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Diplomacy
Currencies of US, China, Russia

Can Russia and China unseat the Dollar from its throne?

by Sauradeep Bag

​Although the dollar continues to be the dominant global currency, Russia and China could dent this dominance. In the aftermath of global financial exclusion, Russia has had to make some strategic adaptations. The West’s sanctions had crippling consequences, and the Kremlin scrambled to find alternatives. In light of these developments, China became an important ally, and the Yuan—its currency—has taken on a more prominent role. It is telling that in Russia, the yuan has surpassed the United States Dollar (USD) in trading volume, a feat achieved a year after the Ukraine conflict, which triggered a series of sanctions against Moscow. As Russia and China band together, one wonders what other shifts will take place and how they will shape the future. Change is afoot, and the Russian market bears witness. The month of February saw a watershed moment as the yuan surged past the dollar in monthly trading volume for the first time. The momentum continued into March as the gap between the two currencies widened, showcasing the growing sway of the yuan. It’s an impressive feat, considering that the yuan’s trading volume on the Russian market was once quite insignificant. The winds of change blew through Russia’s financial system as the year progressed. Additional sanctions had taken their toll on the few remaining banks that still held power to make cross-border transactions in the currencies of countries that had been deemed “unfriendly” by the Kremlin. One such bank was Raiffeisen Bank International AG, whose Russian branch played a significant role in facilitating international payments within the country. However, the lender found itself under the watchful eye of both European and US authorities, which only added to the pressure. These events spurred the Kremlin and Russian companies to shift their foreign-trade transactions to currencies of countries that had not imposed sanctions.Converging coalitionsThe bond between Russia and China is growing stronger, with both nations seeking to bolster their positions on the global stage. Their alliance has spread across various spheres: military, economic, and political. With relations between Russia and the West crumbling, China has emerged as a key partner for Russia, providing it with the necessary support to counter economic and political pressure. On the other hand, China is keen on expanding its global reach, especially in the Eurasian region, and sees Russia as an important ally in this regard. President Xi Jinping’s recent visit to Moscow and his pledge to expand cooperation are likely to take this partnership to greater heights. Trade and investment ties are set to grow stronger, with both nations seeking to reduce their dependence on Western economies. Russia’s focus on infrastructure development and mega projects is also likely to benefit from China’s expertise in these areas. Energy is another significant area of collaboration, with Russia being a leading exporter of oil and gas and China being the world’s largest importer of these resources. Technology is also an essential domain, with both countries investing heavily in research and development to remain competitive in the global economy. While the alliance between Russia and China will likely have far-reaching geopolitical consequences, it is a complicated relationship with both nations pursuing their interests, even as they work towards common goals. As a result of Western sanctions, Russia has shifted its foreign trade transactions away from the dollar and euro to currencies of non-restricted countries. By doing so, the Kremlin and Russian companies hope to decrease their dependence on the Western financial system and explore new avenues for conducting their trade and economic activities. This shift in strategy reflects Russia’s determination to maintain its economic stability despite restrictions on its access to the global financial system. It also underlines the growing importance of alternative currencies in global trade as countries strive to minimise the impact of sanctions and safeguard their economic interests.Structural overhaulsThe Russian Finance Ministry was not immune to the winds of change either. Earlier this year, it made the switch from the dollar to the yuan for its market operations. It even went a step further by devising a new structure for the national wealth fund, earmarking 60 percent of its assets for the yuan. The Bank of Russia joined the chorus, urging its people and businesses to consider moving their assets to the rouble or other currencies considered “friendly.” This would help mitigate the risk of having their funds blocked or frozen. As the world undergoes a seismic geopolitical shift, it seems Russia is moving in tandem, searching for ways to secure its economic future. However, the dollar still reigns supreme in the Russian market. Even with all the changes taking place, it remains the most widely used currency, ceding its throne only occasionally to the yuan. This underscores the enduring dominance of the dollar, which has played a significant role in Russia’s financial landscape for years. However, as the world continues to evolve, one wonders how long it can hold on to its crown.

Energy & Economics
European Commissioner for Energy, Kadri Simson giving speech during the European Green Deal

Industrial Policy, Green Energy of the European Union and Long-Term Regional Developement Problems

by Pavel Sergeev

Annotation The features of the implementation of the industrial policy of the European Union aimed at achieving the goals of ensuring the functioning of green energy are considered, an assessment of the prospects for regional and global development in the context of rising prices for energy products is given The beginning of 2023 showed the correctness of scientists who have long warned about the strengthening of the negative impact on humanity of natural and climatic changes, natural disasters, man-made disasters and their consequences, which leads to a decrease in the sustainability of global economic and social development. The most incomplete list of them includes the earthquake in Turkey, the danger of a new pandemic, the strongest tornado in the USA. As for the problems of climate change for the European Union countries, at present the problem of drought and the increasing shortage of fresh water is becoming increasingly urgent there. Moreover, in the most unexpected places, natural hazards that are not characteristic of the region, including volcanic activity, may also occur. Clearly, overcoming this kind of problem will require, at a minimum, a reliable energy supply. However, the orientation of the region's industrial policy towards green energy, the creation of capacities for the production of alternative energy sources means, if we do not consider the negative environmental consequences of this, a sharp decrease in the reliability of energy supply. This is all the more important since the EU own energy production is at a rather low level. The prospective restructuring of regional gas supply means for the EU a significant decrease in the competitiveness of goods produced in the region, which, without the supply of cheap Russian natural gas, leads to the loss of the main markets.  At the same time, it is possible that regional crises, such as climate, environmental, migration, demographic, food, logistics, which continue to intensify, will one day lead to global consequences, including a financial crisis. And it will eventually lead to an exchange crisis, which will necessarily spread to commodity markets with appropriate consequences. In a natural way, ordinary EU citizens understand how the abandonment of a cheap and reliable source of energy supply will end, including its long-term consequences. And the companies of the global energy market are now confident that the time has come for long-term contracts. The fact is that modern competition, conducted by individual subjects of international relations in a very specific way, began to deny international law, primarily the UN Charter (at least Article 1.3). The result of all this will be serious disproportions in the development of the global economy and very many will have to refresh the survival skills formulated by Robert Baden-Powell (1857-1941) at the beginning of the twentieth century.

Defense & Security
Civilian protests in the city of Rehovot Israel against the planned changes of Israeli government to the high court of justice

The political crisis in Israel

by Mario Sznajder

The political crisis currently experienced by Israel has its origins in the structure of the political system of this country, institutionalized since the twenties of the last century, in British Palestine, through the installation of an electoral system first adopted by the Jewish community authorities, which was growing with immigration, and then by the State of Israel since its establishment in 1948. It was a parliamentary proportional representative system, with a single national list, with an entry band for Parliament that varied from 1% of the votes to the current 3.25%. This system worked regularly while the big parties of the time –Labor and Likud (liberal nationalist)– received a large percentage of votes that allowed them to choose minor partners for the government coalition and at the same time they were led by politicians who possessed high levels of legitimacy by their foundational roles in Israel, such as were Ben Gurion and Begin. Around the 1980s, electoral parity began to emerge between the possible government coalitions led by both parties, and this situation gave rise to governments of national unity led by Shamir and Peres. Later, the big parties lose electoral support, and the government coalitions are increasingly weak. This is because the leader of the party that wins the first electoral majority wins just over a quarter of the votes, while to achieve a coalition that includes more than 50% of the parliamentary seats, he must pay high 'prices' to the small parties and depends more and more on them in order not to lose the government. This is the current case of the Netanyahu government. The attempt at electoral reform in the 1990s, which separated the election of the Prime Minister from the parliamentary election - from the coalition supporting the government - failed, as it reinforced both ideologically and electorally the smaller parties. Ultimately, at the beginning of this century, the previous system was restored with an increase in the percentage of votes required for entry into Parliament. At the same time, Israel lacks a written Constitution and instead has a series of basic laws that outline the structure of the State and safeguard the rights of citizens and minorities. In the 1990s, the Israeli constitutional void was filled through judicial activism by the Supreme Court, which carried out a process of judicializing politics and exercised its authority to limit government actions and legislation that it deemed contrary to the prevailing legal system. Some politicians viewed this as an attempt by the Supreme Court to assert supremacy and curtail the popular will expressed through parliamentary elections. Meanwhile, the weakness of the major political parties and the personalistic and populist tendencies - which were accelerated during the years when electoral reform led to the separation of the election of the Prime Minister from that of the Parliament (Knesset) - led to Israel holding five national elections between 2019 and 2022, in which the major parties had great difficulty in generating stable government coalitions. The latest election, on November 1, 2022, granted the first majority to the Likud, and its leader, Netanyahu, formed a government coalition that they themselves described as "completely right-wing." The coalition includes, outside the Likud, three ultra-Orthodox parties and two religious nationalist parties. One problem with it is that it contains many ideological contradictions among its members and also generates serious disputes over the leadership of each of the sectors. An additional problem is that it includes a party - the Jewish Power party, led by Ben Gvir - that is openly anti-Arab in racist terms. Among the electoral proposals of this bloc of parties, which make up the current government, the one for judicial reform stood out, whose central content was to remove from the Supreme Court of Israel its role and authority with respect to the revision of legislation, as well as over the actions of the Government and its power to curb everything that it considered undemocratic and in opposition to the existing basic legislation. This would be accomplished through a series of laws that would change the judge election commission, removing the Supreme Court's right to veto judge appointments, and introducing a representative majority of the governing coalition on this commission. Another proposed law would give Parliament, with a 61-vote majority, the power to override any political decision of the Supreme Court. Beyond these, it is proposed to weaken the control authority that the Attorney General's Office has regarding appointments and government acts, and a series of measures that would practically eliminate the political powers of the Judiciary within the current Israeli system of checks and balances (brakes and balances designed to prevent any of the branches of the State from acquiring supremacy over the other two). The argument of Netanyahu and his coalition allies is that they have the power to carry out this judicial reform or revolution, since the people have wanted it and have manifested it through their vote in the last election. Beyond this, Netanyahu and his allies make “identity politics” arguments, which maintain that Israel, although governed by Likud-led coalitions, remains in the hands of the former Ashkenazi elites originating from historic Labor; and this means the discrimination of Eastern Jews from the institutions of power, such as the Supreme Court and the judicial system, the academic elite, the financial elite, the high-tech elite, and even certain military elites. The speed with which Netanyahu and the government coalition attempted to legislate this reform caused an unexpected popular protest to emerge from civil society, without clear political leadership, as the parliamentary opposition was practically dragged along by the popular protest. In addition, it should be noted that the protest is focused not only on the reform itself but also on Netanyahu's personal interest, as he is facing three corruption trials and the disqualification of Deri, the leader of the ultra-Orthodox Sephardic party Shas, from serving as a minister in the current coalition. The massive protests and strong international criticism, especially from the US and the European Union, along with a climate of instability that weakens the value of the national currency - the Shekel -, the withdrawal of capital, and threats in the area of internal and international security, have strengthened the protests and created coalitions among sectors that seemed irreconcilable before these recent events. Thus, reservists in elite units have stated that they will not continue to serve in their military roles under a Netanyahu dictatorship since, if everything depends on a parliamentary majority without balance between the powers, that majority forming the government coalition would delegate its parliamentary authority to him and the government would be in the hands of the prime minister, whom the protest activists consider a future dictator. Faced with this, the massive protests have included blockades of central roads and the paralysis of activities. Added to all this is the fact that the Minister of Security (Defense), Gallant, demanded that Netanyahu stop the reform legislation because the security situation - facing Iran, Hezbollah, Syria, the West Bank, and Gaza - during this month of Ramadan is perceived as dangerous and it is a bad period to add internal instability. Netanyahu prevented Gallant from making a public statement explaining all of this, although Gallant did so while Netanyahu was on an official visit to London. Netanyahu reacted by declaring that Gallant would no longer lead the Ministry of Security (Defense), but he did not send him the dismissal letter. When Netanyahu fired Gallant on Sunday night, a large crowd took to the streets across the country to protest this measure, and the next morning, in a special meeting, the Histadrut (General Federation of Labor), in coordination with the associations of industrialists, merchants, and bank directors, declared a general strike that paralyzed Ben Gurion airport and large sectors of the entire country. As a result of all this and after a day of intense negotiations within the government coalition - facing the religious nationalist parties, who, due to past issues and settlement problems in the West Bank, were the ones who most demanded the reform, and alongside the Minister of Justice, Levin, who is the author of the reform plan - Netanyahu declared that the reform is on hold for the next month to make way for a conciliatory negotiation that produces an agreed reform of the Israeli legal system, in negotiations that will be guided by President Herzog. It is clear that legislating a Constitution at this time, with the multiple fractures of Israeli society aligning in two polarized blocs, is a pipe dream. It is also necessary to understand that behind the attempt at judicial reform-revolution, there is an ineffective political system that must be reformed and updated in order to face the multiple challenges of Israel in the 21st century, which are very different from those of a century ago when this system began to be institutionalized.

