Courcy's Intelligence Brief - 20 & 27 April 2011

Items

  • Russia accelerating China alliance at expense of Japan

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    It is easy enough to be so mesmerized by the unfolding events in the Middle East as to overlook important developments elsewhere. In our view, not enough attention has been paid to the escalation in hostile rhetoric in February and March between Russia and Japan over the Kurile Islands. The significance is not that Russia and Japan are heading towards conflict, or anything like it, but what it says about Russia’s relationship with China .

    Ever since the collapse of the Soviet Union a number of thoughtful strategists have argued that Russia’s strategic interests would be best served by a close alliance with Japan, with Japan providing the money and the technology to best help Russia develop its energy resources and acting, ultimately, as a balance to the threat of Chinese encroachment in Russia’s Far East. It has not happened, and the litmus test of Russia’s desire (or not) for closer relations with Japan has always been the Kurile Islands. These islands were seized by the Soviet Union in the dying days of World War II and are claimed by Japan.

    Back in September, the analogous dispute between China and Japan over the Senkaku/Diaoyu Islands flared up anew when a Chinese fishing vessel collided with two Japanese coastguard patrol boats near the disputed islands. The Japanese coastguards boarded the trawler and arrested its crew and captain. Following the incident there were anti-Japanese demonstrations in Beijing, Shanghai, Hong Kong, and Shenyang; Chinese tourist groups returned from Japan; expatriate Japanese workers in China were arrested; and Beijing suspended the export of vital rare earths to Japan.

    But what was really interesting was that less than a month later, on 1 November, Russia chose to turn the knife some more, reinforcing Japan’s feeling of isolation, with a provocative visit by President Dimitriy Medvedev to the Kuriles. The juxtaposition of this visit with the flaring up of the China-Japan dispute will not have been coincidental.

    And the escalation of the row over the Kuriles has continued. On 2 March, Japan issued a rebuke to Russia over its plans to deploy anti-ship cruise missiles on the disputed islands. Japan’s chief cabinet secretary, Yukio Edano, described the move as “very regrettable” while former Japanese defence minister Shigeru Ishiba called the move “extremely problematic...[with] significant political implications”.

    Moscow responded by summoning Japan’s charge d’affaires and complaining about “extremists” who had been allowed to demonstrate outside the Russian embassy in Tokyo on 7 February. A spokesman for the Russian foreign ministry accused the Japanese government of “conniving in extremist anti-Russian actions”.

    The BRICS connection

    The contrast between this and the warmth in Russia and China relations on display at the recent BRICS summit (bringing together Brazil, Russia, India, China, and South Africa) was obvious. In an interview with China’s official Xinhua news agency on 13 April, Russia’s Foreign Minister Sergey Lavrov talked about the “qualitative build-up of economic and trade cooperation” between Russia and China “with the goal of imparting a strategic character to it”. The construction of an oil pipeline to China was completed at the beginning of the year, and talks have reached the final stages over pipeline deliveries of Russian natural gas to China. The two sides have also begun implementing the joint “Programme of Cooperation” between the regions of Russia’s Far East and Eastern Siberia and Northeast China.

    On the same day as Lavrov’s interview, the US-China Economic Security and Review Commission (USCC) was holding hearings on China’s foreign policy which included evidence on China-Russia relations. The commission heard that relations “are perhaps the best they have ever been”. The basis of the close relationship is a shared view on non-interference in the internal affairs of sovereign states, opposition to any US plans to militarize outer space and to develop missile defence, and a common view on the need to stabilize Central Asia through the Shanghai Cooperation Organization (SCO).

    This is not to say that all is perfect between China and Russia (China has not recognized the pro-Moscow breakaway mini-states of Abkhazia and South Ossetia in the Caucasus, for instance), but the level of cooperation and strategic direction are clear and in stark contrast to the nature of Russia-Japan relations. The possibility of a divergence between Russia and China remains, given the fundamental imbalance that Russia is the largest country in the world in terms of territory while China has nine times as many people. But, on the other hand, Russia is the world’s largest oil producer while China is the largest energy importer, and for the moment that is driving the relationship in a positive direction.

    The present upheavals in the Middle East could also be pushing Russia and China into closer collaboration to support the Central Asian autocracies through the SCO. That this closer Russia-China collaboration is at the expense of Japan was demonstrated by Medvedev’s Kurile Island visit. It could also be at the expense of the United States if the two begin cooperating on, for instance, technology to overcome US ballistic missile defences.

