10 January 2015

10 Russian foreign policy black swan events for 2015

Jan 7, 2015

These are ten of the most outlandish forecasts for Russian foreign policy events that might occur over the coming 12 months that nobody could possibly predict (but we just did).
A Ukrainian soldier stands guard at a road during prisoner exchange near the town of Donetsk, eastern Ukraine, Sept. 28, 2014. Photo: AP

2014 was an unexpected year for Russian foreign policy – a year no expert could have predicted. It wasn’t just Russia’s annexation of Crimea, it was the whole head-spinning relentless downward tumble of global oil prices that threatened to wreck the ruble and eviscerate Russia’s economy from the inside out.

So why, then, are the Russian foreign policy forecasts for 2015 as equally dull as the ones heading into 2014?

Yes, we know that tensions between Russia and the U.S. are likely to remain high, that the situation in Ukraine probably won't get resolved anytime soon, and that low oil prices will continue to put pressure on Russia’s domestic economy. Those are not so much forecasts for the year ahead as just extrapolations of events already in motion.

In an attempt to predict the unpredictable, here are just some of the Black Swan foreign policy events that might – hypothetically speaking – turn U.S.-Russian relations upside down in the year ahead.
1. Pressure on the Euro makes pressure on ruble look like child's play

This one might happen sooner rather than later, with all the noise that Greece is making about an exit from the Euro at the start of 2015. The so-called “Grexit” would have a huge impact on the Euro, no matter what the economists and diplomats in Germany might say. If you thought the collapse of Lehman Brothers in 2008 was big, wait until you have people worried about the collapse of the Eurozone.

One big beneficiary of any “Grexit” would, of course, be Moscow. EU members would have very little interest in punitive sanctions against Russia at a time when their own economies threaten to unravel. If Russia were able to throw an economic lifeline to Greece or convince other nations of Europe to make noise about an exit from the Euro, it would help to break any sense of cohesion within the EU and possibly threaten the whole system of Euro-Atlantic cooperation.
2. Instability in Saudi Arabia abruptly reverses the downward spiral in global oil prices

If you buy into the whole “Putinization of energy” thesis of Marin Katusa that he describes in his recent bestselling book “The Colder War,” then it’s clear that what happens in Saudi Arabia has huge implications for Russia. Saudi Arabia is the linchpin of the whole petrodollar system engineered by the U.S. in the mid-1970s and a long-time supporter of the U.S. While Saudi Arabia and OPEC may not have the same sway as they once did 40 years ago, there’s no denying that they still have the ability to influence global oil prices in a big way.

ANY POLITICAL INSTABILITY WITHIN SAUDI ARABIA WOULD BE A HUGE WINDFALL FOR RUSSIA

That’s why any political instability within Saudi Arabia would be a huge windfall for Russia. That’s because any instability within the country (either from contenders to the Saudi monarchy or from the Islamists) would almost certainly result in new leaders who are resentful of the West and favorably disposed to Russia. And it would almost certainly result in greater instability throughout the Middle East (possibly even a shooting war between Saudi Arabia and Iran if radical Islamists take power in Riyadh). And, that’s right – with so much instability, disruption and mayhem in the Middle East, the price of oil would almost certainly spike upward.
3. Russia finds an unexpected high-profile member for Eurasian integration

2015 was supposed to be the big debut year for the Eurasian Economic Union, but it’s been tough going so far, with just Belarus and Kazakhstan as original launch members alongside Russia and no chance of Ukraine joining anytime soon. But Armenia just signed up at the end of 2014, as did Kyrgyzstan, and there are rumors Azerbaijan might join as well. But think really big – what if Turkey, Iran, India or Egypt decides to join the process of Eurasian integration in 2015?

If the Eurasian Union starts to get viewed as more than just a reconstitution of the Soviet Union, we might be talking about a 1-2 punch of the Eurasian Union and the Shanghai Cooperation Organization (SCO) to challenge EU and NATO as an economic and military alternative for nations in the Middle East or Asia. Most importantly, a beefed-up Eurasian Union would give Russia a bigger bargaining chip to convince the nations of Central Asia to turn away from the alluring advances of China.
4. Russia pulls off the peace conference of the year

Heading into 2015, the talk in foreign policy circles was of a potential “Moscow I” peace conference to stabilize the situation in Syria. While the Kremlin obviously has a vested stake in Syria’s Assad regime, it has lately been making signs that it’s willing to take into account the interests of the Syrian opposition and play the role of the big-time peacemaker. Hosting a major peace conference in Moscow would be a big step forward in burnishing Russia’s foreign policy image – especially in the Middle East, where it needs as many partners as it can find. A peace conference might not win Vladimir Putin a Nobel Peace Prize, but it might just change a few minds in the Western political establishment.
5. Cyber war replaces information war as the new mode of U.S.-Russian confrontation

Throughout 2014, “information war” was one of the buzzwords of the confrontation between Russia and the West. It referred not just to overt propaganda on the part of Russia and the use of state-owned television as a new tool to control public opinion, but also all attempts to introduce the “fog of war” into what was going on in Ukraine. Both Russia and the West accused each other of manipulating the truth, and the battle for the moral higher ground often revolved around something like a YouTube video or a tweet.