Diplomacy
Genghis Khan Statue Complex

Mongolia: squeezed between China and Russia fears ‘new cold war’

by Christoph Bluth

Mongolia’s prime minister, Luvsannamsrain Oyun-Erdene, recently expressed his country’s fear that the world is heading towards a new cold war as the relations between Russia and China and the west – particularly Nato – have taken a turn for the worse. “It’s like a divorce,” he said. “When the parents divorce, the children are the ones who get hurt the most.” The country sits landlocked between Russia and China and is fearful of antagonising either. It gets much of its power from Russia, and China buys much of its exports – mainly agricultural goods and minerals such as copper. By pursuing a nimble foreign and trade policy since it transitioned to a multiparty democracy in the early 1990s, Mongolia has established a stable economy, receiving a thumbs up from the World Bank in its latest country report: With vast agricultural, livestock and mineral resources, and an educated population, Mongolia’s development prospects look promising in the long-term assuming the continuation of structural reforms. But the war in Ukraine has brought home to Mongolia just how carefully it must now navigate its foreign and trade policies to remain independent.Smooth transition to democracyFrom 1921 to 1990, Mongolia was effectively part of the Soviet bloc, although not part of the Soviet Union itself. The country’s centralised command economy was almost entirely dependent on Moscow for survival. The collapse of communism in the early 1990s resulted in what proved to be a smooth transition. The then leader, Jambyn Batmönkh, refused to even consider quelling pro-democracy demonstrations, instead saying: “Any force shall not be used. There is no need to utilise the police or involve the military … Actually, these demonstrators, participants, and protesters are our children.” His resignation in 1990 and the emergence of Ardchilsan Kholboo (Mongolian Democratic Union) paved the way for the development of a multiparty democracy. The June 1993 presidential election in Mongolia, which was ruled as free and fair by the International Foundation for Electoral Systems, saw the incumbent president, Ochirbat Punsalmaa – who had been appointed after a ballot by members of the existing Presidium of the People’s Great Khural (the national assembly) – elected for a four-year term. A new constitution was adopted, with a three-part structure under the speaker of the parliament, the prime minister and the president and, while there have been instances of political corruption, Freedom House gives the country a high rating for both political rights and civil liberties. All of which cannot disguise that the fledgling democracy remained wedged between (at the time chaotic) Russia and an increasingly assertive and authoritarian China. The obvious policy for Mongolia to pursue was to attempt to balance the two great powers in the region. Initially, Mongolia’s foreign policy relied heavily on “omni-enmeshment”. This basically meant building relationships with as many partners as possible, both regionally and globally – including, significantly, the US. But since 2000, Mongolia has embraced the policy concept of “balance-of-power” to reduce the country’s reliance on any one nation. To this end, they have partnered with strategic states in Asia, such as Japan and India, and rekindled military ties with Russia by entering a “strategic partnership” and conducting joint military exercises, while still maintaining a strong relationship with China. Mongolia has also strengthened bilateral security relations with the US. Mongolia’s relationship with China is complicated by the fact that a significant part of what was traditionally Mongolia is now an “autonomous region” of China (Inner Mongolia), with a population of ethnic Mongolians larger than that of Mongolia itself. This, and the activities of secessionist groups in the province, is a persistent point of conflict between China and Mongolia.Third neighboursBut Mongolia sees its independence increasingly threatened as Russia and China grow closer. Since the demise of the Soviet Union, Mongolia has adopted a strategy of maintaining strong ties with “third neighbours” – countries that embrace democratic values but also practice market economics, including the US (it was a term first articulated with connection to Mongolian foreign policy in August 1990 by then US secretary of state James Baker). The US and Mongolia formalised their relations as a Strategic Partnership in 2019 and in 2022 – clearly with one eye on Ukraine – the two countries announced they were deepening the partnership “in all areas of mutual interest”, including an “open skies” agreement which would guarantee scheduled nonstop passenger flights between the two countries. The US – with other third-neighbour allies – also takes part in the annual Khaan Quest military exercises.Dangerous timesThe war in Ukraine has brought the precarious geopolitical situation in Ukraine into sharp focus. The latest joint declaration from the US-Mongolia Strategic Partnership stressed that “disputes should be resolved by peaceful means and with respect for the United Nations Charter and international law, including the principles of sovereignty and respect for the independence and territorial integrity of states, and without the threat or use of force”. It added: “To this end, both nations expressed concern over the suffering of the Ukrainian people.” Mongolia has abstained from the UN votes condemning Russia’s invasion of Ukraine, while also refusing to criticise the sanctions imposed on Russia by the west, despite the fact that they have affected Mongolia – for example, sanctions against Russian banks have made it difficult to pay for its imports from Russia. And, for all its efforts to forge ties around the globe, Mongolia remains heavily dependent on both Russia and China. The prospect of a new cold war setting the west against the Beijing-Moscow axis is a major concern for Mongolia. As Elbegdorj Tsakhia, a former prime minister and president of Mongolia – now a member of The Elders group of global leaders – told Time magazine in April 2021: “I feel that we have just one neighbour. China, Russia, have become like one country, surrounding Mongolia … Every day, we face very tough challenges to keep our democracy alive. Mongolia is fighting for its survival.”

