Russia

/
3354 views
3 mins read

The Ukraine Safari

I don’t usually write about cultural products from my own country, but I must make an exception for Slovenian filmmaker Miran Zupanič’s new documentary Sarajevo Safari, which details one of the most

More
1173 views
2 mins read

Edward Snowden: A Russian Citizen

Yesterday Edward Snowden was granted Russian citizenship. Snowden had to flee his country, because he released information that proved that the NSA was, and still is, illegally spying on US citizens.  The presstitutes will use Snowden’s grant of citizenship as proof

More

Ukraine: Scapegoat of NATO expansion

//
283 views
19 mins read

Nearly a year in, the war in Ukraine has cost hundreds of thousands of lives and brought the world to the brink of, in President Joe Biden’s own words, “Armageddon.” Alongside the literal battlefield, there has been a similarly bitter intellectual battle over the war’s causes.

Commentators have rushed to declare the long-criticized policy of NATO expansion as irrelevant to the war’s outbreak, or as a mere fig leaf used by Russian President Vladimir Putin to mask what former Secretary of State Condoleezza Rice and former Defense Secretary Robert Gates recently called “his messianic mission” to “reestablish the Russian Empire,” in a Washington Post opinion piece. Fiona Hill, a presidential adviser to two Republican administrations, has deemed these views merely the product of a “Russian information war and psychological operation,” resulting in “masses of the U.S. public… blaming NATO, or blaming the U.S. for this outcome.”

Yet a review of the public record and dozens of diplomatic cables made publicly available via WikiLeaks show that U.S. officials were aware, or were directly told over the span of years that expanding NATO was viewed by Russian officials well beyond Putin as a major threat and provocation; that expanding it to Ukraine was a particularly bright red line for Moscow; that such action would inflame and empower hawkish, nationalist parts of the Russian political spectrum; and that it could ultimately lead to war.

In a particularly prophetic set of warnings, U.S. officials were told that pushing for Ukrainian membership in NATO would not only increase the chance of Russian meddling in the country but also risked destabilizing the divided nation—and that the United States and other NATO officials pressured Ukrainian leaders to reshape this unfriendly public opinion in response. All of this was told to U.S. officials in both public and private by not just senior Russian officials going all the way up to the presidency, but by NATO allies, various analysts and experts, liberal Russian voices critical of Putin, and even, sometimes, U.S. diplomats themselves.

This history is particularly relevant as U.S. officials now test the red line China has drawn around Taiwan’s independence, risking military escalation that will first and foremost be aimed at the island state. The U.S. diplomatic record regarding NATO expansion suggests the perils of ignoring or outright crossing another military power’s red lines and the wisdom of a more restrained foreign policy that treats other powers’ spheres of influence with the same care they extend to the United States.

An Early Exception

NATO expansion had been fraught from the start. The pro-Western, then-Russian President Boris Yeltsin had told then-U.S. President Bill Clinton he “[saw] nothing but humiliation for Russia if you proceed” with plans to renege on the verbal promises made years earlier not to extend NATO eastward, and warned that this move would be “sowing the seeds of mistrust” and would “be interpreted, and not only in Russia, as the beginning of a new split in Europe.” Just as containment architect George Kennan had predicted, the decision to go ahead with NATO expansion helped inflame Russian hostility and nationalism: The Duma (the Russian parliament) declared it “the largest military threat to our country over the last 50 years,” while the leader of the opposition Communist Party called it “a Treaty of Versailles for Russia.”

By the time Putin became president the day before the new millennium, “the initial hopes and plans of the early ’90s [were] dead,” a leading liberal Russian politician declared. The first round of NATO enlargement was followed by the organization bombing Yugoslavia in 1999, which was done without the UN Security Council authorization, and triggered Russia to cut off contact with the alliance. By 2000, the revised Russian national security strategy warned that NATO’s use of force beyond its borders would be seen as “a threat of destabilization of the whole strategic situation,” while military officers and politicians started claiming “that if NATO expands further, it would ‘create a base to intervene in Russia itself,’” the Washington Post reported.

Ironically, there would be one exception to the next two decades’ worth of rising tensions over NATO’s eastward expansion that followed: the early years of Putin’s presidency, when the new Russian president defied the Russian establishment to try and make outreach to the United States. Under Putin, Moscow reestablished relations with NATO, finally ratified the START II arms control treaty, and even publicly floated the idea of Russia eventually joining the alliance, inviting attacks from his political rivals for doing so. Even so, Putin continued to raise Moscow’s traditional concerns about the alliance’s expansion, telling NATO’s secretary-general it was “a threat to Russia” in February 2001.

“[I]f a country like Russia feels threatened, this would destabilize the situation in Europe and the entire world,” he said in a speech in Berlin in 2000.

Putin softened his opposition as he sought to make common cause with then-President George W. Bush administration. “If NATO takes on a different shape and is becoming a political organization, of course, we would reconsider our position with regard to such expansion, if we are to feel involved in the processes,” he said in October 2001, drawing attacks from political rivals and other Russian elites.

As NATO for the first time granted Russia a consultative role in its decision-making in 2002, Putin sought to assist its expansion. Then-Italian President Silvio Berlusconi made a “personal request” to Bush, according to an April 2002 cable, to “understand Putin’s domestic requirements,” that he “needs to be seen as part of the NATO family,” and to give him “help in building Russian public opinion to support NATO enlargement.” In another cable, a top-ranking U.S. State Department official urged holding a NATO-Russia summit to “help President Putin neutralize opposition to enlargement,” after the Russian leader said allowing NATO expansion without an agreement on a new NATO-Russia partnership would be politically impossible for him.

This would be the last time any Russian openness toward NATO expansion was recorded in the diplomatic record published by WikiLeaks.

Allies Weigh In

By the middle of the 2000s, U.S.-Russian relations had deteriorated, partly owing to Putin’s bristling at U.S. criticism of his growing authoritarianism at home, and to U.S. opposition to his meddling in the 2004 Ukrainian election. But as explained in a September 2007 cable by then-President of New Eurasia Foundation Andrey Kortunov, now director general of the Russian International Affairs Council—who has publicly criticized both Kremlin policy and the current war—United States mistakes were also to blame, including Bush’s invasion of Iraq and a general sense that he had given little in return for Putin’s concessions.

“Putin had clearly embarked on an ‘integrationist’ foreign policy at the beginning of his second presidential term, which was fueled by the 9/11 terrorist attacks and good relations with key leaders like President Bush” and other leading NATO allies, Kortunov said according to the cable. “However,” he said, “a string of perceived anti-Russian initiatives,” which included Bush’s withdrawal from the Anti-Ballistic Missile (ABM) Treaty and “further expansion of NATO,” ultimately “dashed Putin’s hopes.”

What followed was a steady drumbeat of warnings about NATO’s expansion, particularly regarding neighboring Ukraine and Georgia, much of it from Washington’s NATO allies.

“[Former French presidential diplomatic adviser Maurice] Gourdault-Montagne warned that the question of Ukrainian accession to NATO remained extremely sensitive for Moscow, and concluded that if there remained one potential cause for war in Europe, it was Ukraine,” reads a September 2005 cable. “He added that some in the Russian administration felt we were doing too much in their core zone of interest, and one could wonder whether the Russians might launch a move similar to Prague in 1968, to see what the West would do.”

This was just one of many similar warnings from French officials that admitting Ukraine and Georgia into NATO “would cross Russian ‘tripwires’,” for instance. A February 2007 cable records then-French Director General for Political Affairs Gérard Araud’s recounting of “a half-hour anti-U.S. harangue” by Putin in which he “linked all the dots” of Russian unhappiness with U.S. behavior, including “U.S. unilateralism, its denial of the reality of multipolarity, [and] the anti-Russian nature of NATO enlargement.”

Germany likewise raised repeated concerns about a potentially bad Russian reaction to a NATO Membership Action Plan (MAP) for Ukraine and Georgia, with then-Deputy National Security Adviser Rolf Nikel stressing that Ukraine’s entry was particularly sensitive. “While Georgia was ‘just a bug on the skin of the bear,’ Ukraine was inseparably identified with Russia, going back to Vladimir of [Kyiv] in 988,” Nikel recounted, according to the cable.

Other NATO allies repeated similar concerns. In a January 2008 cable, Italy affirmed it was a “strong advocate” for other states’ entry into the alliance, “but is concerned about provoking Russia through hurried Georgian integration.” Norway’s then-Foreign Minister (who is now the prime minister) Jonas Gahr Støre made a similar point in an April 2008 cable, even as he insisted Russia mustn’t be able to veto NATO’s decisions. “At the same time he says that he understands Russia’s objections to NATO enlargement and that the alliance needs to work to normalize the relationship with Russia,” reads the cable.

Almost Complete Consensus

The thinkers and analysts that U.S. officials conferred with likewise made clear that the anxieties of Russian elites over NATO and its expansion, and the lengths they might go to counteract it. Many were transmitted by then-U.S. Ambassador to Russia William Burns, who is presently Biden’s CIA director.

Recounting his conversations with various “Russian observers” from both regional and U.S. think tanks, Burns concluded in a March 2007 cable that “NATO enlargement and U.S. missile defense deployments in Europe play to the classic Russian fear of encirclement.” Ukraine and Georgia’s entry “represents an ‘unthinkable’ predicament for Russia,” he reported six months later, warning that Moscow would “cause enough trouble in Georgia” and counted on “continued political disarray in Ukraine” to halt it. In an especially prescient set of cables, he summed up scholars’ views that the emerging Russia-China relationship was largely “the by-product of ‘bad’ U.S. policies,” and was unsustainable—“unless continued NATO enlargement pushed Russia and China even closer together.”

Cables record Russian intellectuals across the political spectrum making such points again and again. One June 2007 cable records the words of a “liberal defense expert Aleksey Arbatov” and the “liberal editor” of a leading Russian foreign policy journal, Fyodor Lukyanov, that after Russia had done “everything to ‘help’ the U.S. post-9/11, including opening up Central Asia for coalition anti-terrorism efforts,” it had expected “respect for Russia’s ‘legitimate interests.’” Instead, Lukyanov said, it had been “confronted with NATO expansion, zero-sum competition in Georgia and Ukraine, and U.S. military installations in Russia’s backyard.”

“Ukraine was, in the long term, the most potentially destabilizing factor in U.S.-Russian relations, given the level of emotion and neuralgia triggered by its quest for NATO membership,” stated the counsel of Dmitri Trenin, then-deputy director of the Russian branch of the U.S.-based Carnegie Endowment for International Peace, in a Burns-authored February 2008 cable. For Ukraine, he said prophetically, it would mean “that elements within the Russian establishment would be encouraged to meddle, stimulating U.S. overt encouragement of opposing political forces, and leaving the United States and Russia in a classic confrontational posture.”

