StrategyUnit

Hello Everyone,

Just wanted to thank everyone who has visited StrategyUnit and to those that have posted invaluable comments as well. StrategyUnit has only been online for only four months, but has attained decent visitor numbers and some recognition from greats like Zenpundit to Instapundit.

I would like to state that if anyone feels they share the same interests, scope and focus as StrategyUnit is welcome to solicit potential articles. I both wish to expand StrategyUnit capacity to produce relevant articles and also lighten my personal blogging burden. With a full time 9-7 job in a fast-paced industry, its quite the effort to maintain this blog.

Cheers

Quick Post on the Iran and Iraq

In the Wretchard’s “The Coming of the Bomb” at Belmont Club, he excerpts from the US Army War College’s “Getting Ready For A Nuclear-Ready Iran” monograph:

“[An] ever more nuclear-ready Iran will try to lead the revolutionary Islamic vanguard throughout the Islamic world by becoming the main support for terrorist organizations aimed against Washington’s key regional ally, Israel; America’s key energy source, Saudi Arabia; and Washington’s prospective democratic ally, Iraq.”

The Wretchard extends this analysis to declare, “It could mark the final end of efforts to prevent nuclear proliferation and provide Islamic terrorism with a nuclear deterrent.”

If the prediction above holds true than the Iraqi project will fail before it even has a chance to really succeed. The great hope for the Operation Iraqi Freedom (OIF) was to help galvanize democracy and openness in the Middle East with the chance to be a Shia counterweight to the mullahs in Iran and bring hope to the Iranian people by showing them an alternative route.

An emboldened nuclear Iran that would be able to leverage its nuclear power status to aggressively support Islamic terrorist organizations and would contribute to even more instability to the security environment in the Middle East and many Muslim nations.

Iranian President Mahmoud Ahmadinejad intentions for the nuclear weapons are still not quite clear. His extreme rhetoric has caused much alarm and, indeed, the cause of the escalation of the crisis. Here are just some possible motives:
1) Deterrent against the US. The US surrounds Iran on three sides: Iraq in the west, Afghanistan in the south, and in the Persian Gulf where the US superior naval forces can be sent.
2) To generate a crisis that will consolidate Ahmadinejad’s political base? This would be in line with his stark political rhetoric, which has captured the political discourse.
3) Leverage to propel Iranian Republic as the revolutionary vanguard of Islam (despite the Shi’a vs. Sunni differences)?

I don’t think we have enough information on this to move beyond such speculation and until the only logical route with Iran is through engagement, exchanging the world’s acquiesce of Iran’s nuclear development for some sort of economic openness (a way to tie and restrain Tehran’s action). Short of a risky military action or regime change, we sadly have no options left.

PS: As a side note Officer’s Club (via DefenseTech) points to a Washington Post’s article on a “bolt-out-of-the-blue” plan for rapid global strike, a supposed plan called CONPLAN 8022 that deals specifically with Iran and North Korea. Unless the world stands behind the US (with the pen and the sword), such a plan would be very unlikely.

Introduction

Tom Friedman’s recent NYT column, “Axis of Order?”, is a very interesting article not because of its main topic, dealing with Iran, but its recognition that we need to adjust to new realities of the new-core states. In essence, the need for bringing in the new-core states like China, Russia and India into the interntional process to be stakeholders:

Why has this now become a stakeholder test for China, Russia and India? Because if the Iranian mullahs who are now awash in petro- dollars know one thing, it is how to read power and weakness. The Iranians know that the United States has already put all the sanctions on Iran that it can. They seriously doubt that the Europeans will ever impose sanctions. And this is the key even if the Security Council censures Iran, and Europe miraculously joins the U.S. in imposing sanctions, the Iranians assume that China, Russia and India that’s half the world will never follow.

Only if China, Russia and India make it clear that they are not only willing to let Iran’s case be taken up by the Security Council, but that they will also join in stringent economic sanctions, will Iran back down. Western threats, which Iran’s radical president dismissed with the back of his hand Thursday as some little “fuss,” are no longer credible.

Communist Russia and China opposed the United States during the Cold War, and socialist India was neutral. But since the end of the Cold War, all three countries have embraced capitalism and become huge players and beneficiaries of today’s global economy, with Russia providing oil and gas, China manufacturing and India software. All three now have a huge stake in the stability of the international system.

