• Russia
    Changing Course: Financial Sanctions on Russia
    There are reports this morning that the Obama administration is contemplating extending economic sanctions against two large Russian banks-- Gazprombank and  Vnesheconombank (VEB).  This is a step I have called for here and here.  If true, this is a significant event and, given the magnitude of Russia’s links to global financial markets, introduces a new era in the use of economic sanctions.  It also makes sense to do this now, as the current strategy is not working to deter Russian aggression against Ukraine. It is interesting  that the sanctions are aimed at two state-controlled banks most closely associated with the fiscal authorities, and holding back for now on the most active, leveraged banks (e.g., VTB, Sberbank).  So the goal would seem to be to punish the state, not go after corruption or specific activities.  I presume that the sanctions would prohibit U.S. institutions from financing and transacting with the two banks, holding their securities/collateral, or buying and selling their liabilities in U.S. markets.  It is not clear whether the Europeans will match these sanctions, but even if they don’t I believe that the measures could be powerful as long as the major European and Japanese banks do not fill in as U.S. banks depart--and risk of getting entangled in future sanctions.
  • Digital Policy
    What Is Internet Governance?
    An intense international debate over who manages parts of the internet’s technical infrastructure is likely to feed a broader discussion of internet-related public policy.
  • Ukraine
    Is Ukraine on a Long Road to Rupture?
    Ukraine may be heading for the type of frozen conflict that occurred in Georgia, Azerbaijan, and Moldova immediately after the breakup of the Soviet Union, says CFR’s Stephen Sestanovich.
  • Russia
    Is the West at a Breaking Point With Russia?
    The crisis in Crimea may represent something more than just another low point in Moscow’s relations with the United States and its allies, says Russia expert John R. Beyrle.
  • International Law
    Crimea: Stop Citing International Law and Start Condemning Russian Expansionism
    Yesterday, Russian president Vladimir Putin pulled off a rigged referendum in which an overwhelming majority of Crimean voters chose union with the Russian Federation. But his victory is far from complete. The West retains a powerful card to play: mobilizing international opposition to deny Russia the international legitimacy it seeks for this naked power play.  U.S. and European leaders have roundly condemned the referendum, citing international law. It would be wiser for the West to shift the terms of the debate away from the legal merits of Russian conduct, and to focus instead on the illegitimacy of Russia’s annexation of Crimea and Moscow’s clear aspirations to expand its territory. To date, the global debate over Russia’s intervention in Ukraine has been framed primarily in legal terms, but this is devolving into an exchange of accusations and messy interpretations of historical precedents. Indignant Western governments condemn Russian’s conduct and Crimea’s secession as a blatant “violation of international law.”  Moscow, meanwhile, claims that it is affording the inhabitants of Crimea with their inherent right to national self-determination “in full compliance with international law.” Russia has also accused the West of hypocrisy, invoking the precedent of Kosovo—which unilaterally declared its independence from Serbia in 2008, to the fury of Belgrade and Moscow but the vigorous applause of the United States and many European countries. Moscow notes that the International Court of Justice in July 2010 subsequently judged that Kosovo’s declaration of independence was legal. The West has returned fire, noting that the Crimea already enjoyed considerable autonomy in Ukraine, like several regions in Russia, but that Moscow had brutally repressed independence movements within its own territories, including in Chechnya and Ingushetia. Moreover, the West counters, the Kosovo referendum occurred in the context of a UN peace operation, eight years after a massive campaign of ethnic cleansing at the hands of Serbia. In the case of Ukraine, it is occurring in the presence of Russian military troops occupying Crimea, and with no evidence of any Ukrainian campaign of oppression against Crimea’s Russians. This argument over the legality of Crimean secession has clearly proved a fruitless distraction. International law is flexible on the question of whether self-determination includes the right to secede. It is not a recognized “right,” but nor is it seen as necessarily “illegal.” Given the vulnerability of many states to secessionist movements, the general international preference has been to offer increased autonomy to ethnic minority enclaves, rather than independence. Secession, when it occurs, is expected to be a peaceful outcome of protracted negotiations both with the national government and the international community. In Crimea, of course, neither condition was satisfied. Farcically, the referendum was announced only ten days before it was to occur, and neither of the two options on the ballot included the status quo. And though the vote patently violated Ukraine’s own constitution (article 73 of which requires a referendum of the entire country before its territory is altered) ), secessionists have rarely bothered to consult with the mother country before acting—further undercutting legal arguments. This is true both for successful secessions (e.g., the United States against Great Britain after 1776) and unsuccessful ones (e.g., the Biafran campaign against the state of Nigeria). The "velvet divorce" allowing the secession of Slovakia from Czechoslovakia in 1993 is the exception rather than the rule here. Whatever the legality, Russia will find it even more difficult to sell the Crimean secession as legitimate. Despite attempts to liken it to Kosovo, (which 106 countries have recognized), the Crimean situation is more reminiscent of the Turkish Republic of Northern Cyprus, whose declaration of independence in 1983 has been recognized by only one nation: Turkey itself. As noted in a previous blog, Crimea’s secession sets a terrible precedent. Hundreds of minority populations around the world might in principle insist on secession, throwing existing borders into chaos. Not for nothing did Woodrow Wilson’s secretary of state Robert Lansing bemoan that the principle of national self-determination advanced by his president was “loaded with dynamite.” Moreover, Russia’s aspirations are not limited to Crimea, and its successful annexation could clear a path for the Kremlin to seek to regain de facto sovereignty over territories in the former Soviet Union with large Russian minority populations, under the pretext of protecting “oppressed” compatriots. We have seen this movie before, most obviously in Georgia. In 2008, the Russian military intervened to assist two breakaway republics, Abkhazia and South Ossetia. In the aftermath of that intervention, Moscow pledged to remove its troops. They remain there today. Or consider Moldova, where Moscow has for more than two decades supported the statelet of Transdniester, allowing it to become a veritable Walmart of arms trafficking. But in this case, the scale of Russian audacity is even more alarming. Dismembering portions of tiny Georgia (population 4.5 million) and Moldova (3.5 million) was outrageous but of limited geopolitical significance. Doing the same to Ukraine—population 46 million—is another thing. It suggests that Putin is determined to expand Moscow’s effective control, formal or informal, over as much of the Russian-speaking “near abroad” as he can. That this impulse may be driven less by overconfidence than desperation is of little comfort. Historically, the world has had as much to fear from anxious powers in decline than rising ones eager to sow their oats. Consider the role that miscalculations by Putin’s Romanov predecessors, along with the aging Hapsburg dynasty, played in the outbreak of the Great War one hundred years ago this coming August. Putin’s actions are unlikely to trigger another great power war. The United States and the European Union are already treating the annexation of the Crimea—a territory of only 2.3 million and a strategically and historically important part of Russia—as a fait accompli, But unless the West can make Putin feel the pain of his audacity, his irredentist ambitions are likely to grow. The most obvious target is the large Russian-majority population in eastern Ukraine, including the cities of Luhansk,  and Kharkiv. The resulting dismemberment of Ukraine, if allowed to proceed, would enter the history books alongside the partition of Poland as a naked exercise in power politics. But Ukraine is not the only country of concern. Commentators have expressed worries about the Baltic nations of Estonia, Latvia, and Lithuania, given their sizeable Russian minorities. In 2007, the mere act of dismantling a Soviet-era statue of Lenin in the center of Tallin led to a massive cyberattack, apparently orchestrated from Russia, on Estonian government ministries. At the same time, Moscow is likely to avoid any direct military confrontation with the Baltic states—each of which is a NATO member—to avoid triggering a third world war. More realistic targets for incorporation into an expanded Russian Federation, beyond Ukraine, are Belarus and, potentially, portions of Kazakhstan. The former is already Moscow’s most reliable client state, suggesting there is no hurry to absorb it officially. The latter could become a target, depending on whether the government of Nursultan Nazarbayev toes a Russian line within Moscow’s Eurasian Union or adopts a more independent course, including overtures to China. Russia’s annexation of Crimea—which holds only 4 percent of Ukraine’s population—will not by itself significantly alter the balance of power in Eurasia. But it does establish a worrisome precedent that other powers—great and not-so-great—may seek to emulate. Beyond depriving Putin of recognition of his spoils, the West needs to send a powerful message about the wages of “sin”--in this case, unilaterally challenging the sanctity of borders. Targeting a few senior Russian officials for sanction should be only the beginning. And the Obama administration and international allies should stop citing international law and instead adopt more aggressive rhetoric noting that Russian expansionist aspirations are illegitimate and threaten peace on the continent.