Indeed, opposing NATO’s enlargement eastward, particularly in Ukraine and Georgia, was “one of the few security areas where there is almost complete consensus among Russian policymakers, experts and the informed population,” stated a cable of March 2008, citing defense and security experts. Ukraine was the “line of last resort” that would complete Russia’s encirclement, said one defense expert, and its entry into NATO was universally viewed by the Russian political elite as an “unfriendly act.” Other experts cautioned “that Putin would be forced to respond to Russian nationalist feelings opposing membership” of Georgia, and that offering MAP to either Ukraine or Georgia would trigger a cut-back in the Russian military’s genuine desire for cooperation with NATO.

From Liberals to Hardliners

These analysts were reiterating what cables show U.S. officials heard again and again from Russian officials themselves, whether diplomats, members of parliament, or senior Russian officials all the way up to the presidency, recorded in nearly three-dozen cables at least.

NATO enlargement was “worrisome,” said one Duma member, while Russian generals were “suspicious of NATO and U.S. intentions,” cables record. Just as analysts and NATO officials had said, Kremlin officials characterized NATO’s designs on Georgia and Ukraine as especially objectionable, with the Russian Ambassador to NATO from 2008 to 2011, Dmitry Rogozin, stressing in a February 2008 cable that offering MAP to either “would negatively impact NATO’s relations with Russia” and “raise tension along the borders between NATO and Russia.”

Then-Russian Deputy Foreign Minister Grigory Karasin “underscored the depth of Russian opposition” to their membership, a different March 2008 cable stated, underlining that the “political elite firmly believes” “that the accession of Ukraine and Georgia represented a direct security threat to Russia.” The future, Karasin said, rested on the “strategic choice” Washington made about “‘what kind of Russia’” it wanted to deal with—‘a Russia that is stable and ready to calmly discuss issues with the U.S., Europe and China, or one that is deeply concerned and filled with nervousness.’”

Indeed, numerous officials—including then-Director for Security and Disarmament Anatoly Antonov, who is currently serving as Russia’s ambassador to the United States—warned pushing ahead would produce a less cooperative Russia. Pushing NATO’s borders to the two former Soviet states “threatened Russian and the entire region’s security, and could also negatively impact Russia’s willingness to cooperate in the [NATO-Russia Council],” one Russian foreign ministry official warned, while others pointed to the policy to explain Putin’s threats to suspend the Conventional Armed Forces in Europe (CFE) treaty. “CFE would not survive NATO enlargement,” went a Russian threat in one March 2008 cable.

Maybe most pertinent were the words of Russian Foreign Minister Sergey Lavrov, at the time a veteran diplomat respected in the West, and who continues to serve in the position today. At least eight cables—many, though not all of them, written by Burns—record Lavrov’s expressions of opposition to expanding NATO to Ukraine and Georgia over the course of 2007-2008, when Bush’s decision, over the objections of allies, to publicly affirm their future accession led to a spike in tensions.

“While Russia might believe statements from the West that NATO was not directed against Russia, when one looked at recent military activities in NATO countries… they had to be evaluated not by stated intentions but by potential,” went Burns’s summary of Lavrov’s annual foreign policy review in January 2008. On the same day, he wrote, a foreign ministry spokesperson warned that Ukraine’s “likely integration into NATO would seriously complicate the many-sided Russian-Ukrainian relations” and lead Moscow to “have to take appropriate measures.”

Besides being an easy way to garner domestic support from nationalists, Burns wrote, “Russia’s opposition to NATO membership for Ukraine and Georgia is both emotional and based on perceived strategic concerns about the impact on Russia’s interests in the region.”

“While Russian opposition to the first round of NATO enlargement in the mid-1990s was strong, Russia now feels itself able to respond more forcefully to what it perceives as actions contrary to its national interests,” he concluded.

Lavrov’s criticism was shared by a host of other officials, not all of them hardliners. Burns recounted a meeting with former Prime Minister Yevgeny Primakov, a Gorbachev protégé who had negotiated over NATO’s first expansion with former Secretary of State Madeleine Albright, who warmly eulogized him years later as a pragmatist. The U.S. push for MAP for Georgia and Ukraine “‘infuriated’ Russians and threatened other areas of U.S.-Russia strategic cooperation,” Primakov had said, according to Burns, mentioning Primakov was asked later that day on TV about rethinking Crimea’s status as Ukrainian territory. “[T]his is the kind of discussion that MAP produces,” he said—meaning that it inflamed nationalist and hardline sentiment.

“Primakov said that Russia would never return to the era of the early 1990s and it would be a ‘colossal mistake’ to think that Russian reactions today would mirror those during its time of strategic weakness,” Burns’s cable stated.

This went all the way to the top, as U.S. officials noted in cables reacting to a famously strident speech Putin gave at the Munich Security Conference in February 2007, which saw Putin assail NATO expansion and other policies as part of a wider, destabilizing U.S. abuse of its sole-superpower status. Putin’s tone may have been “unusually sharp,” Primakov told Burns, but its substance “reflected well-known Russian complaints predating Putin’s election,” shown by the fact that “talking heads and Duma members were almost unanimous” in supporting the speech. A year later, a March 2008 cable reported then-German Chancellor Angela Merkel’s farewell, two-hour-long meeting with Putin, in which he “argued strongly” against MAP for Ukraine and Georgia.

Putin’s Exit

Any illusions this stance would evaporate with Putin leaving the presidency were quickly dispelled. Such warnings continued and, if anything, grew more intense after Putin was replaced by his liberal successor, Dmitry Medvedev as president of Russia, whose ascent sparked hopes for a more democratic Russia and an improved U.S.-Russian relationship.

Under Medvedev, officials from the Russian ambassador to NATO and various officials in the foreign ministry to the chairman of the Duma’s international affairs committee made much the same warnings, cables show. In some cases, as with Karasin and Lavrov, it was the same officials making these long-standing complaints.

Medvedev himself “reiterated well known Russian positions on NATO enlargement” to Merkel on his first trip to Europe in June 2008, even as he avoided bringing up MAP for Ukraine and Georgia specifically. “Behind Medvedev’s polite demeanor, Russian opposition to NATO enlargement remained a red-line, according to both conservative and moderate observers,” one June 2008 cable reads, a view shared by a leading liberal analyst. Even critics to his right read Medvedev’s words as “an implicit commitment to use Russian economic, political and social levers to raise the costs for Ukraine and Georgia” if they moved closer to the alliance. The cable’s author, then-Deputy Chief of Mission at the U.S. Embassy in Moscow Daniel Russell, concluded he “agree[d] with the common wisdom.”

By August 2008, following the war with Georgia, Medvedev started to sound a lot more like his predecessor, threatening to cut ties with the alliance and restating grievances about encirclement. A cable from after the end of the five-day war between Russia and Georgia—which an EU-commissioned report would later blame the Georgian government for starting—stated that “even the most pro-Western political experts” were “pointing the finger at the U.S.” for jeopardizing the U.S.-Russian relations, with U.S.’s dismissal of Russia’s concerns over, among other things, NATO expansion being a key part of their analysis. Echoing Burns, one analyst argued that Russia finally felt “strong enough to stand up to the West” when it ignored its concerns.

Those concerns were central at a roundtable of Russian analysts months later— a January 2009 cable showed—who explained to a group of visiting U.S. congresspeople Russians’ “deep displeasure” with the U.S. government, and stressed the “bitter divorce” between Russia and Georgia would be even uglier with Ukraine. Pushing MAP for the country “helped the ‘America haters come to power’ in Russia and gave legitimacy to the hard-liners’ vision of ‘fortress Russia,’” said one Russian analyst.

Increasingly, cables show, such warnings came from liberals, even those who hadn’t previously viewed NATO and the United States as Russia’s chief threats. An August 2008 cable described a meeting with Russian Human Rights Ombudsman Ambassador Vladimir Lukin—described as “a liberal on the Russian political scene, someone disposed toward cooperation with the U.S.”—who explained Medvedev’s post-war recognition of the independence of Georgia’s breakaway regions, which he had at first opposed, as a security-driven response to NATO’s drift toward Russia’s borders. Because escalations like the 2008 U.S.-Poland missile defense agreement showed anti-Russia actions “would not stop,” he said, “Moscow had to show that, like the U.S., it can and will take steps it deems necessary to defend its interests.”

The cable concluded that Lukin’s views “reflect the thinking of the majority of Russian foreign policy elite.”

Selling NATO to Ukraine

Other than Burns—whose Bush-era memos warning of the breadth of Russian opposition to NATO expansion and that it would provoke intensified meddling in Ukraine have become famous since the Russian invasion—U.S. officials largely reacted with dismissal.

Russian objections to the policy and other long-simmering issues were described over and over in the cables as “oft-heard,” “old,” “nothing new,” and “largely predictable,” a “familiar litany” and a “rehashing” that “provided little new substance.” Even NATO’s ally Norway’s position that it understood Russian objections even as it refused to let Moscow veto the alliance’s moves was labeled a case of “parroting Russia’s line.”

U.S. officials were similarly dismissive of explicit warnings—from Kremlin officials, NATO allies, experts and analysts, even Ukrainian leadership—that Ukraine was “internally divided over NATO membership” and that public support for the move was “not fully ripe.” The east-west split within Ukraine over the idea of NATO membership made it “risky,” German officials cautioned, and could “break up the country.” Ukraine’s three leading politicians all “took foreign policy positions based on domestic political considerations, with little regard to the long-term effects on the country,” one said.

Those very politicians likewise made clear public opinion wasn’t there, whether anti-Russian former Foreign Minister Volodymyr Ogryzko of Ukraine, or more Russian-friendly former Prime Minister Viktor Yanukovych—later misleadingly painted as a Kremlin puppet and was ousted as president in the 2014 Maidan protests—who boasted to a U.S. diplomat that support for NATO had jumped under his tenure. In response, the cables show, NATO officials pressed Ukrainian leaders to take a firm public stance in favor of joining, and discussed how to persuade Ukraine’s population “so that they would be more favorable [toward] it.” Ogryzko later disclosed to Merkel “that a public education campaign is already underway,” and that Ukraine “had discussed the issue of public education campaigns with Slovakia and other nations that had joined NATO recently.”

This came in spite of acknowledged risks. Cables record liberal Russian analysts cautioning “that [then-Ukrainian President Viktor] Yushchenko was using NATO membership to shore up a Ukrainian national identity that required casting Russia in the role of enemy,” and that “because membership remained divisive in Ukrainian domestic politics, it created an opening for Russian intervention.”

“Experts tell us that Russia is particularly worried that the strong divisions in Ukraine over NATO membership, with much of the ethnic-Russian community against membership, could lead to a major split, involving violence or at worst, civil war,” Burns wrote in February 2008. Russia, he further wrote, would then “have to decide whether to intervene; a decision Russia does not want to have to face.”

Despite the dismissive attitude of many U.S. officials, parts of the U.S. national security establishment clearly understood Russian objections weren’t mere “muscle-flexing.” The Kremlin’s anxieties over a “direct military attack on Russia” were “very real,” and could drive its leaders to make rash, self-defeating decisions, stated a 2019 report from the Pentagon-funded RAND Corporation that explored theoretical strategies for overextending Russia.

