________________________________________ Need to Know Something Fast? Try STRATFOR's Find Facts Service Visit http://www.stratfor.com/findfacts/ Or e-mail [EMAIL PROTECTED] ________________________________________ Global Intelligence Update Red Alert February 22, 1999 The IMF, Kosovo, Iraq, Turkey and the Russian Question Summary: A series of unconnected problems are coming together as different aspects of a single problem: Russia. The G-7 met this weekend in Bonn and made it clear that major help for Russia is not going to be forthcoming without the implementation of impossible reforms. Russia made it clear that it was going to stand against the U.S. and the West on the three critical issues of the week. Russia let the U.S. know that it would oppose any stationing of NATO troops in Kosovo without Serb permission, and it would also oppose air strikes. Leaks appeared throughout Western newspapers about Russian arms sales to Iraq. We believe that these reports were deliberate leaks from Moscow and Minsk designed to warn the West. The Russians condemned the Turkish invasion of Iraq, and a Russian General said that the S-300 missiles shipped to Armenia were designed to protect the CIS from Turkey and NATO. At the same time, high-level meetings were being held with German and Japanese leaders. Russia is putting pressure on these two countries, and particularly Germany, to get the West to provide financial help to Russia. The Russian lever on Germany: the threat of a return of a mini-Cold War. Analysis: Three crises moved along smartly during this past week. In Kosovo, the United States and NATO postponed an unchangeable deadline after which air strikes on Serbia would begin. The capture of a Kurdish leader by Turkey led to intense rioting throughout Europe, a severe governmental crisis in Greece, and denials by Israelis and Americans concerning involvement in the capture and handover of Ocalan to the Turks. In Iraq, daily air attacks against Iraqi air defense sites continues, with Iraq continuing to warn of undefined retaliation. A Shiite cleric in Iraq has been killed and the Iranians have now said that they hold Baghdad responsible for the death. No specific threat of retaliation was made. What we are seeing is an intensifying arc of crises running from the Balkans, through Asia Minor to the Persian Gulf. We have, in the past, speculated on coordination between Baghdad and Belgrade on a strategy designed to draw U.S. military forces deeper into geographically dispersed arenas by their intensifying inherently inconclusive conflicts. Whether there has been intentional collusion or these are merely separate crises running in parallel, the fact remains that U.S. forces are now engaged in daily combat operations in Iraq and currently stand a little over 48 hours away from operations against Serbia. In the meantime, almost as a bridge between the two, Turkey, an American ally, stands simultaneously exultant over the seizure of Ocalan, as well as under intensifying pressure from a number of quarters. There appears to us to be two common denominators to these crises. The first is obvious. The United States is deeply involved in each of them. The second is less obvious but increasingly apparent. Russia is increasingly involved in each of these crises, albeit in different ways. It is our view that the willingness of both the Iraqi and Serb governments to resist U.S. pressure and thereby incur the risks of American displeasure has a great deal to do with their perception of the new role that Russia is playing in the world. It also appears to us that the Turkish capture of Ocalan and its invasion of Iraq -- while not particularly triggered by perceptions of Russian policy -- will serve to hasten the general evolution of Russian foreign policy. The Russians are primarily focused on their internal political and economic condition. There is now a general sense that the West has effectively abandoned Russia. Except for making impossible demands for reform, demands that cannot be met given Russian economic and political reality, the West is no longer prepared to underwrite Russian reform efforts. This weekend, for example, the finance ministers and central bank governors of the G-7 group met in Bonn, Germany. Their general position on Russia was that no further assistance would be forthcoming without major reforms. Without that, the G-7 announced, Russia "is increasingly faced with the serious risk of accelerating inflation, further exchange rate weakening and continued economic retraction." The G-7 announced no steps whatever to solve Russia's problems, leaving it to the IMF to negotiate with the Russians. In parallel to the Bonn discussions, Russian President Boris Yeltsin held meetings with German Chancellor Gerhard Schroeder on Friday. The meetings included Russian Prime Minister Yevgeny Primakov, Foreign Minister Igor Ivanov and Defense Minister Igor Sergeyev. This was clearly a major bilateral meeting and not a casual get-together. Among the topics that were to be discussed were Iraq, Kosovo, NATO, weapons modernization, fighting the Russian Mafia, and, of course, economic assistance to Russia. After the meeting with Schroeder, Russian Prime Minister Primakov left for talks with the Japanese in Tokyo. The Russians have mounted a full-court press focused on Germany and Japan. They have had no