should be built on the assumption that it is dealing with a powerful and motivated enemy and must prepare for a tough war.

Meanwhile, Russia did not expect the sheer amount of aid and weaponry the United States would send. It saw the U.S. as too disjointed politically and socially and with too strong an opposition to make much of a difference. The Russians have been very effective in waging psychological warfare as a key dimension of combat and engaged, as was reasonable, in creating division over the war in the United States. Moscow believed the U.S. would see the fall of Ukraine and the deployment of Russian troops to NATO’s eastern frontier as a potential recipe for another Cold War. Washington would probably want to respond but would be too fragmented to do so, or so the Russian thinking went.

These failures were evident from the outset of the war. Russia deployed three armored formations to break Ukrainian resistance, which it believed would be far inferior and isolated from American assistance. Neither was the case. The Russians were blocked by logistics problems of their own, as well as Javelin anti-tank missiles. Russian tanks froze in place or made little progress. With the Ukrainians emboldened, the Russians were forced to reevaluate their adversary.

But they changed their tactics without changing their opinion of their enemy. Though they consolidated their forces in Donbas and fought an extended battle for control there, they didn’t advance to western Ukraine. They retreated toward their border.

This was a crucial moment for Russia. It was clear that the Ukrainians were a significant and coherent fighting force, and it was clear that the United States was not going to limit its support, even as the Poles intensified the training of Ukrainians. Simultaneously, tactical and strategic intelligence mapped Russian forces and anticipated Russian moves. In many cases, Ukrainian troops could attack Russian forces at the most vulnerable point or retreat when Russian offensives appeared too costly.

At this point, the Russians should have reevaluated their likelihood of success. Offensive operations had had only limited success. The Ukrainian force outnumbered the Russian force and fought with discipline while U.S. resupply and intelligence flowed. Russia retained enough potential power to alarm the West, power it ought to have used to seek peace through negotiations. In other words, Russia should have followed German Field Marshal Gerd von Rundstedt’s advice about what should be done near the end of World War II. His answer: “Make peace, you fools.”

Given the confidence with which the initial attack was launched, making peace was unthinkable. All the dead, confident, and well-spoken politicians would have been considered fraud. Putin has sought to turn the war from a Russian invasion to an American invasion of Russia. He has threatened nuclear war. He has mobilized truculent thousands, who may be trained by the end of winter, or perhaps never.

The most challenging part of a war is ending it without victory. The United States suffered through this in Vietnam. The wars that appear to be easy are sometimes the hardest to fight and always the hardest to concede. No one doubted, in Russia or America, that World War II would be long, hard, and possibly lost. Neither Russia nor the United States thought it could lose in Afghanistan.

It is an odd thing about confidence. Within the confines of reality, confidence is essential to fight a war. The most brutal war is when the commander thinks victory is a given. When Russia started the war, it believed the mere sight of Russian tanks would scatter the Ukrainian army. Every reversal since has been dismissed by Moscow as simply an accident of war instead of what it was: a war begun with certainty now confronting the reality of an enemy force superior to its own. Concern can be productive if you don't mind. Denial is the preface to desire. In war, the continued denial of reality is deadly.

Putin is responsible because he is the president. But the general staff and intelligence services share the blame. A systemic breakdown of leadership has happened in Ukraine that led the country into a poorly understood war, insisting that victory is just around the corner if it simply holds the line. Wars like this usually end in political deaths. Vietnam finished Lyndon B. Johnson, World War II the Japanese and German regimes. Each fought with the hope of something turning up. It never did. The pivotal question is: What makes Russia think it can win next week when it hasn’t won in seven months? There is sometimes an answer to that kind of question, but Russian politicians are now laying blame on others for the failure. Making peace sounds easy to those who didn’t start the war.-----

 

Update 4 October 2022: Is China Losing Its Grip On The Media?

Over the past few weeks, there have been unusual signs of discontent in China, none stranger than an article written in a party mouthpiece by President Xi Jinping himself. It’s not so extraordinary for a president to publish something like this significantly ahead of the all-important National Party Congress. Still, the occasion is usually reserved for introducing positive catchphrases for next term’s agenda and praising the country’s recent growth. Instead, Xi focused on terms such as “struggle,” “peril,” and “challenge,” hardly the picture Chinese media typically portrays of a faultless, all-powerful leadership.

For Chinese society, receiving information about public dissent is new, and it’s no surprise that it comes amid months of economic and financial distress, disappointment, and frustration. Now is the time for Chinese leaders to keep the media under firm control, but they are apparently losing their ability to do so. And if this is indeed the case, then they are losing one of their most powerful tools in maintaining power – a particularly foreboding prospect for a country that is historically prone to fragmentation.

 

Organs Of Control

It’s well-known that China censors its media. Choosing what the people see and read is essential in maintaining faith in the government. It became more pressing with the widespread use of the internet and social media platforms. According to the first white paper on internet sovereignty issued in 2010 under President Hu Jintao, strict controls were meant to prevent sensitive state secrets from getting out and hurting the country. But over the next few years, it became clear that the measures were being used to censor people’s thoughts regarding the party, the government, and especially the president. Under Xi, the government went one step further, using internet-based media to promote Communist Party propaganda. The danger to Xi, of course, was that improved access and communication would educate the people and bring his house of cards down, but the benefits – tightened control over all forms of state media, turning them into a powerful voice, a kind of foundation for the party’s unity and the government’s stability – outweighed the risks.

As with almost everything else in China, media censorship is centralized and managed mainly from above. The most powerful monitoring body is the Communist Party’s Central Propaganda Department, which coordinates with the State Administration of Press, Publication, Radio, Film, and Television to ensure all media content promotes official party doctrine. The CPD was founded almost 100 years ago and had been operating since, suspended only once, during the Cultural Revolution (1966-76). The CPD is no less powerful than the police. It was designed to have the authority to take away all financing from media outlets that don’t fully comply with its official guidelines. In case of open defiance, media outlets risk restructuring or complete closure.