    Russia’s Foreign Minister Lavrov, speaking on 15 April in Berlin after a session of the Nato-Russia Council, called once again for a unified Russia-Nato missile defence system, describing cooperation over European missile defence as “a test of the real preparedness of us all for strategic partnership and the consideration of the lawful security interests of each other”. But the call was quickly rejected by Nato General Secretary Anders Fogh Rasmussen, who said: “We are thinking about two systems – one Nato’s and one Russia – that will cooperate and exchange information to make us more secure.”

    Another Nato diplomat said that there was too great a level of distrust between Nato and Russia. He said: “When we ask the Russians what they can contribute to the possible future shield, they don’t talk.” If this is really the way the wind is blowing for Nato (and sentiment towards Russia will not have been improved by increasing criticism from Moscow of Nato’s intervention in Libya), then the fears expressed at last week’s USCC hearings about possible Russia-China collaboration to counter the US’s anti-missile defence programme would seem to be well placed. JdeC.

  • Pessimistic views gaining ground in the Mideast

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    From the outset of the ‘Arab Spring’ we have urged caution about taking an overly optimistic view of the eventual outcome. The evidence supporting a pessimistic assessment is mounting.

    Some of the most pessimistic assessments of the Mideast turmoil have been coming out of Russia, where the intelligence services believe that the current unrest could presage decades of instability. This pessimistic Russian view was on display again on Monday (18 April) – albeit in a different context.

    As we discuss in this week’s main briefing, there had been much talk at last week’s Russia-Nato Council (RNC) meeting in Berlin about missile defence cooperation. Returning to this subject on 18 April, Russia’s permanent representative at Nato, Dmitriy Rogozin, argued that the rising visible danger to the south would make Nato step up its plans for missile defence – at the expense of Russia. Although Rogozin was making a point about Russia-Nato relations and not specifically about the Arab revolutions, his comments nevertheless revealed the level of pessimism in Moscow about the future of these revolts. Rogozin said that he believed Islamist radicals would eventually take over the Arab revolutions from radical leftists because of “the radicalization of political Islam”.

    Not surprisingly, Israel is amongst the most cautious, and according to sources in Jerusalem the new plan of the Israel Defence Force (IDF), called Halamish, sees an increasing chance for war on multiple fronts. The plan, which is in the final stages of approval, is not thought likely to include a major public reassessment of the threat from Egypt, but that is undoubtedly the direction from which the increased risk is seen to be emanating.

    Recent negative indicators from Egypt include the growing activity and confidence of the Muslim Brotherhood (MB). With the previously dominant National Democratic Party (NDP) being disbanded, the change in tone from the MB has included talk by at least one prominent MB leader of introducing Sharia law (in an interview with the Egyptian newspaper al-Masri al-Yawm) and suggestions that it could win 75% of parliamentary seats despite previously having said it would not seek to win more than 33% (which would be just enough to block the passage of key legislation, as Hezbollah has been doing in Lebanon).

    The Egyptian economy is in freefall, and radical Islamists are beginning to exploit the spread of criminality and anarchy. There are increasing reports of women being harassed, and Islamist extremists have been breaking into mosques and destroying the tombs of holy men of which they disapprove. As a former Israeli ambassador to Cairo, Zvi Mazel, put it this week: “The Arab Spring could turn into the Spring of Illusions, which would bring with it a long period of instability to the Middle East.”

    Israel’s disquiet is increased by the fear that whatever the outcome in Syria, the end result will be bad. The survival of the Assad regime would mean an entrenchment of Iranian influence in Syria and Lebanon at a time when it is also increasing its influence in the Gulf Arab states and Iraq through the efforts of the Shiite Arabs. On the other hand, Assad’s downfall could lead to a Sunni regime aligned with a Muslim Brotherhood dominated Egypt.

    Iran on the “offensive”

    Then there is Iran itself. Intelligence analysts believe that President Mahmud Amadinejad’s Army Day address on 18 April showed a marked increase in confidence over the same address this time last year. Where last year’s speech could be categorized as “defensive”, this one was “offensive”. He spoke about self-reliance and self-confidence, and he talked about “using opportunities”. Clearly, the situation in Bahrain and Saudi Arabia is seen as an opportunity for Iran, but so is the change of regime in Egypt, where Iran has just appointed an ambassador for the first time in more than 30 years.

    Also noteworthy is the extent to which Iran has been increasing its economic ties with Turkey despite UN sanctions against Iran. Trade volume between the two leaped by more than 70% in the first two months of 2011, having surpassed $11bn in 2011. The Turkish ambassador to Tehran said on 13 April that the aim is to increase bilateral to $15bn by the end of 2011.