Defense & Security
President Vladimir Putin with his military personnel

Armies and Autocrats: Why Putin’s Military Failed

by Zoltan Barany

AbstractThis essay analyzes the failure of Vladimir Putin’s military in Ukraine in terms of five key factors. The first of these is Putin’s monopolization of control over the armed forces, which has driven critical voices and honest debates out of military and defense matters. Second is the failure of reform: Efforts to overhaul the bloated, ill-equipped post-Soviet military have not produced a twenty-first century fighting force that can match the world’s best armies or counter their capabilities. Third, Russia’s military has been unable to attract talented young people. Fourth, Russia’s mammoth defense industry produces too few weapons, and those it does turn out cannot match sophisticated Western arms. Finally, the operations in Georgia, Crimea, and Syria were conducted against feeble adversaries and said zero about how Russian forces would perform in a conventional land war against a resolute, well-armed enemy. In short, the Russian military is a reflection of the state that created it: Autocratic, security-obsessed, and teeming with hypercentralized decisionmaking, dysfunctional relations between civilian and military authorities, inefficiency, corruption, and brutality. Before and even shortly after Russian president Vladimir Putin invaded Ukraine on 24 February 2022, most experts predicted that Russia’s military would make short work of its southwestern neighbor’s defenders. The conventional wisdom held that while Russia’s forces had fallen on hard times after the Cold War, Putin’s more than two decades of rule had transformed them into an effective military machine. In early 2014, Russian troops in unmarked green-camouflage uniforms had taken Crimea from Ukraine with little bloodshed or even exertion. Two years later, one analyst called the intervention of the Russian Air Force on the side of the Bashar al-Assad regime in Syria “the most spectacular military-political event of our time.” In 2021, another commentator pointed to successful campaigns not only in Ukraine and Syria but also in Georgia (2008) while crediting Putin with having “overseen a thorough transformation of the Russian Armed Forces.” Flawed appraisals such as these are based on a misunderstanding of Russia’s military landscape. The Russian military is a quintessential reflection of the state that created it: Autocratic, security-obsessed, and teeming with hypercentralized decisionmaking, dysfunctional relations between civilian and military authorities, inefficiency, corruption, and brutality. We should note five key points. The first is that Putin’s monopolization of control over the armed forces and refusal to allow an independent legislature have driven critical voices and searching, honest debates out of military and defense matters. Second is the failure of reform—as the world can now see, efforts to overhaul the bloated, ill-equipped post-Soviet military have not produced a twenty-first–century fighting force that can match the world’s best armies or counter their capabilities. Third, Russia’s military has been unable to attract talented young people. Senior officers stubbornly refuse to delegate authority, robbing juniors of chances to develop initiative and leadership qualities, while most noncommissioned officers (NCOs) and their troops are poorly prepared. Fourth, Russia’s mammoth defense industry—largely owned and run by the state—produces too few weapons, and those it does turn out cannot match sophisticated Western arms. Finally, the operations in Georgia, Crimea, and Syria proved nothing: They were conducted against feeble adversaries and said zero about how Russian forces would perform in a conventional land war against a resolute, well-armed enemy. In a constitutional democracy, the legislature and the executive are both involved in controlling the armed forces. The chain of command is codified, as are respective institutional responsibilities vis-`a-vis the military. Laws likewise prescribe the potential uses of the military in various domestic and external scenarios. The national legislature passes the defense budget and supervises its disbursement, the chief executive acts as commander-in-chief, the defense minister is not a serving officer, and civilians—including those in the media and defense-focused NGOs—offer advice and scrutiny. In authoritarian states, the executive directly controls the military while the national legislature (if one exists) and regional authorities have no say. There is no safe place for independent security-policy experts, scholars, or journalists to function. The Kremlin runs the Russian armed forces, and today the Kremlin means Putin. He has few confidants. Since 2012, his principal advisors in the security realm have been Defense Minister Sergei Shoigu (who has no military background) and General Valery Gerasimov, the armed forces chief of staff. They serve entirely at the pleasure of the president—who summarily dismissed each man’s predecessor. Putin’s frustration with the Defense Ministry’s handling of the “special military operation” in Ukraine (to say “war” or “invasion” can bring a Russian citizen years in jail) has led to the marginalization of Shoigu, who nonetheless has kept his job despite strident criticism from prominent Russian nationalists. When Putin came to power in 2000, the military and its top brass held considerable sway over foreign and defense policy, military reform included. Since then, Putin has wrestled control of all military and security forces into his own hands. During Defense Minister Anatoly Serdyukov’s tenure (2007–12), bloodless purges removed from the general staff officers who disagreed with the Kremlin’s ideas about military reform, who were thought too independent-minded and unwilling to give Putin constant support. Serdyukov cut the Central Military Administration staff by more than 30 percent, mostly getting rid of generals and colonels. For the last dozen years, Russian generals have been Putin’s servants. Their careers depend not merely on their professional competence but on their personal loyalty to him. On paper the Defense Ministry answers to parliament and its committees on defense and security, but in practice the ministry answers to the Presidential Administration alone. The president decides whether, when, where, and how to deploy the military, at home or abroad. Putin is a centralizer; while Russia remains nominally federal, local councils have lost capacity to perform even traditional tasks such as calling up reservists, as recent events have shown. Journalists who have dared to write objectively on defense issues have been hit with heavy jail time even for open-source reporting. Membership in NATO—a defensive alliance espousing liberal-democratic principles—may constrain an authoritarian such as Hungary’s Prime Minister Viktor Orbán from seeking to “adjust” his country’s borders, but Putin faces no such obstacle. He dominates the Collective Security Treaty Organization (comprising ex-Soviet republics), while the “dictators’ club” that is the Shanghai Cooperation Organization in no way constrains his grip on the Russian military. For more than a decade, Russia’s army has been indisputably Putin’s army; no trace of institutionally balanced civilian authority, transparency, or accountability impedes his control over it.Reform InterruptusAt the Cold War’s end, Russian political and military leaders were aware of their forces’ shortcomings. For most of the 1990s, however, little happened beyond a reduction in force size. Generals opposed structural changes, political elites lacked the will to push back, and resources were scarce. The Russian army won the First and Second Chechen Wars (1994–96; 1999–2009) against a tiny breakaway region, but with an operational performance that was embarrassing. The August 2008 defeat of Georgia, another small and underfunded neighbor, also underlined Russia’s military deficiencies. Systems for command, control, communications, and intelligence performed so poorly that at times officers had to borrow war correspondents’ cellphones to reach troops. The air force admitted that it had four aircraft downed during the twelve-day conflict (the Georgians claimed to have shot down 21), losses that would have easily been avoided had unmanned aerial vehicles (UAVs or drones) been on hand to fly reconnaissance. Russian sources acknowledged that tanks and warplanes had seen no overhaul since the Afghan War (1979–89), “smart” weapons and modern communications systems had been unavailable, and the Defense Ministry had relied on “favorite suppliers” known for making obsolete armaments. In response to such weaknesses, the reform program begun in 2008 sought to turn a Soviet-legacy military still based on mass mobilization into a leaner, more professional force ready for combat. Even if Ukraine has laid bare their limits, the changes made since 2008 have been considerable. With carte blanche from Putin, Defense Minister Serdyukov pensioned off or cashiered enough stubborn senior officers to break institutional resistance. The military’s structure was rationalized and streamlined. The number of large units shrank from 1,890 to 172, while 65 military colleges became ten and sixteen Soviet-era military districts became four. A main purpose of the defense reforms was to bridge the deep qualitative gap between Russian and NATO military personnel that the brief Russo-Georgian War had highlighted, or at least to improve the training and combat readiness of the nonelite troops who have always filled most Russian units. Modernizers also wanted to stabilize the army’s troop strength at a million. Russian official data are best treated with skepticism, but it appears that the total personnel strength of the Russian armed forces (land, naval, and air) has been between 700,000 and 900,000 over the past decade. Serdyukov reduced the size of the officer corps, phased out praporshchiki (roughly equivalent to warrant officers), and drastically increased the number of “contract” (professional) soldiers. In a bid to make professional soldiering more attractive, money went to improve the working conditions, housing, welfare, and pensions of servicemen and their families. Shoigu carried on the reform process, raising the number of contract soldiers to 410,00 by 2020, when conscripts in uniform numbered only 260,000. The conscripts are a token of Russia’s limitations: The Kremlin would like to have a fully professional military but cannot afford it, so the draft is needed to fill the ranks. The reform plan called for a half-million contract soldiers by 2019, but only 405,000 were said to have been signed up and that figure is likely inflated. As of 2012, contract soldiers were paid 25 percent more than the average Russian civilian, and military benefits were comparatively generous as well. But inflation has been a key problem. Its erosion of contract soldiers’ pay and benefits has made military careers less enticing and driven down applicant quality: The military has been chasing not only fewer but less desirable recruits. Without able contract recruits, the dream of a high-quality, NCO-enabled Russian military can never come true. A traditional weakness of Soviet or Russian armies going back to czarist days has been the absence of career NCOs. A modern military relies on professional “noncoms”: They enjoy significant autonomy; keep commissioned officers and enlisted personnel working together; and give to the troops training, discipline, and (not least) hands-on leadership “at the sharp end.” Russia’s military reform recognized the need for a professional NCO force; within ten years after the Georgian campaign, contractors predominated in what were considered NCO billets. But questions remained about the depth of their training and the degree of initiative accorded them in an army where the idea of delegating authority downward has long been a foreign concept. In 2009, the Defense Ministry established an NCO academy, but the two-thousand graduates that it