Tag: Russia

Tightening The Noose Around Russia’s Economy

Yesterday, Europe and the US announced new sanctions against Russia. Obama explains the gist:

The Cable summarizes the news:

The new European sanctions go further than ever before but still fall short of the type of “sectoral sanctions” that would block business with entire Russian industries. That reflects EU leaders’ concerns that hitting Russia too hard would also hurt their own companies and industries. The arms embargo, for instance, doesn’t apply to existing agreements. That means the $1.6 billion French deal to sell Mistral warships to Russia, which had come under fire from British officials last week, will be allowed to go forward, though France has said it will only deliver the first one while re-evaluating whether to also deliver the second.

That’s not the only sacred cow left untouched. While the new coordinated measures target future oil production, they don’t touch the natural gas business, a pillar of Russia’s export economy and a lifeline for Europeans. Both the United States and Europe took steps to restrict trade in key oil industry equipment needed for extracting oil from deep waters, in the Arctic, and from shale — all areas where Russia hopes to boost its oil output in years to come. The U.S. Commerce Department said it will limit the export of crucial oil technology to Russia, but it is not yet clear exactly what goods and services will be banned, how that will affect Russia’s current oil production, or even how much U.S. and European firms will be hit by export bans on certain oil projects.

Robert Kahn foresees “inexorable momentum for further sanctions”:

(1) Europe now is less of a constraint on further U.S. action; (2) Ukraine is achieving success on the battlefield, and without intensified Russian involvement would likely see further gains. If recent evidence of Russian shelling across the border is any indication, Russia has intensified its support in response to developments on the ground, which is justification for further sanctions; and (3) sanctions are likely to be extended over time in response to evasion. This last point is often unappreciated.

As with capital controls, prohibitions on financial transactions create incentives to innovate to evade the control. In some cases, that can be a helpful escape value, but in this case, where the West desires to impose a credible cost on Russia for its continued destabilization of Ukraine, controls need to be extended. If the restrictions on new debt, for example, are evaded in size by using non-sanctioned companies or alternative markets (such as foreign exchange swap markets), I’d expect the types of transactions and/or sanctioned institutions to be extended to close off those flows. This may be only the early innings of the sanctions game.

Yglesias unpacks the EU’s sanctions:

Russia’s export economy consists overwhelmingly of fossil fuels. This sector is Russia’s greatest point of vulnerability, but it is also the most costly sector for Europe to target since Europeans enjoy burning Russian oil and natural gas.

The EU is going to halt the export of certain categories of equipment and technology that are used in fossil fuel extraction. Europe will not target the natural gas sector, but is going to implement restrictions on the sale of equipment used in deep-sea drilling, arctic exploration, and shale oil extraction.

This won’t put much short-term pressure on the Russian economy. What it will do, however, is possibly divide the Russian elite. The long-term financial prospects of the Russian oil sector depend on its ability to continue pressing into new sources of oil. The imposition of this kind of sanctions could turn Russian oil barons into a constituency for a more restrained foreign policy. There is nothing concrete at stake in Ukraine that is nearly as valuable as tapping Russia’s own offshore and shale reserves.

But Julia Ioffe fears a cornered Putin is a dangerous Putin:

This is Putin today: a brash and unpredictable man backed into a corner with little, if any, way out. And it’s not a good Putin to be faced with.

His whole image mirrors that of the Russia he’s tried to create since he came to power in 2000: sovereign, strong, and unbowed by Western heckling. Putin, like the Russia he leads, likes to make decisions on his own terms. And he may very well lash out if the West demands he come out of that corner with his tail between his legs. This causes him to dig in his heels and resist at all costs, or to lash out. Because Putin, and Russia, do not follow commands, and they do not dance to the beat of Washington’s drum.

“Putin backed into a corner is not a great outcome for the West,” says Masha Lipman, a prominent Russian political analyst. She points out that boxing in the hard-to-predict leader of a massive military and nuclear power that has its fingers in various geopolitical pies that are of interest to the U.S. is quite risky. Will Russia retaliate by scuttling Iran talks? By forging a closer bond with China? And what will it make him do in Donetsk?