“Providing more U.S. military equipment and advice” to Ukraine, it stated, could lead Moscow to “respond by mounting a new offensive and seizing more Ukrainian territory”—something not necessarily good for U.S. interests, let alone Ukraine’s, it noted.

Warnings Ignored

Nevertheless, in the years, months, and weeks that led up to the Russian invasion of Ukraine in February 2022, successive U.S. administrations continued on the same course.

Ukraine’s cooperation with NATO has “deepened over time,” the alliance itself says today. By the war’s outbreak, the country frequently hosted Western troops at a military base, Ukrainian soldiers received NATO training, it planned two new NATO-linked naval bases, and has received unprecedented sums of U.S. military aid, including offensive arms—a former President Donald Trump policy his liberal predecessor had explicitly rejected, out of concern for provoking a disastrous response from Moscow. Three months before the invasion, Ukraine and the United States signed an updated Charter on Strategic Partnership “guided” by Bush’s controversial Bucharest declaration, which both deepened security cooperation between the two countries and supported Ukraine’s membership aspirations, viewed as an escalation in Moscow.

As U.S. military activity has increased in the region since 2016, sometimes involving Ukraine and Georgia, NATO-Russian tensions have ratcheted up too. While Moscow publicly objected to U.S. missions in Europe that experts feared were too provocative, NATO and Russian forces have experienced thousands of dangerous military encounters in the region and elsewhere. By December 2022, with fears of invasion ramping up, Putin told Biden personally that “the eastward expansion of the Western alliance was a major factor in his decision to send troops to Ukraine’s border,” the Washington Post reported.

None of this means other factors played no role in the war’s outbreak, from Russian domestic pressures and Putin’s own dim view of Ukrainian independence to the copious other well-known Russian grievances toward U.S. policy that frequently appear in the diplomatic record, too. Nor does it mean, as hawks argue, that this somehow “justifies” Putin’s war, any more than understanding how U.S. foreign policy has fueled anti-American terrorism that “justifies” those crimes.

What it does mean is that claims that Russian unhappiness over NATO expansion is irrelevant, a mere “fig leaf” for pure expansionism, or simply Kremlin propaganda are belied by this lengthy historical record. Rather, successive U.S. administrations pushed ahead with the policy despite being warned copiously for years—including by the analysts who advised them, by allies, even by their own officials—that it would feed Russian nationalism, create a more hostile Moscow, foster instability and even civil war in Ukraine, and could eventually lead to Russian military intervention, all of which ended up happening.

“I don’t accept anyone’s red line,” Biden said in the lead-up to the invasion, as his administration rejected negotiations with Moscow over Ukraine’s NATO status. We can only imagine the world in which he and his predecessors had.

This article is distributed by Globetrotter in partnership with the American Committee for U.S.-Russia Accord.

Russia and Pakistan Energy Diplomacy

/
300 views
3 mins read

 The economy of Pakistan is under pressure, and several important economic indicators specify a dire scenario. The decision-makers must have a real debate about how they intend to take genuine action to address the difficulties ahead as the problems with oil, gas, and power worsen for the general public and the government. Unfortunately, we are mired in a political drama that never seems to let up.

The first shipment of crude oil and petroleum products is anticipated to enter Pakistan in late March after the completion of a definitive agreement between Pakistan and Russia. In Pakistan, to negotiate the contract, Russian Energy Minister Nikolay Shulginov said that we have already resolved to prepare an agreement to address all of the concerns that we have with respect to volume, payments, insurance, and transportation.

Even though certain important elements still need to be worked out, the agreement would greatly impact Pakistan’s economy and relations with the rest of the world if it were to go through. It is the first significant step that Pakistan and Russia have taken toward developing their bilateral cooperation in oil and gas trading. In the past, discussions in this respect remained at the level of first expressions of interest. Pakistan now intends to meet 35% of its whole crude oil need from Russia and start imports in a few months. If all goes according to plan, the trade may significantly alter the bilateral relationship, enabling both nations to better organize their interactions.

The possibility of importing gas and oil from Russia also gives Pakistan another outlet to acquire oil at a lower cost. This is crucial since Pakistan’s foreign currency reserves are adequate to pay for three weeks’ worth of oil imports, putting the country in a similar scenario to the default. Most of Pakistan’s imports are made up of energy, and the country would benefit from cheaper oil from Russia by being able to control its growing trade imbalance and balance-of-payments issue. To pay for Russian oil, Pakistan is anticipated to utilize the Chinese yuan. The joint declaration states that the oil and gas trade transactions would be set up such that both nations profit after an agreement on the technical specification has been reached. This may lessen some of the strain on Pakistan’s foreign exchange reserves.

The outcome is also a significant diplomatic victory for Pakistan. Following Russia’s invasion of Ukraine, it seems that Pakistan has discovered a means to evade the sanctions imposed by the West. Pakistan might not have gone this far in talks with Russia if it had been concerned that the agreement would upset the United States and its allies. This is especially significant since Pakistan is now in negotiations for another review to allow the release of significant money from the International Monetary Fund (IMF).

The speed at which Pakistan and Russia are closing a deal suggests that the United States may not oppose the two nations doing commerce. It’s also probable that Pakistan accepted American advice while deciding to acquire Russian oil. The United States and Pakistan’s usual Gulf energy suppliers have not yet made any public declarations objecting to Islamabad’s continuing talks with Moscow.

The U.S. seems ready to ignore the agreement. Ned Price, a spokesman for the State Department, said that “the U.S. was sensitive to the difficulty of stabilizing Pakistan’s economy. I know Pakistan’s collaboration with the IMF and other global financial organizations. We want Pakistan to be in a situation where its economy is stable”. According to reports, Washington has increased financial involvement with the present Pakistani administration. A team of top U.S. Department of Treasury officials is scheduled to visit Pakistan shortly to address various areas of financial assistance for Pakistan. In addition, the American embassy in Islamabad plans a seminar on energy security challenges for Pakistan in March.

For Pakistan, everything seems to be going well. It is encountering little opposition in its efforts to reach an agreement with Moscow. Now, Islamabad should concentrate on fulfilling all technical requirements to guarantee that Russian supplies reach Pakistan’s ports as soon as possible. Thus, the IGC session is crucial and significant. The general diplomacy in the Asian area around energy and gas has also caught Pakistan off guard. A power struggle between the two giants has developed out of what started as China’s economic sway over the ASEAN area. It is now being fueled by Russia’s attempts to advance east. India’s oil consumption appeared to have no boundaries as it devoured roughly 60 million barrels of Russian oil in 2022. Is India only trying to restock its oil supplies, or is it attempting to sway regional oil diplomacy on the Quad’s behalf? With the best U.S. oil refineries awaiting Russian oil supply, which has been speculated as another reason for the increased Indian oil supply, a ban on Russia from Europe does not have a significant impact on its oil and gas supply. The officials’ nerves will be tested as they attempt to clinch a successful deal, particularly with the IMF watching their every move intently.

Pakistan’s greatest failure has been the inability to recognize the actual problems that we are currently facing and the propensity of moving funds from one area to another over the last 75 years without truly paying our bills and commitments. The most recent Geneva Convention is a prime example of this pattern when Pakistan obtained bank and soft loans totaling more than $ 9 billion to avoid the looming economic crisis. The facilitators of Pakistani government machinery need to reevaluate several things, including their upcoming diplomatic commitments and agreements as well as our internal competence.

Russia’s gas union eyes Pakistan, India

//
480 views
5 mins read

Pakistan’s acute energy crisis is the immediate backdrop against which Foreign Minister Bilawal Zardari’s forthcoming talks with Russian Foreign Minister Sergey Lavrov in Moscow today need to be understood.

But then, Lavrov is a ‘Renaissance man’ in the world of international diplomacy and is sure to synchronise his watch with Zardari’s. For both countries, things have changed, old friends are leaving and life doesn’t stop for anyone. 

The Russian Foreign Ministry press release on Zardari’s visit stated tersely, “The foreign ministers will discuss the state of bilateral relations, regional and international issues. Special attention will be paid to the development of trade and economic relations.” 

The MFA spokesperson Maria Zakharova subsequently disclosed that the Russian and Pakistani companies are “actively working to resolve the remaining issues” concerning the supply of Russian energy resources to Pakistan. She noted that the payment system is an issue, as Russia wants an arrangement in national currencies “or in the currencies of third countries that are protected from sanctions risks.” 

Also, energy cooperation by its very nature involves substantial long-term investments and the fact remains that, as Zakharova put it, “the US currency is a soap bubble, unsecured money that is printed even despite America’s huge public debt.” 

Importantly, Zakharova highlighted that the two countries have also decided to “discuss a comprehensive plan for energy cooperation, which provides for the construction of infrastructure and the supply of energy carriers” within a framework that holds the potential to “ensure the sustainable development” of Pakistan’s gas industry. A  Russian gas pipeline to Pakistan is in the making. 

Zardari’s visit to Moscow comes within 3 weeks of a  tripartite gas cooperation arrangement between Russia, Kazakhstan and Uzbekistan making headlines in the news cycle. The termination of Russia’s decades-old energy ties with Europe, including gas supplies via pipelines, motivates Moscow’s search for new markets, Asian markets being a priority. 

Thus, late last year, Moscow proposed a gas union with Kazakhstan and Uzbekistan offering to help out the two Central Asian states that are struggling with gas shortages. Earlier this month, Kazakhstan and Uzbekistan signed two separate agreements with the Russian giant Gazprom cementing the new partnership. A new vista is opening for Russia to use the existing gas pipelines in these two countries to export gas to their domestic market in immediate terms. 

Albeit in a bilateral format, this arrangement also positions Kazakhstan and Uzbekistan potentially as transit countries enabling Russian gas supplies to the regional and world market, especially China, South Asian countries and the ASEAN region. (Russia has proposed a similar arrangement to Ankara to route its gas to the European market via an energy hub in Turkey.)   

All energy projects are “geopolitical,” as the recent destruction of Russia’s Nord Stream pipelines, masterminded by the US, would show. But this one is a “win-win” for both Russia and the two central Asian states, as the income accruing to Kazakhstan and Uzbekistan out of transit fee will be very substantial and long-term, whilst Russia gains access to new markets. 

Enter Afghanistan. On January 11-12, Russia’s presidential envoy for Afghanistan, Zamir Kabulov came down to Kabul and held in-depth consultations with the Taliban leadership in pursuit of “Moscow’s unwavering commitment to developing a comprehensive dialogue with Kabul.” The Russian Foreign Ministry press release stated that the focus was on “mutually beneficial cooperation in such sectors as energy, agriculture, transport, infrastructure, industry, mining, in particular, the organisation of regular commercial supplies of Russian fuel and agricultural products to Afghan companies.” 