produces each year do not seem to have been enough to transform army culture. In 2010, seventy-thousand of the junior officers whom Serdyukov had discharged had to be recommissioned in order to keep doing what in the West would be classed as NCOs’ jobs. The available data suggest, and the war in Ukraine has confirmed, that Russia is a long way from fielding the kind of proficient NCO force that is essential to a modern military, and which Ukraine itself is increasingly displaying through its own performance under arms. Reform never even touched other areas. These include combat medicine, something that Western armies have worked hard on in recent decades. Quickly bringing together wounded soldiers and critical care is key, but the Russian military with its history of tolerating high casualties has focused little on this. Young Russian army doctors who resigned their commissions protested that they had been issued “practically nothing” to work with in terms of equipment and could “provide only first aid.”Generals and SoldiersLack of trust in subordinates and reluctance to delegate mark every command level of the Russian military. The Soviet-era practice of waiting for orders to filter down from headquarters—a custom meant to leave no room for independent thinking and creativity—often results in missed opportunities on the battlefield. Serdyukov dismissed or eased out about a third of senior officers, including the last group of critical thinkers who might have disagreed with Kremlin policy. He made senior generals’ promotion prospects depend on their ability to read the signs emanating from the Presidential Administration. Even at the top of the military hierarchy, generals are wary of taking initiative for fear of angering superiors who now include Putin himself. Nonetheless, it seems that some in the high command did question Putin’s plan going in, especially the idea of a lightning strike to seize Kyiv, warning that Russian troops and equipment were not up to the task. When the doubters turned out to be correct, the Kremlin apparently allowed these generals to draw up a new strategy. They then turned the conflict into a war of attrition based on the old Russian standby of overwhelming firepower. When massed artillery and aerial bombardment failed too, as fighting around the vital southern city of Kherson and Ukrainian breakthroughs in other sectors showed, Putin shook up his roster of senior commanders three times. In April, in June, and again in September, the Kremlin changed generals in search of better combat performance. In early October, Putin gave General Sergei Surovikin the task of turning the war around even as Ukrainian forces carried on with counterstrikes around the flanks and into the rear areas of surprised Russian formations. Surovikin’s qualifications include experience in complex combat environments as well as a reputation for “total ruthlessness,” “corruption and brutality,” and mistreating subordinates. In other words, he promises to be a perfect fit for Putin and his army. We can also see Putin’s distrust of his high command in his ever deeper personal involvement in military decisions. As the Ukrainians counterattacked in September 2022, he told his generals that he himself would now set strategy. His micromanagement of the war extends to making low-level tactical decisions and giving orders to frontline generals from the Kremlin. According to Western intelligence sources, the Russian president “is making operational decisions at the level of a colonel or brigadier,” helping to determine the movements of forces and ordering stands “at all costs” (an approach that leads to troop and equipment losses as units banned from making tactical retreats fall prey to encirclement). Putin’s heightened involvement likely stems from his realization that early in the war his commanders kept him in the dark about how badly Russian forces were faring against unexpectedly nimble and fierce Ukrainian resistance. But should Putin, who has no military background, ever have expected his forces to do well in Ukraine? Starting in 2008, military education and training of all ranks did improve. There were more drills, including large-scale joint exercises featuring tens of thousands of personnel from different Russian services. Beefed-up flight hours for military aviators and improved maintenance routines for their aircraft reduced mechanical failures and combat losses in Georgia and Syria. To put all this in context, however, it must be stressed that outside a few elite units, Russian training and maintenance standards across the board have never been more than modest, and hardly reach the levels that characterize the world’s top militaries. Despite pay raises, the Russian armed forces have been unable to attract the best and brightest of young Russians in the face of competition from the civilian labor market. Housing remains a problem for officers with families, and for years pay has not kept up with inflation. In many units, conditions are poor and junior officers are treated with contempt as superiors play favorites. Anecdotal evidence suggests that many officers with employment opportunities outside the military resign their commissions. The 2018 decision to revive the post of zampolit (political officer) in units as small as infantry companies harks back to the Soviet era and signals that the state doubts its soldiers’ loyalty. Mandatory military service has been unpopular. Many of those who can afford to avoid it (by bribing army doctors to declare them unfit) do so, while the most desperate flee the country or even deliberately injure themselves to evade the draft. The brutal hazing of raw recruits, sometimes with tragic results, remains a problem despite efforts to curtail it. In 2008, the period of mandatory active service was halved to a single year, which means that after training a soldier is available for just six months of duty. Most troops that the army considers combat-ready are not draftees, though (perhaps surprisingly) conscripts make up about a quarter of elite commando units. The army planned to reduce its intake of conscripts to 150,000 by 2021, but missed that goal. As the Ukraine war grinds on, unwilling draftees will become more common, and the army will increasingly have to rely on poorly trained and motivated soldiers. Putin’s 21 September 2022 call-up of 300,000 reservists put new focus on manpower issues just ten days before the beginning of the fall conscription period. Many experts believe that mobilizing hundreds of thousands of reservists will prove exceedingly difficult. So far, the call-up has fallen disproportionately on ethnic minorities. These include nomadic reindeer herders from northeastern Yakutia (5,600 kilometers from Kyiv) as well as the Crimean Tatars, long repressed by Soviet and Russian regimes and vocal opponents of the peninsula’s annexation. Even if those mobilized are actual reservists, it is likely that only a fraction of them have had regular training in the years since they left active duty. It will be months before these troops can add to Moscow’s war effort. In a September 29 video call with advisors, Putin publicly admitted “mistakes” such as call-ups of fathers with children, people with chronic illnesses, and some over military age. Mobilized soldiers, some of them middle-aged, have complained that they were kept in “cattle conditions,” had to buy their own food, and received ill-fitting boots and uniforms as well as old, poorly kept weapons. The president left it to regional governors and officials below them to fix the problems, not mentioning that his own policies have undermined local governments’ capacities. During the first week after the mobilization declaration, at least 200,000 young Russians and their families absconded to neighboring countries including Kyrgyzstan and Mongolia, as well as farther afield. The absconders were joining millions of their fellow citizens, many of them young and highly educated, who have voted with their feet against Putin’s war. In recent years, elite troops and private military firms in Moscow’s employ have done much of Russia’s fighting. The best known among the latter is the Wagner Group, a mercenary outfit possibly named for the German composer and established in 2014 by Dmitri Utkin, a former special-forces lieutenant-colonel, and Yevgeny Prigozhin, an oligarch from Putin’s inner circle with multiple Soviet-era criminal convictions. The unit is allegedly overseen by Russia’s military-intelligence agency, the GRU, in which Utkin served. How Wagner gets paid remains murky, but funds likely come from state sources as well as oligarchs. Wagner operatives in their insignia-free uniforms were the “little green men” who first appeared during Putin’s Crimea takeover, and since then have taken part in armed conflicts in Syria as well as several African states including Libya, Mali, Mozambique, and Sudan. Reportedly, more than a thousand Wagner mercenaries have deployed to Luhansk Oblast in the Donbas region of eastern Ukraine and have suffered heavy casualties. Wherever they go, human-rights violations and war crimes follow.Failings of a State-Run Defense IndustryThe Russian state is the main owner of the industries that yield most of its income (energy, banking, arms, and transport) and is directly involved in running them. As state-owned corporations, defense companies enjoy cheap credit, debt relief, and freedom from competitive market pressures. Although the state has invested heavily in the defense industry and has seen success in some areas, on balance Russia’s arms makers have failed to narrow the distance—and especially the quality gap—between their wares and those of the world’s leading weapons producers. Starting around 2005, Moscow’s defense reforms and ambitious armaments programs began to demand serious military-spending hikes. The Stockholm International Peace Research Institute and the International Institute for Strategic Studies in London broadly agree that the Russian military budget swelled from about US$20 billion in the late 1990s to more than four times that amount in 2015, before subsiding to its current official figure of $65.9 billion (or 4.1 percent of Russia’s 2021 Gross Domestic Product). In nominal terms, this is less than a tenth of annual U.S. defense spending, but there is reason to think that these figures grossly understate the real volume of Russian military expenditures. Using Purchasing Power Parity (PPP) measures, Moscow’s effective military expenditures may be as high as $200 billion per year. In recent years, only the United States, China, and India have had defense budgets that exceed Russia’s. Russia’s State Armament Program of 2011–20 aimed to breathe new life into the defense industry by commissioning it to manufacture or refurbish 70 percent of the military’s weaponry. Official sources claim that the industry achieved this. It developed new artillery, introduced some highly accurate cruise missiles, delivered several hundred new tanks (including the highly touted T-90M), and updated hundreds more with improved armor and electronics. Almost five-hundred new fighter jets, mainly Su-27s and MiG-31s armed with radar-guided missiles, were to boost Russian airpower to a new level, with hundreds of new combat helicopters and modernized older warplanes securing Moscow’s domination of the skies. The latest State Armament Program, which began in 2020 and is to end in 2027, is more modest and focuses on advancing mobility, logistics, and the optimization and standardization of extant weapons systems. Over the past decade, Russia has become the world’s second-largest arms exporter behind the United States. Russia’s share of sales in this market from 2017 through 2021 was 19 percent while the U.S. share was 39 percent. Seeing the mediocre performance and vulnerability to Western weapons (such as the U.S.