There are, of course, other organs of control. Since 2012, the central government and several private companies connected to the government have employed millions of civilians to review internet search keywords, forums, blog posts, and news articles – basically all media sectors. They receive detailed guidelines from the government on how to conduct monitoring and directives to restrict coverage of a range of politically sensitive topics. Some of them are paid by the CPD, but most get their salaries from the private companies that hired them. Some are true believers, and some are threatened or coerced into the job to spot any event or news that sheds a negative light on the leadership or could undermine its power. They remove it from the web immediately, even censoring keywords that would lead to internet users potentially finding any clues related to the event. Those outside China monitor websites like Facebook, Twitter, and Wikipedia that are banned in China and have the means to take down compromising news that appears on domestic news websites, blogs or forums. Foreign websites must contend with the “Great Firewall,” the rules and measures employed to regulate domestic internet use, which prevents Chinese citizens from accessing particular websites with sensitive content by blocking the IP addresses of these websites. Some foreign websites are not blocked, but the CPD usually significantly extends the loading time for these websites. VPNs are illegal, but the government can’t monitor them thoroughly.

The key to Chinese media censorship is speed, precision, and efficiency, and the government has generally achieved all three under Xi. It employs a ton of people and has given authority to CPD officials to rewrite articles before they are published and, failing that, shut down websites and investigate their publishers.

Even so, the government’s ability to control and censor politically sensitive media content started to show signs of decline around late 2021, when the first reports on panic buying, food shortages, supply chain issues, and other quarantine-related problems appeared prominently and frequently in Chinese media. Most of the information originated from small provincial branches of larger media outlets, which are generally not directly monitored by the CPD. This indicates that some of its subsidiary employees have been unable or unwilling to censor information. After all, it’s difficult to keep endemic food, inflation, and supply chain issues completely under wraps.

Demonstrations are more censorable, yet in 2022 news of them got out and spread worldwide. The first reports were about a protest in Shanghai due to COVID-19 lockdown measures. Then came the Henan banking scandal in July, followed by more COVID-related protests in Wuhan (August), Shanghai again (September), and Shenzhen (October). Meanwhile, forum discussions appeared occasionally, with people detailing their own negative experiences and fears related to quarantine, food security issues, unemployment, and other highly sensitive topics. These threads get taken down quickly but need to be done more quickly. When people realize that there are thousands of others experiencing the same hardships, it will be easier for them to organize and harder for the government to suppress the gatherings beforehand.

 

Backfire

The Xi administration continues to crack down on media companies, but some of its efforts have backfired. For example, big media groups such as Tencent and Baidu were recently fined a substantial sum of money, and some of their managers were fired and investigated for suspicion of corruption. The crackdown was aimed at two things: redistributing money from large, wealthy companies to poorer interior regions and removing officials considered a threat to the government’s power.

The problem is that these are the very companies that help the government employ many of the monitors responsible for censoring forums, blogs, and news websites. Losing money and fearing when the next axe would fall has obstructed the once smooth process of media monitoring by alienating employees and indirectly inspiring organization and agitation.

Moreover, nearly all the top officials of China’s large media companies are affiliated with financial institutions based in coastal hubs whose interests do not always align with those of Xi – namely, ensuring stability through targeted crackdowns and redistribution. The fact that some of them were removed from their posts confirms that their interests contradict Xi’s. Consequently, workers found themselves in a position where even abiding by the government’s demands was not enough to avoid punishment. This may make them more sympathetic to the opposition and its purpose of weakening the leadership’s highly centralized power.

The emergence of an opposition group aligned with an important part of the general public is enough to start challenging the current regime. It’s a slow and incremental process that begins simply with the government not having absolute control. The National Congress on Oct. 16 will, to some degree, set the tone of how China will be governed in the next few years by giving the opposition, such as it is, an opportunity to present their ideas and gain positions with more momentum at its back.

However, the congress will also give Xi and his camp a chance to consolidate power through brute force or by introducing a new agenda that appeases party opponents and an increasingly skeptical body politic. The most telling part of the meeting will be the media coverage, indicating who has the upper hand. This, in turn, will influence the degree to which each political faction can control public sentiment. This is the nature of media in China.----

 

Update 6 October--- 2022: Saudi Arabia Inches Toward Peace With Israel

After signing the Israeli-UAE peace agreement in 2020, many believed Saudi Arabia would be the next Arab country to normalize relations with Israel. Indeed, behind closed doors, the Saudi royals have long been eager to communicate with the Israelis. But the Saudi foreign minister said Riyadh would not sign a peace deal with Israel until a Palestinian state is established. The Saudi leadership worries that normalizing ties would hurt its image in a country where the public remains resistant to reconciliation. Unlike Arab rulers who, for the most part, wanted to open to Israel decades ago, the Arab public has been reluctant to interact with Israeli Jews, let alone recognize Israel’s right to exist. Thus, Arab leaders have consistently denied having contact with their Israeli counterparts, despite privately forging ties on economic, security, and other affairs.

 

State of Denial

Arab leaders have for decades collaborated with the Israelis. In the early 20th century, the Hashemites in Hejaz, who cooperated with the British Empire during World War I and aspired to create an Arab kingdom in West Asia, knew that the British had a different plan for Palestine and still declared the Arab revolt against the Ottomans in 1916. In talks about an Arab rebellion, British diplomat Henry McMahon said he didn’t promise anything to the king of Hejaz beyond freeing Arabs from the Turks. McMahon said the king understood the British position and went along with it.

