Courcy's Intelligence Brief - 10 October 2012

Items

  • Moscow senses an opportunity with Turkey

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    Back in March we reported on a faction within Turkey’s policymaking establishment which was arguing for a ‘grand-bargain’ with Iran to bring it in from the cold and to defuse the tensions over Syria.  We later reported that this faction had lost the argument to those who favoured a more sectarian pro-Sunni foreign policy that was aggressively anti the Bashar al-Assad regime in Syria.  It seems that Turkey is not reaping the rewards it hoped for with this approach, and the upcoming visit to Turkey by Russia’s President Vladimir Putin (scheduled for 15 October) has once again set off the internal debate about where Turkey’s best interests lie.  Russia, of course, supports both Iran and Assad.

    It is possible that Russia senses Turkey is open to offers, as the Russian spin on President Putin’s visit next week is that it should consolidate what is already on the way to becoming a strategic partnership.  During Turkish Prime Minister Recep Tayyip Erdogan’s visit to Moscow in July, both parties tried to give the impression that they would not allow differences over Syria to affect their relationship.  And, indeed, it seems that bilateral economic relations are flourishing.

    Russia is to build Turkey’s first nuclear power plant, in Mersin, and it is providing US$20m for the construction.  Turkey buys over 60% of its natural gas from Russia – and it has agreed that the South Stream Gas Pipeline, linking Russia to the European Union via Bulgaria, can transit Turkey’s exclusive economic zone in the Black Sea in return for a reduced price for Russian natural gas sold to Turkey.   Recently, Russia’s biggest bank, Sberbank, bought Denizbank for US$3.6bn.  Last year, Russia and Turkey abolished visa requirements.

    However, substantial differences persist.  First, of course, there is Syria.  Clearly Moscow and Ankara are on different sides of the Syrian crisis, but Russia did at least agree to a UN Security Council statement condemning Syria’s shelling of Turkish territory, and it even conceded to a Western demand that the text should refer to a Syrian violation of international law.  Russia had previously used its veto in the Security Council on three occasions to protect Syria.

    This marginal concession is being viewed in Ankara as positive, and as a message from Moscow to Assad that there are limits to Russian support for his regime.  Equally it could be a message from Moscow to Ankara that it is worth keeping close to Russia.

    Beyond the differences over Syria, there is the fact that Russia does not recognize the Kurdistan Workers’ Party (PKK) as a terrorist organization.  As Ilyas Kemaloglu of the Ankara-based Centre for Middle Eastern Strategic Studies (ORSAM) says: “Since the Cold War era, Kurds have had an important place in Russia’s Middle East policy and Russia may not want to offend the Kurds.”

    More than 10 Kurdish organizations are legally operating in Moscow and are known to have contacts with the PKK.  They were even allowed to organize a mass celebration in Moscow on 15 August to commemorate the PKK’s first armed action in Turkey in 1984.

    There are also clear differences between Moscow and Ankara in the Caucasus, where Russia is allied to Armenia while Turkey supports Azerbaijan in its ambition to regain control of the Armenian-populated enclave of Nagorno-Karabakh.

    Turkey’s position in the Caucasus has been further challenged by the coming to power of a more pro-Russian president in Georgia.  As it is on Syria, Iran is aligned with Russia in its animosity towards Azerbaijan.

    The fact that Azerbaijan has grown so close to Israel hardly helps Turkey’s cause given how estranged Turkey has become from former ally Israel since the May 2010 Mavi Marmara incident.

    Another bone of contention between Russia (and Iran) and Ankara is the deployment of a Nato early-warning anti-missile radar in Turkey.

    But Russia has bargaining power.  Turkey’s greatest immediate fear is that Damascus will begin to arm the PKK, including with Kornet anti-armour and anti-tank missiles.  It is this fear, it seems, that has been behind Turkish restraint on arming the Syrian rebels, and this is something that Moscow will play on.

    Turkey will also surely have taken note of the fact that the al-Maliki administration in Iraq has signed contracts to buy $4.2bn worth of Russian weapons.  The new weapons contracts were announced after talks in Moscow on 9 October and are said to include 30 Mi-28 attack helicopters and 42 Pantsir-S1 surface-to-air missile systems, with further discussions continuing for the sale to Iraq of MiG-29 jets, heavy armoured vehicles, and other unspecified weaponry.

    Al-Maliki explained the weapons purchases by saying, in clear reference to the US which is Iraq’s main supplier, that he did not want Iraq to be “part of someone else’s monopoly”.

