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Author Topic: Stratfor: Russia's Great Power Strategy  (Read 13086 times)
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« Reply #50 on: November 17, 2013, 08:23:16 AM »

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Russia Warily Eyes a U.S.-Iran Deal
November 14, 2013 | 0528 Print Text Size
Russia Warily Eyes a U.S.-Iran Deal
U.S. Secretary of State John Kerry (R) and Russian Foreign Minister Sergei Lavrov on Oct. 7. (SONNY TUMBELAKA/AFP/Getty Images)

Russia is concerned that a U.S.-Iranian accord could alter the regional balance of power at Moscow's expense. Even before the possible entente, the Kremlin was worried that the U.S. military withdrawal from much of the Islamic world would give the United States more freedom of action elsewhere. An agreement with Iran could undermine Moscow's influence in the Middle East and open the door to U.S.-Iranian cooperation along Russia's southern borderlands. Like many other global and regional players with a stake in the outcome of the talks, Russia will have to contemplate a world in which Iran and the United States are not at odds.

Over the past two decades, Russia has been one of Iran's primary supporters at a time when Tehran was relatively isolated in the international community and had hostile relations with many Western powers. However, Moscow and Tehran never shared any particular affinity. In fact, Russia and Iran have historically competed for influence in Turkey, the Caucasus and Central Asia. During the imperial periods, Persia and Russia fought several large wars from 1722 to 1828. While the Soviet Union was the first state to recognize the Islamic republic in 1979, relations between the two were cool, in part because Tehran condemned Moscow's restrictions on religion and the Soviets were already allied with Iraq.
Russia and Iran: Competing Spheres of Influence

Following the fall of the Soviet Union, relations between Tehran and Moscow began to warm while Iran's international isolation was growing. Russia committed to take over construction of Iran's Bushehr nuclear power plant and became a source of military hardware for Iran. Russia has also provided Iran with intelligence on a range of matters, including Israeli networks in Lebanon and U.S. and British plans to destabilize the Iranian government by, for example, taking advantage of the 2009 "Green Revolution" protests.

For much of the 2000s, U.S. attention (military and otherwise) was focused on the Islamic world, from the wars in Iraq and Afghanistan to the standoff with Iran. Moscow took advantage of Washington's preoccupation to start rolling back Western influence in Russia's borderlands. In addition, Russia could leverage its ties with Iran in negotiations with Washington on other matters, such as U.S. support for anti-Russian governments in Ukraine and Georgia. The relationship with Iran was also a way for Russia to secure its southern flank and limit Iranian-Russian competition in the region.
George Friedman and Robert D. Kaplan on U.S.-Iran Relations

Indeed, Moscow has found the standoff between Iran and the United States to be a particularly useful foreign policy tool. For example, during Moscow's negotiations with Washington over U.S. missile defense installations in Central Europe, Russia threatened to counter by selling S-300 missile defense systems to Iran. But Russia has been careful not to support Iran too much, both because a strengthened Iran would threaten Russia's southern flank and because it could provoke the United States and its allies into taking action against Moscow.
From Leverage to Liability

Russia is comfortable and familiar with partnering with a U.S. foe, though in the past such relationships have not proved durable. During the Cold War, Moscow assumed that the United States and China would remain adversaries because there were too many constraints on either side to ever reach a compromise. Following the Sino-American entente in 1971, the United States became a swing player in Sino-Soviet relations, and China became the same in Soviet-American relations. A similar phenomenon is now taking place with Iran. Russia knows that any agreement between Iran and the United States does not mean the two will become allies, and a change would not necessarily affect Russia immediately. But Russia's leaders past and present have had to be long-term strategists, and the Kremlin is weighing the ramifications of an U.S.-Iran entente well into the future.

First, should there be a true rapprochement with Iran, it could free Washington to focus more on other parts of the world. Moscow is worried that Washington would expand its attention both in Russia's periphery, where it has been attempting to boost its influence, and inside Russia itself, where the United States has actively supported anti-Kremlin groups. Russia would not be able to use Iran to counter any U.S. activities against Moscow's interests, and it has little else that is comparably effective in negotiations with Washington.

The second concern is how much the U.S.-Iranian relationship warms in the long term. Iran alone cannot threaten Russia in the region, since the Islamic republic is much smaller economically and militarily. However, U.S. backing could allow Iran to weaken Russia's regional position. Moscow cannot be certain that improved U.S.-Iranian ties would not eventually lead to increased military cooperation and support similar to Washington's relationship with Tehran in the decades before Iran's Islamic Revolution in 1979.
Moscow's Areas of Concern

A U.S.-backed Iran increases the vulnerability of Russia's southern flank. Specifically, there are three regions that Russia is concerned could once again fall away from its influence: Turkey, the Caucasus and Central Asia. Namely, Iran has the potential to be a regional energy competitor to Russia, and it can act as a land bridge for Eurasian transit through the Russian borderlands to the Persian Gulf.