The press release said, “As the situation in Afghanistan stabilises, domestic economic operators may participate in the construction and operation of the Turkmenistan–Afghanistan–Pakistan–India gas pipeline, as well as in the restoration of large infrastructure projects built on the territory of Afghanistan during the Soviet era.” 

Most important, the MFA added that “During the consultations, considerable attention was paid to the prospects of political and diplomatic recognition of the current Afghan Government by the international community, including by the Russian Federation.” It concluded that “The leadership of Afghanistan highly appreciates the efforts of the Russian Federation to assist the Afghan people in building a peaceful, independent and economically self-sufficient State.” 

Interestingly, in a TV interview soon after his return to Moscow, Kabulov openly alleged that the ISIL in Afghanistan is nothing but an Anglo-American project with an agenda to cause instability in the region. Indeed, the regional setting is changing dramatically. Russia has become intensely conscious of the burden of history and realises the imperative to strengthen its leadership role as the provider of security for the Central Asian region. The western threat to Central Asia and North Caucasus is continuing. 

Russia hopes to lead a regional effort to stabilise the Afghan situation and counter extremist groups, which act as a geopolitical tool for Washington. Russia (and China) increasingly deals with the Taliban rulers as the established government of Afghanistan. Fundamentally, terrorism is a major concern for Russia (and China).

Moscow estimates that the Taliban has the political will to act against the ISIS optimally, but lacks the financial resources. To be sure, Afghanistan will figure in Lavrov’s talks with Zardari. India’s National Security Advisor Ajit Doval will also be visiting Moscow shortly for consultations on Afghanistan. 

This is an appropriate time for India to improve its relations with Pakistan. Fortuitously, the SCO-related events will bring Pakistani leaders to India. PM Modi has announced that India’s G-20 Presidency “will be grounded in the theme ‘Vasudhaiva Kutumbakam’ or One Earth, One Family, One Future.’” Conceivably, India should invite Pakistan to the G20 Summit in Delhi in September as a special guest.  

At a pragmatic level, the TAPI gas pipeline project  dovetails with the tripartite gas union that Russia is putting together with Kazakhstan and Uzbekistan. The Russian daily Nezavisimaya Gazeta wrote recently that Moscow has high hopes of extending the Central Asian gas grid to the South Asian region and to the ASEAN region in the medium term.

Andrei Grozin, head of the Department of Central Asia and Kazakhstan at the Institute of CIS Countries and senior researcher at the Institute of Oriental Studies of the Russian Academy of Sciences, told the Russian daily that “This is already a new state policy of Russia, and it is obvious that neither Astana nor Tashkent will be able to refuse to participate in this project. Experts agree that by the middle of this century, Southeast Asia will become the main energy-consuming region. No matter how fantastic the expansion of the gas pipeline network to Afghanistan, Pakistan, India, China may sound now,  it will soon become a reality. Therefore, it is necessary to promote our raw materials to the southern markets today.”

Of course, such a mega project will raise hiccups in Washington. It comes as no surprise that the US Undersecretary of state Victoria Nuland (who midwifed the 2014 regime change in Kiev and openly gloats over the sabotage and destruction of Russia’s Nord Stream gas pipeline) is arriving in Delhi this week. 

Washington is upset that Western sanctions pressure on Russian oil exports has led to a significant strengthening of India’s energy ties with Russia. Not only is Russian crude sold to India twice as cheap as world analogues, but the Russian production of petroleum products is actually transferred to India.

After the entry into force of the European embargo on Russian oil products w.e.f February 5, India is set to become the main supplier of refined Russian oil to Europe with a potential export turnover in tens of billions of dollars. (Please see Russia gives India the supply of Europe with petroleum productsNezavisimaya Gazeta, Jan. 16, 2023Exports of diesel fuel from India are already increasing.

Technically, this does not violate EU sanctions against Russia. But it annoys the Biden Administration, which had anticipated that there would be potential to boost US exports to replace Russian  petroleum products in the lucrative European market.

The US will be uneasy about a “gas union” betwixt Russia, Pakistan and India. But India has vital interests in safeguarding its energy security. The western hegemony in the world order is ending. Russia’s “gas union” in Central Asia signals that the time has come for regional states in South Asia to respond with a unity of purpose. 

Israel: Netanyahu wades into Ukraine war

/
479 views
5 mins read

In his second coming as Israel’s Prime Minister, Benjamin Netanyahu has hit the ground running. The international climate in which he skilfully operated for close to 15 years in two stints as prime minister has changed beyond recognition.

Netanyahu’s foreign policy legacy has become listless — principally, the Abraham Accords and Israel’s hugely consequential relationship with Russia, both of which significantly impacted the tough neighbourhood in which he successfully navigated Israel’s core interests. 

For sure, breathing new life into the above two vectors — Abraham Accords (Israel- Saudi ties) and Israel’s relations with Russia — will remain top priorities for Netanyahu. While Israel-Saudi relations impact regional security, Israel’s relations with Russia will have far-reaching consequences for Israel’s security. That is for three reasons. 

First, Putin is at war with the US and the Western world who are Israel’s traditional allies. But Netanyahu is anything but a one-dimensional man. Trust him to turn challenges into new opportunities.  

Second, recapturing the verve in the relationship with Moscow has a  great deal of collateral significance. Russia has become a full-fledged West Asian actor today and, arguably, in certain ways makes a more effective regional partner for Israel than the US. The US’ retrenchment is plain to see and the ensuing decline of its capacity to leverage allies such as Saudi Arabia, the UAE or Egypt hits Israeli interests. 

Third, during these 18 months that Netanyahu was out of office, Russia and Iran have turned around their difficult relationship into a quasi-alliance, thanks to western sanctions against Moscow. Netanyahu senses the folly of the West trying to “erase” Russia. 

The media is discussing a possible deal between Moscow and Tehran over Russia’s Su-35 Super Flanker multi-role 4+ generation fighter jets. What lends an intriguing touch is that the deepening military ties between them coincide with Tehran’s intention to expand its uranium enrichment program. Iran reportedly reached 60% enrichment of  uranium at its Fordow enrichment plant and has reportedly informed the IAEA that it had started to enrich uranium at the higher levels.

Then, there is the Syrian sub-plot where Israel continues to operate in that country’s air space, which Russia controls, largely due to the secret understanding between Netanyahu and Putin whereby Moscow acquiesced with Israeli activities to contain Iran and its militia groups and squash its attempt to turn Syria into yet another “resistance front” like Lebanon or Gaza. 

However, it is the Ukraine war that has dramatically uplifted Russia-Iran strategic ties. Netanyahu realises that the fledgling Russo-Iranian quasi-alliance can be tackled if the Russian dependency on Iranian military technology is rolled back. 

That ultimately requires that the Ukraine war should be brought to an end sooner rather than later and also an easing of western sanctions. Most certainly, the war should not be allowed to run its current indeterminate course. This is precisely where Netanyahu can be expected to concentrate his formidable diplomatic skill. 

The signs are there already. Soon after taking over as the new foreign minister in Netanyahu’s cabinet, on Monday, Eli Cohen stated that he was planning to have a conversation with his Russian counterpart Sergey Lavrov on January 3. 

The manner in which way Cohen framed this disarmingly simple proposition during his inaugural speech (which was broadcast live by Israeli Foreign Ministry’s press service) needs to be carefully noted: “Tomorrow, I am supposed to talk with Russian Foreign Minister Sergey Lavrov and later on with other European ministers.” 

Earlier, in a recent speech, Cohen hinted that on the issue of Russia and Ukraine, Netanyahu government will be discreet in its public utterances, pointing toward a major course correction toward engaging  Russia. The outgoing Israeli PM Yair Lapid had condemned Russia publicly. Since the Russian operation in Ukraine began on February 24, Lapid as FM never once spoke with Lavrov — or with Putin, while officiating as interim PM. 

However, even under Lapid, Israel’s pro-Kiev policies did not go far beyond rhetoric. The Israeli ambassador to Kiev, Michael Brodsky told Washington Post recently that Israel’s relations with Russia are creating “limits that cannot be overcome.” Brodsky added that Israel is aware of the “frustration of some Ukrainian Jews,” but “no government in Israel is going to jeopardise this interest [with Russia] for anybody else, including the Ukrainians.” Brodsky also noted that Israel’s situation is “fragile,” as it is not part of NATO, and most Ukrainian Jews understand that Israel is in a “tough position.”

For Israel, Russia is not like any country. Russian-speakers constitute 15% of Israel’s population. It is an influential constituency in Israeli domestic politics and has kinship with the Jewish population in Russia. Russian investment in Israel is rather substantial and it is an open secret that Russia’s oligarchs viewed Israel as a home away from home. 

Truly, the umbilical chords that tie Russian culture and history with Jerusalem cannot easily be ruptured. Only last week, Moscow reiterated its demand to reclaim Russian assets in Israel. Former prime minister Sergei Stepashin who handles the issue announced in Moscow that Russia will submit a claim to Israeli court for the Church of Mary Magdalene, Chapel of the Ascension, and the Viri Galilaei Church!

Putin has also demanded an end to the litigation preventing the transfer of Alexander Nevsky Church in the Old City, after commitments made by Benjamin Netanyahu during a previous term as prime minister. Conceivably, such demands are part of internal Russian politics as well. 

The Kremlin feels elated that Netanyahu is back in the diplomatic circuit. What is most gratifying will be that unlike the previous Israeli set-up, Netanyahu will not passively accept a subaltern role in the US-Israeli partnership. 

Netanyahu has extensive networking with American elites and he won’t hesitate to leverage it if Israeli interests are at stake. And, without doubt, Israel is a stakeholder in the Ukraine crisis and Israeli interests are well served by creating space for peace talks to commence between Moscow and Kiev. 

Netanyahu has Putin’s ears and can play a role for the Biden Administration, too, like no other western leader can perform today. On the other hand, Iran’s nuclear programme is turning into a fuming volcano and a point may come very soon when Netanyahu will be compelled to act. And that could happen in the 2024 election year, something that the Biden Administration can ill-afford to see happening. Suffice it to say, the Ukraine conflict and Iran’s bomb are joined at the hips, as it were. 

Putin said in a message to Netanyahu on Thursday, “In Russia, we greatly appreciate your personal and longstanding contribution to strengthening friendly relations between our countries.” Russia’s foreign ministry said it was “ready for constructive cooperation” with Israel to “clear up the climate in the Middle East and the international scene in general”.

On December 22, Putin called Netanyahu to congratulate him on his election victory and the establishment of a new government, while Netanyahu’s office disclosed in a statement that the conversation mainly revolved around the conflict in Ukraine. Netanyahu told Putin he hopes a resolution to end hostilities will be found as soon as possible, and the consequent suffering.

Netanyahu also told Putin that he is determined to prevent Iran from obtaining nuclear weapons and curb Tehran’s attempts to establish military presence in Lebanon and Syria along Israel’s northern border. 