luck pleading with the Americans directly on economic issues. They have now focused their attention on two key American partners who also are extremely vulnerable in their own ways. The Japanese are extremely vulnerable economically, given their lack of recovery from financial problems. The Russians are carrying this message to the Japanese: unless Western help is forthcoming, Russia's economy will continue to worsen, undermining the prospects of a global economic recovery. Therefore, the Japanese have a serious interest in advocating the Russian position to the Americans. Moreover, unless the Japanese succeed in this task, they can forget about recovering Japanese islands occupied by the Russians at the end of World War II. The Russians were delivering a more geopolitical message to the Germans. The Germans badly want stability along the territory running from the Baltics to the Balkans. They are more directly effected by instability in these regions than any other major power. They have made enormous investments in this region as well as huge investments in Russia. Russia is letting Germany know that more than investments are at stake in this region. Russia is in a position to destabilize the entire region. This would lead to increased German dependence on the United States for stability, to Germany being forced to intervene in the region on its own or in concert with other European nations, or to the acceptance of instability and tension in its own back yard. None of these options appeal to the Germans. That is what the Russians are counting on. Russia appears now to have adopted a general strategy that takes care of both its domestic political requirements and its foreign interests. This strategy is simple and reasonable, because it simultaneously plays to Russia's strengths while decreasing its weaknesses. The predicate of U.S. and NATO policy toward Serbia, for example, has been the isolation of Serbia from both political support and weapons supplies. The core assumption has been that, given its isolation, Belgrade would, in due course, have to capitulate to Western demands. Even if this process required a degree of military intervention, the assumption was that this intervention carried minimal risk and would have a maximum effect precisely because of this isolation. Russia has made it clear that this premise is no longer valid. During the past week it has done everything possible to signal the United States and NATO not only that it was opposed to unilateral intervention in Kosovo, but also that it had the means and the will to make that intervention difficult and painful. Yeltsin sent a tough note to Clinton earlier in the week, warning him of the consequences of unilateral action on Kosovo and warning that, "We will not allow Kosovo to be touched." State Duma Chairman Gennadiy Seleznev warned that bombing Serbia would inevitably result in the cancellation of the Russia-NATO treaty, and went on to say that, "We will have to render military and technical assistance to Yugoslavia, if aggression is unleashed against it." British press reports indicated that Russia was canceling a naval cooperation treaty with the UK. During the same week, press reports began to surface to the effect that Russia and its partner Belarus were supplying weapons to Iraq. These reports have, of course, been surfacing for a while, but the frequency and prominence of these reports are now increasing. What is decreasing is the vehemence of the denials. Belarus President Lukashenko was reported by the Interfax News Agency as saying simply "I have not signed a single contract for any delivery of weapons to Iraq." He went on to say "cooperation with Persian Gulf states represents significant possibilities." In other words, all he said was that he signed no contracts, which is not even close to saying that Belarus, with Russian knowledge, is not delivering weapons. There is little doubt in our mind that Russian and Belarussian weaponry is reaching Iraq. What is interesting is that they are slowly removing the veil over these deals. One of the motivating factors here is Turkey. Russia has long been worried about Turkish intentions in the Caucuses, particularly among the Moslem nations in the region. Moscow has been increasingly close to Armenia, a non-Moslem antagonist to Turkey. In recent weeks, Russia began delivering S-300 surface- to-air missiles to Armenia, in a dramatic increase in weaponry certain to alarm Armenia's neighbors. This week, Russia went one better. According to the Armenian Snark News Agency, Colonel General Anatoly Kornukov, Commander-in-Chief of the Russian Air Force, made a speech at Air Base 102, a Russian operated facility in Armenia intended to protect the borders of the CIS. Snark quoted Kornukov as follows: "The deployment of S-300 missile complexes at Russian military base No 102 in Armenia is being implemented within the framework of planned rearmament. At the same time, there is a real threat from Turkey where, apart from Turkish planes, NATO planes, which in fact fly daily bombing missions to Iraq, are deployed as well. We cannot rule out the possibility of flights straying off-course, or apparently off- course over the territory of the sovereign state of Armenia, which has joined the CIS Collective Security Treaty. The new missile systems will enable us to give a dignified