Turkey is Russia's second-largest energy consumer, as well as another regional rival to Moscow's influence in its borderlands. Ankara has been looking for alternative suppliers for energy in order to reduce its dependence on Russia. Though there are minor alternatives such as Azerbaijan, Iran has the potential to seriously compete with Russia on the energy production front. Iran is already a minor energy exporter to Turkey, but with increased foreign investment and support in Iran's energy sector -- particularly from U.S. firms -- the country could increase its production on a scale that might challenge Russian energy dominance in the region. In addition, the historical geopolitical competition that saw Russia spar with Ottoman Turkey and Persian Iran -- with the countries alternately aligning with and against one another -- could resume.

The second region where Russia's sway could be undermined is the Caucasus, where Russia relatively successfully increased its influence this year. Currently, Armenia is isolated and reliant on its relationship with Russia in nearly every respect. Georgia has ushered in a government that is more cooperative with Russia, and Russian troops are still stationed in the country's breakaway territories. Azerbaijan has become more accommodating to Russian interests to avoid isolation as the rest of the region moves closer to Moscow. Russia will want to solidify its position in the Caucasus in the short term in case Iran (possibly with U.S. backing) attempts to undermine Russia's position. For example, Iran could offer Azerbaijan an alternative land route for transporting energy to Turkey and Europe or the Persian Gulf. Iran could also boost trade and energy exports to Armenia or Georgia, challenging Russian influence there.

Lastly, Moscow's grip on Central Asia -- a region already seeing increased Sino-Russian competition -- could be jeopardized. The current struggle between Moscow and Beijing has centered on the flow of energy out of Central Asia. Russia has strengthened its control over the pipelines that run between Turkmenistan and China through Kazakhstan. However, Turkmenistan's largest natural gas fields are on the border with Iran, making Iran an option for increasing Turkmen energy exports to the Persian Gulf or the West. Iran could become a transit corridor for Kazakh and Uzbek energy as well. For Central Asian states concerned about possible instability in Afghanistan, Iran could also prove to be a useful security partner on intelligence or even military cooperation in the wake of the U.S. military withdrawal.

The Kremlin understands these vulnerabilities, but it also sees that there is little it can do to interrupt the trajectory of U.S.-Iran negotiations. Instead, Russia has to be thinking of how to protect its position in a changing world. If Iran is no longer an option, finding a new tool to counter U.S. actions and shoring up the southern borderlands will be at the top of Moscow's list of priorities.

Read more: Russia Warily Eyes a U.S.-Iran Deal | Stratfor

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« Reply #51 on: February 13, 2014, 09:51:50 AM »

Russia is facing a confluence of strategic challenges in the former Soviet periphery, an area where the Kremlin has worked hard to expand Russian influence over the past decade. An emerging financial crisis in Kazakhstan and the political crisis in Ukraine are threatening Russia's economic and strategic interests. At the same time, progress in Georgia and Moldova's path toward European integration is eroding Russia's leverage in the region.

What is a Geopolitical Diary? George Friedman explains.

These challenges to Russia's status as a resurgent regional power come at a delicate time because the country faces a growing host of domestic difficulties. Demographic decline, ethnic tensions and a continued dependency on an unreformed extractive industry are looming dark clouds on the horizon for the Kremlin. While not yet threatening Russia's dominance, the current crises in the former Soviet space are a challenge to Moscow's long-term strategy for the region.

Yesterday, the National Bank of Kazakhstan devalued the country's currency, the tenge, by nearly 20 percent in the aftermath of the emerging markets crisis that has been rocking developing economies over the past few weeks. The impact of the devaluation was immediate, with some currency exchanges and shops throughout Kazakhstan shutting down. More important, the devaluation has raised fears of contagion to other regional economies. A financial crisis in the Moscow-led Customs Union -- currently comprising Russia, Kazakhstan and Belarus -- would hamper the expansion efforts of the bloc and perhaps even threaten the cohesion of what has been a cornerstone of Russia's strategy to secure its Central Asian hinterland.

The Kazakh move has also placed additional pressure on the already volatile economic and political situation in Ukraine, where Russia faces yet another strategic threat. Constrained in part by its need to maintain its international image during the Sochi Winter Olympics, Russia has been unsuccessful in helping President Viktor Yanukovich to end the political standoff and defuse the protests that have been reinvigorated by support from the West as well as from independent domestic actors. The ongoing political stalemate in Ukraine has demonstrated that although Russia has significant levers of influence in the country, it is for now unable to unilaterally shape political outcomes.