 

The Aftershocks Of Russian Decline

Josh Well tries to make sense of Putin’s appeal within Russia. During his travels there, Well detected “an undercurrent of aggrievement; a sense of having to restart after seven decades of the Soviet State, having to retrace steps back to the path the rest of the world had been on—and then struggle to catch up; a feeling that the chance for Russia to remake itself had been hampered by the hegemony of the West; a knowledge that the county was less than it could be, should be”:

That’s a feeling a great number of Americans can relate to: not only the frustration with growing inequality, but the sense that our country is also somehow becoming smaller than it should be. Here, when our sense of self is threatened, we turn to historical mythology that buttresses our belief in who we are: The American Dream, our forefathers wrestling with what that would be, the presidents who, through our beloved democracy, shaped how we understand it now—FDR, JFK, Reagan. We look for the next in that mold.

But Russians don’t have that history.

Theirs is one in which revolutionary uprisings led to instability before being channeled by a system of control; one in which democracy is associated with a time of devastating economic collapse. We all know the long history of Russian strongmen—from Ivan the Terrible to Joseph Stalin—but can you imagine having that history as our own, having those leaders to look back on? Can you imagine our own country collapsed, our own inequality increased, our own dreams squeezed? Maybe you can, all too well. Now imagine that we had a leader who not only gave us hope, promised us change, but delivered.

Given that state of affairs, Keating is unsure “that U.S. and European leaders hoping to alter the Russian government’s behavior can count on public opinion working in their favor.” What might make a difference:

The bigger concern for Putin may be reports that Russian business leaders are furious about the economic impact of the war in Ukraine, Western sanctions, and Russia’s increasingly isolated political position. So far we haven’t seen any major business or political figures publicly breaking ranks. If that starts to happen, it will be time to start talking about whether this was a game-changer.

The Best Of The Dish Today

There’s always a moment – sooner or later – when a regime propped up by lies will have to account for an empirical reality that refutes it and threatens to bring the entire edifice down. That’s the potentially game-changing significance of MH17, it seems to me.

Here’s Putin’s strange 13 minute address to Russians today on foreign policy – after his deeply weird televised address at 2 am. He’s visibly panicking; and the faces of his colleagues are quite a study:

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Notice the petulant raging at Ukraine and then the litany of paranoia and isolation: “we know what’s really going on.” No wonder the Russian population had to be talked down from widespread panic at the thought of an imminent invasion by the West! That’s how far Putin had ratcheted up the hysteria – a very dangerous place for a leader with nukes to be in. A reader who has been monitoring the Russian Internet writes:

As you can imagine, the last few days have been a rollercoaster ride on the runet. The first reaction to the downing of MH17 was panic. They were trying to shoot down Putin’s plane! Two doubles took off from Russian President Vladimir Putin Visits SamaraAmsterdam at the same time, one filled with corpses who all had new passports and totally new Facebook pages!

The second wave of the pro-Putinists was despair – “It is all over now! The only thing standing between us and slavery to Western interests is our beloved Vladimir Vladimirovich Putin!”

Now, already, it seems that they are quickly realizing that “everything has changed.” The anti-Putin journalists and posters are becoming much more courageous than they have been in recent months about opposing Putin directly. Here is a piece from Slon.ru, the Russian version of Salon:

The nighttime address to the nation was something unprecedented, and even more unprecedented was its content, in the sense that there was no content in this speech at all.  Why did Putin call up his press service, cameramen, make-up artists, and internet site workers and many others at 2 in the morning? Just to repeat once more that there would have been no tragedy if there hadn’t been any war in the Donbass, to call for peace negotiations and inviting ICAO aviation experts to the site of the crash? Couldn’t these two and a half points waited until the morning?

The pro-Putin people have seen their arguments fall to pieces against the reality of the situation. Putin is being portrayed as in a total panic. The anti-Putin forces are worried about what he might do in such a state, but he is no longer being seen as the magician in control.