-made Javelin antitank missile) of Russian arms in Ukraine, countries that have been buying military hardware from Russia (the top three customers are China, India, and Egypt) may think twice about purchasing from Moscow again. The systemic and structural challenges that beset Russia’s defense industry are not going away. Supply-chain problems delay deliveries. Money to replace outdated machine tools and pay for research and development is lacking, while neglect of quality control is common. A recent analysis concluded: Centralized and inefficient bureaucracies, weak intellectual property rights and rule of law, poor investment climate, pervasive corruption, and insufficient funding are among the problems that hinder swift progress in fields that are particularly dependent on creating a breeding ground for creativity and the free exchange of ideas.Russian arms makers are a long way from producing weapons that can compete with Western weapons in technological sophistication and general quality. Large-scale building of precision-guided munitions, targeting systems, and heavy-strike long-range drones is beyond the reach of Russian industry. The onset of conflict with Ukraine in 2014 cost the Russian military-industrial establishment its longstanding and beneficial ties to Ukrainian weapons producers. Now sanctions have cut off Russia’s access to the Western optics and electronics that are key to advanced modern weapons. Expanding existing factories will be hard, as funds and other requisites are not there. Ambitious plans announced with much fanfare and bluster have often come to little or nothing. In 2008, the first year of military reform, there was a proposal to create autonomous mobile forces teaming airborne, naval-infantry, and special-forces components, but nothing has come of it. The widely publicized program to produce a fifth-generation fighter, the Sukhoi Su-57, is now more than twenty years old and has generated nothing but a few prototypes. The Su-57 is the first stealth aircraft Russia has ever attempted. Meant to be capable of both air-to-air and air-to-ground combat, it is supposed to be Russia’s answer to the U.S.-built Lockheed Martin F-35 Lightning II, thousands of which are being produced for the United States and multiple allies around the world, including nine or more NATO countries. Technical setbacks, India’s decision to pull its financing, and a December 2019 crash (the first publicly known) make it doubtful that the Su-57 will be ready for full-scale production anytime soon. Since Soviet times, the security sector has been among the most troubled parts of the economy when it comes to graft and corruption In the twenty-first century, Russia has become, in Karen Dawisha’s fitting formulation, “Putin’s kleptocracy.” Transparency International’s Corruption Perceptions Index for 2021 gave Russia a corruption score of 29, putting it far closer on the 100-point honesty scale to the world’s most corrupt country (South Sudan with an 11) than to its least corrupt (Denmark, Finland, and New Zealand with an 88 each). As defense minister, Serdyukov made it a major goal to root out or at least curb the bribery and fraud often tied to arms procurement, as well as the misuse of funds set aside to improve living conditions for the troops. Putin fired Serdyukov in 2012 because of the latter’s links to a Defense Ministry official charged with embezzlement. Large-scale corruption continues, with often hundreds of millions of dollars disappearing. A Russian military prosecutor recently admitted that about a fifth of the Defense Ministry’s budget was stolen; other officials said that it could be as high as two-fifths. Few experts would disagree with former Russian foreign minister Andrei Kozyrev’s recent claim that the corruption—and the fear of telling Putin about it—had left Russia with a “Potemkin military.”Under Arms and UnderwhelmingHow are Russian forces doing in Ukraine? It is impossible to discern precisely because most Western sources are Ukraine-friendly, while both Ukrainian and Russian media have incentives to bend the truth. That said, Russia’s military performance has been far below what most experts expected. Experts have been surprised because their assumptions were faulty. The Russian military’s track record going back to 2008 may have looked impressive on the surface, but it was compiled against weak adversaries. Georgia is very small, and its miniscule army was poorly organized to boot. In Crimea, Moscow’s troops faced little resistance. In Syria, much was made of Russian airpower’s renewed capabilities, but it was up against insurgents whose air-defense capabilities were modest at best. Russia also sent into these lesser-scale operations mostly elite troops and special forces, not average soldiers. In short, the Russian military experienced nothing like the demanding combat environment that it has met with in Ukraine. As of this writing, the war in Ukraine is almost a year old. The course of the fighting has undercut the many experts who claimed that post-2008 Russia had clawed its way into the first class of the world’s military powers. So far, Russian forces from the top down have failed most of the tests facing them in Ukraine. Military planners seldom do well to underestimate an opponent. After seizing Crimea, Putin predicted that Kyiv could be taken in two weeks; in 2022, he shrank that figure to two days. The Russian high command underestimated how many soldiers it would need to attack Ukraine while overestimating the number of locals who would welcome them. Conquering a city such as Kyiv, with its three-million people spread over 839 square kilometers split by a large river and its tributaries, would have required a massive number of collaborators. Once the plan for a quick air-mobile strike at the Ukrainian capital’s downtown collapsed amid firefights with fast-reacting Ukrainian forces at Antonov Airport northwest of the city on February 24 and 25, Russia’s campaign fell apart. Misconceived operational plans, careless logistics, and the lack of combined-arms coordination all suggest deep deficiencies in Russia’s high command. The invaders handled their tanks poorly, trying to drive them forward without proper logistical support or infantry escorts to keep Ukrainian drones and ambush teams at bay. In the skies, overcautious Russian pilots “punched below their weight,” failing to translate their superior airpower into gains on the ground. Russian troops struggled to use their communications systems and failed to disrupt their enemies’ access to satellite signals. Stories of Ukrainian soldiers using smartphones in combat to call their trainers in the United Kingdom for advice, like the ability of those defending the Azovstal steel works in Mariupol to stay in electronic touch with Ukrainian intelligence throughout the five-week siege in April and May, hint at Russian ineptitude. Troops’ general sloppiness—their neglect of small but important tasks such as properly inflating truck tires, for instance—proved costly to Russia’s war effort. As the war drags on, it is unlikely that fresh Russian officers and soldiers dispatched to Ukraine will be better prepared and equipped, or will perform better, than those whom they replace. Nuclear threats could easily backfire: If Russia were to “go atomic,” it might lose its remaining allies, misgauge wind direction and have fallout drift back over Russian territory, or find itself directly at war with a NATO alliance capable (even without nuclear weapons) of inflicting massive destruction on Russian military assets. Further, Russia’s stocks of tactical and medium-range nuclear warheads are, like many Russian weapons, Soviet leftovers. They have been sitting in scattered storage sites for decades. The work of rendering these warheads operational would involve much effort and risk of human error. There is a good chance it would also be detected by Western intelligence given the known locations of stockpiles, the limited number of units even capable (on paper) of handling and firing these warheads, and the travel distances to the theater of conflict that would be involved. The underlying theme of the assault on Ukraine has been the yawning gap between what Putin and his forces want to do, on the one hand, and what they can do, on the other. Ambition is not ability. A Revitalized Ukrainian Army Just a few years ago, Ukraine’s military itself was facing daunting challenges. An ambitious reform program was launched in 2006, but it failed amid political instability, corruption, and inadequate resources eaten by inflation and the 2008 global financial crisis. This top-down overhaul was also poorly conceived: Ukraine was striving to create an all-professional force with cutting-edge technology and advanced command and control in defiance of institutional and funding constraints. Moscow’s 2014 aggression against Crimea and the Donbas shook authorities out of this reverie and into a push for swift change in the Armed Forces of Ukraine (AFU). Under President Petro Poroshenko (2014–19), naval and defense-industry reform succumbed to infighting and embezzlement, but the creation of an autonomous special-forces command with four-thousand troops was a success. The 2014 events showed that large numbers of soldiers would be needed to defend Ukraine against Russia. The draft, abolished in 2013, was brought back in 2014. More innovatively, the AFU also became a community-based military. The financially strapped government appealed to civil society, the large Ukrainian diaspora around the world, and ordinary people to help fund the AFU and to join its ranks. New organizations cropped up “to equip, uniform, protect, and improve the Ukrainian Army as soon as possible” and to supply much-needed military equipment—their donations made up 4 percent of the Ukrainian defense budget in 2015. Another significant change that partly relieved the AFU’s manpower shortage was the creation of volunteer battalions that already by 2014 comprised more than ten-thousand fighters. While raising some disciplinary concerns, they proved effective in the conflict against separatists in eastern Ukraine and are likely to play a consequential defense role for years to come. Finally, Western countries led by the United States and Britain but also including (remarkably) Germany have sent lethal military aid that makes Kyiv’s forces measurably more effective on the battlefield. As of mid-October 2022, Washington had offered about $66 billion—a sum more than eleven times larger than Ukraine’s entire 2021 defense budget. The help has been high in both quantity and quality, including as it has sophisticated items such as U.S.-made M142 HIMARS mobile precision multiple-rocket launchers, British- and U.S.-made M777 155-millimeter howitzers, various types of UAVs, and more. Between 2015 and February 2022, active-duty British soldiers trained more than 22,000 Ukrainian recruits in western Ukraine through a program called Operation Orbital. As of September 2022, instructors from Canada, Denmark, Finland, Lithuania, the Netherlands, New Zealand, and Sweden were joining U.K. soldiers to give accelerated training to thousands more Ukrainians at camps in Britain. The programs teach junior officers, NCOs, and soldiers to think critically and make independent frontline decisions without waiting for permission from commanders sitting at distant headquarters. Ukraine’s military has been everything that Putin’s army has not. The smaller country has managed to convert its own recent reforms and massive Western aid into combat advantages. Defending their own soil, Ukrainian volunteer and professional soldiers alike have excelled in drive, courage, and resourcefulness. President Volodymyr Zelensky has been a revelation: Ukrainians are fortunate to have been led by a clear-thinking and uncompromising figure who knows that this is a contest between democracy and tyranny. The war has made Ukrainian nationhood (long denied by Russian nationalists of Putin’s type) undeniable and has underscored the larger but too-easily-forgotten truth that freedom is not free. Opposition to the invasion has also brought Western democracies closer together as members of NATO, which is adding Finland and Sweden to its ranks. If NATO continues to stand united behind Ukraine, David will have very good chances against Goliath.

