"How The World Sees Russia"

Issue #42: 02/02/2019

From the Publisher:

It happened...

The  Intermediate-Range Nuclear Forces (INF) Treaty has been officially suspended. After months of threats, the U.S and Russia effectively called off the treaty. The first to instigate this was the U.S, who effectively pulled away from it yesterday. Russia responded in kind today, and confirmed the end of this longstanding treaty. 

As stated in prior issues, we believe that the rise of China to be a key instigator in the suspension of this treaty. The world is changing, and Cold War treaties are not addressing the geopolitical concerns of both the U.S and Russia. Hence, we forecast that we are likely to see more old treaties fall by the way side over the next few years.

Moscow is said to have offered Pyongyang a nuclear power plant in exchange for their weapons mass destruction. North Korea is essentially a Chinese sphere of influence. Beijing is an ally of Moscow, but one that appears to be of mere convenience. This move by Moscow could mean several things, and we unpack some for you in this issue.

The theories and stories surrounding U.S President Donald Trump’s personal relationship with Russia are vast. We briefly visit this topic and consider all the geopolitical moves that have been happening lately. Is Trump compromised? We don’t know, but discuss some of the aspects in this increasingly global story.

Finally, Russian tycoon Oleg Deripaska has had the sanctions against his companies lifted. It appears that a deal was made, however, the details are not entirely clear. Deripaska appears to have retained a controlling stake in his companies. Hence, this story is likely to heat up as far as U.S domestic politics, and in turn ripple into the international. Members of the U.S Democratic party are unhappy with this decision from the U.S Treasury department, and are likely to use whatever deal was made against the Trump administration.

-Rossiya Scan

R.I.P: The INF Treaty....

The Intermediate-Range Nuclear Forces (INF) Treaty, one of the most successful treaties of the Cold War, is no longer in force. Russian President Vladimir Putin has deferred Russia’s commitments to the treaty, exactly one day after U.S Secretary Mike Pompeo announced that the U.S would no longer stand by this arms control pact.

Putin met earlier today with members of his cabinet to craft a response to Washington’s decision to pullout of the treaty. After the meeting Putin announced that Moscow would respond in kind.

"We will do as follows," said Putin during a meeting with the press, according to RFE/RL. "We will come up with a tit-for-tat response. Our American partners have announced the suspension of their participation in the treaty, so we will suspend as well."

The INF Treaty from 1987 prohibited the elaboration, construction, and positioning of both ground-launched cruise or ballistic missiles with a range between 500 and 5,500 kilometers. The treaty was also the first to essentially eliminate an entire class of missiles.

Moscow and Washington blamed each other for violating the treaty prior to its dismissal. The U.S, and its NATO allies, have told Russia that their new generation of land-based missiles, 9M279 violate treaty. On the other hand, Russia has stated its displeasure with the American made THAAD anti-missile defense system. Stating that that the missiles used in this defense system, which are expected to be housed in Poland, don’t respect the treaty.

Of course, as previously discussed in prior issues of Rossiya Scan, there is also a Beijing angle to the INF denouement.

China is not a signatory to the treaty, and has been developing intermediate range missiles without constraints. Even positioning these missiles on artificial reefs in the South China sea, an area that is widely seen as a major point of future conflict. The U.S views China as  the biggest threat to its geopolitical interests. Russia (although an ally of Beijing) has also exhibited hesitations about its strengthening neighbor.

Beijing, unsurprisingly, called for Russia and the U.S to reconcile.

"China opposes the United States' move to denounce the treaty and urges the U.S. and Russia to properly settle the differences through efficient dialogues,"  said a Chinese Foreign Ministry statement.

The arms control structure of the Cold War era appears to be reaching its expiration date. Without the participation of other nations, such as China, its ability to effectively tackle the global security problems of the 21st century is coming to an end. Its framework puts Moscow and Washington at a disadvantage against other global and regional players who do not have these constraints.

Hence, the INF treaty is likely to not be the only arms control pact to be deemed obsolete. Others, such as the New Strategic Arms Reduction Treaty, which was signed in 2010 by the U.S and Russia, is another pact that is likely to be in the chopping block when it is set to expire in 2021. For some it still holds too much of a Cold War era DNA, and again puts a restraint on the two main actors of that retro global reality. U.S President Donald Trump and Russian Foreign Minister Sergey Lavrov have already singled it out as a potential treaty that could be discarded in the future.

Of course, as the former main players of the Cold War dismantle these treaties, a new global arms race is likely to follow. That being said, this arms race has been effectively going on for the past decade. There is now less holding these two back though, which means that the splash made by Russia and the U.S is in defense manufacturing is likely to heat things up. After all, Russia and the U.S have the most sophisticated, and mature defense industries on the planet. 