response if necessary." Without speculating on what a dignified response might be, we also note that the Russians were furious over the Turkish attack into Iraq this week following the capture of Ocalan. The Russian Foreign Ministry stated that "We have repeatedly announced the inadmissibility of such moves which grossly violate the international law, the sovereignty and territorial integrity of Iraq no matter what motives are given." The statement went on to link the invasion to the U.S. bombing and demanded that both stop. To emphasize the situation, the Syrian Foreign Minister, Faruq al-Shar'a visited Moscow last Tuesday for talks with Prime Minister Yevgeny Primakov. Both condemned the U.S. bombing of Iraq. Russia endorsed the Syrian view that there should be no separate Israeli-Lebanese peace agreement while the Syrians endorsed a strong role for Russia in the Middle East. If we didn't know better, we would say that the Cold War is back. That is overstating it by a great deal. What is going on, however, is a concerted Russian effort to let the West know what the price will be if it maintains its current hard line on economic help. The primary audience for this blitz is not the United States, although Russia would be delighted if it had some impact. Rather, Germany is the primary audience, with a secondary one in Japan. Germany is the key for two reasons. First, it has huge investments in Russia and is naturally motivated to solve Russia's problems. Second, even if it was ready to write off those investments, Russia is trying to let Germany know that the resulting increase in international tension would leave Germany particularly exposed. With its treaty with Belarus, Russian troops may well be on the Polish border before the end of the year. This could mean pressure on Poland, which will be part of NATO, as well as on the Baltic states and Slovakia. Germany's leftist government is not eager to intervene unilaterally nor in concert with the United States. It does not want a geopolitical confrontation with Russia, which, in turn, is making the same case to the Japanese over the Kuriles. Russia is sending a message to both Germany and Japan that the price for geopolitical stability is economic support and will leave it to Germany and Japan to make the case to the United States in the event that the Americans can't directly hear it. Politically, this is an excellent move for the Russian government. Confronting the West is the one thing that all factions in the Duma can agree on. No one will speak against it, especially if it is couched in both economic and geopolitical terms. Confrontation strengthens Yeltsin's and Primakov's positions. Moreover the Russians do have military levers in terms of arms sales and weapons transfers, making advisors available, and potentially, as in Armenia, even committing troops. Finally, however the U.S. responds, U.S. allies have no stomach for even a low-grade return to the Cold War. The Serbs and Iraqis are completely aware of this evolution in Russia. There is no question in our minds that their willingness to accept increased risks of U.S. military action is rooted in the perception that whatever the pain imposed, the long-term results of these actions will be to draw Russia deeper into the conflicts. The more Russia is present, the stronger Serbia and Iraq's position becomes. Since the Russians have excellent reasons for getting involved, reasons having nothing to do with the conflict at hand, U.S. actions to increase pressure on Serbia and Iraq work against the U.S. policy of isolating them. When we add into this the genuine Russia concern about long-term Turkish intentions in the Caucuses, we see a situation in which discreet problems are beginning to merge into a series of interrelated crises. We note that the United States has given Serbia until Tuesday to agree to NATO troops on its soil. Assume that Belgrade does not agree and NATO decides to stage Iraqi-like air attacks. Assume that the results of the air attacks parallel those in Iraq. There is pain but there is no capitulation. Assume further that the IMF stonewalls the Russians while the Turks continue their attacks on Iraq. In other words, consider the world as it will likely be at the end of next week if the U.S. does not shift its course. Russia will have no reason not to increase pressure. Then the focus will be on the German government, which does not know what it will do. For these reasons, we would likely expect the U.S. to try to defuse the Kosovo crisis. We do not expect the Serbs to be motivated to provide much help in defusing it. Therefore the U.S. has three choices: get the IMF to give the Russians a lot of money in what would, in effect, be a bribe; hit Belgrade and suffer the consequences; figure a way to climb down out of the confrontation. We won't try to guess what course the U.S. will choose. ___________________________________________________ To receive free daily Global Intelligence Updates, sign up on the web at http://www.stratfor.com/mail/, or send your name, organization, position, mailing address, phone number, and e-mail address to [EMAIL PROTECTED] ___________________________________________________ STRATFOR, Inc. 504 Lavaca, Suite 1100 Austin, TX 78701 Phone: 512-583-5000 Fax: 512-583-5025 Internet: http://www.stratfor.com/ Email: [EMAIL PROTECTED]
