A Machiavellian Plan Against Russia?
By Timothy Stanley
June 12, 2015 "Information
Clearing House" - "Forbes"
- MOSCOW – To the Kremlin, recent events in its
backyard have proved once and for all that the amorphous body known as ‘the
West’ – its politicians, institutions, media, diplomats, armies, financial
architecture and governance bodies – are not to be trusted. The charge sheet is
long and contested: it starts with NATO’s ‘out of theater’ bombing campaign in
Yugoslavia in 1999, includes broken promises over eastern European integration
into the EU and NATO in the early 1990s, color revolutions in neighboring
states, botched interventions in Afghanistan and Iraq, destabilization in Libya
and Syria, repeated attempts to find common security architecture rebuffed, and
leads to the revolution/coup that took place in Kiev in March 2014, breakaway
regions in eastern Ukraine, subsequent political and economic sanctions against
Russia and, most recently, threats to remove Russia’s FIFA World Cup hosting
rights in 2018. Whether all of this is part of some long-term, Machiavellian
plan to destabilize Russia – an entirely uncontroversial view at all levels of
society here – is questionable, but calls to mind the famous quote from
Catch-22: ‘Just because you’re paranoid, doesn’t mean they’re not out to get
you.’And Russia is not alone. That other great
misunderstood Eurasian civilization, China, shares many of these concerns. The
Bretton Woods institutions have proven incapable of self-reform, subject to the
narrow influence of just a few countries and shareholders, and ignored calls to
restructure. When, last year, the US Congress blocked
IMF
IMF
reform plans that had been agreed among the G20, it was to many the most visible
sign yet that internal reform could not be expected. As a result, competitor
institutions have been created – the BRICS development bank, the Asian
Infrastructure Investment Bank (AIIB) – whose priorities, it is claimed, will
more closely match 21st century realities.
It is against this backdrop that Russian President Vladimir
Putin next month will play host to two of the most significant—and least
trumpeted—global meetings of the year. In the remote industrial city of Ufa,
located some 1000km east of Moscow in the southern Urals, the leaders of the
BRICS nations and the Shanghai Cooperation Organization (SCO) will convene
separately, potentially heralding a new dawn in global summitry.
The BRICS Summit brings together the leaders of Brazil,
Russia, India, China and South Africa for the seventh time in its history (and
second time in Russia). President
Vladimir Putin has been a strong proponent from the start, encouraging the
initial ministerial meeting in New York in 2006 and hosting (with former
President
Dmitry Medvedev) the bloc’s first full summit in Ekaterinburg in 2009. It is
unusual for institutions to be born as shorthand acronyms created by investment
bankers, and, as a result, the organization struggled initially to develop
traction. But those early days seem to be behind it, and the organization is now
busy creating an alternative international financial and regulatory framework to
replace what it sees to be the outdated Bretton Woods model. The Ufa meeting
represents the beginning of Russia’s year-long presidency, which will culminate
in next year’s China summit. Reportedly, a 130-item discussion agenda has been
created based on proposals presented to the Kremlin by all federal agencies.
The Shanghai Cooperation Organization (SCO) was created in
2001 by China, Russia, and the Central Asian states Kazakhstan, Kyrgyzstan,
Tajikistan and Uzbekistan. Its initial focus was on counter-terrorism and
extremism, but as its membership has grown (observers now include Afghanistan,
India, Iran, Mongolia and Pakistan, and ‘dialogue partners’ Belarus, Turkey and
Sri Lanka), its objectives have broadened accordingly to include political,
trade, economic, scientific, and cultural aims.
So far, real progress has been limited, but the ambitions are
clear. Infrastructure projects have been inked valued in the hundreds of
billions of dollars. Oil and gas pipelines, LNG ports, power plants, road links,
fast rail, all are present in China’s ‘One Belt, One Road’ (or ‘Silk Road’)
project, a strategic initiative underpinned by the new governance structures. A
$40 billion investment fund has already been created, with many times that
amount in bilateral deals agreed across Central and South
Asia. The
AIIB alone has initial capital of $100 billion. Small wonder, then, that many
citizens of EU and NATO member Greece, distressed and disillusioned after years
of austerity economics, see a possible future in these new institutions.
No one doubts that there will be huge challenges.
Institutional capacity, relationships based on realpolitik rather than
shared values, overlapping organisational structures (for example, the
much-touted Eurasian Economic Union that Russia has created also includes
Belarus, Kazakhstan, Kyrgyzstan and Armenia), low levels of trust between the
parties, and competition for influence over Central Asia could all lead to
institutional impasse.
But it is hard to deny that the momentum is on their
side. Mechanisms to present alternatives to the ubiquitous US dollar
are being created, with a $25 billion credit swap facility opened
between Russia and China last year, maiden yuan-denominated letters
of credit recently agreed between Russia’s
Sberbank
Sberbank and China’s Export-Import Bank, and a
proposal for a BRICS alternative to the international payment
mechanism SWIFT, access to which Russia was threatened with losing
last year. In the meantime, the central banks of a number of
regional economies, including China, Russia, and Kazakhstan, are
purchasing gold bullion in unprecedented volumes, suggesting
preparations are in place to create some kind of gold-backed
financial instrument in the medium term.
Russian officials have been keen to point out that the BRICS and SCO
meetings will not overlap. At this stage, this is almost beside the
point; the symbolism of simultaneously hosting a group that combines
the world’s largest economic growth markets as well as a group that
seeks to secure national sovereignty and territorial security over
the largest landmass, Eurasia, will not be lost on their
populations. Meanwhile, in the West, US President Obama’s jibe about
recreating the ‘glories of the Soviet empire’ is consistent with an
approach and narrative that look backwards rather than forwards.
Western ‘isolation’ of Russia is inspiring the country to create new
economic realities that should create the growth towards a more
balanced and sustainable economy for decades to come.
Timothy Stanley is Managing Director for
Russia and the CIS at Control Risks, the global risk consultancy.