Read more: 

"In Tit-For-Tat Move, Putin Announces Russian Suspension Of INF Treaty," by RFE/RL staff. 

"The Cold War Treaty is Dead," by Ivan Tselichtchev for the South China Morning Post.

"U.S Announces Withdrawal from INF Missile Treaty," by DW staff. 

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What Was Behind Russia’s Offer to North Korea?

Currently the world is at disarray, we have the government of Venezuela’s Nicolas Maduro collapsing (critical, yet alive), the Middle East is an explosive cocktail (we know all the ingredients, but not how it will end), Africa is a mess, Europe is politically fragmented and North America has the erratic U.S President Donald Trump at its helm (this speaks for itself).

Scanning the global landscape, we spot another issue which means more than what it seems, and could be an answer to a few unexplained questions. Even though Asia is not currently on the spotlight, developments are happening. Japan is re-militarizing; South Korea has installed the THAAD anti missile defense system (deterring Chinas nuclear capabilities), China’s rhetoric to re-unify Taiwan is menacing and the South China sea is a powder keg waiting to explode.

All major powers are involved in Asia one way or another, entangled in a giant knot. Previously in Rossiya Scan we have discussed the friendly, but no so friendly accord that Russia has with its Sino-neighbor.

North Korea has always had strong ties with China, to the point of being practically dependent on their Sino neighbors for trade and economic help. Due to its closeness to the secretive state, we believe that China has consistently leveraged North Korea as a political tool in its favor when convenient.

However, out of the blue it has been revealed that Russia is also attempting to broker a deal with North Korea; offering the totalitarian state a power plant in exchange for their nuclear weapons. North Korea is in dire need for energy, Russia has the expertise and resources to alleviate this critical problem North Korea has.

This action indirectly puts Russia in conflict with China, steeling attention. Although, this is interesting because Trump is openly claiming the success and progress made with North Korea, when nothing has yet to be achieved. Considering the links being tied between Russia and the U.S this makes us reflect, what was discussed last time Putin and the Trump met during the G20 with no U.S attaches present (besides other topics)?

Once again, this could be a major power play induced by Russia via the backdoor communication channel we have previously discussed. It makes  sense for Trump to ask this favor from the Russian leader (which some claim he looks up to as a mentor) to make some headway in this world flashpoint. A place where the interest of both is actually more aligned.  Each could also boost their popularity if an agreement is reached. Perhaps, even more so if there is an admittance that it was done jointly.

On the other hand, Russia is sending a strong message to China. Unless Russia did this at the behest of Beijing.  We doubt that the latter is the case though, given the fact that China does very little in regard to pressuring North Korea, as they are more interested in maintaining the status quo. Although Trump has taken on Putin more directly than the prior Obama administration in some areas, we believe the Trump's more direct approach to Moscow is in the interest of the Kremlin in the long run. This will be even more valuable to Russia if Trump is re-elected. Potentially posing a threat to China, whilst Russia remains comfortably seated between both.

Read more:

“Russia Offered North Korea Power Plant in Exchange For Nuclear Weapons,” by Nicholas Smith for the Telegraph.

“Russia Secretly Offered North Korea a Nuclear Power Plant: Officials,” by John Hudson and Ellen Nakashima for the Sydney Morning Herald.  

“Trump Sat Down with Putin at G20 without U.S Note-Taker,” by James Politi, Demetri Sevastopulo and Henry Foy for the Financial Times.  

“Dark Nights in Power-Starved North Korea," by Agence France-Presse staff.

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Trump…Kompromat?

“An educated person is one who has learned that information almost always turns out to be at best incomplete and very often false, misleading, fictitious, mendacious – just dead wrong” –  Russell Baker, American Journalist.

What we are going to discuss in this issue may sound farfetched, but give us a chance to present our case and make your own conclusions.

In Rossiya Scan we have previously discussed perceptions and established that not everything is what it seems to be, although assumptions can be implied with research from past and current events.

In this issue we discuss Russia attempting to broker a deal with North Korea, risking its mutual beneficial relationship with China. No doubt their may be a national/economic interest for Russia in this deal, however the major goal in this action could be for U.S President Donald Trump to score a win for his 2020 re-election.

Politically speaking the world is a mess, focusing on Venezuela where Russia and the U.S have contradicting interests; on one hand Venezuela has a $17BB debt with Russia, on the other hand they have the largest oil reserves, which the U.S wants easy access to.