But these countries have basically been cruising along as free riders on a stable international order, which has been maintained largely by the United States, with help from the European Union, NATO and Japan. Both Russia and China have actually used their clout at times to protect international bad actors like Iran, Sudan and North Korea out of a narrow economic self-interest and a kind of residual third-world, gotta-counter-the-Americans reflex.
…
That helped keep Iran on the fence for a while. But now Iran has gotten off the fence, and so must Russia, China and India. For their own sakes, if not America’s, these emerging big three have got to become the Axis of Order. The old cops on the beat can’t deal with the Axis of Evil alone anymore. Pay attention to how this one ends, folks. The structure of the whole post-Cold-War world is at stake.

Commentary

On the Evolving International System

Friedman is correct that the Iran Crisis will be an interesting test on how the new New Core members - India, China, and Russia - will react to a major crisis that is ocurring in: 1) near their neighborhood; and 2) a country with which they have substantial energy and financial connections with.

Calling the trio of New Core states to be an “Axis of Order” is cute, but doesnt address the bigger questions: How do these New Core states fit in to the international system? And, how do we ensure that these New Core states will adjust to the new international system in a way beneficial to the United States and the world?

For the United States, at the very least we need a Big Four Alliance system composing of the UK-US-Japan-India. Thomas Donnelly at AEI has written an excellent essay, Big Four Alliance on this. The only fault is that Donnelly’s focus is too narrow - focusing on anglosphere countries and it needs to be more ambitious. There should be a “Big Four Alliance” for sure, but this should be part of a larger framework of institutions that include the Big Four, as well as, Russia, China and Brazil.

On Iran and Nuclear Proliferation
The bigger question to ask in Iran is: Can we honestly say we can stop nuclear proliferation? And if not, what are our options?

In The Atlantic (Jan/Feb 06), William Langewiesche correctly argues in “The Point of No Return” that in this current world we cannot stop proliferation. Here’s a choice anonymous quote from the article:

You cannot have a world order in which you have five or eight nuclear-weapons states on the one hand, and the rest of the international community on the other. There are many places like Pakistan, poor countries that have legitimate security concerns—every bit as legitimate as yours. And yet you ask them to address those concerns without nuclear weapons—while you have nuclear weapons and you have everything else? It is not a question of what is fair, or right or wrong. It is simply not going to work.

Indeed, the world has changed and with it - to quote Thomas Barnett - we need new “rule-sets”.

Related:
If you would like a good roundup on events surrounding Iran, I suggest checking out this excellent posting by The Moderate Voice by Joe Gandelman.

Introduction: Chinese and Indian Energy Cooperation

India and China kicked off their “Year of Friendship” to a rather good start. Only a few days ago (Jan 9), China and India’s respective state-owned oil companies agreed on a joint venture on the purchase and development on oil assets in Syria. And now China and India agreed on sharing bid information on bidding on foreign hydrocarbon fuel (to avoid driving prices unnecesarrily) and to encourage joint ventures.

The document that China and India signed, the two most populous states, outlined “cooperation in upstream exploration and production, refining and marketing of petroleum products and petrochemicals, oil and gas pipelines, research and development, and promotion of environmentally friendly fuels.” (source) The document also included agreements on coopertion on the production of biofuels.

In a visit to China, the Indian Petroleum and Natural Gas Minister Mani Shankar Aiyar stated:

“We look on China not as a strategic competitor but a strategic partner,” said Aiyar in an exclusive interview in Beijing. “It is clear to me that any imitation of the ‘Great Game’ between India and China is a danger to peace. We cannot endanger each other’s security in our quest for energy security.”

Aiyar also brought up the idea of joint pipeline connecting India and China, but this is something India has brought-up in the past as well without substantial response from China.

Motives and Benefits?

On the surface, this partnership is quite puzzling. This movement towards cooperation would benefit India far more than China:

• India is more dependent on imported oil (China’s 30-40% to India’s 70%)
• Indian oil companies have been repeatedly outbided by China, so why the need for China to cooperate?
• China’s “Go-Out” oil strategy has been thus far successful with its connections in Central Asia, South American and from Sudan to Iran. So why would China cut a deal now?
• China and India have gone through minor wars in the past and unresolved border disputes. How will these issues loom over China and India’s ability to cooperate?

However, China and India have cooperated in some major instances, such as China’s support of India for permanent membership in the Security Council and in the Russian-Chinese led Shanghai Cooperation Organization (SCO), India sits as an observer and a potential future member.

But in a larger context, Chinese would be foolish to stand-by as US and India continue to forge a closer tie, esp. with word last year about the Bush Administration wishing to “help India become a major world power in the 21st century”, which has mainly manifested itself in the US willingness to help India’s civilian nuclear energy program despite the nuclear testing in 1998.