All of which makes me appreciate the deliberativeness of Obama’s response, praised by my reader earlier today. Putin is blustering, lying, and using the crudest of means to impose his will on Ukraine. Obama is just slowly raising the costs – and those just got a lot more onerous for Russia. Today, the Europeans finally approved of a host of new sanctions, yet to be implemented. That may give Putin some room to climb down. But it won’t be easy. That’s the look on Putin’s face. It’s called rattled.

Today, because the news isn’t depressing enough, we checked in on Syria’s civil war. It makes Gaza look like a side-show: up to 700 people were killed last Thursday and Friday in clashes between ISIS and Assad. Next up: Libya teeters toward ever more chaos.

I sought relief in two stand-bys: Oakeshott, the last great English Romantic, and Montaigne – yes, we kicked off our third book club discussion today. You can buy How To Live here.

The most popular post of the day was For Israel, There Is No Such Thing As An innocent Gazan; followed by Putin Creates His Own Reality.

Many of today’s posts were updated with your emails – read them all here.  You can always leave your unfiltered comments at our Facebook page and @sullydish. 36 more readers became subscribers today. You can join them here – and get access to all the readons and Deep Dish – for a little as $1.99 month. Gift subscriptions are available here. A Founding Member writes:

I’ve been dragging my heels on renewing my subscription to The Dish. But the events of the last few weeks – clashes in Gaza, Central American children spilling into the U.S. border, the downing of a Malaysian Airliner in the skies over Ukraine, not to mention the bits and bobs of spirituality, pictures, gay sensibilities etc. etc. – demand the re-up.

I’ve got my NYT, my Gawker and yes, I hate to admit it, my Daily Mail, but I find the in-depth offerings on The Dish to be so much more nuanced, thoughtful and just off-kilter enough to make me want to read more, reflect, and oftentimes enlarge the scope of my viewpoint. Not sure what the future of media will be – digital, print, visual – but somehow, somewhere, I think you are going to be in the mix – annoying, exciting, comforting, challenging.

See you in the morning.

Some Clarity On Russia And Ukraine

Anne Applebaum has a really sober and accurate description of what has been going on:

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A reader adds:

For too long, news reports have spoken of the “Ukrainian rebels” as if the warfare underway in the Donetsk to Luhansk corridor were some sort of bona fide local uprising. It is true that the populace in this zone have pro-Russian sympathies. But the suggestion that they rose up against Kiev is nonsense. Everyone who has looked closely at these operations–starting with a study of the personnel who sprouted up out of nowhere as local “mayors” or “leaders” has come to the same conclusion–this is a very sophisticated covert operation of Russian intelligence, using Russian personnel with clear links to the Russian intelligence services (but covert nevertheless) in all the starring roles, drawing on support from regular Russian military as well as the elite Spetsnaz units, with money, weapons, munitions and logistical support all supplied with a go-ahead from the Kremlin. In other words, Putin really is calling all the shots–including telling the “Ukrainian rebels” to make a show of being independent.

Now, that being established, let us not lose sight of the fact that the United States decided back in the Bush years to rely principally on covert operations for its counterterrorism operations, and Obama fully embraced this.

This is the reason for the full militarization of the CIA, its outfitting with its own air force, and the revving up of JSOC as the covert military unit of the Pentagon. The Kremlin has tracked all of this very carefully, and it’s firmly of the view that if the Americans can wage covert war around the globe using the CIA/JSOC, so can they, using their Spetsnaz and their covert military operations. This in no way excuses MH17, of course, but it provides some important context.

The U.S. decision to turn steadily in the direction of covert warfare has consequences, and we see some of them in the tools used by the Kremlin to fight in Ukraine. It’s a darker, nastier world, and Obama’s decisions have made a significant contribution to that.

