by Richard Gowan | Aug 22, 2008 | Conflict and security, Europe and Central Asia, North America
With each day that passes, members of the commentariat out-bid each other with explanations of how events in Georgia signify the decline of the West. Comparisons to the Soviet invasions of Hungary and Czechosolvakia abound. And South Vietnam, obviously. It takes a brave skeptic to argue that this is not the start of “Cold War II”. So I expect to be consigned to the “insane” file when I say this: Russia has fought a successful, rather classical, limited war and won a tactical victory that may yet turn into a strategic defeat for Moscow.
I’m not saying that’s certain, but it’s a real possibility. To see why, it’s necessary to get past the images of Russian armor grinding up Georgian roads. There’s no doubt that the war went Moscow’s way. But remember: in 1968, nearly 200,000 Soviet and Warsaw pact troops poured into Czechoslovakia. Today, we worry because Russia may leave 2,000 soldiers on Georgian soil. That’s 2,000 too many, but the imagery shouldn’t obscure the numbers. This was a small war.
And a small war that hasn’t necessarily ended exactly as Russia hoped. Mikhail Saakashvili is still in office. He is receiving a stream of visitors: Rice, Cameron, etc. Now think back. In 1968, Alexander Dub?ek didn’t get to meet a similar cast of characters – as you ask, the equivalents would have been Dean Rusk and Edward Heath. He got flown to Moscow (in fairness, the last leader of South Vietnam was allowed to return home and grow orchids).
So what we’ve discovered over the last weeks is that Russia can conduct a small victorious war on its immediate border, but that the West is still able to project enough political influence to prevent a total rout there. By itself, this puts Russia into a similar league to Rwanda, which can destabilize the eastern Congo all it likes but still has to put up with U.S. and UN meddling there. Go the Red Army!
This point is not lost on the Russians. They are making it themselves. From the West, this looks like an attack on the West. From Russia, it’s Grenada. I don’t deny that this is not only a tragedy for Georgia, but also a shock to the (post-Cold War) system. But will the long-term effects on that system necessarily favor Russia? Here are two reasons to think that they might not.
Reason #1 is that Russia has compounded growing Western business mistrust. That hurts. Daniel Drezner excerpts the following from the FT:
Investors pulled their money out of Russia in the wake of the Georgia conflict at the fastest rate since the 1998 rouble crisis. Russian debt and equity markets have also suffered sharp falls since the conflict began on August 8, with yields on domestic rouble bonds increasing by up to 150 basis points in the last month.
Alexei Kudrin, finance minister, said the capital flight had largely subsided and would be more than made up for by projected inflows. Russia’s foreign currency reserves, at $581bn, are the world’s third largest. But the ebbing of foreign investor confidence will make it harder for Russian companies to raise debt and equity finance since foreign sources account for a disproportionate share of long-term capital for Russian corporate borrowers. “The market is vulnerable to foreign capital flight,” said Kingsmill Bond at Troika Dialogue, the investment bank. “The major Achilles heel of the Russian market is that there is very little domestic long-term capital.”
Of course, Russia is an energy superpower and all that, but the idea that it is now immune from foreign financial forces is overstated. Reason #2 for thinking all may not be going Moscow’s way is geopolitical. U.S. commentators are reviving the Vietnam-era domino theory with a Eurasian twist: after Georgia, Ukraine will be next, then the ‘stans and so on. Maybe so, but again it’s not inevitable. The BBC notes that many former Soviet states have shown support for Georgia (or at least the West) or stayed quiet during the crisis. That’s not just Ukraine. It’s Belarus:
Only a few years ago Russia was such a close ally, there was talk of the two countries merging, so one might have expected [Belarusian mini-Stalin President Lukashenko] to back Russia’s action in the Caucasus. But Belarus has had a series of bad-tempered rows with Russia over energy supplies and has recently shown more interest in improving Western contacts.
The initial response from Minsk to Russia’s intervention in Georgia was decidedly ambivalent – so much so, that the Russian ambassador there even publicly expressed his displeasure. President Lukashenko travelled to Sochi to reassure President Medvedev that Moscow’s military operation had been conducted “calmly, wisely and beautifully”.