Broad energy cooperation from China (successful so far in its “Go Out” strategy) would prove very significant for an equally energy hungry India. Indeed, one could say that using energy cooperation would present a more enticing carrot than what the US can offer India: military equipment and nuclear energy technology.

Additionally, engaging and building relationships with neighboring partners would fit into China’s strategy of “Raising Peacefully”. China is continuing to build regional institutions to project its power, such as through the Shanghai Cooperation Organization (SCO) and the recent Easts Asia Summit.

Some would perhaps point out that any partnership would never work between India and China, as they are economic rivals. This is true in the area of energy resources, but when it comes to their economies, the two are very different. China is concentrating on manufacturing where as India moving ahead to high-tech software area and providing advances services, such in the financial industry.

Conclusion

With the exception of Japan (which even signed a $3 billion deal for Iranian oil), things are looking rather lonely for the U.S. in Asia. US must more vigorously appraoch India as natural partners, in its shared Anglo-heritage and as the world’s largest democracy. India can help share the burden as one of the pillars of security in the Middle East and Central Asia. And China too should be approach and incorporated under a new security framework in East Asia, with the United States and Japan.

The U.S. needs to lead in incorporating China, India and other emerging New Core powers into international organizations, as prescribed by Thomas Barnett. Else, these New Core states will look to seize the initiative and form their own alliances and institutions that will increasingly sideline the United States. We can help lead the future or sit back and watch as others make it for us.

PS: Why the lack of any coverage in this on New York Times, Washington Post etc? I am writing this on 1/13/2005 12:36AM, Pacific Time. Only the Financial Timeshas something major so far.

Summary

Declining birthrates in places like Europe, Japan and Russia and increasing immigration in once homogenous states (like France) is becoming an issue of mainstream discussion. Just last week (January 04 & 05), the WSJ and the Economist both ran articles on the issue of demographics, commenting on the opposite ends but equally faulty premises. One seeing immigration and demographics change as signaling the decline of the West (WSJ) and the other tends to underplay the challenge of declining birthrate and changing demographics (Economist).

The impact of changing demographics are analyzed through the New Republic’s piece on the Netherlands, on the effects of Muslim immigration and the socio-political upheaval (a turn to the Right) it has caused in a state stereotyped as an uber-liberal country.

The challenge facing Netherlands (and other countries) is a major one: it is the challenge of successfully transitioning from a nation-state to a market-state. Indeed, Philip Bobbitt has already foresaw such issues in his seminal work The Shield of Achilles:

“Whereas the nation-state based its legitimacy on a promise to better the material well-being of the nation, the market-state promises to maximize the opportunity of each individual citizen…The current conflict is one of several possible wars of the market-states as they seek to open up societies to trade in commerce, ideas, and immigration which excite hostility in those groups that want to use law to enforce religious or ethnic orthodoxy.” (Emphasis mine)

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Weekend Reading: Thomas Friedman on Energy Gluttony and Security in the Middle East and Beyond
In Yesterday’s New York Times, columnist and author Tom Friedman writes calls for a mature U.S. energy policy as central to the US and global security. Unfortunately, the piece is behind New York Time’s firewall, but thankfully it is freely available from my city library’s online database.

Most strikingly Friendman states that “A democratization policy in the Middle East without a different energy policy at home is a waste of time, money and, most important, the lives of our young people.”

In a sense he is correct. Reform in the Middle East will be more about economic diversity/connectivity rather than democracy. As we know petrol states suffer from lacking both, but economic connectivity (beyond just state oil companies selling black gold abroad) will help foster political moderation and pull these states from Gap to the Seam and to the Core (to use Thomas Barnett’s terminology).

Here’s an excerpt from Friendman’s article, “Being Green is the New Red White and Blue“:

The biggest threat to America and its values today is not communism, authoritarianism or Islamism. It’s petrolism. Petrolism is my term for the corrupting, antidemocratic governing practices — in oil states from Russia to Nigeria and Iran — that result from a long run of $60-a-barrel oil. Petrolism is the politics of using oil income to buy off one’s citizens with subsidies and government jobs, using oil and gas exports to intimidate or buy off one’s enemies, and using oil profits to build up one’s internal security forces and army to keep oneself ensconced in power, without any transparency or checks and balances.

When a nation’s leaders can practice petrolism, they never have to tap their people’s energy and creativity; they simply have to tap an oil well. And therefore politics in a petrolist state is not about building a society or an educational system that maximizes its people’s ability to innovate, export and compete. It is simply about who controls the oil tap.
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Quick Weekend Reading Post (Update 01)

Just added: Check out Foreign Policy (Jan/Feb06) on “China Rising” with contribution from Zbigniew Brzezinski, John J. Mearsheimer, Minxin Pei and the like. Definately worth the lengthy read.