    And, curiously, even Turkey is now beginning to worry. It had been thought that Turkey’s Islamist-tinted democracy could provide the template and leadership for the post-revolutionary Arab states of the region, but now it is slowly beginning to dawn on Ankara that it is Egypt that will be returning to leadership of the Arab world – which may be why Ankara is seeking to deepen ties with Iran.

    Looking only slightly further ahead, Israel is concerned that a majority of the United Nations General Assembly will vote in September to recognize a Palestinian state within the pre-1967 borders, and that a second-term Obama administration could significantly increase the pressure on Israel to make dangerous territorial concessions.

  • Russian power struggle not what it seems

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    We made two points about the Russian power struggle last week. The first was that it was real and intensifying, the second was that the difference between Prime Minister Vladimir Putin and President Dimitriy Medvedev might not be as great as it is being portrayed. Further evidence supporting both these conclusions can be found in the resignation of Deputy Prime Minister Igor Sechin as chairman of the state-owned oil company Rosneft.

    Medvedev, who is presenting himself as the liberal option for the ruling party in 2012, set out a 10-point strategy for improving Russia’s investment climate on 30 March. The measures include extra protection for minority shareholders, a three-year plan to privatize major state shareholdings, and the removal from compnay boards of ministers and deputy prime-minister who have a regulatory role in the sectors of the companies in question, with a mid-year deadline.

    Those affected by the measure concerning ministers include Finance Minister Aleksey Kudrin (bank VTB), First Deputy Prime Minister Viktor Zubkov (agro-business Rosagroleasing), Deputy Prime Minister Sergey Ivanov (nanotechnology business Rosnano), Transport Minister Igor Levitin (Aeroflot), and Energy Minister Sergey Shmatko (hydroelectric company RusHydro, pipeline company Transneft, and gas giant Gazprom).

    The speech, in which Medvedev virtually accused major state corporations of corruption, was seen as an attack on Putin and his associates and a further deepening of the power struggle. Sechin, who is one of Putin’s closest associates and thought to have been the chief architect of the downfall of jailed oligarch Mikhail Khodorkovskiy, took the hint and duly resigned on 11 April.

    So far, so good. But sources in Moscow say that Sechin’s permanent replacement as chairman of Rosneft is likely to be Sergey Shishin, the vice-president of the bank VTB – and there is nothing reformist or liberal about Shishin. He is a former major-general in the Federal Security Service (FSB) who is said to be close to Sechin, to current FSB chief Alexander Bortnikov, and to his predecessor Nikolay Patrushev. As one commentator put it, Shishin’s appointment would represent a “nominal personnel rotation as a result of which there will be no change in the dominant actor”.

  • Risk pointers

    LatinNews 06 September 2011 Hits: 329

    *** Russia’s drug problem. In our 31 March issue we reported on possible moves by Russia to talk to the Taleban in Afghanistan. The suggestion, made on 28 March by Russia’s special presidential envoy to Afghanistan, Zamir Kabulov, was motivated by the increase in drug trafficking from Afghanistan. Under the Taleban from 2000-2001, there was a near cessation of poppy-growing in Taleban-controlled areas of Afghanistan.

    The latest figures from the Russian Federal Drug Control Service indicate that there are up to 2m-2.5m drug addicts in Russia, or 2% of the population. The service estimates that 126,000 people aged between 15 and 34 die from drugs each year in Russia. Of the 2m-2.5m estimated drug addicts, there are 1.5m users of opiates, essentially heroin from Afghanistan. The life expectancy of those who begin to take heroin is 5-7 years.

    *** Militants in North Caucasus. So far in 2011, some 94 militants have been killed in Russia’s North Caucasus Federal District (NCFD). A further 122 militants have been detained since the beginning of 2011. Some 40 law-enforcement and service personnel have also been killed, along with 30 civilians caught in crossfire.

    *** France-China: A sign of the times. There has been much speculation that China’s financial help to Eurozone countries facing debt crises, particularly Spain, would have a diplomatic cost for the European Union. In what could be a sign of the times, on 17 April a Catholic mass for Hong Kong’s French-speaking Catholic community to be held on a visiting French frigate in Hong Kong was cancelled.

    The official French explanation is that the cancellation was because of security considerations. However, Catholic church sources say that France cancelled the mass because of fears of upsetting Beijing. There has been a major cooling between China and the Vatican recently, and Armed Forces chaplain Father Bertrand Lorentz said that he had received an email saying that the service was being cancelled for “French-Chinese diplomatic reasons connected to the present day”.

    *** Russian arms for Chavez. According to Russia’s state arms export monopoly, Rosoboronexport, Venezuela has signed arms contracts worth $11bn with Russia in the past four years, making it the largest buyer of Russian weapons in Latin America.