| "How The World Sees Russia" Issue #39: 01/12/2019 From the Publisher: We are back. After our much needed holiday break, we bring you again the latest on Russia from a foreign policy and economic perspective. As we enter a new year, we will keep a close eye on Russia as per usual, but also hopefully find ways to better deliver our editorial promise and product to you. At Rossiya Scan, we hope that 2019 is a year where our small operation is taken to a higher level. A year where we gain more insights on how to better serve our readers. So what are we going to talk about today? We start of by looking at Russia’s growing influence in Libya. Moscow is quickly becoming the undisputed powerbroker in this war-torn nation. Like in the Middle East, the West has essentially weakened its position in Libya by abandoning it. Allowing Russia to step in and build relationships with various opposing factions without much competition. Japan and Russia are having problems again. Russia is making moves in the disputed Kuril Islands and Japan is not happy. The relationship between these two appears to be worsening despite attempts by both sides to improve it. We again analyze further the relationship between these two countries, and try to understand how it is continuously shaped by global affairs. The de-dollarization of the world economy continues. Russia and China are taking the lead in this movement. Although the world is increasingly adopting non-U.S dollar policies it is far from completely doing so. The U.S dollar is still king, but should U.S foreign policies continue to vex allies and non-allies, it is likely to continue lose ground. Finally, we take a look at Moscow’s response to London’s decision to build two new military bases overseas. The South China Sea and Caribbean were listed as the regions where the U.K would seek a permanent military presence. Russia said it would retaliate if the U.K were to go through with the plan. We believe that this latest spat between these two countries is more bark than bite, and explain why. -Rossiya Scan Russia is Winning in Libya In Rossiya Scan, we have spilled a lot of ink over Russia’s growing influence in the African continent. Their realpolitik playbook of using private military contractors (PMCs) to support at risk governments or armed irregular factions in exchange for mineral rights has worked without much opposition. Libya has been a country that we have yet to properly analyze. In fact, we will have to write several pieces over time to correctly decipher the many pieces at play in this geopolitical quagmire. So what’s Russia doing in Libya? Much like in the rest of Africa, Moscow is taking advantage of the West’s decision to pullout from the area. They are backing several strong factions with military assistance, and Russian PMCs have even setup bases. Libya has been engaged in a civil war since the toppling of the Muammar Qaddafi regime. NATO airstrikes were instrumental in ensuring the rebel victory over Qaddafi. The West hoped democratic institutions would fill void left by the brutal Qaddafi regime. However, a civil war amongst several rival factions is what has resulted from the overthrow. The Kremlin has for the most part thrown its support behind Khalifa Haftar, a Libyan military leader, whose forces control the vast majority of the the oil producing area of eastern Libya. That being said, Russia is said to be playing several sides in this conflict. A strategy, that is putting them ahead of all outside powers, which tend to support one side over another, according to two unnamed European diplomats, reported Bloomberg. This flexibility that Russia has is particularly easy for them to carry out considering the bad reputation that the West has developed in Libya. They might have lead a successful intervention to topple Qaddafi, but their essential abandonment led to the civil war. “All parties to the conflict trust Moscow,” said Alexander Dynkin, head of the Institute of World Economy and International Relations, a Russian state-run research group. “The West did everything it could to plunge this country into chaos.” Russia had a fairly positive working relationship with the former Qaddafi government. So much so, that it is speculated that they would likely prefer if a former member or members of that government resumed power. The Kremlin has even been flirting with the idea of giving support to Saif al-Islam Qaddafi, the son of the deceased Libyan dictator, who has been said to be a possible candidate for the presidency in the elections the UN wants to hold this year. Russia has also begun to court the UN backed Tripoli government. Giving them yet another in within a faction that could eventually take control of the country. Russia is skillfully laying the seeds in Libya to become something that it has become increasingly known for. That is a broker amongst opposing sides. The West appears again to be caught flatfooted in Libya, and for now uninterested in reclaiming its former leadership role. Read