  • Russia
    Why the Crimean Referendum Is Illegitimate
    The vote by some Crimean citizens to join Russia violates Ukrainian and international law and could come back to haunt Moscow, its primary backer, says CFR’s John Bellinger.
  • Ukraine
    Putin’s Risky Improvisation in Ukraine
    Russia’s president is now seen by many in the West as an international outlaw for his actions in Crimea, and his intervention could still expand, says CFR’s Stephen Sestanovich.
  • Russia
    An Energy Weapon vs. Russia?
    As the standoff between Russia and Ukraine drags on, there are increasing calls to use U.S. oil and gas exports to weaken Vladimir Putin’s hand. There’s something to this, but it’s likely to be a lot less powerful than most pundits seem to think. Europe imports about thirty percent of its natural gas from Russia. Russia could, in principle, cut off some or all of that supply. That prospect presumably makes European leaders less willing to take strong positions against Russia in its confrontation with Ukraine. People have argued that boosting U.S. natural gas export capacity (or, more precisely, changing policy to make that more likely in the future) could do two things. First, in the current crisis, it could deter Putin from using the gas weapon, lest he encourage Europeans to make concerted efforts to shift their long-term gas procurement to the United States when that becomes possible in a few years. Second, in future crises, it could blunt the Russian gas weapon, since U.S. exports would be available to fill in for Russian supplies. (You might have noticed that I haven’t said anything about oil. That’s because the idea that U.S. oil exports would give Europe some sort of special buffer is silly. The world oil market is pretty flexible, and U.S. exports would be a drop in an already large sea. To the extent that Europe is constrained in its ability to switch oil sources quickly, that’s because of infrastructure, something U.S. exports wouldn’t change.) There are two essential things to keep in mind when thinking through the claims about natural gas exports. First, decisions about whom to export to and import from are made by commercial entities, not by governments. When a U.S. analyst says, “we should tell Europe we’ll sell them our gas”, the first response should be, “who’s ‘we’”? (The second response should be, “who’s Europe?”) The U.S. government doesn’t get to sell gas to anyone; it can create a framework in which commercial entities can sell gas, but after that, it’s up to those businesses to decide where the gas goes. Similarly, “Europe” doesn’t buy gas – all sorts of European companies do, within European and national regulatory frameworks. Second, surging natural gas into Europe to respond to a crisis requires that there be infrastructure in place that can accommodate that surge. In the case we’re talking about here, that means having a bunch of unused (or partly used) European natural gas import terminals that can suddenly absorb newly arrived U.S. supplies. And remember – back to the first point – these terminals will be built by private players. So what does this all mean for the big strategic claims? It is difficult to see how U.S. exports will substantially erode the long-run share of Russian gas in Europe. It is far more profitable for buyers of U.S. natural gas to ship it to Asia – where prices are far higher – than to Europe. (The exception is if European companies are willing to pay a hefty premium to get their gas from the United States – but remember, these are commercial entities, which makes it very difficult for them to do that.) There is, of course, a knock on effect from that, since if U.S. gas frees up other supplies that were destined for Asia, those supplies can potentially move into Europe instead. But Russia remains a relatively low-cost supplier into Europe, and can trim its prices to keep its market share. Moreover, unlike European gas companies, the big Russian players have much tighter ties with the state. If Moscow wants them to keep their share in the European market for strategic reasons, it may be able to make them do that. Russia would lose money – an important piece of geopolitical harm – but its leverage wouldn’t be slashed. What about supplying gas to Europe in a crisis? Here the basic constraint is infrastructure. Gas demand is seasonal, so during some parts of the year, there may be underutilized LNG import terminals. [UPDATE 3/6: Moreover, with a weak European economy, there is currently a lot of unutilized European LNG import capacity year-round; whether