NOBODY’S EXPECTING A MAJOR MILITARY CONFRONTATION BETWEEN RUSSIA AND THE WEST OVER UKRAINE – THAT WOULD BE TOO APOCALYPTIC TO EVEN CONSIDER

Nobody’s expecting a major military confrontation between Russia and the West over Ukraine – that would be too apocalyptic to even consider – but there’s no denying that cyber warfare might be one way for both sides to chip away at each other while still providing enough cover for “plausible deniability.” In 2014, there were already accounts of Russian hackers breaking into computer networks of NATO. Given the accusations of cyber warfare being leveled against North Korea right now by the U.S., cyber warfare is becoming an increasingly likely prospect for the next round of asymmetric warfare.
6. Project Double Eagle goes into overdrive at the Ufa BRICS Summit

According to Marin Katusa in “The Colder War,” the de-dollarization of the world economy is one of the primary geo-economic goals of the Russian government. In Chapter 11 of his book (“Twilight of the Petrodollar”), Katusa calls de-dollarization “Vladimir Putin’s grand strategy for waging the Colder War and unseating the dollar.” Conspiracy theorists have a sexier name for it: Project Double Eagle

Anything Moscow can do to weaken the dollar (such as by pricing oil in gold instead of dollars), then, is in Russia’s interests. One place to continue this offensive against the dollar would be at the upcoming BRICS Summit in Ufa. Russia and China have already started to make noise about settling energy trades in rubles and yuan, and last year, one of the big announcements at the BRICS Summit in Fortaleza was the creation of a New Development Bank based in Shanghai. There have been other signs that Russia is trying to find alternatives to institutions like SWIFT, the Bank for International Settlements (BIS) and the IMF, so don’t be surprised if Russia makes another splashy announcement on its home turf of Ufa that supports the push toward de-dollarization.
7. Russia makes a new pivot to Africa

Russia’s pivot to Asia got all the headlines in 2014, culminating with the massive $400 billion gas deal signed between Russia and China. And the deals kept coming throughout the year, as Russia made every effort to prove to the West that it had other partners and other options. After doing major new deals in China and India, there’s not much that Russia could do for encore this year. So where will the new Russian pivot be in 2015? 

ANY OIL BEING SUPPLIED TO CHINA BY AFRICA IS OIL THAT’S NOT BEING SUPPLIED BY RUSSIA – AND THAT GIVES RUSSIA A REAL INCENTIVE TO GET MORE INVOLVED IN AFRICA’S FUTURE ECONOMIC DEVELOPMENT

One candidate would be Africa, where Russia might seek to counter growing Chinese power on the continent, a place where China is now an economic juggernaut. In 2009, China passed the U.S. to become Africa’s biggest trading partner. China now gets one-third of its oil from Africa, from places like Nigeria, Mozambique and Angola. Any oil being supplied to China by Africa is oil that’s not being supplied by Russia – and that gives Russia a real incentive to get more involved in Africa’s future economic development. Too much African oil making its way to China dilutes the value of any Sino-Russian partnership.
8. Ukraine massively defaults on all of its debts

The financial situation in Ukraine is not just beyond bleak, it’s almost catastrophic. The country can’t pay back $17 billion in IMF financing, it can’t get the U.S. or any other international lender to go along with some kind of bailout scheme to the tune of another $15 billion to $20 billion, and it has almost lost all chance of mending economic fences with Russia. A Ukrainian debt default would have serious knock-on political consequences within the nation, including the probable breakup of the coalition government in Kiev and more domestic political squabbling in Ukraine. In a worst case, you get an unwelcome replay of Euromaidan, starring a whole new cast of very unhappy characters.
9. Russia launches a massive counter-terrorism initiative against ISIS

While there have been disturbing signs of potential ISIS involvement in recent terrorist activity in Chechnya and the North Caucasus, Russia has thus far not taken many visible steps to combat ISIS extremism at its source. In other words, we’ve had U.S. airstrikes against ISIS, but Russia has thus far preferred to combat Islamist extremism on home soil by cracking down on known terrorist organizations in the North Caucasus. A major terrorist attack in a city like Moscow or St. Petersburg – or even any signal that ISIS wasthreatening to topple the Syrian regime once and for all – could force Moscow’s hand. 
10. MH17 turns out to be a “false flag” operation after all

IT’S STILL NOT OUTSIDE THE REALM OF POSSIBILITY THAT 2015 TURNS UP NEW EVIDENCE THAT RUSSIA (OR THE EASTERN UKRAINIAN SEPARATISTS) HAD NO ROLE AT ALL IN THE SHOOT DOWN

And, finally, our most controversial prediction of the year… Last summer,MH17 was the leading headline story for so long, and then, suddenly, all the news about MH17 went dark. Even after the black box for MH17 was recovered, there still has been no definitive proof that a Russian-made Buk missile took down the airliner. While some of the Kremlin’s theories for the shoot down of MH17 – like a Ukrainian missile intended for Putin’s private plane – sound like they’ve been launched in an Internet chat room by conspiracy addicts with way too much time on their hands, it’s still not outside the realm of possibility that 2015 turns up new evidence that Russia (or the Eastern Ukrainian separatists) had no role at all in the shoot down. And just imagine what would happen if the blame, instead, shifted to Ukraine or the West for the tragedy of MH17.

And that’s just the start. It’s possible to think of many other Black Swan events that would turn the U.S.-Russian relationship upside down. Any major military escalation within Ukraine – possibly as a result of the Ukraine Freedom Support Act passed by the U.S. Congress during the final days of 2014 that authorizes the U.S. to provide lethal military aid to Ukraine – would certainly qualify. As would any Russian intervention in the Baltics or Moldova. And, of course, there’s the blackest of all Black Swans – regime change in Moscow, financed and encouraged by Western Color Revolutionaries, that ends Vladimir Putin’s 15 years in power. So what is your pick for the Black Swan event of the year?

The opinion of the author may not necessarily reflect the position of Russia Direct or its staff.

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