more: "Russia Has a Plan for Libya - Another Qaddafi," by Henry Meyer, Samer Al-Atrush and Stepan Kravchenko for Bloomberg. "Life On the Run No Bar to Gaddafi Son Leading Libya, Says Russia," by Business Day staff. "What is Russia Really Up To?" by Stasa Salacanin for Qantara.de Moscow & Tokyo Clash...Again...Over Islands.... Old quarrels are hard to settle. They sprout over and over again, despite the fact that moving on, would be strategically more beneficial for those involved in these seemingly never ending disputes. We have already previously highlighted that since Moscow and Tokyo established diplomatic ties in 1928 this has been a thorny relationship. Primarily, due to the territorial disputes over a chain of islands (Kuril & Sakhalin) located between Japanese mainland and Russia’s Kamchatka peninsula. One of Japans key foreign policy objectives has been to settle the dispute over these islands, whilst consolidating their relationship with Russia (Russian President Vladimir Putin has met Japanese Prime Minister Shinzo Abe 21 times in the last 6 years). Simultaneously, tensions are escalating between Japan and China in the South China sea. Could this be a coordinated attack on two fronts, between Russia and China? First, Russia has recently been getting closer politically and militarily to China (Japan’s greatest threat in the region). This mutually beneficial friendship concerns Japan and by default its strongest ally, the U.S. Although we have noted previously that Russia does have apprehension with its Sino neighbor. Given the current state of global affairs, Russia is conveniently playing ball with China . The question is, how long will this last… Second, Japan has a huge energy deficit and is one of the greatest net importers of energy globally. Japan has substantially increased its appetite for Natural Gas, Russia has been consistently looking for new markets to export its energy. To the extent that a gas pipeline, is prospected for the future to unite these two nations trade and economic interests. We believe that recent actions, will further postpone this project. Albeit the fact that we truly do not know Russia’s, nor Putin’s real intentions with his recent establishment of settlements in these disputed islands. The Russian Ministry of Defense said it would open four accommodation blocks for service member’s families, and construct a storage facility for military vehicles. Japan is disappointed and concerned with this decision, as it feels that no progress has been made in the past 6 years in conversations with Russia. We believe that Russia is being opportunistic given the current situation, and the end goal of this action may be more directed to its domestic policy (increase popularity in Russia) rather than foreign policy (gain ground with Japan). However, we believe that this blow to Japan is not final, and will not come without future concessions to Russia. Read more: “Japan Objects to Russian Military Construction on Disputed Islands,” by James Marson for the Wall Street Journal . “Japan protests Russian military build-up on island disputed since Second World War,” by Alec Luhn for the Telegraph: “Japan files protest over new Russian military barracks on disputed islands” written by Kyodo for the Japan Times. De-Dollarization Continues… As the West goes back to work, Russia is still celebrating. Hence, the world can breathe a little easier, and enjoy a brief moment of peace from this ongoing New Cold War. As the 2019 begins, information has emerged about Russia’s currency reserves. Continuing from its spree initiated in the wake of the U.S sanctions, Russia is further decreasing its holdings in U.S Treasuries. After lowering its reserves in U.S dollars to just under $15bn in 2018, which is down from $100bn. Russia is also shifting its assets geographically from the U.S to other geographies to avoid them being frozen or seized. Out of the $100bn, Russia has reinvested $44bn into euros, $44bn into the Yuan and $21bn into the Yen. Last year, Russia was the largest purchaser of Chinese bonds, accounting for 90% of the market. This can be perceived as a further strengthening of the Sino-Russian relationship. As both countries increase their partnership they are contesting the preeminence of the U.S. China has been escalating its sell off after the trade war initiated by U.S President Donald Trump. The erratic behavior of the Trump administration in international affairs is pushing countries to reconsider their U.S dollar positions. The EU is also currently considering increasing and promoting the usage of the single currency in regional transactions in order to stay away from the turbulence generated by U.S policies. As countries cannot predict future actions taken by the U.S, they are looking more towards their own national interests. By weaponizing their currency, the U.S has overplayed |
"How The World Sees Russia"
Issue #39: 01/12/2019
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From the Publisher:
We are back.