Recently, Russia, sent two “White Swan” strategic nuclear bombers to Venezuela, projecting its military might on the Western hemisphere. Furthermore, Russian bombers have been spotted lately close to U.S & Canadian air space where they have had to be escorted out by U.S fighter jets. Simultaneously, the U.S and Russia have pull backed from the Intermediate-Range Nuclear Forces Treaty. Moreover, the U.S has left Syria leaving it at the mercy of Russia whilst slowly retreating form the Middle East, where Russia has become the major power broker in the region.

All of the above, gives mixed signals as to how close, or not Trump is to Russia. Going down memory lane, we see that Trump’s first trip to Moscow was in 1987. He visited Moscow, all expenses paid with his Czech wife at the time, Ivana Trump. Its worth highlighting that Czech agents, were amongst the most effective in the Soviet Block and Ivana’s father had close ties with the secret police.

The KGB at the time had a program to gather foreign intelligence assets, especially those which were young and ambitious with forward projection. The most revealing section of the program concerned kompromat. It asked for: “Compromising information about subject, including illegal acts in financial and commercial affairs, intrigues, speculation, bribes, graft … and exploitation of his position to enrich himself.”

This profile sounds a lot like something many feel that Trump could be a victim to. That being said, this would need to have been handled with an impressive amount  of deceit and competence. It seems difficult to imagine that Trump could have attained the U.S presidency if faced with such a harsh reality. U.S domestic intelligence agencies should have also in principle figured this out easily. After all, Trump has never exactly been the sort of person that hides his actions.

Could Trump’s personal agenda not be aligned with U.S foreign policy and instead with Russia's? These ties could have been established long ago, it's  been said that the dossier the KGB has on Trump has never come to light. Could Trump's election be part a grander scheme? Who knows? One thing is for sure though, with all the investigations taking place, something rotten is increasingly likely to be found in the White House. 

Read more:

“U.S., Canadian Jets Scrambled To Escort Russian Bombers Away From North American Coastline,” by RFE/RL staff. 

“Here's Why Russian Bombers Are in Venezuela. And Why the U.S. Is So Angry About It,” by Michael Zennie for Time. 

“The Hidden History of Trump’s First Trip to Moscow,” by Luke Harding for Politico.

“How Trump walked Into Putin’s Web,” by Luke Harding for the Guardian.

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U.S Lifts Sanctions on Deripaska Firms 

Russian Tycoon Oleg Deripaska can breathe a little easier now.  The U.S Treasury Department has removed sanctions on his companies, including aluminum giant Rusal (MCX:RUAL), as well as EN+ (MCX:ENPL), a holding company that owned much of Rusal.

What led to this reversal?

As we have recounted in several prior issues, Deripaska was targeted with sanctions by the U.S Treasury last April along with 6 other Russian businessmen. This was done for their alleged role in worldwide “malign" activities. The  Kremlin connected oligarchs thus stood accused of bribing government officials, making threats on the lives of business rivals and for having links to organized crime.

Members of the U.S Congress belonging the Democratic party tried to block the lifting of the sanctions. However, there votes fell short, as not enough members of the Republic party backed the measure.

Most sanctions against the these individuals and companies went into effect. However, for Deripaska it was only the sanctions that were directed at him personally, with those aimed at his company facing constant delay due to fears that said sanctions would cause a disruption in the world aluminum markets. A disruption that was deemed to likely damage U.S companies.

U.S Secretary of the Treasury, Steven Mnuchin appeared to share these concerns after clarifying that these sanctions hoped to “change” Deripaska’s  behavior, and not to put Rusal as a company out of business. Thereby acknowledging the importance of Rusal in the global aluminum market.

In December 2018, the U.S Treasury Department agreed to lift the sanctions if Deripaska reduced his ownership and control of his companies. Deripaska appeared to be making strides to achieving this, in exchange for said treatment. However, according to the NYTIMES, a confidential legal document detailing the agreement  shows that Deripaska and fellow allies are retaining a majority ownership of EN+.  

As the Robert Mueller special investigation continues, we can expect that Democrats are likely to visit this said deal. Mnuchin has already been accused of having a conflict of interest by Democrats regarding this decision. Regardless of what happens, we are entering a new stage, where things are becoming even less clear.

Read more: 

"Trump's Treasury Department Just Lifted Sanctions on Three Businesses Linked to a Russian Oligarch," by Hallie Detrick for Fortune. 

"Treasury Department Lifts Sanctions on Russian Oligarch's Companies," by Kenneth P. Vogel for the NYTIMES. 

"Trump Lifts sanctions On Firms Linked to Russian Oligarch Oleg Deripaska," by Reuters staff. 

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