In 1938, the head of the nonprofit Jewish Agency, David Ben-Gurion, met with the Saudi ambassador to London to try to win Saudi founder Ibn Saud’s approval for establishing a Jewish state in Palestine. A year later, Ibn Saud’s adviser, John Philby, proposed to the chairman of the World Zionist Organization the establishment of a Jewish state in coastal Palestine in exchange for 20 million British pounds. Ibn Saud denied his involvement in the potential deal after Philby leaked it to the media. But he was willing to go along with the plan even after World War I because he needed British assistance against the Ottomans and British weapons to seize Hejaz in the west, Asir in the south, and Hail in the north. He was also concerned about the expanding influence of Jordanian ruler Prince Abdullah bin Hussein, whom he feared would dominate all of Palestine.

There are many more recent examples of cooperation between the Saudis and Israelis. Following the 1962 coup in Sanaa that toppled Yemen’s monarchy and led to Egypt’s intervention to help the fledgling republicans, Saudi Arabia reached an agreement with Israel to supply the Yemeni royalists with weapons. Many Israeli prime ministers have boasted about their secret meetings with Arab officials. In 2020, Israeli Defense Minister Benny Gantz revealed that he had secretly visited all Arab countries, including Algeria, which had consistently said it wouldn’t deal with the Israelis. Even Iran under the Shah and Turkey, when the military ran it, preferred to describe ties with Israel as a love affair, not a marriage.

For many years, former Secretary-General of the Saudi National Security Council Prince Bandar bin Sultan led efforts to forge secret relations with Israel – in coordination with Israel’s intelligence chief at the time, Shabtai Shavit. After the 9/11 attacks, while still Saudi ambassador in Washington, Bandar assumed the task of coordinating ties between the Saudi security services and the U.S. and Israeli intel agencies to confront al-Qaida and the Iranian-backed Shiite militias in Saudi Arabia’s oil-rich Eastern Province. In a meeting with former Israeli Prime Minister Ehud Olmert in Amman during Israel’s 2006 war with Hezbollah, Bandar suggested that Israel destroy Hezbollah in exchange for Saudi Arabia bearing the cost of the war.

There have been many secret visits by high-ranking Israeli officials to Saudi Arabia over the past decade to coordinate security against Iran. Former Prime Minister Benjamin Netanyahu met with Saudi Crown Prince Mohammed bin Salman and former U.S. Secretary of State Mike Pompeo in November 2020 – though the Saudi foreign minister later denied that the meeting took place. The two countries cooperation on the security front opened the door for Israel’s NSO Group Technologies to provide Saudi Arabia with its Pegasus spyware.

Despite the depth of the Saudis’ covert ties with Israel, they have publicly taken an uncompromising anti-Israeli position in regional and international arenas. When Egypt signed the Camp David Accords with Israel in 1978, Saudi Arabia was one of the fiercest critics and cut diplomatic ties with Egypt, describing the country as a traitor to the Arabs.

 

Slow Shift In Saudi Policy

Saudi Arabia has repeatedly proposed peace plans to resolve the Arab-Israeli conflict, but Israel has consistently rejected them. In August 1981, Saudi Crown Prince Fahd presented a peace plan that demanded Israel’s withdrawal from all the lands it occupied after the 1967 war in return for Riyadh’s affirmation of the right of all countries in the region to live in peace. The Israeli Ministry of Foreign Affairs described it as a project to destroy Israel in stages. In 2002, King Abdullah proposed the Arab Peace Initiative, which Israel rejected because it required creating a Palestinian state in return for full recognition and normalization of relations.

Meanwhile, the Saudis didn’t oppose the Israeli-UAE peace treaty. The Saudi foreign minister said Riyadh would welcome any development that would stop Israel’s annexation of Palestinian territory in the West Bank after the Emiratis said the deal addressed the issue, though Israel denied this. The Saudi press also welcomed the accord, believing it could stop the expansion of Israeli settlements.

Israeli-Saudi relations began to develop publicly during the reign of King Salman. In February 2014, former Saudi intelligence chief Prince Turki al-Faisal participated in the Munich Security Conference alongside former Israeli Minister of Justice Tzipi Livni. Al-Faisal also attended another meeting with the former head of Israeli military intelligence, Amos Yadlin, who invited him to visit Jerusalem, pray at al-Aqsa Mosque, and address the Israeli people at the Knesset. For years, Saudi Arabia and Israel established economic relations via third parties whereby Israeli agricultural and technological products could reach the Saudi market from the West Bank, Jordan, and Cyprus. Last July, Saudi Arabia opened its airspace to Israeli airlines in a move that Prime Minister Yair Lapid considered the first official step toward normalization with Riyadh.

 

Peace Imperative

Israel’s move toward reconciliation with the Greater Middle East is part of its plan to expand its strategic and security sphere. The Saudis’ role here is pivotal. It outweighs that of the United Arab Emirates, and Abu Dhabi knows it. For Israel, normalization with Saudi Arabia is the grand prize. If it can achieve this, it will no longer be a small country surrounded by a sea of adversaries but a regional power around which Arab countries can gather. Although the Saudis are behind other Gulf countries in opening to the West, they realize the importance of this project if they want to market themselves as a center for foreign investment.

The Saudis feel that their country has grown weaker as the U.S. has grown more distant, especially given President Joe Biden’s view of Iran as a potential partner in the Middle East. Saudi Arabia is therefore leaning toward Israel to compensate for its loss of Washington as a reliable partner and ally. In 2011, billionaire Saudi Prince al-Walid bin Talal said he supported an Israeli attack on Iran. He later said he would be proud to become his country’s first ambassador to Israel. In 2017, MBS visited Tel Aviv to discuss regional issues and Israeli participation in Saudi Arabia’s massive NEOM development project on the Red Sea coast. Although MBS preferred to keep the visit a secret, it laid the foundation for cooperation on political, military, and economic matters.