Notwithstanding that observation, I’d say his handling of the MH17 incident, and the rest of the Russian adventure in Ukraine, has been pitch perfect. I can hardly imagine where we’d be with someone like John McCain or Butters at the helm. Probably inching our way towards global thermonuclear war… over whether Donetsk and Luhansk are part of Ukraine or part of Russia (talk about issues which matter not an iota in terms of U.S. national interest).

Putin Creates His Own Reality

The Russian leader continues to deny any wrongdoing:

Putin’s government also held a news conference [yesterday], in which it denied that Russia had supplied the separatists with a BUK missile system “or any other weapons,” and suggested that the Ukrainian government is the prime suspect in the crash. Air Force Lieutenant General Igor Makushev said that Russian radar detected the presence of Ukrainian fighter jets close to the Malaysian flight, suggesting that one of them may have shot down the airliner.

Margaret Hartmann unspins Russia’s spin:

Unfortunately for Russia, the scant evidence available doesn’t appear to support its fighter-jet theory. Photographs of wreckage riddled with holes have begun surfacing on social media, and experts say that suggests the plane was targeted by a missile that exploded nearby. After analyzing photos taken by New York Times reporters, IHS Jane’s, a defense consultancy, concluded that the damage was consistent with that caused by a Buk system. The missiles are designed to explode below a target, increasing the likelihood that a fast-moving Western military aircraft will be damaged even if it avoids a direct hit.

Which makes the entire spectacle riveting. What happens when a Tsar’s propaganda becomes completely untenable in a porous media world? What he can get away with at home is not as possible when your drunken proxies take down a plane from the civilized world? Watching that video statement from Putin in the early hours of the morning gave me some solace. Just look at the body language, the deflected gaze, the nervousness:

A Tsar never had to do this, or felt compelled to. He’s hanging by a thread, and we should take some pleasure in watching him struggle. Alex Altman examines Russia Today’s absurdist coverage:

In the aftermath of the crash last week, the RT machine kicked into overdrive, churning out a steady stream of strange reports. In an effort to implicitly assign blame on the Ukrainians, it noted the proximity of Putin’s own plane. It quoted a Russian defense ministry source asking why a Ukrainian air force jet was detected nearby. And it quoted another anonymous Russian official, who volunteered the juicy claim that a Ukrainian anti-aircraft missile was operational in the vicinity at the time of the incident. This is how RT works, explains [former RT employee Sara] Firth: by arranging facts to fit a fantasy.

Kirchick piles on:

A particularly egregious example was the most recent episode of the inaptly named Truthseeker, a program devoted to conspiracy theories. Titled “Genocide in Eastern Ukraine,” the 14-minute segment accused the Ukrainian government of conducting a crime on par with the 1994 Rwandan genocide (which claimed anywhere from 500,000 to 1 million victims), which, for good measure, the host accused the United States of sponsoring. The Ukrainian government (“the most far-right wing government on the face of the Earth,” a description that far better suits the current Russian regime), whose leaders“repeat Hitler’s genocidal oath,”is “bombing wheat fields to ensure there’s famine,” a perverse claim in light of the Soviet-orchestrated Holodomor, the killing by starvation that took the lives of millions of Ukrainians in 1932 and 1933. The segment featured an interview with crank “historian” William Engdahl, a regular columnist for the virulently anti-Semitic website Veterans Today, where he has suggested that terrorist bombings in Russia earlier this year were conducted by Israel in retribution “for Putin’s role in winning Obama away from war against Syria last fall and openly seeking a diplomatic resolution of the Iran nuclear problem.”

Such ravings are par for the course on RT, but what happened afterwards surprised observers who have grown accustomed to the network’s practice of throwing out an endless stream of indefensible allegations in hopes that some of them will stick in the media ecosystem. Two days after the program aired, RT announced via Twitter that it had removed the episode from its website due to “uncorroborated info.” If this were to be the new standard by which RT determines what material to air, it would have no choice but to shut down altogether.