After our much needed holiday break, we bring you again the latest on Russia from a foreign policy and economic perspective. As we enter a new year, we will keep a close eye on Russia as per usual, but also hopefully find ways to better deliver our editorial promise and product to you. At Rossiya Scan, we hope that 2019 is a year where our small operation is taken to a higher level. A year where we gain more insights on how to better serve our readers.
So what are we going to talk about today?
We start of by looking at Russia’s growing influence in Libya. Moscow is quickly becoming the undisputed powerbroker in this war-torn nation. Like in the Middle East, the West has essentially weakened its position in Libya by abandoning it. Allowing Russia to step in and build relationships with various opposing factions without much competition.
Japan and Russia are having problems again. Russia is making moves in the disputed Kuril Islands and Japan is not happy. The relationship between these two appears to be worsening despite attempts by both sides to improve it. We again analyze further the relationship between these two countries, and try to understand how it is continuously shaped by global affairs.
The de-dollarization of the world economy continues. Russia and China are taking the lead in this movement. Although the world is increasingly adopting non-U.S dollar policies it is far from completely doing so. The U.S dollar is still king, but should U.S foreign policies continue to vex allies and non-allies, it is likely to continue lose ground.
Finally, we take a look at Moscow’s response to London’s decision to build two new military bases overseas. The South China Sea and Caribbean were listed as the regions where the U.K would seek a permanent military presence. Russia said it would retaliate if the U.K were to go through with the plan. We believe that this latest spat between these two countries is more bark than bite, and explain why.
-Rossiya Scan
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Russia is Winning in Libya
In Rossiya Scan, we have spilled a lot of ink over Russia’s growing influence in the African continent. Their realpolitik playbook of using private military contractors (PMCs) to support at risk governments or armed irregular factions in exchange for mineral rights has worked without much opposition.
Libya has been a country that we have yet to properly analyze. In fact, we will have to write several pieces over time to correctly decipher the many pieces at play in this geopolitical quagmire.
So what’s Russia doing in Libya? Much like in the rest of Africa, Moscow is taking advantage of the West’s decision to pullout from the area. They are backing several strong factions with military assistance, and Russian PMCs have even setup bases.
Libya has been engaged in a civil war since the toppling of the Muammar Qaddafi regime. NATO airstrikes were instrumental in ensuring the rebel victory over Qaddafi. The West hoped democratic institutions would fill void left by the brutal Qaddafi regime. However, a civil war amongst several rival factions is what has resulted from the overthrow.
The Kremlin has for the most part thrown its support behind Khalifa Haftar, a Libyan military leader, whose forces control the vast majority of the the oil producing area of eastern Libya. That being said, Russia is said to be playing several sides in this conflict. A strategy, that is putting them ahead of all outside powers, which tend to support one side over another, according to two unnamed European diplomats, reported Bloomberg.
This flexibility that Russia has is particularly easy for them to carry out considering the bad reputation that the West has developed in Libya. They might have lead a successful intervention to topple Qaddafi, but their essential abandonment led to the civil war.
“All parties to the conflict trust Moscow,” said Alexander Dynkin, head of the Institute of World Economy and International Relations, a Russian state-run research group. “The West did everything it could to plunge this country into chaos.”
Russia had a fairly positive working relationship with the former Qaddafi government. So much so, that it is speculated that they would likely prefer if a former member or members of that government resumed power. The Kremlin has even been flirting with the idea of giving support to Saif al-Islam Qaddafi, the son of the deceased Libyan dictator, who has been said to be a possible candidate for the presidency in the elections the UN wants to hold this year. Russia has also begun to court the UN backed Tripoli government. Giving them yet another in within a faction that could eventually take control of the country.