Israeli economists estimate that Israeli exports would increase by 30 percent if Saudi Arabia imported just 10 percent of its needs from Israel. In 2019, MBS approved a plan allowing Israeli Arabs to work and live in the kingdom without showing a passport. Earlier this year, dozens of representatives from the business and tech sectors arrived in Riyadh to discuss investment deals.

 

Saudi Apprehensions

Privately, MBS expresses concern over official normalization, fearing the Arab media would condemn him for establishing diplomatic relations with Israel, given the Saudis’ claim to be the protector of Islam and the guardian of its two most sacred religious sites. Saudi Arabia is competing for influence in the Islamic world with Turkey and Iran and believes a peace agreement with Israel would weaken its case.

But popular support for normalization is increasing in Saudi Arabia, as well as in the UAE and Bahrain. The process will take time, and both countries are waiting for more favorable conditions to take shape. But both countries' security and economic interests are at stake, and MBS has already publicly acknowledged Israel’s right to exist. He attacked the Palestinian leadership, accusing it of corruption, mismanagement, missing opportunities to make peace, and ingratitude for Riyadh’s generous financial aid. He needs Israel to help him realize his development goals. He even launched the NEOM project near its northwestern border to facilitate the movement of Israelis to the new megacity and encourage economic cooperation. He wants to reach a peace agreement and is waiting to ascend the throne to make it happen.----

 

Update 6 October 2022: Asian Developing Economies' Path To Recovery

Given sputtering global trade, Asian economies have relied on domestic consumption to recover from the pandemic. This was particularly notable in Malaysia, the Philippines, Thailand, South Korea, Singapore, and India. Strict zero-COVID measures made China and Hong Kong exceptions to this trend.

Exports are growing slower in the first half of this year (15.1 percent, compared with 23.8 percent in 2021). Equally problematic is that two-thirds of this growth is due to rising prices. Commodities exporters, particularly of energy and food, benefited the most. These include Azerbaijan, Brunei, Indonesia, Kazakhstan, Malaysia, Papua New Guinea and Turkmenistan. Manufacturing's contribution to exports declined, and new manufacturing export orders are weakening. Measures of business managers' confidence are negative already in China and South Korea, while Malaysia, the Philippines, and Indonesia aren't much better. Only India has bucked this trend.

The most pressing challenge for many of these economies remains the cost-of-living crisis. Asian governments have moved aggressively to keep food and fuel costs in check, implementing a variety of subsidies, tax cuts or suspensions, and price caps. In the case of food, they've also imposed export bans.----

 

Update 9 October 2022: On Geoeconomics: Systemic Challenges

It’s no secret that central banks and governments worldwide are dealing with rising inflation and economic uncertainty, which need to be addressed head-on if they want to maintain internal stability. To do so, they are considering measures outside the usual monetary toolkit that address geopolitical events by stimulating national investment more creatively.

The British government, for example, proposed a deficit-financed expansionary fiscal policy, while the Bank of England raised interest rates and reduced its balance sheet to fight high inflation. The same week, Japan’s Ministry of Finance spent 2.84 trillion yen ($19.5 billion) to slow the currency's rise – the first such intervention since 1998. The two countries are the world’s third- and fifth-largest economies, as well as key U.S. allies in their respective regions. Such news frames the next phase for the global economy, giving several hints to understand how different countries will seek to restructure their economies, a trend that we have written about since 2021

In other words, state actors behave more like (aggressive) investors in financial markets as they defend their interests. This was common enough in the 1990s, before globalization tightly bound national economies to one another. But times have changed. World economies are less globalized than they once were, a trend accelerated but not started by the COVID-19 pandemic and made all the more apparent with the fallout over Russia’s invasion of Ukraine. Even so, existing trade and technological dependencies limit the extent to which central governments can defend their interests, and all measures they take will affect others faster than they would have before.

There are several systemic challenges the world is facing at once. The first and most consequential is the weaponization of economic ties. Global economic warfare continues, and the current energy crisis is just one of its major theaters. Few anticipated a long-term war when Russia invaded Ukraine, so few believed the global economic war would continue into the winter of 2022.

The sanctions imposed on Russia by the West were supposed to force Moscow into submission. Instead, they have balkanized the global economy. Before the imposition of sanctions, foreign-exchange reserves were thought to be untouchable. At the same time, the U.S. dollar, the world’s reserve currency, was thought to be a sort of public good – as was SWIFT, the globally accepted mechanism for international financial exchanges. Curbing Russia’s access to both was, in a sense, unprecedented – the West has done this before (to countries like Iran and Venezuela) but not to such an essential economy as Russia’s.

For the sanctions to succeed, Russia had to be caught off guard. It wasn’t. The ruble initially collapsed, inflation skyrocketed, interest rates soared and output dwindled. But six months later, Russia’s economy, though bad, seems to be performing better than expected. Russia had prepared itself for measures like these since 2014, when it invaded Crimea and was thus subject to the first wave of Western sanctions. Since then, the Kremlin invested heavily in supporting national industry and campaigned internally for the need to increase Russian entrepreneurship and for Russian-made products. Russia's energy strategy toward Europe since the early 2000s insulated it from punishment.

After the initial shocks, the world understood that SWIFT and the U.S. dollar are conditional public goods. The West couldn’t manage to secure alliances beyond the G-7 in a quick manner (which would have helped its rapidly winning the economic conflict against Russia), and though developed economies and the global north have coordinated their actions against Russia, the global south is largely undecided. Most unaligned G-20 countries have more to gain from playing Russia and the West of one. Still, some are trying to find alternatives to SWIFT, while others have found some already. Western control over global financial markets is being challenged, and while alliances are still in the making, uncertainty continues to affect the global economy.