Mambo De Moscow

Over the past week, Russia has taken a number of steps to revive its partnership with the Castro regime in Cuba. Ahead of a visit to Havana last Friday, Putin announced that he was writing off $32 billion of the island’s debt to Moscow, and just Wednesday, Russian media broke the news that Putin would reopen a Soviet-era intelligence facility there:

Opened in 1967, the Lourdes facility was the Soviet Union’s largest foreign base, a mere 155 miles from the US coast. It employed up to 3,000 military and intelligence personnel to intercept a wide array of American telephone and radio communications, but Putin announced its closure in 2001 because it was too expensive – Russia had been paying $200m (£117m) a year in rent – and in response to US demands. … “Lourdes gave the Soviet Union eyes in the whole of the western hemisphere.

Jay Ulfelder expects this revival to delay, but not forestall, Cuba’s economic reckoning:

Putin’s government seems to be responding in kind to what it perceives as a deepening U.S. threat on its own borders, and this is important in its own right. As a specialist on the survival and transformation of authoritarian regimes, though, I am also interested in how this reinvigorated relationship affects prospects for political change in Cuba. …

None of these developments magically resolves the fundamental flaws in Cuba’s political economy, and so far the government shows no signs of rolling back the process of limited liberalization it has already begun. What’s more, Russia also has economic problems of its own, so it’s not clear how much help it can offer and how long it will be able to sustain that support. Even so, these developments probably do shrink the probability that the Cuban economy will tip soon into a deeper crisis, and with it the near-term prospects for a broader political transformation.

Russia Isn’t Winning Any Popularity Contests

Russia

It’s losing support around the globe:

In the United States, unfavorable views of Russia had jumped by 29 points in just one year. Similarly, in Europe, they climbed 20 points. Latin America, Asia and Africa had also seen their opinions of Russia grow more guarded, albeit by a far smaller margin.

In sum: more than two-thirds of people in the United States, Europe and the Middle East — all the regions most interested in what comes next — are pretty much anti-Russia. Any way you slice the data, Russia has few allies beyond China and a smattering of others that include Greece, Bangladesh and Vietnam.

Le Pen, Farage, Putin

Timothy Snyder, whose historic analysis of the conflict between Russia and Ukraine is worth reading in full, situates Putin’s ideology within the rising tide of far-right nationalism in Europe:

More than anything else, what unites the Russian leadership with the European far Right is a certain basic dishonesty, a lie so fundamental and self-delusive that it has the potential to destroy an entire peaceful order. Even as Russian leaders pour scorn on a Europe they present as a gay fleshpot, Russia’s elite is dependent upon the European Union at every conceivable level. Without European predictability, law and culture, Russians would have nowhere to launder their money, establish their front companies, send their children to school, or spend their vacations. Europe is both the basis of the Russian system and its safety valve.

Likewise, the average Heinz-Christian Strache (FPÖ in Austria) or Marine Le Pen (Front National in France) voter takes for granted countless elements of peace and prosperity that were achieved as a result of European integration. The archetypical example is the possibility, on 25 May, to use free and fair democratic elections to the European parliament to vote for people who claim to oppose the existence of the European parliament.

In an equally weighty essay, Pádraig Murphy explores the intellectual heritage of Eurasianism:

The most prominent representative of this school in Moscow is Aleksandr Dugin, a professor at Moscow State University and leader of the Centre for Conservative Research. … Dugin is a disciple of Sir Halford Mackinder (1861-1947), the geopolitician who introduce the concept of the “Heartland”, or the “world island”, the Eurasian land mass, and who theorised that “who rules the world island commands the world”. He contrasted this with the Sealand, essentially the geopolitical sector dominated by sea power – in his time, Britain, now, the United States.

Dugin sees Russia as dominating the Heartland, the term he consistently uses. He explicitly harks back to the Slavophiles who, he says, had the concept of the Heartland, while the Westernisers did not, but also to the Eurasianists and their disparagement of Romano-German civilisation. The White emigration in Prague, he says, declared Russia not a part of European culture, but a separate “state world”, made up of a unique blend of western and eastern cultures.