Victor Davis Hanson’ s “A Letter to the Europeans” - A nice “State of Europe” piece by the ever controversial VDH.

Dan tdaxp: “Good News from Iraq” - Excellent argument for the dividing of Iraq in the context of Thomas Barnett’s Core-Gap perspective.

Dan tdaxp: “Mother’s MILC and the Department of the MISCellaneous” - Highlighting events in South Korea, China and elsewhere, Dan puts forward the the need for a “Military-Industrial-Leviathan-Complex” all within the context of Thomas Barnett’s “Reverse Domino Theory”.

More to come…

Complimentaring StrategyUnit’s post on the Russia-Ukraine Gas sega, StratFor’s Peter Zeihan has an interesting perspective on the possible role and orientation of Dimitri Mendevev, Putin’s newly selected Prime Minister, and his in the Ukraine-Russian Gas issue.

StratFor’s article is interesting because it takes account to the role of Mendevev, whereas Jamestown Foundation, Eurasianet et al have been more focused on Putin or Russia itself.

So, who is this Medvedev?

In mid-November, Russian President Vladimir Putin named Dmitry Medvedev as first deputy prime minister. Medvedev is a rather rare personality in Russian politics, in that he is a modernizer who has not become unrealistically optimistic about Russia ever looking like — much less joining — the West, and a nationalist who has not fallen prey to the debilitating paranoia that often characterizes Russian policy. He also happens to be Putin’s protégé and the board chairman of Gazprom. The Ukraine natural gas crisis was his first Russian foreign-policy initiative.

Medvedev, like all Russians, recognizes that his country’s long-term prospects without Ukraine are, at best, bleak. That means that Russia’s European relations have become of secondary importance — they are no longer an end in their own right, but rather a means to other ends.

According to Stratfor, Medvedev’s motivations are similar to what was mentioned in StrategyUnit’s article: a method to reassert Russia on the world stage, taking advantage of the G-8 chairmanship to set the tone of its chairmanship. In this case it is to force Europe to consider Russia’s interests, power and importance seriously.

Prior to the Jan. 1 shutoff, the Europeans had become complacent, unappreciative of the scope of their dependency upon Russia or how much they have taken a “friendly” Moscow for granted since the end — or even before the end — of the Cold War. Energy supplies to Europe continued throughout the Afghan war, the 1983 war scare, the Moscow Olympic boycott, the putsch against Gorbachev, the Soviet breakup, the Chechen war, the Kosovo war, and the enlargements of NATO and the EU. The Europeans grew confident that as far as energy supplies were concerned, the Russians — while unpredictable in their rhetoric — were rock-solid in their reliability.

Medvedev’s primary goal was to redefine European perceptions of Russia. As of Dec. 31, Western Europeans perceived Russia primarily as an easily dismissed, benign former foe. But with the Gazprom cutoff — which diminished gas supplies needed for heating in the middle of winter — Russia proved itself not only sufficiently erratic to be taken seriously, but also capable of inflicting very real pain with a modicum of effort.

Now, did the Russians want to hurt the Europeans? Of course not. Europe, particularly “old” Europe, remains a potential partner for Moscow, and there is no reason for the Kremlin to introduce spite into an already complex relationship. But did the Russians want the Europeans to know that the Kremlin has the capacity and chutzpah to turn the screws? Absolutely. And doing so at a time of year when the wind whipping off the North Sea is anything but balmy adds that ever-incisive Russian touch.

This is not about establishing trust, but about establishing in Europe a respect for Russia’s strengths and an awareness of Russia’s concerns.
…
The elegance of Medvedev’s strategy lies in the fact that simply causing the Europeans to think about Russian interests means that the Kremlin has driven a wedge not only between the Europeans and the Ukrainians, but between the Europeans and the Americans. If Russia is to recover what it has lost in geopolitical stature these past 15 years, this is precisely the sort of policy that will give it a fighting chance.

The entire article has more details regarding Ukraine’s motivations and calculations as well as its historic importance to Russia. Most interestingly it points to Yushchenko potential use of the gas issue as a way to play the “anti-Russian” card to boost his popularity for the upcoming March parliamentary elections.

If someone would like to see the article, please let me know and I can forward it. I am unsure if its available freely online.

Updated December 03, 2006
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Introduction

With the breakdown in price negotiations during recent days, Russian state-owned Gazprom choose to cut the gas deliveries to Ukraine, the main conduit for exports to the rest of Europe. This is a critical situation because, as mentioned by Bloomberg, “State-run Gazprom supplies about a quarter of gas consumed in Europe and ships about 75 percent of that volume through Ukrainian pipelines.”