Farther west and south, Russia faces growing pressure in maintaining its influence in another two traditional strategic focal points: Georgia and Moldova. While those countries are not as essential to Russia's security as Ukraine, they are the key for the Kremlin's strategy of consolidating its southwestern flank. European incentives have contributed to the development of Moldova and Georgia's Western-leaning trajectory in recent years.

While Georgia's current ruling Georgian Dream coalition has been more open to engagement with Russia than the previous administration of President Mikhail Saakashvili, Georgia is developing a strong partnership with NATO and is pursuing a path to European integration that threatens Russia's policy. However, Georgian Prime Minister Irakli Garibashvili has balanced Wednesday's announcement that the United States would finance his country's participation in the NATO Response Force with a public statement that he would be willing to meet with Russian leaders. Similarly, Moldova is building stronger ties to Western institutions.

Also on Wednesday, the European Parliament took a step toward visa liberalization for Moldovans, further incentivizing Moldovan leaders to strengthen cooperation with the European Union. Russia's support for breakaway regions, as well as its past economic pressures on Georgia and Moldova, have not been effective in dissuading the countries from pursuing integration with the West.

Much of Moscow's current assertive foreign policy in its periphery has been driven by concerns that its relatively strong position in the region will come under threat, especially when the United States is able to pay serious attention to the former Soviet periphery. The Putin administration is in the process of addressing the delicate question of restructuring the country's energy sector -- the lifeline of the country's economy -- while also managing the country's looming demographic crisis and growing ethnic tensions, which have the potential to spiral into violence.

The confluence of crises in its periphery may not necessarily signify a definite weakening of Russia's global and regional position -- the European Union, for all its rhetoric, remains weak and internally divided while the United States remains relatively distant -- but it adds to Moscow's growing burden.

Read more: Russia Suddenly Feeling Under Siege | Stratfor
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« Reply #52 on: March 16, 2014, 12:57:34 PM »

Very interesting piece
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« Reply #53 on: March 24, 2014, 12:17:35 PM »

Ruchir Sharma
March 23, 2014 5:55 p.m. ET

Vladimir Putin had been named the "world's most powerful person" last year by Forbes magazine well before he annexed Crimea. The land grab added to the string of geopolitical victories credited to the Russian leader—including his rescue of Syria's Bashar Assad in the chemical-weapons standoff and the safe harbor he gave to the American secrets-spiller Edward Snowden. But Mr. Putin's real power base, the economy, is crumbling.

Russia's economic growth rate has plummeted from the 7% average annual pace of the last decade to 1.3% last year. Now the brokerage arm of the country's largest state bank, Sberbank, SBER.MZ -0.23% expects zero growth in 2014.

Sensing trouble, wealthy Russians have been moving money out of the country at one of the fastest rates in two decades—$60 billion a year since 2012—and now foreign investors are pulling out too. The ruble has fallen by 22% against the U.S. dollar since 2011, and the Central Bank of the Russian Federation has been fighting to prevent a ruble collapse since the Crimean crisis began.

The situation is especially revealing because oil—the mainstay of the Russian state—has stayed relatively stable, hovering at $110 per barrel for three years. Yet the Russian economy is stagnating. This suggests deep-seated problems.

After Mr. Putin became president in 2000, he began working to end the political turmoil and inflation that gripped Russia under Boris Yeltsin. He managed the economy responsibly, getting control of the government budget and retiring debts. Rising global oil prices and easy money did the rest. Between 2000 and 2010, growth and per capita income rose to $10,000 from $1,500. Mr. Putin started this decade with an approval rating of 70%.

But he grew complacent and cocky. Former KGB allies replaced economic reformers in his inner circle. As former President George W. Bush told me in an interview, Mr. Putin in private conversations morphed from a leader who worried about Russia's debt to one who by 2008 taunted the U.S. for having too much debt. He went from saving oil profits in a rainy-day fund to spending them to cement his power.

Before 2008, Russia was putting back to work the oil fields, factories and labor force that were idled by the collapse of the Soviet Union. Even so, Mr. Putin built little that was new. While Russia has a relatively high rate of investment, 26% of GDP, much of the money gets funneled into dubious projects by the state. Now the spare capacity is shrinking, and the old Soviet roads and railways are deteriorating, as any regular visitors to Russia can attest.