The second systemic challenge facing the global economy is post-pandemic uncertainty. Remember that the current energy crisis is only partially responsible for high inflation. In 2021, excessively loose monetary, fiscal, and credit policies and supply shocks caused prices to surge. The war in Ukraine only made things worse, of course, but a dramatic decrease in consumption, more than anything, changed the inflation equation in 2022. With all polling data pointing to pessimism about the future, consumption is unlikely to recover anytime soon. Those same supply shocks, meanwhile, are still distressing markets. Some industries such as shipping, have slowly adapted to the new reality, but things like China’s continued lockdowns of major ports have created new bottlenecks that are hard to cope with.

China’s economic uncertainty is the third major systemic challenge for the world’s economy. The country has been struggling, of course. Still, how it handles its recovery is a major contention within the Community Party of China. It is so strong that there are rumors of viable opposition to President Xi Jinping at the upcoming National Party Congress. The relationship between China and the world, specifically between China and the U.S., its most important customer, depends on Chinese politics and socioeconomics.

The fourth systemic challenge is European fragility. An economically weakened China and Russia is bad for Europe, which depends on both in different ways. The European economy never got over the pandemic, so it never really found a way to mitigate the damage of Chinese supply chain shocks. The energy crisis is worse, politically and economically, and, with a cold winter coming, is likely to trigger more socioeconomic consequences on the Continent. The key question is the degree to which German industry will be affected by the Nord Stream 1 supplies cut earlier this month – and thus, the degree to which the European economy will be affected. But others to watch are France and Italy. Many have criticized Paris over its inability to launch a new reform agenda, while Italy just elected a new right-wing government. Central and Eastern Europe are mostly preoccupied with military threats from Russia, while not excepted from socio-economic troubles.

The last but likely most crucial systemic challenge is Washington’s weaponization of the U.S. dollar. The U.S. Federal Reserve uses all the standard policies to force monetary supply and demand into better balance, focusing primarily on interest rates. While inflation is high and the labor market is tight, the Fed will likely keep tightening financial conditions to slow growth enough to cool the economy, even though this makes for challenging and volatile markets.

The Fed’s hiking rates to bring down inflation has spillover effects for the rest of the world through the appreciation of and demand for the dollar. The problem is this kind of weaponization doesn’t discriminate between friend and foe. When the global economy is stable, this may give countries like Germany, the U.K., and Japan a spark to increase their exports to the American market. But the global economy is not stable – and all these countries are fighting back inflation and dealing with similar problems that the U.S. is.

Likewise, the European Central Bank, in charge of stabilizing the eurozone, has echoed the Fed policy of increasing interest rates. At the same time, it has delayed its quantitative easing and bond purchasing programs to make sure countries in Southern Europe, like Italy and Greece, have the flexibility they need to deal with rapidly changing market conditions. For them, high-interest rates and debt levels would create poor liquidity in markets where businesses are still recovering from the last decade's economic crisis. Keeping some monetary stimulus is still key for businesses to continue working in the European periphery, at least until inflation is under control.

The U.K. and Japan, as mentioned, are taking completely different paths. They’re betting on expansive fiscal stimulus while ensuring funding for energy and critical infrastructure projects. Instead of increasing the interest rates, they are increasing the borrowing on the governments’ part, looking to subsidize both consumption and investment. In essence, they are replacing the economic crisis with a currency crisis – which explains recent reports about the pound and the yen dropping to historic lows against the dollar. By doing that, they have a larger set of tools to address economic imbalances related to both the post-pandemic reality and the war in Ukraine. Specifically, they’re looking at cyclical sectors like industrials and construction to support the rebound in economic activity.

Considering the systemic challenges that the global economy is facing, the coming winter will be difficult. With liquidity low and with credit expensive, a recession is likely around the corner. Recession may be an old game, but deglobalization is not. That means that in the next few months, we will see the first signs of the restructuring processes that could have been anticipated since 2021. With many businesses cutting down on operations and governments becoming more active in shaping the national economy, more government spending is next. Since most of the developed world has an aging population and thus excess savings, spending on defense and energy infrastructure may come with still-low real interest rates for governments. But more government spending doesn’t necessarily mean responsible spending or lower inflation. Expect more uncertainty and investor anxiety in the next months. Further shocks will determine whether (and how) states become more aggressive in protecting strategic assets and critical infrastructure. Protectionism will likely become a preferred trade policy, with all the populist and nationalist sentiment that comes with it.----

 

Update 10 October, 2023: Why The US Vulnerable To Future Copper Supply Squeeze.

In a context of mounting antagonism between Washington and Beijing, which hit a recent peak in August following US House Speaker Nancy Pelosi’s visit to Taiwan, the US ought to remember its copper supply chain is vulnerable to countries that dominate the midstream and downstream processes, like China.  share of global copper, and through policies like domestic ore beneficiation, export restrictions, tariffs, and quotas, has the power to disrupt the US supply chain; In 2018, a 25% tariff by China on US copper concentrate made exports to Beijing economically unviable, threatening in return the US’ ability to import processed copper and the future of KGHM International’s Robinson mine.

Washington appears only to be making limited investments in copper refining and smelting to address this challenge. This is particularly due to the high investment these facilities require compared and the relative volatility of commodities overall.  than domestically – or elsewhere – for the US, and it is also less likely to be politically challenged. In Arizona, projects like the Rio Tinto and BHP merger Resolution Copper or Hudbay Mineral’s Rosemont, deemed critical by the mining industry to meet the US’ growing copper demand, illustrate how social and environmental factors can make or break a project. But in mining, policymakers shying away from addressing domestic concerns also means turning a blind eye to foreign practices with much lower environmental and social standards, sometimes even involving alleged child labor.