But he took steps to clear the way for better relations with the US and Europe. In the last few days the final three political prisoners in Belarus have been suddenly released – the beneficiaries, it seems, of an unexpected presidential pardon.
One has hallucinatory visions of McCain’s International Freedom Express steaming into Minsk in 2009, with Son of Liberty Lukashenko offering anti-missile facilities…
OK, it’s unlikely. But it’s striking that Russia’s neighbors and investors aren’t all buying into the “New Russian Dawn” rhetoric pervading the op-ed pages. The real question is whether Western governments are ready to take advantage of these openings to gain strategic leverage over Russia, or whether they’ll pass. Over on the ECFR website, Daniel offers the hawkish take. Russia’s actions have “made the West’s embrace of both Georgian and Ukraine more rather than less likely.” I’m not so sure. But the essential point is that Georgia was only a tactical win for Russia: like France in 1940 for the Germans, and Iraq in 2003 for the U.S., a quick victory involving lots of tanks may invite longer-term failure.
by Richard Gowan | Jul 31, 2008 | Africa, Conflict and security, Cooperation and coherence
So, farewell then the UN Mission in Ethiopia and Eritrea (UNMEE), born after the two countries ended a massive war in 2000 and gently put down by a sorrowful Security Council on Wednesday. It won’t really be missed, as it wasn’t one of the coolest missions out there. It was one of the last old school, peacekeeping-equals-troops-stuck-between-two-states-that-had-a-big-war operations left in Africa, an anomaly in the age of peacebuilding-as-changing-the-DNA-of-the-country.
And closing it down was the only option, as the Eritreans had cut off its fuel supplies through their territory last December, forcing a troop withdrawal this February. The remarkable thing about UNMEE is that it stayed in place so long, as the Eritreans began to bugger about with it in December 2005 and never really let up. Their excuse was that Ethiopia has refused to comply with international rulings on the delineation of the border with the UN was meant to monitor, so why bother?
Eritrea had a point. But its behavior towards UNMEE has been an important part of the trend towards greater resistance to UN missions that I blogged about earlier in July. One UN staffer responded to my post, which argued that Darfur is now a textbook for anti-UN spoilers, by pointing out that “the Eritreans provided the Sudanese with a wonderful case study in how to ‘red team’ a UN mission through de facto withdrawal of consent by removing critical mission enablers [that’d be the helicopters, etc.] and not honoring Status of Forces Agreements”.
So Eritrea has earned its place in the roster of UN failures (a sign that the UN will probably be back there sooner or later, as in the DR Congo, Central African Republic and maybe Somalia). The Eritreans are trying to be reassuring that this doesn’t mean war with Ethiopia straight away, but given that they managed to pick a fight with tiny Djibouti recently, I wouldn’t get too relaxed. Last month, I suggested in an op-ed for ECFR that the way out of this impasse is to enlarge the context by several orders of magnitude, addressing East Africa’ problems en bloc:
There is a need for an international drive for a regional security conference that could hammer out a credible framework for resolving border disputes, guaranteeing peace agreements and rehabilitating rebel groups. The African Union and UN should take a political lead. The U.S. (which sees East Africa as a front against terror) and China (which buys its raw materials) must join in. The EU could play a role in coordinating conditional financial support to back up the deal-making.
All rather grandiose, and observant readers may wonder how this proposal squares with my recent warning against “piling international institution on international institution in Africa”. My answer would be that such a conference, involving horizontal negotiations between African governments, may be the best Plan B when trying to impose security frameworks from New York stops working.
by Alex Evans | Jul 26, 2008 | Climate and resource scarcity, East Asia and Pacific, Economics and development, Global system
Herewith an attempt to marshal my thoughts about what’s happening on the oil price (which has fallen sharply over the last few weeks), what’s likely to happen next, and what policymakers need to do to move forward. Brief summary as follows:
– The oil price has fallen sharply over the last couple of weeks, from a peak of $147 to a 7 week low of $123 at close yesterday. So is this the start of a long decline, or just a brief pause to draw breath before a resumption of the relentless upward march of recent years?