Russia is skillfully laying the seeds in Libya to become something that it has become increasingly known for. That is a broker amongst opposing sides. The West appears again to be caught flatfooted in Libya, and for now uninterested in reclaiming its former leadership role.
Read more:
"Russia Has a Plan for Libya - Another Qaddafi," by Henry Meyer, Samer Al-Atrush and Stepan Kravchenko for Bloomberg.
"Life On the Run No Bar to Gaddafi Son Leading Libya, Says Russia," by Business Day staff.
"What is Russia Really Up To?" by Stasa Salacanin for Qantara.de
| |
Moscow & Tokyo Clash...Again...Over Islands....
Old quarrels are hard to settle. They sprout over and over again, despite the fact that moving on, would be strategically more beneficial for those involved in these seemingly never ending disputes.
We have already previously highlighted that since Moscow and Tokyo established diplomatic ties in 1928 this has been a thorny relationship. Primarily, due to the territorial disputes over a chain of islands (Kuril & Sakhalin) located between Japanese mainland and Russia’s Kamchatka peninsula.
One of Japans key foreign policy objectives has been to settle the dispute over these islands, whilst consolidating their relationship with Russia (Russian President Vladimir Putin has met Japanese Prime Minister Shinzo Abe 21 times in the last 6 years). Simultaneously, tensions are escalating between Japan and China in the South China sea.
Could this be a coordinated attack on two fronts, between Russia and China?
First, Russia has recently been getting closer politically and militarily to China (Japan’s greatest threat in the region). This mutually beneficial friendship concerns Japan and by default its strongest ally, the U.S. Although we have noted previously that Russia does have apprehension with its Sino neighbor. Given the current state of global affairs, Russia is conveniently playing ball with China.
The question is, how long will this last…
Second, Japan has a huge energy deficit and is one of the greatest net importers of energy globally. Japan has substantially increased its appetite for Natural Gas, Russia has been consistently looking for new markets to export its energy. To the extent that a gas pipeline, is prospected for the future to unite these two nations trade and economic interests. We believe that recent actions, will further postpone this project.
Albeit the fact that we truly do not know Russia’s, nor Putin’s real intentions with his recent establishment of settlements in these disputed islands. The Russian Ministry of Defense said it would open four accommodation blocks for service member’s families, and construct a storage facility for military vehicles. Japan is disappointed and concerned with this decision, as it feels that no progress has been made in the past 6 years in conversations with Russia.
We believe that Russia is being opportunistic given the current situation, and the end goal of this action may be more directed to its domestic policy (increase popularity in Russia) rather than foreign policy (gain ground with Japan). However, we believe that this blow to Japan is not final, and will not come without future concessions to Russia.
Read more:
“Japan Objects to Russian Military Construction on Disputed Islands,” by James Marson for the Wall Street Journal.
“Japan protests Russian military build-up on island disputed since Second World War,” by Alec Luhn for the Telegraph:
“Japan files protest over new Russian military barracks on disputed islands” written by Kyodo for the Japan Times.
| |
De-Dollarization Continues…
As the West goes back to work, Russia is still celebrating. Hence, the world can breathe a little easier, and enjoy a brief moment of peace from this ongoing New Cold War.
As the 2019 begins, information has emerged about Russia’s currency reserves. Continuing from its spree initiated in the wake of the U.S sanctions, Russia is further decreasing its holdings in U.S Treasuries.
After lowering its reserves in U.S dollars to just under $15bn in 2018, which is down from $100bn. Russia is also shifting its assets geographically from the U.S to other geographies to avoid them being frozen or seized.
Out of the $100bn, Russia has reinvested $44bn into euros, $44bn into the Yuan and $21bn into the Yen. Last year, Russia was the largest purchaser of Chinese bonds, accounting for 90% of the market. This can be perceived as a further strengthening of the Sino-Russian relationship. As both countries increase their partnership they are contesting the preeminence of the U.S.
