Thursday, January 15, 2009

Bear Market


When Barack Obama assumes the Presidency this Tuesday, he will face an array of foreign policy issues that will demand his attention and not in the let's-make-nice-now-that-George W. Bush-is-gone sort of way. Israel and the Palestinians are mixing it up again, North Korea continues its hysterical temper tantrums, Iran continues to foment global Islamic terror and of course, the wars in Afghanistan and Iraq proceed unabated. Lost in the shuffle, possibly, is a dispute between Russia, Ukraine and the European Union over natural gas that threatens NATO expansion and possibly a split in the alliance itself, and which serves as a perfect example of the problem an inexperienced and outclassed rookie President has to handle.


The rise in fuel prices has given Russia a power it never enjoyed during the Cold War as the world's leading Communist nation. Flush with money, Russia has rebuffed American designs against Iran's nuclear program, has intimidated her Baltic neighbors, has sold weapons to that socialist goon Hugo Chavez in Venezuela and has threatened Poland and the Czech Republic for daring to cooperate with America's ballistic missile defenses. Led by Vladimir Putin and other KGB alumni, Russia has cast off its post-Cold War image as a weakened and pathetic country, asserting itself as a huge, ancient and powerful nation accustomed to dominating two continents and intimidating its neighbors. Money is indeed power, they have discovered, too late to save the USSR but in time to shape a new Russia and get things done.


They started four years ago in Ukraine. In an effort to maintain control of their former Soviet satellite, they poured boatloads of money into the presidential campaign of Viktor Yanukovych, tried their best to rig the election in his favor and when that failed, tried to assassinate his rival, Viktor Yushchenko: Old habits die hard. Overwhelming popular resistance ultimately prevailed, Yushchenko survived the dioxin poisoning and was inaugurated President, but the hearts that rule the Kremlin are stout hearts indeed and the new old Russia would try again.


Aleksandr Litvenenko, a former KGB agent turned author and rabid Putin critic, became violently ill in London in November 2006 and died an agonizing death three weeks later, all the while claiming that his enemies in Moscow were responsible. He was right. British authorities determined that he had been poisoned with radioactive polonium-210, a substance produced by nuclear power plants, tightly controlled by national governments and which was used to send a very loud message that the Kremlin was not to be trifled with. British attempts to interrogate and extradite Andrei Lugovoi failed, the man suspected and charged with Litvenenko's murder. British diplomats were expelled from Russia in retaliation, no-one has ever gone to jail and more proof was provided that the Russia everyone knew and feared was back and ready for a brawl.


Next was a territorial dispute with Georgia, another ex-Soviet slave state. President Mikhail Saakashvili embraced the US and emphatically sought NATO membership in the face of bitter Russian protests, confident that his personal relationship with George W. Bush ensured American support in any potential conflict, and made the mistake of putting that assumption to the test. In August 2008, he ordered Georgian military forces to reoccupy Abkhazia and South Ossetia, two Georgian provinces who were ethnically Russian and who had been allowed to assume a measure of autonomy. Russia responded swiftly. In a matter of days, Russian troops had repelled the Georgian attack, seized their largest Black Sea port, cut the major east-west highway and a major oil pipeline and threatened the capital of Tbilisi while inflicting thousands of casualties before retiring, proving that handshakes and photo ops in the White House are no match for Russian tanks.
That brings us to the present. Ukraine imports Russian natural gas for its own consumption as well as for transit to Europe through a 23,000-mile network of pipes, paying about $195 per 1000 cubic meters for its fuel. Russia has demanded that Ukraine pay $450 per 1000 cubic meters, has withheld gas for Ukraine while shipping supplies meant for its European customers and refusing to supply so-called "technical gas" meant to push fuel through the pipeline. President Yushchenko of Ukraine, of course, is unwilling to allow his own citizens to freeze while he argues with the Russians and has kept the gas intended for Europe, sparking criticism from the EU since they now have to scramble for alternate supplies in the middle of winter. Russia is capitalizing on this mess as they now blame Ukraine for stealing fuel and forcing Europe to suffer unnecessarily, President Dmitri Medvedev going so far as to propose a conference in Moscow where the whole European Union can debate a solution, his own preference being to place Ukraine's pipeline network under "international control" - meaning Russia. In short, we have Russia bullying Ukraine with a view of either ruining her economically, gaining control of her pipeline network, short-circuiting her aspirations of NATO membership (most of the EU nations now shivering in the cold are also NATO members who would look at any Ukrainian request with a certain amount of, say, circumspection), cancelling further NATO expansion altogether or, in a perfect world, all of the above. This is bare-knuckle politics the way the Kremlin likes to play it, and there is real danger here. If Russia is allowed to intimidate the West and those countries who have befriended the West, if Russia is allowed to bite off those smaller countries and beat them up, if Russia is allowed to force Europe to choose between loyalty to the alliance and keeping her people warm, if Russia is allowed to dictate European and American foreign policy without heavyweight repercussions - they do, after all, need us so much more than we need them - then the effort of winning the Cold War will have been wasted and Mr. Obama will find himself facing the Russia of 1949, not 2009.







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