One cannot count on the hope that high inflationary pressures will be reflected in high commodity prices, which could shift investor sentiment toward funding midstream and downstream copper projects in the United States. An October Labor Department report and China’s languishing economy contributed to a decrease in the copper price as the overall market sentiment for risk (and volatile) assets such as commodities is currently on a negative trend, feeding a roughly 23% decrease in the red metal’s price in 2022. But over the longer term, demand will undoubtedly outpace supply, providing a brighter outlook for copper highlighting the need for Washington to strengthen all components of the supply chain for this “metal of the future” that it is well endowed with.

Part of reinforcing the domestic supply chain will be redefining “critical minerals” that are needed not only for the “green transition,” but also for the US economy and security. The current geopolitical turmoil indicates the need to be self-sufficient and ensure mineral independence on the road toward energy security. The World Bank’s “demand risk matrix” qualifies copper as a critical mineral required for the functioning of many future technologies. Ongoing discussions by the London Metal Exchange regarding – Russia accounting for 4% of global copper supply – would drastically affect the metal’s price and global movements. This news and falling copper prices amid the Ukraine war highlight how reactive commodities are to conflicts, wars, and geopolitical unbalances.----

 

Update 12 October 2022: Saudi Oil Policy: Between Retribution And Market Pricing

U.S. President Joe Biden visited Saudi Arabia last July, hoping to convince Saudi King Salman and Crown Prince Mohammad bin Salman to do what they can to reassure markets and stabilize fuel prices. He also urged them to reduce cooperation with China, the dominant economic partner in the region.

The Saudis were not convinced. Despite Biden’s calls to refrain from cutting oil production, OPEC+ energy ministers announced following a meeting in Vienna earlier this month that output would be slashed by 2 million barrels per day. The unexpected decision triggered congressional demands to punish Saudi Arabia. It also stunned the Biden administration, given that all previous Saudi administrations had avoided embarrassing Washington, even during turbulent times in their relationship. U.S. Secretary of State Antony Blinken said his country would consider options to respond to the move, which he described as short-sighted and disappointing. He also said the U.S. would not act against its interests, alluding to a demand by members of Congress to withdraw important U.S. military assets stationed in Saudi Arabia and the United Arab Emirates – an indicator of the tough choices facing Washington today.

 

Gulf Oil In U.S. Foreign Policy

U.S.-Saudi relations have experienced several periods of friction that have played out on the oil issue. During the October 1973 Arab-Israeli war, Saudi Arabia imposed an oil embargo on the U.S. because it supported Israel. By the time the ban was lifted in March 1974, oil prices had quadrupled, exacerbating the United States' economic crisis. That crisis included a recession, inflation, and the Watergate scandal. Recently declassified British documents indicate that President Richard Nixon had considered invading Saudi Arabia to control oil prices but decided instead to rely on the shah of Iran to discourage the Gulf states from trying to destabilize the global economy again.

Iran’s 1979 revolution and hostility to the U.S. led to the adoption of the Carter Doctrine in 1980, which was meant to ensure that there would be no more oil embargoes or Soviet intrusion into the Persian Gulf. The doctrine considered any attempt by a foreign power to gain control of the Gulf region as an attack on vital U.S. interests. It established the Rapid Deployment Force that, in 1983, integrated with U.S. Central Command, organizing regular military exercises codenamed Bright Star involving several countries. These drills, which are Central Command’s most significant, focus on desert combat skills, training troops to maintain their equipment in harsh combat conditions, and communications between soldiers.

Today we are again seeing cracks in the relationship between the U.S. and Gulf producers. After OPEC+ decided to reduce production, some Americans demanded Washington end Saudi Arabia’s special status and even launch a military strike against it. Others denounced Washington’s disingenuous affection for Riyadh. The U.S. Congress is now considering the NOPEC (No Oil Producing and Exporting Cartels) bill, which would allow the Department of Justice to sue OPEC countries and their allies under the pretext that the organization is a monopoly conspiring to raise oil prices. U.S. National Security Council spokesperson John Kirby said Biden is dissatisfied with the Saudi position and will coordinate with Congress to determine the future relationship with Riyadh.

 

Biden And MBS

One of the reasons for Biden’s distrust of the Gulf states generally, and Saudi Arabia specifically, is the absence of democracy in the Arab region. Last year, he hosted the Summit for Democracies to reaffirm the United States’ commitment to democratic values in its foreign policy. The only Arab country invited to the summit was Iraq, which the U.S. hopes will eventually transition into a pluralist democracy. Even by Arab standards, Saudi Arabia would rank at the bottom of the democratic continuum in the region.

Before Russia invaded Ukraine, Biden seemed to believe that applying consistent pressure on the Saudis would help end the conflict in Yemen and tame MBS with minimal damage to Washington’s relationship with Riyadh. Biden ended U.S. military support for the Saudi-led coalition in Yemen and removed the Houthis from the U.S. list of terrorist organizations. But MBS believes the Houthis’ place in post-war Yemen should be up to him.

Biden was also disturbed by the assassination of Saudi journalist Jamal Khashoggi, for which he holds MBS personally responsible. He even allowed the partial publication of the secret U.S. intelligence report on the Khashoggi case. Biden sees MBS as an authoritarian and ruthless leader, a description confirmed by various personal accounts of interactions with the crown prince. A former Saudi intelligence officer who was MBS’ right-hand man for years said the crown prince likened himself to Alexander the Great and wanted to become the most powerful man in the world.

Biden didn’t want to shake hands with MBS when he visited Saudi Arabia in July, preferring to greet him with a fist bump instead. Prior to the trip, Biden avoided communicating with MBS, in contrast to the way previous American presidents have dealt with Saudi royals. Some senior U.S. officials avoided visiting Saudi Arabia when they toured the Middle East.

