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What’s Russia looking for In Libya?

Russia’s engagement with Libya’s General Khalifa Haftar serves anti-terrorist, economic and geostrategic purposes.

Andrew Korybko

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Moscow’s unfolding strategy towards Libya could have a lot more to do with Cairo than observers realise.

The Western press’ anti-Russian hysteria has spread to North Africa, with feverish reports circulating among the Mainstream Media warning about a speculative Russian special forces deployment to Egypt.  According to the prevailing narrative that’s being pushed, Russia is considering some form of clandestine or overt low-intensity military involvement in neighbouring Libya, though this has been officially denied by Moscow. Rumours spread late last year about a possible Russian base in Sidi Barrani, which housed a Soviet-era facility during the Cold War and is also the scene of the latest chatter, but these were also refuted at the time, too.

There’s no telling exactly why the West is promulgating these same debunked reports again, but one of the reasons might have to do with Moscow’s latest diplomatic engagement with the East Libyan forces of General Khalifa Haftar. He was flown out of the country by helicopter to meet with Russian military officials aboard the Admiral Kuznetsov aircraft carrier in early January, and it’s presumed that the two sides spoke about how Russia could aid the general in his anti-terrorist crusade in the country. Accordingly, gossip spread like wildfire soon thereafter, and the West began nervously watching Libya for signs of what some of its representatives were convinced might have been an imminent “Russian invasion”.

That scenario obviously hasn’t been forthcoming, but it’s still realistically feasible to countenance that Russia’s assistance to Haftar might one day move beyond potential arms shipments and medical treatment for wounded soldiers and into the realm of intelligence, advisory, and possibly even special forces assistance, with none other than Sidi Barrani being the most likely location for housing Russia’s operational headquarters.

To be clear, there’s no indication that this is in the works at all, though it’s curious to note that the self-proclaimed East Libyan-based House of Representatives recently extended an invitation to the members of the defence and foreign affairs committees of the Russian Duma to visit their territory.

Russian Presidential spokesman Dmitry Peskov also just reaffirmed that his country “is of course interested in Libya stabilising in one way or another” because it “wants (an) authority in Libya who could combat terrorism”, though he unequivocally dismissed any prospect for an “excessive intervention”.

Therefore, what’s most likely to happen is that Russia will continue intensifying its military-diplomatic contacts with Haftar but will refrain from any conventional intervention in Libya’s affairs. The most immediate and pressing purpose behind this engagement is to help clear the country of terrorists, but there are also three other supplementary imperatives driving this policy as well, the most important of which is Russia’s desire to solidify Egypt’s multipolar pivot.

Other than the anti-terrorist cooperation that was already described, here’s what Russia might be looking for in Libya:

Energy Influence

Libya hosts the world’s 10th-largest oil reserves and the biggest ones in Africa, though it’s been stuck in underproduction ever since the NATO War on Libya led to the assassination of Gaddafi and turned the bombed-out country into a clan-centric patchwork of rival Islamist factions. The subsequent civil war that erupted shortly afterwards ground most production to a halt, though it’s been steadily recovering in the years since.

Russia doesn’t want to control what it hopes to be Haftar’s post-war oil spoils, but it could understandably want to exercise a degree of influence over them in order to help regulate the global energy market and prevent another price glut such as the one which contributed to weakening the rouble over the past two years.

To this end, it’s foreseeable that Moscow’s crucial anti-terrorist assistance (weapons, diplomatic backing, and possible intelligence, advisory, and special forces) to Haftar during his forces’ liberation and unification campaign could be rewarded in the form of profitable energy contracts for rebuilding and exporting some of Libya’s oil. In that case, Russia wouldn’t just earn monetary profits, but also strategic ones as well, since it would be powerfully positioned to indirectly influence the North African state’s energy policies and affiliated relations, both with its export partners and OPEC. Therefore, it’s reasonable to infer that Russian strategists – being the far-sighted experts that they’ve proven to be over the years – might have their eyes set on Libya’s enormous oil reserves, and they understand that effective anti-terrorist cooperation is the quickest way to achieve this far-sighted objective.