that persists indefinitely remains to be seen. Even in the current case, though, Russian imports into Europe greatly exceed spare LNG import capacity.] Were Russia to cut gas supplies to Europe during a crisis, if prices rose high enough, those terminals could be used to surge in some supplies. During other times (notably winter, when gas demand is most acute) the terminals will be fully utilized, making them unavailable to bring in new LNG supplies. The only way around that is to overbuild. This might happen by mistake, but unless European policymakers offer financial incentives, profit-seeking firms won’t do it on purpose. There is one other wrinkle worth thinking about here. The United States is currently able to take a harder line against Russia than Europeans are in part because the U.S. economy is insulated from energy-related turmoil. Were the prospect of surging gas into Europe a real one, we’d be having all sorts of debates here about the economic fallout for the United States from escalation with Russia. [UPDATE 3/6: It’s worth distinguishing here between swinging U.S. gas from Asian to European customers, which wouldn’t affect the U.S. market, and boosting total U.S. exports, which would.] Ironically, while being more connected to European gas markets might give the United States more tools in a future crisis, it could also deter Washington from aggressively confronting Russia.
  • Russia
    Ukraine’s Lessons for Asia
    This post is one of a three-part Asia Unbound series on the implications for Asia of the crisis in Ukraine. See related posts from my colleagues Elizabeth Economy and Sheila Smith. The most significant international crisis in recent years—Russia’s invasion of the Crimean peninsula in Ukraine—has left global and western institutions scrambling to respond. What lessons do these events offer thus far for Asia? First, at a time when a focus of the U.S. strategy toward Asia has emphasized strengthening regional institutions to deal with differences—establishing strong “rules of the road”—the crisis in Ukraine shows the capabilities as well as limits of such rules. In the European Union (EU) and North Atlantic Treaty Organization (NATO), Europe has strong economic and security institutions, with decades of experience working together, managing differences, facilitating shared security burdens, and coordinating the continent’s trade approaches to the world. In many ways the system worked; there has been no Russian move into alliance members like Latvia or Lithuania, which also have Russian-speaking minorities. Ukraine, at the EU frontier and outside of NATO, is much more vulnerable by comparison. But the crisis also reveals the limits of rules and norms. Moscow seemed unconcerned that NATO members might view an invasion of neighboring Ukraine as a direct threat. Nor did fear of possible alienation from the G8, or condemnation from the Organization for Security and Co-operation in Europe (OSCE), dissuade Russia from an invasion in the name of protecting Russian speakers. The other side of the rules of the road argument would be their limited power. So as the United States focuses in its Asia policy on shoring up the Association of Southeast Asian Nations (ASEAN) Regional Forum, East Asia Summit, and ASEAN Defense Ministers Meeting Plus—all of which now include ASEAN, the United States, India, China, Japan, Russia, and others—the argument that establishing shared rules will enhance regional security has frayed a little at the edges. Second, the Ukraine events illustrate the woeful failings of the UN Security Council (UNSC). Its vulnerability to veto power renders the UNSC in an awkwardly limited position. This is why Europe and the United States are examining persuasive and punitive responses centered elsewhere: on a “contact group,” national visa policies, economic fora like the G8, and possibilities of coordinated sanctions. The UNSC’s vulnerabilities matter in Asia because of the possibility of conflict in several places, compounded by the more limited institutional mechanisms available for dealing with one, should it erupt. The Council on Foreign Relations’ Center for Preventive Action released its 2014 Global Conflict Tracker in January, and the places which global experts feared might be flashpoints in 2014 are instructive. Across South Asia, post-2014 stability in Afghanistan, instability in Pakistan, Indo-Pakistan conflict, and Sino-Indian border conflict all made the list. Of these, Sino-Indian border conflict was ranked below the others in terms of likelihood. Yet that is also