Energy & Economics
Cargo ship on Pacific Ocean Cost

UK joins Asia-Pacific trade bloc

by Marina Strezhneva

At the end of March, the negotiations that started in June 2021 on the accession of the United Kingdom to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) were successfully concluded, reflecting radical changes in British trade priorities after Brexit. More broadly, this move by London undoubtedly confirms the special importance that the Indo-Pacific region has acquired in the concept of "Global Britain" and in its subsequent relevant updates. The signing ceremony is scheduled for July 2023, for which the trade ministers of the participating countries and the United Kingdom will meet in Auckland (New Zealand). As a result of London's accession, this bloc will surpass the EU in terms of the combined population of its constituent countries. However, unlike the European Union, which the United Kingdom, on the contrary, left, the CPTPP does not have - to the satisfaction of British Eurosceptics - its own court like the EU Court of Justice, or a supranational budget. The union operates as a multinational trade agreement. An important obstacle that hindered reaching an agreement more quickly was London's refusal to weaken national food standards. But in the end, Ottawa (Canada) backed down on calls for London to lift the ban on importing beef with growth hormones. Beijing has also applied for membership in the CPTPP following London (the Chinese application is dated September 16, 2021, but negotiations have not yet begun). However, with London's accession as a full member of the agreement, China's chances of joining the bloc look somewhat weaker, as London is likely to obtain veto power on this issue. It is possible that they will use this veto under the pretext of ensuring higher trade standards within the agreement (including issues related to ecology and food safety). In any case, as It is known, the current British Prime Minister Rishi Sunak refers to China as a "systemic challenge", which London intends to respond to with "dynamic pragmatism." Currently, the CPTPP includes 11 states (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam), none of which are European. These countries collectively account for 13% of global GDP. The new partnership replaced the Trans-Pacific Partnership agreement of 2016 with 12 participants, after former US President Donald Trump withdrew the US from the agreement in 2017. In 2020, the 11 countries of the CPTPP accounted for 8.4% of goods and services exported from the United Kingdom. In turn, 6.8% of imports to the United Kingdom came from these countries. The terms of the Trans-Pacific Partnership eliminate unnecessary barriers to mutual trade of services by opening financial markets and reducing obstacles to cross-border investment, facilitating data exchange, increasing business mobility, and ensuring regulatory transparency. All of this will support the British government's plans to turn the country into a global technology and service hub, strengthen semiconductor and critical mineral supply chains to produce electric vehicles and wind turbines.London already has trade agreements with most members of this trading bloc, but now these relationships can deepen, and 99% of British goods exported to the bloc countries will be subject to zero import tariffs. Tariffs on imports of Peruvian bananas, Vietnamese rice, crab sticks from Singapore, and Malaysian palm oil into the UK will be reduced (this is a controversial issue that has sparked discussion in the UK, as the production of palm oil, as ecologists point out, leads to deforestation of tropical forests). At the same time, according to assessments by the British government itself, joining the CPTPP is expected to add no more than 0.08% per year to the country's economic growth in the long term (while the slowdown in growth due to Brexit is estimated at 4%). Many politicians and trade experts rightfully point out that participation in the Trans-Pacific Partnership is not capable of compensating for the economic losses that the UK is experiencing due to its departure from the EU. Moreover, due to differences in its rules and standards from European regulations, Britain's accession will prevent it from returning to the European Union in case of a change of priorities. In other words, this agreement is like driving an additional wedge into the relationship between London and Brussels, which are just starting to improve. It is worth remembering in this regard that it was Liz Truss, a former trade minister in Boris Johnson's cabinet and one of the main advocates of independence from the EU, who submitted the British application to join the CPTPP. So far, for London, it is not so much a direct economic, but rather a strategic and symbolic acquisition, firstly due to the rapid growth (according to some estimates, up to 65% by 2030) in the number of middle-class consumers in a dynamically developing region, committed to innovation, and secondly, because of the fact that in the foreseeable future, mid-ranking trading powers such as Thailand and South Korea, which have already submitted applications, are planning to join the Trans-Pacific Partnership. Membership in the TPP is becoming more important for Britain due to the unattainability of a large trade agreement with the United States and the crisis in the World Trade Organization, which is currently unable to firmly enforce the rules of global trade. The matter is not limited to trade alone as London's foreign policy is clearly shifting towards the Indo-Pacific region. In this sense, Australia and Japan, concerned about economic pressure from China and its military ambitions, see Great Britain as a natural ally in opposing Beijing. It is assumed that stronger economic ties will lead to the strengthening of geostrategic alliances. Due to the high dependence of countries such as Chile on Beijing, which is the largest trading partner and main investor for Chileans, Britain's participation in the CPTPP, according to London's opinion, will contribute to the establishment of necessary connections that are seen by Britain's partners in the region as an attractive alternative to ties with China.

Diplomacy
Central Asian migrants in the airport

By Sending Migrants to Ukraine, the Kremlin is Damaging Ties With Central Asia

by Sher Khashimov

By continuing to rely on Russia’s ethnic minorities and foreign labor migrants to do its dirty work in Ukraine, the Kremlin is inadvertently damaging ties to its former colonies. A young Uzbek man named Fakhriddin has died in Ukraine after being recruited from a Russian prison, where he had been serving a five-year prison sentence, to work on a construction project in Russia-occupied eastern Ukraine. Fakhriddin, who died when a shell hit the site he was working on, is one of the latest casualties of Russia’s push to use Central Asian natives not only on Ukrainian battlefields, but also in the reconstruction of battle-torn occupied territories. Hundreds if not thousands of Central Asian migrants are being hired to work in Russian-occupied Ukrainian territory, despite dangerous conditions and warnings from their governments not to go to Ukraine. Most of these migrants are used in the reconstruction of war-ravaged cities like Mariupol and Donetsk; others dig trenches and collect dead bodies on the frontlines. Female migrants from Central Asia are also offered jobs in military hospitals, canteens, and factories in occupied eastern Ukraine. Vacancies are posted on major employment websites like Headhunter and the classifieds site Avito, as well as some regional employment websites, and shared via social media and in migrant communities or advertised by construction companies directly. Employers promise to cover travel expenses to Ukraine, accommodation, meals, and uniforms. Salaries range from $2,000 to $3,300 a month: significantly more than laborers can earn in Russia. Yet despite the enticing promises, Central Asian migrants face the same issues in Russia-occupied Ukraine as they do in Russia itself: unsanitary conditions, unheated living quarters, and poor treatment by employers. Multiple reports indicate that migrants are either underpaid or not paid at all. Some disillusioned workers who have tried to leave Ukraine were not permitted by Russian border guards to re-enter Russia, forcing them to continue working in dangerous conditions on the frontlines while facing criminal prosecution from Kyiv and their home governments for participating in the invasion. These hostile conditions in eastern Ukraine put Central Asian labor migrants and their governments in a bind. Central Asia’s population continues to grow rapidly, with around half of the region’s population now under thirty years old. A lack of employment options and underdeveloped education systems combined with economies wrecked by nepotism, the COVID-19 pandemic, and capital flight mean many younger Central Asians are forced to move abroad to find work.  Central Asian governments, particularly those of Kyrgyzstan, Tajikistan, and Uzbekistan, have become accustomed to exporting excess labor capacity in order to generate much-needed revenue for households through remittances, relieve domestic pressure to create jobs, and provide public goods and services. Politically, migration serves as a pressure valve that prevents the buildup of unemployment-fueled social and political frustration and helps undemocratic regimes to stay in power. Russia remains the primary destination for these labor migrants. Familiarity with the Russian language and culture stemming from a shared Soviet past, geographic proximity, and Russia’s acute need for labor migrants continues to keep Central Asia in Moscow’s orbit. Streamlined processes for obtaining citizenship for highly qualified personnel from former Soviet republics, such as doctors and engineers, adds to Russia’s allure, particularly to those from Tajikistan and Kyrgyzstan, the most remittance-dependent countries in the region. After a pandemic-induced dip, the number of Kyrgyz, Tajiks, and Uzbeks registered to work in Russia is peaking again. According to Russian Interior Ministry data, as many as 978,216 Kyrgyz, 3,528,319 Tajiks, and 5,837,363 Uzbeks entered Russia intending to work in 2022. Some people are likely to have been counted twice in these figures, as they reflect the number of registered border crossings, but they are still at a five-year high. Now the economic downturn in Russia and pressure to work in Russia-occupied Ukraine might contribute to changes in regional labor migration patterns—both at the grassroots level and from the top—that started during the pandemic. While Uzbekistan has become a popular destination for migrants from Turkmenistan, Kazakhstan has emerged as a popular alternative destination to Russia for a growing number of Uzbeks, Tajiks, and Kyrgyz (precise numbers are harder to find as many migrants take advantage of the lack of visa requirements to work illegally and avoid paying taxes).  Central Asian governments, facing domestic pressure to keep their nationals from dying in Ukraine, are also looking for ways to reduce their employment dependence on Russia by diversifying migration destinations and providing migrants with more resources. Uzbekistan has been working with Kyrgyzstan and Kazakhstan on the bilateral improvement of migration flows. Last December, the Uzbek and British governments discussed collaboration on labor migration during another round of economic talks. USAID has just opened a second consultation center in Uzbekistan for labor migrants, in Samarkand. In early 2022, Kyrgyzstan’s Labor Ministry created a center for employment abroad; later that year, the governments of Kyrgyzstan and South Korea signed an agreement guaranteeing additional employment opportunities for Kyrgyz nationals in South Korea.  This search for labor migration alternatives is part of Central Asia’s slow realignment away from its all-encompassing dependence on Russia: a nuanced dance the regional governments must perform without directly antagonizing the former metropole.  Central Asian governments refused to side with Russia in condemning the UN resolution to end the war in Ukraine. Russia’s regional integration projects are unlikely to expand, as Uzbekistan continues to decline invitations to join the Eurasian Economic Union, and Russia’s defeats in Ukraine have weakened the reputation of the Moscow-led Collective Security Treaty Organization. Finally, Central Asian foreign ministers in February welcomed U.S. Secretary of State Antony Blinken to the first ministerial-level engagement of the C5+1 Diplomatic Platform—which represents U.S. engagement with Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan—in the region since its 2015 founding. This realignment can also be seen on the cultural front: the popularity of the Russian language is declining, while local languages are seeing growing interest in them since the invasion of Ukraine. Local governments are cutting the number of Russian language lessons in schools and renaming streets. The issue of decolonization and anti-colonial solidarity is as salient as it has ever been since the collapse of the Soviet Union.  By continuing to rely on Russia’s ethnic minorities and foreign labor migrants to do its dirty work in Ukraine, the Kremlin is inadvertently damaging ties to its former colonies. The longer the conflict drags on, the more incentive Central Asian republics will have to manage their dependence on Russia in exporting their excess labor. It’s hard to see Central Asia quitting on Russia entirely, but the relationship is sure to grow more nuanced and less lopsided in the months to come.