Washington Post provides further details on the outcome: “On Sunday, with no agreement on a new price, Russia cut by 120 million cubic meters a day the volume of gas it sent down the Ukrainian pipeline — Ukraine’s share. But there were soon reports that the volume of gas reaching Austria, Italy, France, Hungary, Poland, Slovakia, Romania and Croatia at the other end had fallen by as much as 40 percent.

Gazprom claimed that Ukraine was stealing gas — about $25 million worth on Sunday alone, according to Alexander Medvedev, Gazprom’s deputy chairman”

Russian Climbdown

But only one day after cutting the gas supply, Russia has been forced to restore the supply with mounting criticism from Europe and US on Russia’s ability to be a reliable energy partner. Gazprom, however, tried to square all blame on Ukraine:

“With the aim of preventing a possible energy crisis caused by Ukraine illegally taking gas, Gazprom has taken the decision to deliver additional gas into the gas transport system of Ukraine,” the company said in a statement.

“We stress that the additional delivery of gas is not designed for Ukrainian consumers but is meant for transit through the territory of Ukraine for delivery to consumers outside the borders of Ukraine.”

Europe, IEA and the US are placing blame on Russia for the current crisis, demonstrating the limits of Russia’s “Petro-Power”.

Russian Stabs Itself and Stumbles

In the long term, Ukraine will have to come to a compromise with Russia leading to higher prices. But more substantially, Russia’s heavy handed tactics against Ukraine will backfire throughout Europe and Russia’s energy customers. What Russia has seeming underestimated is the reaction from Europe because of its actions against Ukraine. What Russia’s hardball tactics has done for Europe is to:

1. Highlight Europe’s dangerous energy dependency on an increasingly authoritarian Russia
2. Confirm the fear that Russia will turn to its energy resources as its main leverage of power in the global stage
3. Encourage European states to find alternative energy sources, away from Russia (Neighboring Finland is already building its first nuclear to move away from Russia)
4. Highlight that Putin and Russia cannot be trusted in other important issues like Iran, North Korea et cetera
5. Encourage speeding the process to include Ukraine in western institutions like NATO and the EU
6. Underline that the Russian-German gas pipeline (expected to be completed by 2010) is a naked attempt by Russia to consolidate its power and influence in Europe
7. Seals Former German Chancellor Gerhard Schroder image as sell-out for Moscow, as he is now working on Gazprom’s Russian-German Gas Pipeline
8. Draw increasing criticism to Russia for its increasing authoritarian use of power, such as the banning of NGOs, that will only grow as Russia assumes head of the G-8 this year.
9. Increase calls for Russia to be removed from the G-8 for not being a major world economy, a democracy or even a free-market state

This arrogant move against Ukraine amid recent criticism for restricting NGOs and holding the G-8 chair may be a signal that Putin’s consolidation of power is leading Russia to a belligerent authoritarian state, rather than a corporatist Russia (think Singapore) that can help consolidate Moscow’s power before Russia deteriorates and bring Russia back economically.

Conclusion
Ukraine and Russia are still a long way from resolving the issue, but so far we can conclude that even if Russia gets what it wants from Ukraine, it still come out loser on the world stage and its reputation as reliable energy partner is soiled. At this point in the situation, it is difficult to see how Russia stands to benefit against Ukraine and the world stage. The loss in international standing is costing a lot more than any possible gain from Ukraine.

Post-Script: A Contrarian View, Russia Exerts Power?
To keep the analysis balanced (since events are too early to call), Putin could be purposely timing the move against Ukraine because of its G-8 chairmanship.

It is possible that Putin wants to demonstrate that Russia is willing to flex its economic muscle regardless of its cost to the world stage and that in the face of an increasingly energy vulnerable Europe, Russia’s power is very much real. True, states like Finland are increasingly promoting nuclear energy as an alternative, but they take years to build and Russia has the largest natural gas reserve while Norway and the UK’s has dwindled.

In short, this event could be a move to show that Russia is not to be taken for granted as the world “natural gas tank station” to be tapped freely by Europe or its other customers. Raw/Single commodity export states are viewed somewhat disparging as backward states for advanced states to exploit - this is something that obviously Putin would not like Russia labeled as.

However, such increase in fear and power would only be a short/medium term gain. In the long run, such hardballing tactics would likely motivate Europe to move away from Russia - be it using nuclear power or alternative sources of natural gas. Thus, this is a risky gamble for Russia to make, if indeed this is Putin’s intentions.
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