The inflation rate now stands at 6.3%, fourth highest among the major emerging markets, and well above the emerging world average of 3.8%. Russia has become a classic weak-investment, high-inflation economy.

Despite his growing reputation as a geostrategic mastermind, Mr. Putin's economic strategy is increasingly self-defeating, focused on extending Kremlin control. While countries like Mexico are moving to open up the state oil industry, Russia is closing it off, tossing out foreign partners. Rosneft, the large state oil company, is buying out private companies and now controls 40% of the country's oil production. It is launching its own oil field-services company, bringing in-house a service that multinational oil companies have been hiring out to efficient private contractors for years.

Russia grew richer during the last decade but did not develop in the normal sense of building up more sophisticated manufacturing industries. In a vibrant developing economy such as Korea or the Czech Republic, manufacturing accounts for at least 20% of GDP. Manufacturing in Russia accounts for just 15% of GDP, down from 18% in 2005. Small and medium-size companies of any kind, including banks, struggle to gain a foothold alongside state behemoths.

The result is that the Russian state has few new sources of income outside of oil and gas, at a time when it is taking on more dependents. Demographics are putting a squeeze on public finances, as roughly a million Russians are retiring each year, and too few young people are replacing them in a workforce of about 100 million. The situation leaves fewer taxpayers to fund pensions, after a five-year period in which the Kremlin raised pension payouts by an average of 25% a year.

This is a medium-term threat to the federal budget, which is in surplus now but shows a dangerous deficit if oil revenues—$222 billion or around 10% of GDP last year, according to IMF figures—are left out of the equation. Because of slowing growth and deteriorating terms of trade, the non-oil government deficit is now 11% of GDP. The current account is in a similar position: an apparent surplus, dependent on oil. The non-oil current-account deficit is currently running at a whopping 10% of GDP.

To keep its federal budget in balance, Russia requires an oil price of $110 barrel, so it is tiptoeing on the edge. Yet because other commodity prices have fallen, the price of oil, now $107 per barrel, is at a 30-year high compared with industrial metals. This suggests that oil, too, may be poised for a downshift—which would have a crippling impact on the Russian economy.

For now Russians are applauding their president's confident portrayal of the great power player. But that may change if the economy keeps deteriorating. Remember that by late 2011, as the scale of Russia's slowdown was becoming clear, Mr. Putin's approval ratings tanked and he faced protests in Moscow.

Mr. Putin's approval rating has bounced back following the Sochi Olympics and the invasion of Crimea. But the rest of the world should not be fooled. The world's "most powerful man" is scoring his geopolitical victories from an increasingly vulnerable economic position.

Mr. Sharma is head of emerging markets at Morgan Stanley Investment Management and author of "Breakout Nations: In Pursuit of the Next Economic Miracles" (Norton, 2012).
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« Reply #54 on: March 28, 2014, 11:26:06 AM »

Noonan: Mr. Putin's Revealing Speech
At the Kremlin, he makes the case for an increasingly aggressive Russia.
By Peggy Noonan
March 27, 2014 7:35 p.m. ET

It is not fully remembered or appreciated—to some degree it's been forced down the memory hole—that a primary reason the American people opposed the Soviet Union and were able to sustain that opposition (and bear its costs) was that the Soviets were not only expansionist but atheistic, and aggressively so. It was part of what communism was about—God is a farce and must be removed as a force. They closed the churches, killed and imprisoned priests and nuns. Wherever communism went there was an attempt to suppress belief.

Americans, more then than now a churchgoing and believing people, knew this and recoiled. That recoil added energy, heft and moral seriousness to America's long opposition. Americans wouldn't mind if Russia merely operated under an eccentric economic system—that was their business. They wouldn't mind if it had dictators—one way or another Russia always had dictators. But that it was expansionist and atheistic—that was different. That was a threat to humanity.

One of the strategically interesting things about Vladimir Putin is that he has been careful not to set himself against religious belief but attempted to align himself with it. He has taken domestic actions that he believes reflect the assumptions of religious conservatives. He has positioned himself so that he can make a claim on a part of the Russian soul, as they used to say, that his forbears could not: He is not anti-God, he is pro-God, pro the old church of the older, great Russia.

That is only one way in which Putinism is different. The Soviets had an overarching world-ideology, Mr. Putin does not. The Soviets had an army of global reach, Mr. Putin has an army of local reach. The Soviet premiers of old, as Richard Haass, president of the Council on Foreign Relations, noted in an interview, operated within "a certain sense of bureaucracy, of restraints." Mr. Putin's Russia is "so concentrated economically and politically that we don't know what constraints there are on his autonomy." There is cronyism, crackdowns on the press. Mr. Putin has weakened formal institutions—and "institutions are inherently conservative" because "they provide checks and balances." Mr. Haass added that "Putin's ambitions and limits are not clear."