To be sure, Putin is all ears and eyes for Netanyahu. The point is, Moscow gains if diplomacy reappears on the wasteland of Ukraine issue. Certainly, it is  far from the case that Russia is enjoying the destruction of Ukraine or the sorrows of the fraternal people. 

Source: India Punchline

Russia, Iran open a trade route heralding a bloc

/
499 views
4 mins read

Consequent upon the Ukraine war, as the Sea of Azov becomes an inland sea for Russia, bracketed by the Crimean Peninsula and the mouth of the River Don, the sea and rail networks of the region extend to Iranian hubs on the Caspian Sea and ultimately lead to the Indian Ocean. A feature article in Bloomberg last week titled Russia and Iran Are Building a Trade Route That Defies Sanctions brings to centre stage this “sanctions-busting” project in the region. 

Last month, Mehr News Agency reported that a first 12 million–ton shipment of Russian grain bound for India already transited Iran. The time has come for the inland trade corridor known as the International North-South Transport Corridor or the INSTC, which was launched in 2000 to connect the Baltic Sea with the Indian Ocean. 

Ironically, the West’s “sanctions from hell” against Moscow roused the INSTC to life. Moscow is currently finalising the rules that would give ships from Iran the right of passage along inland waterways on the Volga and Don rivers!  

The INSTC was conceived as a 7,200 km-long multimodal transportation network encompassing sea, road, and rail routes to move freight between Russia, Central Asia and the Caspian regions, Iran and India. At its core, this is a Russian-Iranian project who are stakeholders in countering the West’s weaponisation of sanctions. 

But there is much more to their congruent interests. The Western sanctions motivate them to look for optimally developing their economies, and both Russia and Iran are pivoting to the Asian market, and in the process, a new trading bloc is forming that is completely free of Western presence. “The goal is to shield commercial links from Western interference and build new ones with the giant and fast–growing economies of Asia, ” Bloomberg noted. 

Speaking to a group of senior Russian editors on Monday in Moscow, Foreign Minister Lavrov said, “Rest assured that in the near future, we will see a serious drop in the West’s ability to ‘steer’ the global economy the way it pleases.  Whether it wants it or not, it will have to sit down and talk.” This is the crux of the matter — force the western powers to negotiate. 

In the near term, INSTC’s takeoff will depend on some big projects. On Monday, the Russian Deputy Prime Minister Alexander Novak spoke about an energy grid involving Russia, Iran and Central Asia and the South Asian region. 

Novak said, “A constant influx of national currencies gives confidence to the market. At the beginning of the year, we faced a situation where it was not very clear what to do with these currencies. At the moment, they are traded on the stock exchange and ensure mutual trade turnover… If at the beginning of the year this flywheel swayed very hard, then in just a few months it became commonplace, and we began to trade steadily in national currencies.” De-dollarisation provides an underpinning of the INSTC. This is one thing. 

Second, Novak made the disclosure that Russia and Iran may reach an agreement on swap supplies of oil and gas by the end of this year. As he put it, “If we talk about perspective, this includes exports of gas to Afghanistan, Pakistan — either using the infrastructure projects of Central Asia, or through a swap from the territory of Iran. That is, we will receive their gas in the south of the country [Iran], and in exchange we will supply gas to the north for Iranian consumers.” 

Novak added, “We expect around 5 mln tons [of oil] per year and up to 10 bln cubic meters [of gas] at the first stage.” Pakistan is interested in sourcing Russian gas. Novak referred to Russia’s agreement with Azerbaijan, which is set to increase gas supplies, and “when they increase gas production, we will be able to discuss swaps.” 

Pakistan has an inherent advantage, as all the participating countries of the INSTC except India also happen to be members of China’s Belt and Road Initiative. At some point early enough, the two designated Iranian ports in the INSTC — Bandar Abbas and Chabahar — will likely get linked to Gwadar Port, which is the gateway to the China-Pakistan Economic Corridor [CPEC] leading to Xinjiang, and an important component of the BRI. 

Clearly, the INSTC will spawn a web of international economic corridors. Iran is destined to become the hub of converging strategic interests with significant economic dimensions that will determine new alliances and impact the geopolitics of South and West Asia in the 21st century.

The US has been waging an information war to debunk the CPEC and fuel anti-China sentiments in the Pakistani public opinion. But it is a hopeless endeavour to malign the INSTC as a geopolitical project and impractical to threaten regional states from associating with what is an intercontinental trade route that is no single country’s franchise. After all, how to sanction a trading bloc? 

The facts speak for themselves. The INSTC trials carried out to transport containers from Mumbai to St Petersburg using the trade corridor are able to reduce the delivery time of cargo from 45 days to 25 days at 30% cheaper rates than via Suez Canal, justifying the hopes for enhanced connectivity and utility of the corridor. Clearly, the trade potential of INSTC is immense.

However, Russia and Iran are determined to decouple the West. Lavrov said on Monday, “We can no longer rely on these people.  Neither our people nor history will forgive us if we do… we too openly and naively put our faith in the assurances that we heard in the early 1990s about a common European home and the need for an international division of labour that would rely on the best performance and competitive advantages of each country, so that, by pulling our efforts together and saving resources, we would be able achieve the best and cost-effective results. All of that was empty talk.” 

Iran and Eurasian Economic Union [comprising Russia, Belarus, Kazakhstan and Kyrgyzstan] have reportedly finalised the terms for a free trade agreement involving more than 7,500 types of commodities. A market as big as $700 billion is opening up to Iranian products and services as of the next Iranian year [starting March 21, 2023]. 

The FTA encourages free movement of goods and services, and provides for common policies in the macroeconomic sphere, transport, industry and agriculture, energy, foreign trade and investment, customs, technical regulation, competition, and antitrust regulation. It will be a game changer for the INSTC,  transforming the power dynamic in the vast Eurasian landmass and the Gulf region. The INSTC signifies a strategic axis between Russia and Iran built around a trade route heralding a non-western trading bloc of free-wheeling regional states with common interests in resisting western hegemony.  

Moscow’s Leverage in the Balkans

/
629 views
7 mins read

Since September, Kosovo’s fragile stability that has endured since 1999, following intervention by the North Atlantic Treaty Organization (NATO), has grown progressively precarious. Clashes between ethnic Serbians and Kosovo security forces saw Serbia’s military placed on high alert in November. Several high-profile Serbian officials, including President Aleksandar Vučić, announced that the Serbian military could be deployed to northern Kosovo to protect the ethnic Serbs, who make up the majority of the population in the region.

Moscow has natural incentives to provoke the crisis. An unraveling of regional security would create more obstacles for Serbia’s EU aspirations, optimistically slated for 2025. The West’s support for Kosovo has historically undermined Serbia’s European integration effort, and 51 percent of Serbs polled by Belgrade-based pollster Demostat in June 2022 said they would vote against EU membership in a national referendum.

But by escalating tensions, Russia can also prevent further EU and NATO expansion in the region, and potentially reduce Western pressure on Russian forces in Ukraine by diverging resources from Kyiv to the Balkans.

Throughout the 1990s, NATO took a leading role in the breakup of Yugoslavia, perceived to be dominated by Serbia. While the West supported Bosnian and Croatian independence initiatives and Kosovan autonomy, Serbia was supported by Russia. These policies led to considerable tension between NATO and Russia, with the Kremlin’s occupation of Kosovo’s Slatina airport in 1999 leading to “one of the most tense standoffs between Russia and the West since the end of the Cold War.”

However, Russia was too weak to adequately support Serbia in the 1990s. And after then-Yugoslavian President Slobodan Milošević was overthrown in 2000 and Russian forces withdrew from Kosovo in 2003, Serbian political elites instead pursued cautious integration with Europe while keeping the U.S. at arm’s length. At the same time, Serbia and Russia forged closer relations through growing economic ties, embracing their common Slavic Orthodox heritage, and sharing resentment toward NATO’s role in their affairs.

Territories under Serbian control continued to secede in the 2000s, with Montenegro peacefully voting for independence in 2006 and Kosovo in 2008. Yet unlike other secession initiatives in the former Yugoslavia, Kosovo’s failed to gain universal recognition. Almost half of the UN General Assembly refused to recognize Kosovo’s independence, with NATO/EU members Spain, Greece, Slovakia, and Romania among them.

Moscow was firmly against Kosovo’s independence, and prior to the February 2008 declaration of independence, the Kremlin warned of geopolitical consequences if it were to move forward. Six months later, Russia invoked the “Kosovo Precedent” to invade Georgia and recognized the separatist territories of Abkhazia and South Ossetia as independent. The Kremlin is now using the same paradigm to justify its support for Russian-backed separatist territories in Ukraine.

Currently bogged down in Ukraine, the Kremlin is exploring fomenting additional unrest in the Balkans by exploiting Serbian nationalist sentiment. Doing so will undoubtedly redirect some Western political, economic, and military efforts away from Ukraine.

Russia’s influence over Serbia has grown in recent years, and Serbian politicians have become more assertive regarding northern Kosovo. Though overall trade between Russia and Serbia is negligible in comparison to the EU, Russia provides one-quarter of the oil imported to Serbia, while Gazprom finalized 51 percent share in Serbia’s major oil and gas company, Naftna Industrija Srbije (NIS), in 2009.

Russia’s veto power at the UN Security Council has prevented greater international recognition of Kosovo, demonstrating Moscow’s usefulness as a diplomatic ally. Putin has, meanwhile, become Serbians’ most admired international leader, with pro-Putin and pro-Russia rallies having been held in Serbia since the invasion of Ukraine. According to recent polling, almost 70 percent of Serbians hold NATO responsible for the conflict.

Balancing Putin’s popularity and Serbia’s relations with Europe has been a delicate task for Serbian President Vučić. Though he condemned the Russian invasion of Ukraine, he refused to implement sanctions against the Kremlin, prompting German Chancellor Olaf Scholz to signal that Vučić had to make a choice between Europe and Russia in June.

But the Serbian leader had already signed a three-year gas deal with Russia in May, and in September agreed to “consult” with Moscow on foreign policy issues. Other ventures, such as doubling flights from Moscow to Belgrade, have demonstrated Serbia’s willingness to assist Russia in undermining Western sanctions.

More concerning to Western officials is Russia’s attempts over the last decade to alter the military balance between Serbia and Kosovo. A Russian humanitarian center located in the Serbian city of Niš, which is close to the Kosovo border and opened in 2012, is suspected of being a secret Russian military base “set up by the Kremlin to spy on U.S. interests in the Balkans.” Additionally, Serbia has increased imports of Russian weaponry, while joint military exercises between Russia, Belarus, and Serbia (labeled “Slavic Brotherhood”) have been held annually since 2015.

Russian-backed non-state actors have in turn become increasingly present in Serbia. In 2009, Russian private military and security companies, as well as organizations composed of Russian military veterans, began conducting, in coordination with Serbian counterparts, military youth camps in Zlatibor, Serbia. These were seen as attempts to develop the next generation of fighters and were eventually shut down by the local police in 2018.