Defense & Security
President of Russia Vladimir Putin

Russia Faces Three Pivotal Moments in 2023

by Tatiana Stanovaya

In 2023, Russia faces three crucial issues—President Vladimir Putin’s plans for his future, the battle between the hawks and pragmatists in the elite, and looming government personnel changes—that could reshape the country.  More than ten months on from the invasion of Ukraine, the contrast between the scale of the external shocks faced by Russia and the relative inertia inside the country is striking. Despite military failings and punishing sanctions, most Russians have gone on with their lives as though nothing is happening, while the elites have tried not to think about what tomorrow may bring, instead putting their full trust in Putin. However, 2023 could prove a dramatic year for Russia and be make-or-break for its leadership’s resistance to change, with three internal questions in particular promising to shape the country’s development for decades to come.  First, Putin will have to decide whether to run for re-election in 2024. Russia’s constitution was amended in 2020 to allow him to remain president until 2036. He may alternatively name a successor, though to leave enough time for campaigning, he would have to do so by the end of December 2023. For now, no one is sure what his plans are. This is by design, as Putin prefers to keep his elites in the dark. Indeed, in the summer of 2020, he justified the constitutional changes that made it possible to extend his rule as a guard against unrest among the elites, who he said “need to work, not look around for successors.” Following the revision of the constitution, both the presidential administration and elites operated on the assumption that Putin would hold on to power indefinitely. Today, the key question is how his calculations have been changed by the war and, in particular, the fact that it has not gone according to plan. Some believe that in unleashing grave problems and threats, the war has strengthened Putin’s resolve to stay in power beyond 2024. Given his contempt for “political deserters”—those who quit their posts in tough times—he is unlikely to become one of them. Others feel that not only is Putin open to giving up power, he may see doing so as part of a solution to the conflict with Ukraine. Even if that appears to be wishful thinking, part of the elite clearly hopes that such a reset will suffice to end Russia’s recent string of setbacks. However, both sides lack certainty about his designs. In any case, Putin is famously fond of making decisions at the eleventh hour, often based on situational factors and in defiance of popular expectations. The 2024 problem, then, has become a major source of anxiety for the elites. It will do more than any other issue to influence the events of 2023, as the political class tries to work out Putin’s intentions and plan around them with an eye to minimizing risk. A second, related issue is the growing schism between those in the elites who favor escalating the war, and those who warn against doing so. This divide emerged after Russia’s withdrawal from the Kharkiv region and relinquishing of the key city of Kherson, and was fueled by Ukraine’s strike on the bridge to Crimea, the referendums held on annexing occupied parts of Ukraine, and the authorities’ subsequent ambiguity on what Russia’s official borders are.  The pragmatists, who consist of technocrats as well as mid-ranking officials in the military and the security services, are united in their conviction that the war should be paused and rethought, and that the country should opt for a more realistic policy in keeping with its rather limited capacities. The hawks call for Russia to not only unleash its full military might against Ukraine, but also to radically restructure its own political and economic system. The latter plank makes theirs a revolutionary faction (albeit pro-Putin, for now at least) whose aim is to supplant a government they see as stalled. Their struggle for supremacy is set to be one of 2023’s key political fights, and one that hinges largely on events on the battlefield: the worse Russia performs militarily, the more vicious the pragmatists’ battle with the hawks. The Kremlin will find its preferred mechanism for suppressing dissent—repression—ill-fitting if used against the regime’s loyalists. The hawks will take the offensive, targeting the military brass and politicians, as Yevgeny Prigozhin, the notorious head of the Wagner private military company, already has. The pragmatists, meanwhile, will express doom and gloom about the direction of the conflict, seeking to scale back Moscow’s war goals and force recognition that victory is impossible. Their message will be well received by non-military elites, who were taken by surprise by the invasion and fear its medium-term consequences. All this leaves Russia stuck between military madness and careful consideration of a possible de-escalation, and Putin faced with a choice: between doubling down on his quixotic pursuit of Kyiv’s decisive defeat and returning to the negotiating table, with the West if not Ukraine. The third key issue Russia faces in 2023 revolves around government personnel changes, which are highly likely, even if it is hard to predict who will replace whom. One reason a reshuffle is near-certain is the increasing demand at the top for dynamism and effectiveness. Putin’s inclination to invite technocrats into the government may grow further, with senior figures in the cabinet, the presidential administration, and the power structures all aged and exhausted by the war and military failings forcing Putin to look for new ideas. Another is the coming presidential contest, given the historical record: reshuffles have preceded all but one of Russia’s presidential elections. A long buildup of tension within the government offers another reason to expect personnel changes. Defense Minister Sergey Shoigu and Chief of the General Staff Valery Gerasimov are being blamed for corruption within the armed forces, while the FSB has been slammed for intelligence failures. Security Council Deputy Chairman Dmitry Medvedev is seen as having lost the plot altogether, and Moscow Mayor Sergey Sobyanin as too apolitical, while central bank governor Elvira Nabiullina is suspected of secretly opposing the war. The government’s senior figures are all dissatisfied with each other: a mutual dislike that gives Putin cause to switch things up. Still, his conservatism and apprehensiveness when it comes to firing underlings will likely lead him to try to strike a balance between stability and renewal.  These fateful developments will be profoundly influenced by events on the battlefield. If, as Kyiv has predicted, Russia attempts a large-scale offensive in February or March, it will likely be met with significant Ukrainian resistance. Otherwise, Moscow will continue slowly strangling Ukraine with attacks on its infrastructure, to which Kyiv will respond with diversionary attacks on Russian soil. Russian political life will remain in the grip of the war’s grim and oppressive atmosphere, leaving elites even more anxious and fearful of the future. Putin’s hypersecrecy and refusal to explain himself to anyone will do nothing to help the situation. Repression will undoubtedly grow, with all dissent criminalized, elements of a state ideology introduced, and new pretexts found for even longer prison sentences. In 2023, Russia’s already historic war with Ukraine will show its full transformational potential, finally changing Russia from within and straining its leaders’ ability to keep the situation under control and plan the decisions they make.

Energy & Economics
European Commission President Ursula von der Leyen during a visit to Tunisia hosted by President Kais Saied along with Dutch Prime Minister Mark Rutte and Italian Prime Minister Giorgia Meloni