– In a nutshell, probably more like the latter – but with the potential for a big drop in the near term for as long as the credit crunch lasts, as emerging economies slow down sharply in line with falling US demand for their exports.
– However, once we’re through the crunch, we may be back to a game of cat and mouse between oil supply and economic growth. Demand falls, oil price falls; demand picks up, oil price goes back up too – but never for long enough to give investors a clear signal to pump cash into new oil supply infrastructure.
– What we need is a game changing intervention that breaks us out of this stop-start cycle. Massive investment in new oil supply would provide it, but can’t be squared with what needs to happen on emissions reductions.
– It looks like the only way through is for policymakers to agree a global climate policy framework that’s both global in scope and sufficiently long term to provide investors with an unequivocal signal of where to put their cash: this is the only way of squaring energy security with climate change.
Full version after the jump.
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by Alex Evans | Jul 23, 2008 | Global system
Lots of discussion in the US about whether FDIC – the Federal Deposit Insurance Corporation, which makes sure depositors get their cash back if banks go bust – can handle the banking bust that appears to be in the post. Nouriel Roubini points out that the collapse of IndyMac earlier this month used up fully 15 per cent of FDIC’s reserves.
As a result of that, FDIC will need to raise additional capital by hiking the premiums that banks have to pay, so financial services sector analysts are fretting about the additional costs this will imply for banks. What bothers me, though, is the fact that FDIC has five years in which to replenish its reserves. As an unnamed source put it to the FT:
The FDIC says it feels confident with $53bn … That’s incredible. The last crisis, in the ’90s, there were 550 institutions that failed. So far, there have been five. It can be a long season.
by Alex Evans | May 30, 2008 | Climate and resource scarcity, Conflict and security, Economics and development
Next week, the UN is holding a major summit on food security in Rome – I’ll be there throughout (and blogging regularly on what goes on). Ahead of the kick-off, I’ve updated the Global Dashboard page on where to get briefed on food prices, and put out a scene-setter press release through Chatham House that sets out a few thoughts on what the summit needs to achieve.
This week’s already seen a couple of new items on food prices that are worth a look, starting with a new annual FAO / OECD outlook report – which this year looks all the way out to 2017. It finds that although prices will come down in the short term (which you already knew, since you read it here on Global Dashboard on March 18th), nominal prices over the medium term will remain “substantially above” levels over the last ten years. In other words, it’s not just a blip.
Also worth a look is World Bank President Bob Zoellick’s ten point plan for food prices, published in the FT this morning. His article confirms that he’s well ahead of the curve on understanding the need for an integrated approach to scarcity issues:he says collective action is needed on “the interconnected challenges of energy, food and water [which will be] drivers of the world economy and security”. (I’ll be publishing a paper on how the multilateral system needs to be reformed to cope better with scarcity issues just before the G8 in early July.)
What will actually happen at the summit is currently anyone’s guess. It’s fair to say that FAO haven’t been very proactive in briefing the media on likely outcomes or what they’re hoping for, which puts them in the rather hazardous position of allowing high expectations to emerge without really managing them. Another risk is that a major spat over biofuels could erupt: Ahmadinejad and Chavez will both be at the food summit, and would like nothing better to embarrass the US over its support for ethanol – and while US subsidies for corn-based ethanol are certainly problematic, it’s hard to see these particular interlocutors opening up much political space on Capitol Hill as legislators contemplate the Farm Bill.
But on the upside, great progress has been made on financing the immediate humanitarian needs (after Saudi Arabia stunned everyone by coming up with half a billion dollars last week – a coup for WFP head Josette Sheeran and for UN Emergency Relief Coordinator Sir John Holmes, who’s invested much time encouraging Gulf countries to contribute). This, together with the prospect of some short term relief on prices, gives policymakers a chance to look ahead towards the longer term challenges as well as short term crisis management.
It’s also hard to remember a time when the UN system and the international financial institutions have worked together as closely or as effectively as they seem to have been doing on the UN’s food task force – a great story, given how fragmented the international system usually is, but one that’s gone largely unreported. Even so, the real work in pulling together the longer term agenda is still in front of us…