the one potential conflict where a permanent member of the UNSC (China) moved troops to the border with India last May, and about thirty Chinese soldiers pitched tents nineteen kilometers inside Indian territory. That episode lasted for more than three weeks before India and China defused the situation. In addition, in recent years China has become increasingly more assertive in its claim to the Tawang area of the Indian state of Arunachal Pradesh, which lies just below the “line of actual control” between the two countries in place since the two countries’ 1962 border war. Chinese authorities have refused to issue Indian citizens from that state visas in their Indian passports, offering only “stapled visas” instead, and have issued maps that depict the territory as part of China. In India, people view these Chinese claims with an increasingly wary eye; last May’s tent-pitching was just the most expansive demonstration of territorial claim in recent years. Last week one of India’s leading politicians, the Bharatiya Janata Party’s candidate for prime minister, Narendra Modi, gave a speech in India’s northeast in which he called for China to end its “expansionist mindset.” But back to Ukraine: the Indian government has not taken a strong public position on the crisis, walking a tightrope between its deep historic ties to Russia, and its commitment to the inviolability of national sovereignty. The only indication of India’s position so far, despite a reported request from the government of Ukraine for India to support it against Russia’s claims, has been a response to a question on Twitter from the Ministry of External Affairs spokesperson: “We are closely watching fast evolving situation and hope for a peaceful resolution.” How this crisis unfurls in the coming days will matter greatly for Asia. If the combination of NATO, EU, OSCE, G7, and coordinated national responses effectively manage the crisis, then the lesson will be that violating international norms result in costs too steep to bear. But a prolonged period of indeterminate impact, with Russian troops digging in further in Crimea against all appeals otherwise, may lead to the conclusion that the most institutionalized region of the world has few arrows in the policy quiver to respond to territorial aggression—the worst possible lesson. Follow me on Twitter: @AyresAlyssa 
  • Ukraine
    How to Respond to Ukraine’s Crisis?
    Negotiating a Russian withdrawal from Crimea is still possible, but U.S. and Western leaders have options to strengthen Ukraine if the situation worsens, says CFR President Richard N. Haass.
  • Ukraine
    Ukraine’s New Era of Uncertainty
    At a crucial moment for Ukraine and its economic viability, the EU and United States should join efforts with Russia to try to stabilize the country, says veteran journalist Serge Schmemann.
  • Russia
    A Nigerian in the Winter Olympics?
    For an inspiring if also heartbreaking story, check out Drew Hinshaw’s Wall Street Journal piece on Seun Adebiyi, a Nigerian with a Yale law degree, and Wall Street experience who tried to qualify for the 2014 Winter Olympics in Sochi, Russia and compete in the Skeleton event. From all of sub-Saharan Africa, only three athletes qualified for the Sochi Olympics; they are from Togo and Zimbabwe. A Ghanaian and a South African came close to qualifying. In the end, Seun Adebiyi was defeated by funding shortages, stem cell leukemia/lymphoma, and finally a torn Achilles tendon. Adebiyi had to find the money himself to train and his mother had to confront an uncooperative Nigerian Olympic Committee. Through her persistence, the committee eventually signed the necessary paperwork for Adebiyi to compete–but it did not return Hinshaw’s request for comment. Adebiyi is a notable athlete. He broke Nigerian records in the 200 meter freestyle in swimming, but could not compete in the 2000 Olympics because of a slipped disk. This year, he was again done-in by health issues, but the story might have been different if from the beginning he had had the necessary funds to train competitively with the active support of a national Olympic committee. Hinshaw’s piece chronicles how difficult it is for an athlete from sub-Saharan Africa to compete in the Winter Olympics, which are dominated by wealthy countries with snow. Germany and Norway are competing for the most gold medals, both of which have snow and are arguably two of the richest countries per capita in the world. Rounding out the top five for gold medals are Russia, the Netherlands, and the United States. A rich club.