Russia’s Night Wolves biker gang, which has played a pivotal role in the 2014 seizure of Crimea and the unrest that has followed in Ukraine since, also opened a Serbian chapter and conducted road trips in the region for years. And in December, a cultural center was opened by the Russian private military company Wagner—which is similarly fighting in Ukraine—in Serbia, “to strengthen and develop friendly relations between Russia and Serbia with the help of ‘soft power.’”

Using these forces to threaten a low-level insurgency in Kosovo would cause enormous alarm in NATO and the EU. But Russia’s efforts to fan the flames of Serbian nationalism will also be directed toward Bosnia and Herzegovina. The country’s Serb-dominated territory, Republika Srpska, accepted power-sharing stipulations as part of the Dayton Peace Agreement in 1995, and Russian forces similarly withdrew from the country in 2003.

Nonetheless, Milorad Dodik, president of Republika Srpska (who was also the president from 2010-2018), has increasingly allied himself with the Kremlin and has taken greater steps toward declaring his region’s independence from the rest of Bosnia and Herzegovina over the last decade. Republika Srpska security forces are now well-equipped with Russian weaponry, while Moscow has given subtle approval to supporting and developing Republika Srpska paramilitary groups. A Bosnian-Serb militia group called Serbian Honor is believed to have received training at the humanitarian center in Niš and the Night Wolves have also repeatedly held rallies in the territory.

Since the beginning of the Russian invasion of Ukraine, Dodik has expressed his support for Russia, raising alarm over his ability to instigate unrest in Bosnia and Herzegovina with limited Russian state and non-state support. In response, the EU’s peacekeeping mission in the country, EUFOR or Operation Althea, almost doubled its presence from 600 to 1,100 since the invasion in February.

Yet this still pales compared to the NATO-led Kosovo Force (KFOR), which has roughly 3,700 troops in a country with a smaller population and less territory than Bosnia and Herzegovina, and is further aided by the EU Rule of Law Mission in Kosovo (EULEX). Pushing Republika Srpska’s independence initiative to a point where Russia can officially recognize and support it may in turn rapidly overwhelm the smaller international force there. It would also provoke calls for independence among Bosnia and Herzegovina’s ethnic Croatian minority, whose leaders have close relations with Moscow.

Disagreements in the Western alliance over the collective approach to the Balkans have been revealed in recent months. While the UK and the U.S. placed sanctions on “various Bosnian politicians who are threatening the country’s territorial integrity,” the EU chose not to, notably due to opposition by Slovenia, Croatia, and Hungary. And while Croatia was accepted into the Schengen area in December, Romania, and Bulgaria, already EU members since 2007, were denied entry by Austria, while the Netherlands similarly opposed Bulgaria being part of the Schengen area.

Effectively managing potential violence in the former Yugoslavia while continuing the integration efforts of other Balkan EU/NATO members would prove to be a difficult procedure for the Western alliance. Billions of dollars in aid and assistance have already been provided to Ukraine in 2022. Confronting additional instability in the Balkans would also highlight the flaws of NATO policy in the region since the 1990s and the lack of a viable, long-term solution to confront the issues plaguing the Balkans.

Yet regional integration efforts have picked up in recent months. In July, the EU restarted membership talks of bringing Albania and North Macedonia into the organization, Bosnia and Herzegovina was officially accepted as a candidate on December 15, and Kosovo applied for EU membership on December 14. NATO membership for both Kosovo and Bosnia and Herzegovina remains largely on hold, however, and is currently out of the question for Serbia, which considers NATO its “enemy.”

Considerable work will be required to integrate these divided states into the Western alliance, and recent attempts to speed up this process have been largely unsuccessful. The scheme by former President Donald Trump’s administration to change the Serbia-Kosovo border amounted to little, while the proposed Association of Serb Municipalities in Kosovo has been criticized for outlining the creation of another Republika Srpska.

The role of Russian intelligence and Serbian nationalists in the attempted coup in Montenegro in 2016, which sought to derail the country’s NATO accession, reveals the lengths to which Moscow will go to achieve its aims. Western officials must, therefore, remain wary of Russia’s potential in the region. Escalating unresolved Balkan conflicts is now a major part of the Kremlin’s attempts to stall Western integration in Europe and take pressure off its war with Ukraine.

This article was produced by Globetrotter

Modi ignores West’s sanctions on Russia

/
456 views
4 mins read

Prime Minister Narendra Modi’s call with Russian President Vladimir Putin on Friday marks a new stage in the bilateral relationship between the two time-tested friends, both contextually and from a long-term perspective.

The media may find it alluring to link Modi’s call to Ukraine developments despite the Indian and Russian readouts (here and here) making it clear that Russian-Indian bilateral relations dominated the conversation. 

Nonetheless, it is very significant that Modi was not deterred by the fact that although this is not era for wars, the Ukraine conflict in all probability will only escalate, and there is a greater likelihood than ever before that Russia may be compelled to seek a total military victory, as the US is leaving it with no option by doggedly blocking all avenues for a realistic settlement and is furtively climbing the escalation ladder. 

Without doubt, the Biden Administration’s reported decision to deploy Patriot missile in Ukraine is a major escalation. Moscow has warned of “consequences.” Again, Moscow has confirmed that the US planned, masterminded and equipped Ukraine with the military capability to attack deep inside Russian territory — hundreds of kilometres, in fact — including against base at Engels where Russia’s nuclear-capable strategic bombers are stationed. The two superpowers never before targeted each other’s nuclear assets. 

So, there is no question that Modi’s initiative at this point in time to discuss “the high level of bilateral cooperation that has been developing on the basis of the Russian-Indian privileged strategic partnership,” including in key areas of energy, trade and investments, defence & security cooperation, conveys a huge message in itself.

It quietly underscores a medium and long term perspective on the Russian-Indian relationship that goes far beyond the vicissitudes of the Ukraine conflict. Put differently, India will not allow its long-standing ties with Russia to be held hostage to Western sanctions. 

For India, the reorientation of Russian economic diplomacy toward the Asian region presents huge business opportunities. Who would have thought nine months ago that Russia was going to be the largest supplier of oil to India, leapfrogging Iraq, Saudi Arabia and the US? According to Reuters, India purchased about 40% of all export volumes of Russian Urals grade oil transported by sea in November, when European countries accounted for 25%, Turkey 15% and China 5%.

The figures speak for themselves: in November, while Russia supplied 909,000.4 barrels of crude oil to India per day, the corresponding figures were for Iraq (861,000.4), Saudi Arabia (570,000.9), and the US (405,000.5) Suffice it to say that when Modi upfront listed energy as his talking point with Putin, it reconfirms that India is giving a wide berth to the G7’s hare-brained scheme to impose a price cap on Russian oil exports. 

But all good things have a flip side to it. As the volume of India-Russia trade shoots up — with Russia emerging as India’s seventh largest trading partner, rising from 25th place — the imbalance in the bilateral trade is also widening, as Moscow prioritises India (and China) as preferred trading partners. 

EAM Jaishankar’s recent Moscow visit focused on a list of 500 items that Russia would be keen to source from India. Importantly, this is also about a supply chain for Russian industry / economy. Jaishankar reportedly gave an interim reply of India’s readiness to start supplying spare parts necessary for airplanes, cars and trains.

Some Russian experts have talked about India as a potentially significant “trans-shipment” state for Russia’s “parallel imports” — that is, Russia can buy not only Indian goods from India but also products from third countries.

Meanwhile, turning away from the European market, Russia also seeks business opportunities for its export basket that includes mineral products, precious metals and products made from them, aluminium and other non-ferrous metals, electric machines, vehicles, pharmaceutical, chemical, rubber products, etc. 

Clearly, there are systemic issues to be addressed such as transportation logistics; payment mechanism, collateral sanctions. However, for the near term, all eyes are on the Russian oil exports to India in the time of the G7 price cap. 

The Russian government daily Rossyiskaya Gazeta reported on Tuesday, “It is expected that Russia, in response to the price ceiling, will adopt an official ban on selling oil under contracts where the “ceiling” will be mentioned or the marginal price for our oil will be indicated.” That is, Moscow will insist on an embargo on supplies basically restricted to the G7 and Australia. 

China and India are  not affected, as they haven’t joined the price cap. The following excerpts from the Moscow daily outlines the state of play:

“There are no real mechanisms that could enforce these [G7] restrictions… already, about a third of Russian oil exports leave Russian ports without indicating the final destination. That is, a so-called “grey trade zone” is growing before our eyes, which allows traders to purchase Russian raw materials without the risk of falling under secondary sanctions… discount [ie., fair prices] allows the Asia-Pacific countries, primarily China and India, to increase purchases of Russian raw materials.” 

The fascinating part is that not only is the so-called “grey zone” expanding steadily but alongside, other suppliers have begun to adjust to the prices of Russian oil in the Asia-Pacific region — that is, to the real equilibrium prices or discounted prices. Curiously, even Western countries are in a position to receive relatively inexpensive Russian oil through third parties.

The bottom line is that the Biden administration’s goal was not to limit the volume of Russian oil exports but focused on the revenues of the Russian budget from oil production and the world oil market. Rissyiskaya Gazeta concludes: “In fact, so far what is happening does not contradict either our aspirations or the desires of the United States.” [See my article Race for Russian oil begins, The Tribune, Nov. 28, 2022]

This new-found pragmatism in the US calculus about the limits to sanctions took a curious turn in Thursday when the US blacklisted the Russian billionaire-oligarch Vladimir Potanin but exempted two of his biggest assets from the purview of sanctions — MMC Norilsk Nickel and Tinkoff Bank — on the specious ground that his holdings are less than 50% in these two companies [but are only 35%!]   

Why so? Because, MMC’s share in the world market of high-grade nickel is 17%, palladium 38%, platinum 10%, rhodium 7%, copper and cobalt 2% each; and, sanctioning the Russian company could sharply aggravate the world market for non-ferrous metals and can hurt US manufacturers. 

Clearly, the law of diminishing returns is at work in the continued weaponisation of sanctions against Russia. Indian business and industry should pay close attention to Modi’s far-sighted initiative on Friday.

US internationalises Iran’s unrest

/
552 views
5 mins read

The ongoing unrest in Iran since mid-September following the death of a Kurdish woman in police custody shows no signs of abating as of now. The unrest has drawn support from all social strata and assumed anti-government overtones. The efficacy of suppressing the unrest is doubtful. Iran is entering a period of turmoil. 

Indeed, the government faces no imminent threat but seems cognisant of the imperative need to address the hijab policy to pacify the protestors. As the protests continue, many women are walking on the streets of cities across Iran, especially in Tehran, without head coverings.

There is a long history of Western countries fuelling public unrest in Iran. Regime change agenda must be there in the western calculus but,  curiously, Washington is also signalling interest in reaching an accommodation with Tehran under certain conditions relating to the regime’s foreign and security policies in the present international milieu. 