China has been escalating its sell off after the trade war initiated by U.S President Donald Trump. The erratic behavior of the Trump administration in international affairs is pushing countries to reconsider their U.S dollar positions. The EU is also currently considering increasing and promoting the usage of the single currency in regional transactions in order to stay away from the turbulence generated by U.S policies.
As countries cannot predict future actions taken by the U.S, they are looking more towards their own national interests. By weaponizing their currency, the U.S has overplayed its hand and is pushing an ever more aggravated international community into seeking alternatives. Thereby creating the right environment for a challenger to the U.S dollar, as a direct result of its own policies.
With last year’s ending of the Iranian deal, the sanctions against Turkey and Russia, the trade war with China plus further interference into the EU’s energy policies, the U.S is pushing various actors towards the development of new systems that can operate with less exposure to them.
Certes Russia, Turkey and China are not sufficiently important yet. However, they may be a gateway for further change. To develop a new system, their needs to be sufficient actors, and enough support.
We currently have a lot of large actors contemplating or already carrying out business outside of the current defacto U.S dollar system. When too many countries have to operate in areas considered to be outside of the accepted norm (e.g. shadows or grey areas), it shows that the system is likely to enter further overhaul with time if things do not change.
Read more:
"6% Inflation? Russia’s Central Bank Could Be So Lucky," by Scott Johnson for Bloomberg.
"Russia Buys Quarter of World Yuan Reserves in Shift from Dollar," by Natasha Doff and Anna Andrianova for Bloomberg.
"Sanctions, Isolation and Inflation are Killing Russian Incomes," by Kenneth Rapoza for Forbes.
"Russia Ditched Dollar Holdings to Foil U.S Sanctions," by Max Seddon for the Financial Times.
"Russian C.Bank Says Resumption of FX purchases Won’t change Market Balance," by Reuters staff.
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London Irks Moscow with Military Base Plans
Russia has officially expressed concerns over the U.K's decision open two military bases abroad. The areas being considered by the U.K are the South China Sea and Caribbean.
In an interview with the Telegraph, U.K Defense Secretary Gavin Williamson stated after Brexit the British military would seek to strengthen its global position by building said bases. Singapore or Brunei were being considered for the South China Sea. Guyana or Montserrat are being eyed for the potential Caribbean base.
“Statements about the desire to build up its military presence in third countries are counter-productive, destabilizing and possibly of a provocative nature," said Maria Zhakarova, Russia’s foreign ministry spokeswoman. "In the event of any measures that pose a threat to Russia's security or that of its allies our country reserves the right to take appropriate retaliatory measures."
The U.K currently has several logistics, training and military outposts throughout the world. Russia also has several in most former soviet countries, as well as a naval base in Syria. Russia has contemplated expanding its bases to other countries. Basically, in places where they have strong commercial interests and relationships with the military.
Cuba, Venezuela and Vietnam have been reported as potential candidates. Interestingly enough, the latter three are players in the Caribbean and South China Sea. The Central African Republic has also publicly stated that they would welcome a Russian base within their territory.
The U.K. is saber-rattling with this move. The same is the case with Russia. They are annoying each other, and their moves to build bases would be more symbolic than a serious projection of power. This is because both are not strong military players in these areas, and would be increasingly difficult for them to become so. Each certainly has its political influence, but both are highly unlikely to unseat the strong players of these regions.
In the case of the South China Sea, China carries the obvious big stick. In the case of the Caribbean, the answer is clearly the U.S, who not only has access to it through its mainland and island territories. But also with additional military bases in Cuba, Curaçao and Honduras.
Read more:
"Russia Condemns Plans British Plans to Build Military Bases," by RFE/RL staff.
"Russia Warns British Military Plans for Bases in South China Sea and Caribbean Could Lead to Retaliation," by Alec Luhn for the Telegraph.
"Russia Condemns U.K Foreign Army Base Plans, Says Ready to Defend Interests," by Reuters staff.
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