To Deal or Not to Deal: How to Support Tunisia out of Its Predicament

by Michaël Béchir Ayari and Riccardo Fabiani

Tunisia is beset by deepening political and economic challenges. President Kais Saied is transforming the country’s parliamentary system into an authoritarian presidential one that has become increasingly repressive. Arrests and convictions of opposition politicians have surged. Saied’s aggressive anti-foreigner discourse has fuelled xenophobic sentiment and contributed to a spike in violent attacks against sub-Saharan migrants. Economically, Tunisia is grappling with the fallout of a decade of sluggish growth compounded by a series of economic shocks since 2020. The nation’s public debt has soared, with significant debt repayments looming. As the country tries to deal with mounting financial constraints, its inability to attract foreign loans is further clouding its economic future. Saied now must decide whether to embrace a credit agreement with the International Monetary Fund (IMF) or potentially default on Tunisia’s foreign debt. Against this backdrop, the EU and, in particular, Italy have a pivotal role to play. They can either help steer Tunisia toward a more stable economic future or watch it descend into chaos. A worrying political and economic outlook While the protests that led to the Arab Spring began in Tunisia, the promise of a more democratic and egalitarian society in the North African country did not come to fruition. To be sure, the protests did lead to the overthrow of autocratic Tunisian President Zine El Abidine Ben Ali in 2011. Moreover, Tunisia was the sole country to emerge from the regional uprisings with a new democracy. That experiment, however, foundered after Saied – who was elected to the presidency in 2019 – seized a monopoly on power in July 2021. Over the past two years, he has replaced the country’s semi-parliamentary system with one lacking checks and balances, consolidating power in his hands. People’s fear of repression resurfaced. Since mid-February 2023, arrests and convictions of public figures, especially politicians, have accelerated, undermining a disorganised and divided opposition. Meanwhile, large sections of the population have focused on survival in the face of a worsening economic crisis and have increasingly disengaged from politics. President Saied has attempted to shore up his dwindling support by pushing nationalist policies. He has jailed members of the opposition in a move that seems aimed at bolstering his standing with swathes of the public who are frustrated with the former political class. Saied has also xenophobically accused sub-Saharan migrants of conspiring to change Tunisia’s identity, creating a climate conducive to repeated violent attacks against a vulnerable minority. Economically, the country is still reeling from a decade of slow growth. After the 2011 uprising, the Tunisian government combatted rising unemployment in part by hiring hundreds of thousands of civil servants. Today, the public sector is the country’s largest employer and half of the annual budget is spent on the public payroll. At the same time, public and private investment in infrastructure, research and other growth-enhancing spending items has dropped significantly, leading to a sharp decline in GDP growth. External factors also chipped away at the Tunisian economy. The Covid-19 pandemic brought a collapse in tourism. Russia’s invasion of Ukraine, meanwhile, led to a spike in commodity prices. Surging inflation – particularly in food prices – and shortages of basic goods have eroded Tunisian living standards. Against this backdrop, Tunisia’s public debt has skyrocketed, reaching nearly 90 per cent of GDP in 2022, with substantial financing requirements needed to maintain current levels of spending. Credit rating agencies have downgraded the country as it struggles to balance its budget. The latest downgrade took place in June, when Fitch lowered Tunisia’s rating to CCC- (well into junk status territory). As a result, access to international financial markets has been virtually shut off, given the prohibitive interest rates (over 20 per cent) that this sovereign rating would entail. While the current account deficit has shrunk and foreign currency liquidity has improved over the past few months because of an uptick in tourism revenues and remittances from Tunisians working abroad, servicing its external debt will continue to be extremely challenging. With 2.6 billion US dollars in repayments scheduled for 2024 (including a euro-denominated bond maturing in February, equivalent to 900 million US dollars), it is still unclear how the government will be able to secure sufficient funds to meet these liabilities. The 2024 budget draft anticipates loans from Algeria and Saudi Arabia, as well as other, as yet unknown, external sources. The IMF deal and the role of the EU Despite these financing difficulties, Tunisia has not yet signed a deal with the IMF. In October 2022, Tunisia and the IMF agreed on the terms of a 48-month, 1.9 billion US dollar loan aimed at stabilising the economy, but Saied rejected the deal, fearing social unrest from cutting subsidies and reducing the public sector wage bill. The IMF board postponed the deal in response. Since then, the president has remained steadfast in his rejection of what he calls “foreign diktats” from the IMF and Western states. The Europeans – in particular, Italy – have pressed the IMF to reopen negotiations and offered incentives to persuade Saied to accept a revised deal, despite their internal divisions on how to treat Tunisia. They are applying this pressure largely because the economic fallout from a debt default could further increase the number of people – both nationals and migrants from sub-Saharan Africa – leaving Tunisia for Europe. While some EU member states, such as Germany, have taken a more critical stance towards Kais Saied’s authoritarian turn, eventually the migration, security and economic interests of Italy and, to an extent, France seem to have prevailed within the EU. Due to its geographic proximity to Tunisia, Italy would receive a majority of a migration influx, at least initially. For this reason, the Italian government has reiterated its concerns over Tunisia’s economic situation on multiple occasions, while refraining from expressing any criticism of the country’s increasingly authoritarian turn and violent attacks against sub-Saharan migrants. The EU has offered incentives to Tunisia to accept a deal with the IMF. After Giorgia Meloni and later EU Commission President Ursula von der Leyen and Dutch Prime Minister Mark Rutte visited Tunis in June, they unveiled 900 million euros in macro-financial assistance conditioned on a deal with the IMF and 105 million euros for joint cooperation on border management and anti-smuggling measures to reduce irregular migration to Europe. Despite the sweeteners the EU offered, the likelihood of a revised deal between Tunisia and the IMF has receded. In August, Saied removed the head of government, Najla Bouden, who had been directly involved in the negotiations with the IMF, and replaced her with a more pliant official, Ahmed Hanachi. Since then, Tunisia hasn’t put forward a revised proposal to the IMF. In October, the president reinforced his position by sacking Economy Minister Samir Saied after the latter claimed that a deal with the IMF would send a reassuring message to Tunisia’s foreign creditors. Tunisia has also rejected part of the funds offered by the EU. On 3 October, Saied rejected the first tranche of EU financial help, declaring that this “derisory” amount ran counter to the agreement between the two parties and was just “charity”. The repercussions of this refusal on the rest of the EU’s financial incentives are unclear. A fork in the road There are obvious reasons for Tunisia to secure a loan from the IMF. It would send a reassuring signal to Tunisia’s foreign partners and creditors. It could encourage Gulf Arab states to provide additional financial support in the form of government loans and deposits with the central bank, and investment in the economy. That would provide the Tunisian government with breathing space. But implementation of reforms required under the loan’s terms could set off anti-government protests by the country’s main trade union (the UGTT) and, in turn, government-led repression. To forestall such a scenario, the president himself could incite protests and riots by using nationalist rhetoric to scapegoat the IMF for any unpopular measures required by the loan. A no-agreement scenario, however, would have much more severe and potentially even catastrophic consequences. Without a loan, Tunisia would struggle to find alternative funding sources to meet its scheduled foreign debt repayments. Saied could then resort to a politically motivated strategic default, followed by negotiations to restructure the country’s external debt. Some Tunisian economists and supporters of the president are advocating for this approach: they say that declaring bankruptcy on external debt would allow the government to hammer out a restructuring plan with creditors and argue that the impact on the economy would be fairly limited, thanks to Tunisia’s capital controls and its banking sector’s low exposure to foreign bonds. But this approach carries great risk, as a foreign debt bankruptcy could lead to a run on Tunisian banks and destabilise the financial sector. In addition, the government could end the central bank’s independence to print money, fuelling an inflation spiral. Politically, a default and its socio-economic repercussions could open the door to a dangerous spiral of social and criminal violence. It could also boost irregular outward migration, with Tunisians fleeing the growing political and economic chaos. Widespread protests may erupt against the disastrous social effects of the president’s failed economic policy, prompting a violent response targeting businesspeople and political opponents for their alleged links to the West, as well as Western diplomats and the local Jewish community. Balancing economic support and respect for rights In light of these two possible scenarios, the EU and Italy should continue to encourage the Tunisian authorities to negotiate with the IMF, which remains the least politically and economically destabilising option on the table for Tunisia, if carried out with due care. At a minimum, a revised deal should include reduced expenditure cuts compared with the earlier proposal, particularly in the context of energy subsidies. At the same time, Italy and the EU should exercise caution and avoid turning their understandable concerns about Tunisia’s stability into a blank check for the president. In particular, they should press the authorities to rein in the abuses perpetrated against migrants and stave off potential attacks against opposition politicians, businesspeople and the local Jewish community. Aside from humanitarian considerations, this would serve Italy’s overarching goal of curbing migration: after all, attacks against the sub-Saharan minority have spurred outward migration, a trend that would accelerate if government persecution becomes even more severe. While supporting the deal, however, the EU and Italy should also prepare for the possibility of Tunisia continuing to reject it and declaring a foreign debt default. In such a scenario, the EU should be prepared to offer emergency financing to the country to help with imports of wheat, medicines and fuel. In doing so, the EU should synchronise the positions of member states to prevent conflicting agendas. Schisms have already emerged between countries like Germany and Italy over how to address Tunisia’s authoritarian drift. For this reason, acknowledgement of the importance of internal stability could provide a common ground in overcoming divisions and helping prevent a new wave of anti-migrant violence.

Defense & Security
Finland's President Sauli Niinisto and NATO Secretary General Jens Stoltenberg give a press conference during a NATO foreign affairs ministers' meeting in Brussels, Belgium

Finland joins Nato in a major blow to Putin which doubles the length of the alliance’s border with Russia

by Simon J Smith

In 1948, the Treaty of Friendship, Cooperation, and Mutual Assistance was signed between the Soviet Union and Finland, providing a key basis for relations between the two states that was to last throughout the cold war. With memories of the 1939 “winter war” between the two still acute, the agreement embodied the Paasikivi–Kekkonen doctrine, named for two of Finland’s post-war presidents who developed the idea between 1946 and 1982 of a neutral Finland close to the USSR. It also set the context for the term “Finlandisation” used by international relations scholars to describe external interference by a powerful country in the foreign policy of a smaller neighbouring state. A year later, on April 4 1949, the North Atlantic Treaty was signed by the 12 founding members of Nato. Throughout the cold war, Finland remained a neutral state – although more due to circumstance than by choice. And despite its 1,340km (832 mile) border with Russia, it chose not to join Nato in the late 1990s, even as many of its eastern European neighbours did. It officially abandon its policy of neutrality in 1994, joining Nato’s Partnership for Peace and then the European Union in 1995. But aspirations to become a full Nato member state had not quite matured. That all ended with Russia’s second invasion of Ukraine in February 2022. Finland (and Sweden) submitted their formal applications to join the alliance on May 18 2022 and this was endorsed by Nato members at the most recent summit in Madrid in June. Although accession to Nato membership was relatively quick, there were objections from some members, most notably Turkey and, to a lesser extent, Hungary. Turkey held up membership for Finland – and is still doing so for Sweden – due to its concerns over what it called support for terrorist groups, namely the Kurdistan Workers’ party (PKK). Hungary also raised objections due to what it regarded as criticism by the Nordic states with regard to the strength of Hungarian democracy. But Nato chief Jens Stoltenberg said recently he is confident that Sweden could become a member by summer.View from MoscowIf Putin was hoping to achieve the Finlandisation of Nato as one of his strategic aims of the war, what he has actually achieved was the “Natoisation” of Finland since it has now become the alliance’s 31st member state. With this comes Article 5 guarantees – the an attack on one member is an attack on the alliance as a whole and must be responded to as such. This fundamentally changes the defence and security posture of Finland, and European security architecture as a whole. Implications include the size and geographical focus of the alliance (even more so if Sweden joins in the not-too-distant future) as well as inter-organisational relations between Nato and the EU, the other key pillar of the European security architecture. And Finland is not playing catch up in order to meet its Nato commitments. In fact, Finland will be a net contributor to the alliance’s overall collective defence. Over recent years, it has been modernising its armed forces, purchasing robust military capabilities and, unlike the majority of member states, it meets the Nato target of 2% of GDP spent on its own defence. Putin has, of course, issued warnings to Finland (and Sweden) about joining the alliance. In 2016, Putin stated that “When we look across the border now, we see a Finn on the other side. If Finland joins Nato, we will see an enemy.” Although there have been mixed signals with regard to Russia’s views on the sovereign right of Finland to join a collective defence organisation if it so chooses (although Russia does not extend this position to Ukraine itelf), it is gravely concerned that Nato will position military capabilities in Finland, on its border – and close to Russia’s own strategically important bases and geography. Although Russia is very much focused on correcting its strategic blunders in Ukraine, it will at some stage begin to recover and, therefore, reconstitute its armed forces and military posture. Of particular concern could be Russia’s increased dependency on its tactical nuclear posture to offset its (temporarily) decreased capacity with regard to conventional capabilities. Although we do not know what the future holds, given both the duration and eventual outcome of the war, Russia will continue to have security concerns. And now it has a border with Nato that will run from the High North down to the Black Sea and beyond. This is guaranteed to lock in continued tensions between the alliance and Russia for years to come. Nato fundamentally thinks of itself as a collective defence organisation, with (nuclear) deterrence as its core strength. Russia will continue to see the alliance as a key stalwart undermining its threat perceptions and ability to affect its own near abroad. So as the Finnish flag is raised at Nato HQ in Brussels, It would be naive to think that Russia will not respond – even if its power to do so is currently somewhat diminished.