Iran’s Foreign Minister Hossein Amirabdollahian stated explicitly on Monday that the US and a number of other Western countries have incited riots, because “one of the US’ objectives was to force Iran to make big concessions at the negotiating table” for the revival of the JCPOA. Amirabdollahian’s remark followed some megaphone diplomacy by Rob Malley, the US special envoy on Iran last weekend.

Speaking in Rome, Malley connected the dots and outlined the linkages in the matrix. He said: “The more Iran represses, the more there will be sanctions; the more there are sanctions, the more Iran feels isolated. The more isolated they feel [isolated], the more they turn to Russia; the more they turn to Russia, the more sanctions there will be, the more the climate deteriorates, the less likely there will be nuclear diplomacy. So it is true right now the vicious cycles are all self-reinforcing. The repression of the protests and Iran’s support for Russia’s war in Ukraine is where our focus is because that is where things are happening, and where we want to make a difference.”

In effect, Malley admitted that the Biden Administration is a stakeholder in the ongoing protests in Iran. Importantly, he also hinted that although Iran has taken a series of fateful decisions that make a full revival of the nuclear deal and a lifting of some economic sanctions a political impossibility for now, the door to diplomacy is not shut if only Iran’s leadership changed course on relations with Russia. 

In further remarks to Bloomberg on Saturday, Malley said that “Right now we can make a difference in trying to deter and disrupt the provision of weapons to Russia and trying to support the fundamental aspirations of the Iranian people.” 

As he put it, Washington now aims to “disrupt, delay, deter and sanction” Iran’s weapon deliveries to Russia, and any supplies of missiles or assistance in the construction of military production facilities in Russia “would be crossing new lines.” 

In sum, Malley has linked the US approach toward Iran’s protests with Tehran’s foreign and security policies in regard of Russia and its war in Ukraine. 

The first signs that the US intelligence was focusing on Iran-Russia military ties — in tandem with its Israeli counterpart, of course —appeared in late July, when the US National Security Advisor Jake Sullivan made an allegation during a media briefing at the White House that Iran wanted to sell weapons-capable unmanned aerial vehicles to Moscow. 

Sullivan claimed that Iran was already training Russian personnel in using the drones. Within the week, Sullivan doubled down on that allegation. 

The timing of Sullivan’s disclosure must be noted carefully — coinciding with a visit to Tehran by Russian President Vladimir Putin on July 19. Putin’s talks with the Iranian leadership messaged a strategic polarisation under way between Moscow and Tehran with far-reaching consequences for regional and international politics. 

Putin’s discussions ranged from the ongoing conflicts in Ukraine and Syria to the legality of Western-led sanctions regimes, de-dollarisation, geopolitics of energy, the International North-South Transport Corridor, defence cooperation and so on, anchored on the congruent interests of the two countries on a number of important strategic and normative issues. 

Following up Putin’s discussions, Iran’s armed forces Chief of Staff, General Mohammad Bagheri travelled to Moscow in mid-October. Gen. Bagheri met Russian Defense Minister Sergei Shoigu, which signalled that the military relations between the two countries was acquiring an irreversible momentum

A fortnight after Gen. Bagheri’s visit, Russian Security Council secretary Nikolai Patrushev came to Tehran to discuss “various issues of Russian-Iranian cooperation in the field of security, as well as a number of international problems,” according to Interfax news agency. 

Russian state media said Patrushev discussed the situation in Ukraine and measures to combat “Western interference” in both countries’ internal affairs with his Iranian security counterpart Ali Shamkhani. Patrushev also met with Iran’s president Ebrahim Raisi. 

Meanwhile, Washington senses that there is disharmony within the Iranian establishment on how to handle the protests, and, in turn, this is sharpening the internal Iranian debate about the wisdom of growing alliance with Russia vis-a-vis re-engaging with the West in a fresh attempt to revive the nuclear deal. 

Clearly, Malley’s remarks hinted that amidst the US’ support for protests in Iran, it still remains open to doing business with Tehran if the latter rolls back its deepening strategic partnership with Moscow and refrains from any involvement in the conflict in Ukraine. 

In fact, head of the International Atomic Energy Agency Rafael Grossi (who holds Washington’s brief) also chipped in with a remark on Monday that the UN watchdog has no evidence that Iran is pursuing a nuclear weapon programme, implying that the resumption of negotiations in Vienna faces no “systemic” block. 

That said, Tehran’s cooperation with Moscow on foreign and security policy policies is of long-term consequence to Iran and there is no question of the Iranian leadership putting all its eggs in the American basket. For Russia, too, the partnership with Iran is of strategic importance in the conditions of multipolarity. 

Significantly, Iranian media has reported that Iran’s nuclear negotiator and deputy foreign minister Ali Bagheri Kani visited Moscow last weekend and met his Russian counterpart Sergei Ryabkov in Moscow to “discuss the prospects of full-scale implementation” of the JCPOA (2015 nuclear deal) “in order to strengthen the approach of multilateralism and confront unilateralism and adhere to the principles contained in the United Nations Charter” as well as the two countries’ “efforts to prevent instrumental political abuse and selective treatment of human rights issues by Western powers.” 

The official news agency IRNA later reported from Tehran quoting Bagheri Kani that the two sides “reviewed bilateral relations over the past months and created frameworks and mechanisms in agreement with each other for developing relations.” He mentioned Syria, South Caucasus and Afghanistan as areas of cooperation between Tehran and Moscow. 

Most certainly, the latest round of Iran-Russia consultations was noted in Washington. On Saturday, the Director of National Intelligence in the Biden Administration Avril Haines held out a veiled threat that while Iranian leaders may not see the protests as a threat now, they could face more unrest because of high inflation and economic uncertainty. She said, “We see some kind of controversies even within them about exactly how to respond — within the government.”

On the other hand, Bagheri Kani’s consultations in Moscow would have taken into account the large-scale US-Israeli air exercises last Tuesday simulating strikes on the Iranian nuclear program. The Israeli military said in a statement that joint flights of four Israeli F-35i Adir stealth fighter jets that accompanied four US F-15 fighter jets through Israel’s skies simulated “an operational scenario and long-distance flights.”

The statement added, “These exercises are a key component of the two militaries’ increasing strategic cooperation in response to shared concerns in the Middle East, particularly those posed by Iran.” 

The US-Israeli exercises underscores the criticality in the situation surrounding Iran. Tehran’s shift to enrichment at 60% causes disquiet in Washington. But a military strike on Iran is fraught with unpredictable consequences not only for West Asian region but also the global oil market, which is facing uncertainties due to the US attempt to put a price cap on Russian oil. 

The bottom line is that the protests in Iran are assuming the proportions of a casus belli. The US has internationalised Iran’s internal upheaval. 

Sanctions Batter Russia as the Kremlin Attempts to Overcome Them

/
630 views
6 mins read

Immediately after the Russian invasion of Ukraine in February 2022, the U.S., the UK, and the EU placed major sanctions on Russia to constrict its economy and restrain its war effort. Having been updated several times since, these sanctions have compounded the effects of the previous sanctions placed on Russia in 2014 after it annexed Crimea.

The Russian “economy contracted for the second quarter in a row,” according to a November 16 article in the Financial Times, which attributed this downturn to the Western sanctions. Undermining the sanctions through a variety of methods, including cooperating with other countries with sanctions evasion experience, has become an even greater priority for the Kremlin.

Russia has decades of history in helping other countries evade sanctions. In recent years, Russia has exported oil to North Korea and employed its laborers in Siberia in violation of international sanctions, while Russian entities have also been sanctioned for aiding North Korea’s weapons programs.

The Kremlin is now calling in its own favors. Weeks after North Korea and Russia pledged “to strengthen ties” in August 2022, North Korea is believed to have supplied Russia with millions of rockets and artillery shells, undermining Western attempts to isolate the Russian military-industrial complex.

Using North Korean laborers to help rebuild Donetsk and Luhansk—Russian-supported eastern Ukraine breakaway republics—has also been proposed. Additionally, Moscow has recently shown greater enthusiasm toward cryptocurrencies to evade sanctions, and may also look to emulate North Korea by mining bitcoin to increase its access to fiat currencies and facilitate underground trade.

Iran has faced heavy Western sanctions since 1979, aimed at restricting its economy and curbing its weapons programs. In November, Iran was suspected of asking Russia for aid with nuclear energy materials, which could significantly shorten the “breakout time” needed to create a nuclear weapon.

Russia will likely acquiesce, having received significant drone and missile shipments from Iran since September. With the “price cap on Russian seaborne oil” coming into effect from December 5 (and the ban on most petroleum products expected to take place by February 5, 2023), Iran’s assistance in evading oil sanctions will be greatly appreciated in Moscow.

Iranian oil exports, for example, plummeted by 90 percent following the reintroduction of sanctions after former President Donald Trump’s administration pulled out from the Iran nuclear deal, the Joint Comprehensive Plan of Action, in 2018. However, a mix of tactics has allowed Iranian oil exports to rebound in the years since.

These included sanctioned ship-to-unsanctioned ship transfers, changing ship names and other identification markers to disguise Iranian oil tankers, turning off Automatic Identification Systems to make sanctioned ships completely vanish off the radar, and blending Iranian oil with bulk cargoes from other countries to disguise its origin.

Oil giant Shell faced criticism in April for undermining sanctions by purchasing “Latvian blend” oil, almost half of which (49 percent) originated from Russia. The UK has also received hundreds of millions of dollars of Russian oil since its invasion of Ukraine, even as some of this oil “was registered as imports from Germany, Belgium, and the Netherlands.”

Russian and Iranian officials have also discussed using Iran as a “backdoor” to allow Russian oil products to enter global markets, which will become easier should a renewed nuclear deal between Iran and Western states go through.

Russian entities have similarly shown effectiveness in getting sanctioned Venezuelan oil to global markets in recent years. After Russian oil giant Rosneft was sanctioned in 2020 for doing so, the Kremlin quickly created a new oil company, Roszarubezhneft, to continue operations after Rosneft left Venezuela.

With Russian assistance, Venezuela’s oil exports doubled from December 2020 to December 2021, finding many other facilitators and buyers in the global market. In 2021, the U.S. Treasury sanctioned several European oil traders who were working with a Mexican network that was shipping Venezuelan oil to companies in China, Indonesia, and other countries in Southeast Asia.

Creating shell companies has also historically blunted the effectiveness of sanctions. Syrian officials have created countless shell companies to blur ownership of economic assets in recent years, and Iranian clearing houses and foreign-registered front companies have conducted tens of billions of dollars in sanctions-evading trade annually, according to Politico.

Western banks, like Germany’s Commerzbank AG and Deutsche Bank AG, and the U.S.’ Citigroup, often unknowingly, helped Iran conduct underground export transactions and may face Russian attempts to use these banks to facilitate similar transactions—“either wittingly or unwittingly.” Russian oligarchs also have plenty of connections to Western financial actors and the ability to expand their economic empires in other countries.

