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SPEAKING
FREELY
Resurgent Russia challenges
US
By Jephraim P Gundzik
Speaking Freely is an Asia Times
Online feature that allows guest writers to have
their say. Please click here
if you are interested in
contributing.
Washington's "war on
terrorism" is designed to militarily establish
United States economic and geopolitical hegemony
on a global scale. Rather than subduing Russia,
the "war on terrorism" is encouraging Moscow to
strengthen its relations with Washington's
prominent foes. The war is also supercharging
Russia's economy. Over the next four years, Russia
will increasingly challenge the foreign policy
goals of the Bush administration.
Dominating the world
The Bush
administration's stated aim for the "war on
terrorism" is to eliminate the threat of terrorist
strikes against the US. Rather than addressing the
underlying cause of terrorism, namely unpopular US
polices in the Middle East, the Bush
administration opted to invade Afghanistan and
Iraq in order to uproot international terrorism.
International terrorism has been strengthened
after three years of war as evidenced by the
upsurge in terrorist strikes worldwide.
In
addition to rampant terrorism in Iraq, Israel and
the Palestinian Territories, terrorist strikes
have escalated across the Middle East, Africa and
Asia. Terrorism has also impacted Europe. It is
almost inconceivable that Pentagon and Bush
administration planners overlooked the impact US
military action in Afghanistan and Iraq would have
on terrorism. Even government officials cannot be
that ignorant.
Cognizant of its impact on
terrorism, it's safe to assume that the Bush
administration had another motive for launching
the "war on terrorism". This motive was most
likely to establish US economic and geopolitical
hegemony globally. Supporting this idea is
Washington's strongly unilateralist foreign policy
tilt. In addition to the invasion of Iraq,
unilateralism has characterized US foreign policy
action on issues ranging from international trade
to the isolation of rogue regimes.
No
longer lying down
Initially, Moscow
supported Washington's "war on terrorism".
However, the US invasion of Iraq changed this
support into resistance, and later into active
efforts to counterbalance the US. In the past two
years both Washington and Moscow have sought to
strengthen their influence in Central Asia and the
Caucasus. Events surrounding the recent election
in the Ukraine signal that the competition for
influence between the US and Russia has increased.
More significantly, Moscow is working
diligently to strengthen its ties with Iran, Syria
and China - countries that Washington considers to
be adversaries. In addition to supplying Tehran
with dual use nuclear technology, Russia is also
selling Iran a broad array of conventional
military equipment. Many believe that Moscow is
also supplying Tehran with missile technology and
equipment.
Early this year, Israeli media
reported that Russia had concluded a deal with
Damascus to sell Syria sophisticated
shoulder-fired and stationary missiles. Both Syria
and Russia denied the existence of this deal.
However, the benefits to both Moscow and Damascus
from such a deal are unmistakable.
Rapprochement between Moscow and Beijing
in 2004 was an extremely significant geopolitical
event that went largely unnoticed in the West. In
addition to settling long-standing border disputes
and deepening commercial ties, Russia and China
agreed to hold joint military exercises in 2005.
The last joint military exercises conducted by
Russia and China occurred in 1958.
Similar
to closer relations with Syria and Iran, the
newfound friendship between Moscow and Beijing has
fostered Russia's sale of sophisticated military
equipment to China. Interestingly, relations
between Beijing and Tehran have also warmed
recently. It appears clear that the
Moscow-Beijing-Tehran axis is designed to counter
US foreign policy in Eurasia, the Middle East and
Asia.
Russia's upper hand
The Bush
administration's "war on terrorism" has been a
boon for Russia's economy. This war has contained
global oil production growth thus driving
international oil prices higher. Higher
international oil prices have sharply increased
Russia's oil and gas exports, which have fueled
accelerated economic growth.
In addition
to oil and gas exports, the "war on terrorism" has
also fed rapid growth of Russia's arms exports. In
2004, fuel and arms production directly accounted
for about 30% of production-based gross domestic
product (GDP), 65% of total exports and 50% of
federal government tax revenue.
The
contribution of fuel and arms exports to
expenditure-based GDP is much larger than their
contribution to production-based GDP. In addition
to accounting for the majority of domestic and
foreign investment, tax revenue generated by fuel
and arms production and exports have financed
strong growth of wages and pension incomes,
boosting private consumption.
President
George W Bush's reelection practically ensures
that the "war on terrorism" will intensify over
the next four years, sustaining strong economic
growth in Russia. This will strengthen Moscow's
ability to challenge the Bush administration's
hegemonic intentions.
The Kremlin's
trump
In 2005 Russia is likely to surpass
Saudi Arabia as the world's largest oil exporter.
This, combined with continued contraction of
global oil stocks, gives Moscow enormous leverage
over international oil prices. Russia could easily
push the price of crude oil above US$100 per
barrel by reducing oil production. No other
oil-producing country, including Saudi Arabia, has
sufficient spare production capacity to counter a
production cut by Russia.
By effectively
controlling international oil prices, Russia could
undermine US economic growth. More importantly,
Russia could encourage the devaluation of the
dollar by redenominating its substantial energy
trade with Europe from dollars into euros.
Redenomination, which is supported by both Russia
and the European Union, would force Europe's
central banks to rebalance their foreign exchange
reserves in favor of the euro.
Rather than
establishing economic and geopolitical hegemony
around the world, the "war on terrorism" is making
the US increasingly vulnerable to a sharp economic
recession delivered to Washington by Moscow. The
Bush administration should consider this when
formulating plans to expand US power into Russia's
traditional sphere of influence or to undermine
Iran's government. Without this consideration,
Washington risks an economic war.
Jephraim P Gundzik is president
of Condor Advisers, Inc. Condor Advisers provides
emerging markets investment risk analysis to
individuals and institutions globally. Please
visit www.condoradvisers.com for
further information.
(Copyright 2005,
Jephraim P Gundzik)
Speaking Freely
is an Asia Times Online feature that allows guest
writers to have their say. Please click here
if you are interested in
contributing. |
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