    Putin will also be able to play on deep concerns in Turkey about the costs of getting too involved with the Syrian uprising.  There has been much speculation since the escalation between Syria and Turkey brought on by the shelling last week of Turkish territory, and the retaliatory Turkish strikes against Syria, that Turkey could be preparing for a much larger intervention in Syria.  But Turkey understands that no-one wants an escalation of the war in Syria.

    Britain’s Foreign Secretary William Hague may still be arguing for a stronger response to Assad’s atrocities, but it is clear that the United States has moved firmly away from interventionism in the Middle East.  It does not want another war, even one as limited as that in Libya.  And even Turkey’s Prime Minister Erdogan said last Thursday (4 October): “We as Turkey just want peace and security in our region.  The consequences of war are plain to see in Iraq and Afghanistan.”  His statement was no doubt heavily influenced by the fact that a large majority of Turks are opposed to any military intervention in Syria.

    It is also clear that a Turkish intervention would be deeply unpopular in the Arab world, including in much of the anti-Assad Sunni Arab world.  A commentary last Friday (5 October) in the Jordanian daily ad-Dustour provided an accurate reflection of much Sunni Arab opinion.  It was deeply suspicious of what it saw as Ankara’s over-reaction to last week’s shelling incident, which the paper viewed as an attempt to change Turkish public opinion in favour of intervention and as a means of fostering Nato support for any move on Syria.

    This is recognized in Turkey as well.  As the daily Zaman argued on 9 October: “If Turkey goes to war with Syria, it will be waging a war against Arabs for the first time since the Ottoman period.  Such an action may raise enmity between Turks and Arabs. This may provoke Arab nationalism based on opposition to Turkey...”

    When Erdogan was re-elected prime minister in June 2011, we drew attention to his victory speech from the balcony of his party’s headquarters in which he proclaimed that “Sarajevo won today as much as Istanbul; Beirut won as much as Izmir; Damascus won as much as Ankara; Ramallah, Nablus, Jenin, the West Bank, Jerusalem won as much as Diyarbakir.”

    His ambitions for Turkish leadership in the Middle East could hardly have been made clearer.  Yet, as the above indicates, the ambitions are not being fulfilled.

    It is perhaps symptomatic that Turkey’s President Abdullah Gul urged parliament on 1 October to begin the new parliamentary year by giving more attention to the democratization goals set by the European Union.  The EU membership talks were hardly mentioned at the ruling Justice and Development Party’s congress on 30 September.

    Two years ago Turkey had good relations with Syria, Iraq, and Iran while still being on good terms with the Sunni Arab mainstream.  Now it finds itself at odds with Syria, Iraq, and Iran without any compensating gains.  It was almost certainly this realization that was behind the suggestion made on 7 October by Turkish Foreign Minister Ahmet Davutoglu that Syrian Vice-President Faruq al-Shara could make an acceptable alternative to President Bashar al-Assad.

    Our own sources are also indicating that the suggestion is an attempt by Ankara to send a message to Iran and Russia that their influence in Syria need not necessarily end with the exit of Assad.

    It would appear that Moscow may be right in sensing an opportunity in Putin’s upcoming visit to Ankara.  Turkey has over-reached itself and may be preparing to row back.  JdeC.

  • Iran not ready to buckle

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    The recent collapse in the value of the Iranian rial currency has raised hopes that sanctions are at last having the required effect on Iran.  There is no doubt that Tehran is feeling the pressure, but we can see no indication that the pressure is decisive.  And, besides, there has been some good news for Iran in the past week as well.

    The main point for Iran is that neither Russia (see this week’s main briefing) nor China appear to be deserting it.  On 7 October, for instance, China’s official Xinhua news agency published a report arguing that more sanctions could not resolve the Iran crisis.  This was in response to the call by US Defence Secretary Leon Panetta for more sanctions to be imposed and the European Union’s additional threat to impose a ban on Iranian gas exports to Europe.

    Xinhua argued: “Past experiences show that sanctions and sabre-rattling cannot bridge differences but only inflame animosities and trigger tit-for-tat actions.”  It said that it was as a result of sanctions that Iran has accelerated its nuclear programme.

    Sanctions, Xinhua said, “have failed to change Tehran’s nuclear policy”.  On the contrary, “anti-Western sentiment in the Iranian public keeps rising, aggravating the antagonism between the two sides”.

    Xinhua concludes: “The West should realize that blindly ratcheting up pressure on Iran cannot resolve the crisis.  The correct way is to stop threatening fresh sanctions and return to the negotiating table.”

    The second bit of encouragement for Iran this week was the IMF forecast that Iran would return to growth next year despite sanctions.  The IMF report forecasts a contraction of 0.9% this year after 2% growth in 2011 but a return to 0.8% growth in 2013.