There’s little doubt, however, that the Saudi crown prince has used his country’s oil resources to gain recognition from the Biden administration as the true ruler of the kingdom. King Salman recently appointed him as the new prime minister, an unprecedented move by a sitting Saudi monarch. He continues to resist U.S. pressure to pump more oil and, in coordination with Russia, led the OPEC+ decision to slash production by 2 million barrels per day, to Washington’s chagrin. MBS says in private meetings that Biden knows his number and can call him directly to discuss the matter.

 

Logic Behind Oil Cuts

Saudi Arabia has rejected accusations launched by the Biden administration that it favors cash-strapped Russia by keeping prices high. It insists that oil production was cut for technical reasons, to stabilize prices, and to ensure energy security, especially considering the state of the global economy and the decline in demand for oil. Oil is the primary source of revenue for the Saudi budget and, thus, an essential political tool in a country with a severely underdeveloped taxation system. Over the past four months, oil prices have dropped from more than $120 per barrel to $80, and fearing that the downward trend will continue because of the looming recession, the Saudis seem to have determined that lower production would stabilize prices.

Still, the Saudi-Russian rapprochement has reached new, concerning heights for Washington. At the G-20 summit in Buenos Aires in 2018, Russian President Vladimir Putin greeted MBS warmly, shaking his hand, while most other leaders ignored him because of the fallout from the Khashoggi case. Putin wanted to help MBS deliver a diplomatic win. More recently, the Saudis helped mediate the release of foreign prisoners captured by the Russians in the Ukraine war.

Saudi Arabia and the United Arab Emirates did not join the sanctions imposed on Russia. They questioned U.S. motives for punishing Moscow with tools such as capping the price of its oil exports, fearing that, in the long run, it would shift the power to price oil from producers to consumers. The rule that governs the U.S.-Gulf partnership – oil for security – no longer holds, as reflected in the struggle to define the rules of global oil pricing. From a Saudi-Emirati perspective, the U.S. has lost its ability to determine its partnership priorities. The Democrats have tried to strike a balance with the Saudis, refusing to give an American cover for MBS’ domestic policies while working with him on urgent issues such as oil and the normalization of relations with Israel.

 

Implications For Saudi Arabia

The Saudis reacted angrily to U.S. criticism of their decision to slash production and to the calls to punish Riyadh. Saudi activists circulated a statement by the late Saudi Foreign Minister Saud al-Faisal, in which he said: “We in the Kingdom of Saudi Arabia do not break a promise just as we do not accept a threat.” In Saudi Arabia and the UAE, Biden is dealing with a new generation of leaders less confident in partnering with the U.S. and more determined to take an independent foreign policy approach after years of distrust. They believe the Democrats are working to weaken them, despite the recent warming of relations thanks to the need for oil.

But while the chasm between Washington and Riyadh is deepening, the Saudis will continue to maintain close economic and political ties with China and Russia, which, unlike the U.S., don’t raise concerns over human rights. MBS has been charting Saudi Arabia’s foreign policy orientation for years. He believes his country’s future lies with China, Russia, and emerging economies, not with the U.S.----

 

Update 14 October 2022: Not Just Another UN Vote

Franklin Roosevelt's hope for the United Nations was never fully realized. Nations have their interests and are not about to surrender their sovereignty to an entity without the power to force them to. The decisions of the United Nations – particularly the General Assembly, with close to 200 members – are not something that arises to our attention. This week was an exception.

On Wednesday, the General Assembly voted on whether to condemn Russia’s decision to annex parts of Ukraine. Ukraine is a member of the United Nations and, oddly, one of the oldest. When the United Nations was formed, Josef Stalin insisted that the Soviet Union have more than one vote. He reasoned that the Soviet Union was not a nation but a confederacy of independent states. Roosevelt and Churchill choked, and Churchill was prepared to walk, but the U.N. was Roosevelt’s dream, and he needed Stalin’s participation to get it off the ground, so he agreed. This is how Ukraine became a founding member of the United Nations. And though the U.N. never lived up to Roosevelt’s aspirations, it has had some use as a measurement of global opinion and relative power.

The results of this week’s vote were a fascinating seismograph of world opinion. Just over 140 nations voted for the resolution, which means they voted against Russia. Thirty-five abstained, and five, including Russia, sided with Russia. The other four were Belarus, Nicaragua, North Korea, and Syria. Given that Russia is a member of the Security Council and normally ranked alongside the United States and China as a globally significant power, this is a startling result, most of all for the almost universal indifference the members displayed toward possible Russian reprisals. Russia once made the world tremble. Now, just four nations stand “shoulder to shoulder” with it, as old communist propaganda would phrase it.

Even more significant were the 35 nations that abstained, neither condemning nor supporting Russia and, in effect, not wanting to dirty their hands. The fascinating abstention was China's. Having just a year ago entered into an alliance that was meant to last forever, the Chinese effectively announced that they want nothing to do with Russia, at least on this issue and at this moment. Beijing’s abstention was not motivated by concern for the future of Ukraine. It was struck by the powers that contributed to Ukraine’s defense and the impact of U.S. economic power. The Chinese do not want the world, particularly the United States, to view China as supporting Russia or potentially coming to Russia’s aid on this issue. China probably would have acted differently had Russia been successful in its attack on Ukraine. But Russia constantly charges that the U.S. is its real enemy, and China is learning not to underestimate U.S. power.

This vote is significant because it gives us a sense of the decline of Russia, not simply over Ukraine but also as a power with global interests that can punish nations that fail to honor its wishes. The Russian military’s poor performance is part of this. Still, Moscow’s broader lack of economic and political power is more significant because it signals a massive shift in the world order. The fear of Russia, central to that order since 1945, appears to have gone. Even China’s vision of enhanced power through an alliance with Russia did not seem to affect countries like Montenegro, with prior informal links to Russian oligarchs.