Nonetheless, the ambitious Russian oil price cap that has been introduced on December 5 has worried some in Moscow as “About 95 percent of the world’s tanker liability coverage is arranged through a City of London-based insurance organization called the International Group of Protection and Indemnity Clubs.” Russia will struggle to export large volumes of oil without the insurance coverage required to secure its transport options, and Western officials hope Moscow will accept shipping oil at a reduced price rather than find other alternatives.

Lifelines, however, exist for the Kremlin. Former Russian President Dmitry Medvedev stated in June 2022 that the Russian government would “replace commercial insurance and reinsurance cover of oil exports by sea and the vessels that carry them in a bid to counter the European Union ban on companies providing services.” This would be similar to the measures the Japanese government took in 2012 when it provided “a sovereign guarantee of up to $7.6 billion in liability for a tanker carrying Iranian oil” to maintain trade with the country.

Additionally, “There are probably insurers in Russia capable of writing third party liability and reinsurance programs that could then be backed by a sovereign fund from China or Russia,” according to Mike Salthouse, chairman of the International Group’s sanctions subcommittee.

Indian companies also agreed to certify Russian tankers in June, raising suggestions of “a non-Western fleet with sovereign Russian or Chinese insurance and financing, and Indian certifications for the vessels.” Shipping companies and maritime services based in India, China, and the Arabian Gulf would be essential for Russia to successfully achieve this.

Russia is also using former Soviet states to bypass sanctions. In May, Ukraine accused Georgia, Armenia, and Azerbaijan of helping Russia reexport its products to international markets after more than 200 companies were established and tens of thousands of Russians settled in these countries in the months after the February invasion.

Smuggling routes through Central Asia have historically facilitated the northern drug trade route to Europe. But these routes have also allowed Central Asian states to emerge as integral entry points for Western technology sought by Russia in recent months, including microcircuits and semiconductors.

Five Russian nationals were charged with sanctions evasion in October for shipping military technologies, including semiconductors, radars, satellites, and other equipment, from U.S. manufacturers to Russia. Tens of millions of dollars were spent to supply U.S.-origin technologies for use in Russian fighter aircraft, missile systems, smart munitions, and other systems. The deals were facilitated through a mix of real and fake companies and falsified documents, while cryptocurrencies were used for the transactions and to launder the proceeds afterward.

Three Latvian and Ukrainian nationals were also charged in October for attempting to ship U.S. technology for use in Russia’s nuclear and defense industries, in violation of U.S. export controls. Though unsuccessful, the brazenness of Russian networks attempting to penetrate the U.S. points to greater success in other countries with higher bribery rates and laxer inspection policies.

Isolating Russia will also require the assistance of other major economic centers. But China has received resources from IranVenezuela, and North Korea in recent years in violation of U.S. sanctions, and is already pursuing the same policies with Russia. Small refiners in China are able to ignore the risk of U.S. penalties since they are “hard to reach with sanctions,” according to Anders Corr, founder of Corr Analytics.

In July, India set up a framework to conduct international trade in rupees. Vostro accounts required to facilitate this trade have been opened by Russia’s Gazprombank (with India’s UCO Bank), VTB Bank, and Sberbank, with six more Russian banks in talks to do so. A major gas pipeline deal with Pakistan, an agreement to use local currencies in trade with Egypt, and increased energy exports to Brazil in recent months have further demonstrated Russia’s attempts to diversify its economic options.

Beijing will also look to use Russia’s isolation to increase Eurasian trade through its Belt and Road Initiative, as well as use other economic mechanisms to undermine traditional U.S. dominance. After Russian banks were blacklisted from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) payment-verification system, China and Russia have taken greater steps to develop their own alternatives.

This includes Russia’s System for Transfer of Financial Messages (SPFS) and the National Payment Card System (now known as Mir), as well as China’s Cross-Border Interbank Payment System (CIPS) and UnionPay.

Russia’s economy will continue to face significant hurdles, particularly with the imposition of the oil price cap. While U.S. officials have stated that the aim of sanctions is to change Moscow’s behavior, Russia and other countries may double down on developing rival official trade mechanisms to the West and expanding a globalized black market with other rogue states.

No end in view for Ukraine war

/
543 views
5 mins read

The US National Security Advisor Jake Sullivan’s meetings with Ukrainian leaders, including President Vladimir Zelensky, in Kiev has created a lot of confusion and misperceptions. One one side, the White House maintains that the trip aimed “to underscore the United States’ steadfast support to Ukraine and its people.” The readout stated that Sullivan also affirmed “the continued provision of economic and humanitarian assistance, as well as ongoing efforts with partners to hold Russia accountable for its aggression.” 

However, unnamed US officials gave the spin that Sullivan’s real mission was to “nudge” Zelensky to negotiate with Moscow and urge that “Kyiv must show its willingness to end the war reasonably and peacefully.” Politico later reported that Zelensky indeed heeded Sullivan’s “soft nudging”. The US media also reported that the US officials have been nudging the Ukrainians for sometime. 

The Washington Post reported last week that the Biden administration privately encouraged Ukrainian officials to show they are willing to engage in dialogue with Russia, in an acknowledgment of the growing frustration in the US and some of its allies at the cost and duration of the war. But, apparently, the Ukrainians pushed back.  

Sullivan also added some spice to the media speculation by claiming on Monday that the US has channels to communicate with Russia at senior levels. The Wall Street Journal had earlier reported, citing unnamed US and Western officials, that Sullivan had allegedly held a series of confidential meetings recently with Kremlin aide Yury Ushakov and Russian Security Council Secretary Nikolay Patrushev on the conflict in Ukraine. (Moscow has not reacted to these reports.) 

The heart of the matter is that Sullivan has been on a PR exercise in the run-up to the midterms in the US (November 8) in a concerted strategy aimed at countering the growing criticism among the Democrats and Republicans that the Biden Administration is avoiding the diplomatic track to try to end the war in Ukraine. That apart, Sullivan’s theatrics also achieved the purpose of distorting the perception that it is Zelensky who is recalcitrant about dialogue and peace talks — not Biden.

In fact, all indications are that the Biden Administration is preparing for the long haul in Ukraine. Stars and Stripes reported on Wednesday that a three-star general will lead a new Army headquarters in Germany called the Security Assistance Group Ukraine, or SAGU, that will include about 300 US service members responsible for coordinating security assistance for Ukraine. On Sunday, The New York Times had reported last Friday that Lt. Gen. Antonio Aguto Jr., head of the First US Army headquarters at Rock Island Arsenal in Illinois, was a leading candidate for the new job. 

The SAGU will be based out of US Army Europe and Africa headquarters in Wiesbaden. Sabrina Singh, the deputy Pentagon press secretary, told reporters the new command will “ensure we are postured to continue supporting Ukraine over the long term.” She added the US remains “committed to Ukraine for as long as it takes.”

It is improbable that Moscow has fallen for Sullivan’s dissimulation. There is reason to believe that Sullivan who is a thoroughbred neocon from the Clinton clan would only have urged Zelensky to expedite the planned Ukrainian offensive on Kherson, which has been in the making for quite a while as a decisive battle for the Crimea and control of the Black Sea/Azov Sea ports and is critical for Ukraine’s long-term viability as a prosperous nation and of vital interest to the US and NATO for the encirclement of Russia.

Above all, the Biden Administration is badly in need of a success story from Ukraine as the newly-elected Congress convenes in January with a likely  Republican Party majority in the House of Representatives. 

No doubt, the Russians are taking the Ukrainian offensive in Kherson seriously. In a stunning announcement in Moscow on Wednesday, Russian Defense Minister Sergey Shoigu ordered a troop pullout from the western side of the Dnieper River in the Kherson Region. The fact that the Kremlin is risking criticism from the Russian public opinion for ordering such a retreat (from a region that Putin decreed is an integral part of Russia) underscores the gravity of the Ukrainian military threat and the imperative needs to strengthen the defence line.

Zelensky is forcing Moscow to literally eat its words about the “demilitarisation” of Ukraine! He continues to be in a belligerent mood. On Monday, Zelensky did make a peace offer but with five conditions for a settlement:  

  • Restoring Ukraine’s territorial integrity; 
  • Russia respecting UN Charter on sovereignty and territorial integrity;
  • Russia paying off all war reparations; 
  • Punishing each war criminal; and,  
  • Guarantees that such an invasion and atrocities will not happen again.

The only “concession” Zelensky made is that he didn’t mention his earlier precondition that President Vladimir Putin should relinquish office before any negotiations. It is a non-starter. 

There is no end in view for the war in Ukraine. By the way, although the midterm elections are typically the point in a US presidential cycle where one expects to see top Cabinet members being replaced, but there is no sign of that happening to Defence Secretary Lloyd Austin. 

Austin, 69, being a critical voice in the Ukraine conflict, who mobilised billions of dollars worth of military aid from around the world for Kiev, Biden anticipates that the war effort may only become more entrenched and this is not the time to change the top ranks of the Pentagon.

Indeed, the ground situation shows that the ongoing Russian operations in the areas of Ugledar and Bakhmut in Donetsk have run into strong resistance from Ukrainian forces, contrary to the Russian narrative that Kiev’s military is in a shambles and is a demoralised lot. 

In particular, the advance of the Russians around Ugledar got stuck in the mud in the village of Pavlovka, located on the important crossroads, and in a fierce battle three days ago, reportedly, there were heavy casualties on both sides. Putin’s decision to retreat in Kherson was probably with the hope of avoiding a similar fate, as the Russians are experiencing logistical difficulties to supply their forces on the western side of Dnieper river. 

Of course, this seamy picture is not the whole picture insofar as the phase of regrouping and resupplying following the Russian mobilisation is still a work in progress and the ongoing fighting in Donbass and Kherson is at the tactical level and does not involve large movements of troops. 

Equally, the intensive Russian strikes on Ukrainian depots, command centres and artillery and air-defence systems plus the destruction of Ukraine’s military-industrial facilities and energy system are yet to impact Kiev’s capacity to wage the war.  

Meanwhile, the situation on the front lines in Kherson region remains extremely tense for the Russians. The Ukrainian forces are on the prowl poking the Russian defence line incessantly to break through to advance toward the city of Kherson. A large-scale Ukrainian offensive backed by western advisors and mercenaries is to be expected any day. So far, Russian are holding their positions, repelling the ongoing Ukrainian attacks and fortifying their defences. 

From Kherson city, Ukrainian artillery can threaten Crimea. In the prognosis of Moscow’s close ally, Serbian President Aleksandar Vucic, “Challenging times are ahead of us. Next winter will be even harsher than this one because we’re facing the Battle of Stalingrad, the decisive battle in the conflict in Ukraine, the battle for Kherson.” He predicted that both sides are likely to deploy thousands of tanks, aircraft and artillery pieces in the struggle for the key city.

Vucic said, “The West thinks it’ll be able to ruin Russia that way, while Russia believes it’ll be able to defend what it secured at the start of the war and bring it to an end.” 

1 2 3