I think we got a deep look at Mr. Putin's attitudes and goals in his speech last week at the Kremlin, telling the world his reasons for annexing Crimea. It is a remarkable document and deserves more attention. It was a full-throated appeal to Russian nationalism, and an unapologetic expression of Russian grievance. (The translation is from the Prague Post.)

At the top, religious references. Crimea is "where Prince Vladimir was baptized. His spiritual feat of adopting Orthodoxy predetermined the overall basis of the culture, civilization and human values that unite the people of Russia, Ukraine and Belarus."

Crimea has always been an inseparable part of Russia. Yes, in 1954 "the Communist Party head, Nikita Khrushchev" decided to transfer it to Ukraine. "What stood behind this decision of his—a desire to win the support of the Ukrainian political establishment or to atone for the mass oppressions of the 1930s in Ukraine—is for historians to figure out." But Khrushchev headed "a totalitarian state" and never asked the Crimeans for their views. Decades later, "what seemed impossible became a reality. The U.S.S.R. fell apart. . . . The big country was gone." Things moved swiftly. Crimeans and others "went to bed in one country and awoke in other ones, overnight becoming ethnic minorities in former [Soviet] republics." Russia "was not simply robbed, it was plundered." Crimeans in 1991 felt "they were handed over like a sack of potatoes."

Russia "humbly accepted the situation." It was rocked, "incapable of protecting its interests." Russians knew they'd been treated unjustly, but they chose to "build our good-neighborly relations with independent Ukraine on a new basis." Russia was accommodating, respectful. But Ukraine was led by successive bad leaders who "milked the country, fought among themselves for power."

"I understand those who came out on Maidan with peaceful slogans against corruption," Mr. Putin said. But forces that "stood behind the latest events in Ukraine" had "a different agenda." They "resorted to terror, murder and riots." They are "Nationalists, neo-Nazis, Russophobes and anti-Semites." "They continue to set the tone in Ukraine to this day." They have "foreign sponsors" and "mentors."

He declared that "there is no legitimate executive authority in Ukraine now," that government agencies are controlled by "imposters," often "controlled by radicals." In that atmosphere residents of Crimea turned to Russia for protection. Russia could not abandon them. It helped them hold a referendum.

"Western Europe and North America" now say Moscow has violated international law. "It's a good thing that they at least remember that there exists such a thing as international law—better late than never." And Russia has violated nothing: Its military "never entered Crimea" but was already there, in line with international agreements. Russia chose merely to "enhance" its forces there, within limits previously set. There was not a single armed confrontation, and no casualties. Why? Because Crimeans wanted them there. If it had been an armed intervention, he said, surely a shot would have been fired.

In the decades since the Soviet Union's fall—or, as Mr. Putin called it, since "the dissolution of bipolarity on the planet"—the world has become less stable. The U.S. is guided not by international law but by "the rule of the gun." Americans think they are exceptional and can "decide the destinies of the world," building coalitions on the basis of "if you are not with us, you are against us"—Afghanistan, Iraq, Libya. The "color revolutions" have produced "chaos" instead of freedom, and "the Arab Spring turned into the Arab Winter."

Mr. Putin cleverly knocked down the idea of European integration. The real problem, he said, is that the West has been moving against "Eurasian integration." Russia over the years has tried to be cooperative, but the U.S. and its allies have repeatedly lied and "made decisions behind our backs." NATO expanded to the east; a missile-defense system is "moving forward." The "infamous policy of containment" continues against Russia today. "They are constantly trying to sweep us into a corner. . . . But there is a limit to everything."

Russia does not want to harm Ukraine. "We do not want to divide Ukraine; we do not need that." But Kiev had best not join NATO, and Ukrainians should "put their own house in order."

What does this remarkable speech tell us? It presents a rationale for moving further. Ukraine, for instance, is a government full of schemers controlled by others—it may require further attention. It expresses a stark sense of historical grievance and assumes it is shared by its immediate audience. It makes clear a formal animus toward the U.S. It shows Mr. Putin has grown comfortable in confrontation. His speech posits the presence of a new Russia, one that is "an independent, active participant in international affairs." It suggests a new era, one that doesn't have a name yet. But the decades following the collapse of the Soviet Union were one thing, and this is something else—something rougher, darker and more aggressive.

It tells us this isn't about Crimea.

It tells us this isn't over.
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« Reply #55 on: March 28, 2014, 03:14:58 PM »

No worries. Wars never start in Poland.
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