Some will say that this was a unique case, that consuming part of Ukraine is a unique issue and that other votes will go differently. But this misses the point. Only four countries – and idiosyncratic ones – thought their national interest depended on a good relationship with Russia. That fact makes this vote worthy of thought.-----

 

Update 16 October 2022: In 2023, Russia Paints A Picture Of Economic Success

Over the past six months, Moscow has begun to demonstrate that the Russian economy can do without the U.S. and Europe. European sanctions and restrictions hurt the financial sector, the market for components and semi-finished products, logistics, and consumer goods. Russia adapted in various creative ways, including redirecting part of the flow of oil and gas to the east and creating parallel imports that allow companies to keep their shelves stocked and access the necessary components. Moreover, the departure of some foreign companies allowed domestic industries to develop. The growth in the use of national currencies in settlements made it possible to ease the dependence on the U.S. dollar in trade transactions. Import substitution has been notably successful in the textile, service, and food industries. Most importantly, the price of resources such as oil and gas stayed high, allowing Moscow to survive at lower overall export levels.

To be sure, the Russian economy has its problems. Sanctions and supply chains aside, modest consumption, reduced investment and increased emigration are particularly problematic. Since December, the Ministry of Digital Transformation has held meetings with representatives of specialized associations and IT companies to discuss ways to return IT specialists who left Russia. Moreover, the Kremlin isn’t especially happy with the state of the budget. Russian Finance Minister Anton Siluanov said that the budget deficit in 2022 amounted to 3.3 trillion rubles ($48 billion), or 2.3 percent of GDP – except in 2020 at the height of the pandemic, this is the highest budget deficit on record. The Finance Ministry noted that compared with 2021, spending increased by about 25.6 percent, peaking in December at 22 percent of annual spending. The deficit was covered by government borrowing and the National Welfare Fund, as well as by Gazprom, which temporarily paid increased taxes.

And for all of Russia’s success in creating parallel imports in certain sectors, it has failed to find suitable replacements in complex, knowledge-intensive and high-tech industries. Take, for example, the Moskvich, a car that is ostensibly meant to be domestically produced. Though it's assembled in Russia, it's produced using Chinese spare parts. Put simply, it was impossible for Russia to reliably produce and sell a car in less than a year. So while Moscow wants to achieve technological sovereignty, it is actually reorienting itself toward Asian markets rather than Western ones. Representatives of the Moskvich plant said they plan to assemble cars from domestic parts by 2025, which means the Kremlin would need at least two to three years to figure out how to independently produce the necessary parts. That’s a long time to wait.

 

February As A Stress-Test

In the meantime, the health of Russia’s budget depends mainly on three factors: the price of oil, the volume of hydrocarbon production, and the ruble exchange rate in 2023 – none of which inspires much confidence today. When Europe’s petroleum embargo takes effect, February will be a particularly telling month.

Though exceptions may be introduced, carriers have become increasingly cautious of running afoul of new legal regulations. And otherwise, reliable destination markets such as China and India that were eager for crude oil and gas may not be as hungry for certain other products since they are major refining centers in their own right.

Russia will benefit from the sale of oil, but its profits will be lower because it will likely not be able to sell as much of it. The uncertainty surrounding the sale could, moreover, affect oil prices. There is no consensus on what the price of Russia's Urals blend is expected to be in 2023. Western countries introduced a price ceiling for Russian oil of $60 per barrel, after which the average price for the Urals was $50.47 per barrel – 1.44 times lower than in December 2021, when it sold for $72.71 per barrel. Oil production will also likely be constrained by Russia itself: President Vladimir Putin’s ban on exporting Russian oil and oil products to certain foreign legal entities and individuals that directly or indirectly use the price cap mechanism will take effect in February. This may raise the price of oil, but it may also curb sales.

All this calls into question Russia’s projected growth rates. The oil industry plays an outsized role in Russian GDP, and at least for now, conditions bode poorly for production and supply.

With that in mind, the World Bank and Moscow are both right. The Kremlin’s economic forecasts are rosier than they should be, but there’s reason to believe the economy can absorb more shock than the World Bank says it can. The budget deficit is small compared to GDP. Russia managed to accumulate cash receipts from oil exports, and there are enough funds in the National Wealth Fund to cover deficits and potentially fund new social programs. Unemployment is low, and many industries have gradually accelerated their production pace. Inflation is gradually decreasing. Russia isn’t out of the woods, but these signs are enough to convince Moscow that it can survive the next few years as it adapts to new economic realities.

Time is the biggest variable. The Kremlin will want to see positive results as soon as possible; it understands that its prospects for negotiating an end to the Ukraine war depend on its ability to withstand Western pressure, and it knows that domestic stability depends on keeping its population happy.

But the World Bank and Moscow agree on one thing: that the Russian economy will contract. There’s practically no way around it. All the other uncertainties surrounding it will force Russia to scrimp and save so that it doesn’t waste limited funds, all while painting a picture of greater economic success.

 

Update 17 October 2022: According to the state-owned Global Times newspaper, a confrontational Chinese carrier strike group led by the country’s first domestically built aircraft carrier conducted live-fire drills in the South China Sea. In a statement, the Chinese navy called them "combat-oriented confrontational exercises."  As illustrated by the landmark AUKUS deal with the U.S. and the U.K. Also, Australia is reorienting its military forces to more aggressively contest chokepoints on the southern end of the first and second island chains and probe deep into the South China Sea. A recent war game scenario run by the Washington-based Center for Strategic and International Studies indicated that the US would lose its aircraft carriers should they interfere in a possible conflict in the Taiwan Straits.

 

 

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