    On the balance of payments, one of the most obvious casualties of the sanctions regime, the IMF says that there will be a surplus on the current account of 3.4% of GDP this year and 1.3% in 2013, down from 12.5% in 2011 but not a sufficient collapse to precipitate a balance of payments crisis.

    The IMF expects inflation to moderate to just under 22% in 2013 from over 25% in 2012.  However unemployment is forecast to go up to 15.6% next year from 14.1% this year and 12.3% in 2011.  None of this is comfortable, but nor (say the hardliners in Tehran) is it regime threatening.

    An indication of Iranian thinking was given on 4 October by an interview with Foreign Minister Ali Akbar Salehi by Germany’s Spiegel Online.  Salehi was in Frankfurt on his way back from the UN General Assembly in New York.  As a leading Iranian official who has studied in the West (he gained a PhD in engineering from MIT in 1977) and a former head of Iran’s nuclear programme, he is worth listening to.

    Asked about the European Union’s plans to toughen sanctions on 15 October, Salehi said: “Not a big deal.  The sanctions create inconveniences.  For over 30 years now, we have been living with boycott measures that ultimately make us independent and strong...Iranian society is used to living with hardships.”

    We have little doubt that this is the current view of the regime.  They are worried, but not sufficiently worried to buckle.  Salehi’s comments on Israeli threats to attack Iran are equally likely to reflect the authentic view of the regime.

    Asked about Israeli Prime Minister Binyamin Netanyahu’s warnings that Iran will be attacked if it goes beyond the ‘red line’ he outlined to the UN General Assembly, Salehi replied: “If the Israelis had wanted to attack us, and if they could have done so, they would have done so long ago. In 1981, they destroyed an Iraqi reactor without warning.  But they have been threatening us for years, on every occasion and publicly.  They know what would happen if they attacked. We don't want war, but we will defend ourselves.  Aggressors will pay a high price.”

    The important point about this comment is that it is a sober restatement of sentiments that have been increasingly expressed by the more volatile elements in Iran’s political and military establishment in recent weeks.  It reinforces the view that we expressed in our 26 September analysis that Iran has reached the conclusion that Israel will not attack.

    It is this fact, allied to the continuing support from China and Russia (certainly at a sufficient level to protect it within the UN Security Council) and the fact that its economy is suffering but not unbearably so (Salehi suggested to Spiegel that Greece was in a worse position than Iran), that explains why Tehran is still displaying little sign of serious stress.

  • Risk pointers

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    *** India claims more evidence of Pakistani subversion.  India’s National Investigation Agency (NIA) says that it has evidence that Pakistan’s Inter-Services Intelligence (ISI) is funding the Babbar Khalsa International (BKI) group in an attempt to revive militancy in Punjab.  Funds are said to be reaching BKI via informal money-transfer networks in Britain, Thailand, and Malaysia.

    NIA says that BKI has a “large network” of sleeper cells in Punjab and that these are at the centre of a plot to revive 1980s-style militancy in the region.  BKI’s two top leaders, Wadhwa Singh and Mehal Singh, are believed to have been in Pakistan recently for meetings with top ISI officials.

    Last week we reported that Indian counter-intelligence had sent out a special advisory to police intelligence units and special branches in southern India warning about Pakistani spy activity.  The advisory said that Pakistan had developed a “formidable” network in Sri Lanka with a view to spying on key Indian defence and strategic installations in the southern region.  The advisory called for “a special drive to target ISI [Pakistani intelligence] backed espionage networks in the area”.

    *** German warning on Salafist activity.  Hans-Georg Maassen, the head of Germany’s domestic intelligence service, the Federal Office for the Protection of the Constitution, has warned that hardline Salafists are trying to spread their influence among Islamists in Germany.  A German-language media centre has been set up with the intention “to exert influence on Islamists in Germany”.  It is said that over the past few months some 50 Salafists have left Germany to go abroad, mostly to Egypt.

    *** Surge in North Korean trade with China.  A South Korean parliamentary report on 8 October revealed that trading volumes between China and North Korea reached US$3.54bn in the first seven months of 2012, an increase of 14.5% over the same period in 2011.  The trade figure for 2011 ($5.62bn) was itself up 62.4% on the previous year.

    The same report showed that in 2011 China accounted for 89.1% of North Korea’s trading with foreign countries.  This is up from 67% in 2007, 72.9% in 2008, and 82.9% in 2010.  The North’s annual food imports from China came to 155,000 tons in 2008.  In 2011 the figure was 380,000 tons.

    By contrast, aid to North Korea from South Korea has plummeted under President Lee Myung-bak.  The total amount of government and private-sector aid between early 2008 and August 2012 came to US215.1m, which is about a quarter of the average level of aid to the North provided under the two previous administrations.