Previous Dish on Dugin here. Meanwhile, Keating remarks on the role of the Cossacks in Russia’s conservative revival:

It began with Boris Yeltsin signing a number of decrees recognizing special rights, including the right to bear arms, for Cossack groups, but their re-emergence has accelerated under Vladimir Putin, who has made them something of a symbol of his conservative nationalist ideology. In 2005 Putin signed a bill allowing registered Cossack organizations to select members of special Cossack units in the Russian military and giving himself the right to appoint Cossack generals.

Cossack military schools have been formed. Cossack patrols have been policing cities in 19th-century military garb, including Moscow. In Krasnodar, home to Sochi, 1,000 Cossacks were put on the government payroll ahead of the Winter Olympics. They’ve also at times served as conservative cultural enforcers, policing ethnic minorities from southern Russia and leading campaigns against controversial artwork including Pussy Riot and a staged reading of Lolita in St. Peterburg.

Previous Dish on the new Russian chauvinism here and here.

How Do We Keep Russia In Check?

Over the weekend, Douthat recommended “a more realistic assessment of both Russian intentions (which are plainly more malign than the Obama administration wanted to believe) and Western leverage (which is more limited than Obama’s hawkish critics would like to think)”:

Unless we expect an immediate Russian invasion of Estonia, for instance, we probably don’t need a sweeping NATO redeployment from Germany to the Baltics. Unless we’re prepared to escalate significantly over the fate of eastern Ukraine, we shouldn’t contemplate sending arms and military advisers to the unsteady government in Kiev. Unless we’re prepared to go to war for Abkhazia and South Ossetia, we shouldn’t fast-track Georgia’s NATO membership.

In response, Noah Millman asks what our options are:

Given that there’s no obvious way to walk back the annexation, and that accepting the annexation would amount to opening the pandora’s box of wholesale revision of the post-Cold War settlement, I suspect that the real choices are outright war with Russia (which nobody wants) or a persistently high level of tension. But high levels of tension make conflict more likely. Douthat mentions two things that America should not do in response to the situation in Crimea, specifically because they would be provocative: deploy troops to Estonia or send arms to Kyiv. I don’t disagree – but how should we respond if Ida-Viru (which is over 70% Russian, and which contains over a third of Estonia’s Russian population, and also most of Estonia’s natural resources, such as they are) starts talking about seceding from Estonia, with Russian encouragement? How should we respond if outright civil war erupts in Ukraine and Russia moves in to “keep the peace”? Those are not rhetorical questions – we need to know what our answers would be. My point being, “containment” is not a condition of peace.

I suspect that the brutal truth is that we can do very little if Putin continues to act this way.

We haven’t had a major country with nukes invading other countries in order to annex them since, well, 2008, when we did nothing. There is no way that a full-scale war with Russia over its near-abroad is something we can or should contemplate. The key thing, so far as I can see, is keeping the West united, and urging the Europeans to ready economic sanctions that could truly hurt Putin’s grip on power, if he keeps on keeping on. And the latest grim news is that the troops massing on Ukraine’s Eastern border are beginning to seriously worry US intelligence:

American intelligence agencies have told Obama administration officials and key congressional staffers that there is mounting evidence that Russia is putting the pieces in place for an invasion of eastern Ukraine, and that the possibility of an imminent assault cannot be ruled out, according to people with direct knowledge of the matter.

Rogin follows up:

“At this point, they are amassed and they could go at a moment’s notice if Putin gave the go ahead,” the official said. “Don’t do it,” the official added, in a comment directed at Putin.

I’m afraid I’m beginning to fear the worst.

Walzer On Russia

Worth a read:

The invasion may not turn out to be a victory for Russia. The most heartening moment in the last week was the arrival in Tbilisi on Tuesday of the presidents of Latvia, Lithuania, Estonia, Ukraine, and Poland to stand in solidarity with Saakashvili. They are not ready to accept the reassertion of an old-fashioned Russian “sphere of influence.” And their public presence and resistance are more important than any American or European statements.