Geostrategic Positioning

Another commonly held — although widely fear mongered – explanation for Russia’s upsurge of anti-terrorist interest in Libya is that Moscow wants to establish a geostrategic foothold in the Southern Mediterranean to expand its existing footprint in the Eastern portion. What this explanation fails to provide, however, is the contextual differences between what Russia has already attained in Syria and what it might be looking for in Libya. Whereas the Tartus naval station is slated to undergo modernisation and expansion in the near future, there aren’t any indications whatsoever that Russia wants something similar in Libya, despite this lying at the heart of Western fears. Instead, it’s much more likely that the extent of Russia’s potentially envisioned military influence in Libya has a lot more to do with weapons sales and the high-level strategic relationships that accompany them than conventional basing rights.

Russia is wise enough to predict that any tangible moves in the direction of opening up a military facility in Libya could be a tripwire for triggering a harsh Western reaction, up to and including another an all-out bombing campaign or even a limited ground invasion aimed at thwarting what NATO might pretend is a “threat” to its interests. This could only result in more pain and destruction for the Libyan people, so Moscow would likely seek to prevent this from happening. On top of that, conventional weaponry and related deployments are becoming increasingly less important in the era of 21st-century (post-) modern warfare, so this possibility wouldn’t be high on Russia’s list of priorities anyhow when considering the costs that it would probably entail. Therefore, what Moscow would need in order to strengthen its geostrategic position in Libya is a soft military presence that sidesteps NATO’s tripwires and avoids the heavy costs associated with much more conventional deployments.

The most effective solution which meets these conditions while also promoting Russia’s influence is the future dispatch of trainers, advisors, and military maintenance mechanics after (or maybe even before?) Libya’s War on Terror is over. This would give Russia a much more robust and flexible presence in Libya than any conventional basing rights ever could, meaning that Moscow could invariably achieve much higher geostrategic dividends through a lower-level and more indirect form of commitment than if it opted to pursue a high-level and direct one through trying to open up official naval, air, or land facilities there. In a nutshell, Russia wants to do ‘more with less’, and it might be betting on Haftar to liberate Libya from terrorists and reunify the country so that it can call upon its close relations with him afterwards in order to restore Moscow’s Soviet-era relationship with Tripoli.

Strengthening Egypt’s Pivot

The last, but most important, supplementary reason behind why Russia is so interested in lending anti-terrorist support to Haftar’s Libyan forces is because this helps Moscow to reinforce Cairo’s multipolar pivot. President Sisi has recently embarked on taking his country in the direction of multipolarity, strengthening Egypt’s historic relations with Russia and even expressing principled support for Syrian President Bashar Assad. Not only that, but he’s also working real closely with China and is supposedly in talks with Iran to normalise relations with Tehran, all of which have earned him the severe consternation of his Saudi patrons. Egypt has been progressively transitioning from the unipolar to the multipolar bloc, though smartly without doing so in the sort of radical fashion which would otherwise prompt a Hybrid War or other disruptive destabilisation (though that’s not to say that one isn’t in the cards, however).

At this very sensitive time, Egypt needs to be made aware of just how much its pivot means to Russia, and there’s no better way for Moscow to express this than to covertly join forces with Cairo in combating terrorism in neighbouring Libya. Cairo has long been suspected of backing Haftar and the House of Representatives Tobruk government in Eastern Libya, so it comes as a highly symbolic move that Russia is now in the process of supporting him as well, albeit with much more international attention than Egypt is receiving. Under these circumstances, Russia doesn’t need to deploy special forces and drones to Sidi Barrani in order to prove its allied anti-terrorist commitment to Egypt, although that theoretical eventuality could one day come in handy and be a force multiplier in decisively giving Haftar the game-changing support that he might need in liberating and reunifying his country.   

The trust-building anti-terrorist coordination between Russia and Egypt in Libya is undeclared at this time but can logically be inferred through the overlap of common interests that Moscow and Cairo have in aiding Haftar to varying degrees, the end effect of which will hopefully be to give him the boost that he needs in restoring security to this NATO-destroyed North African failed state. By helping to stabilise Libya in its own way, Russia is proving to Egypt that the latter made the right choice in its developing multipolar pivot and that there are immediate benefits for it such as the drastically improved prospects that Haftar will succeed in wiping out the terrorists next door. Conclusively, although Russia’s latest anti-terrorist moves in Libya (not the fake news that was propagated) obviously have some energy-military motivations, they’re actually predicated more on the much grander intention of cementing Egypt’s multipolar pivot and geostrategically reshaping the larger Middle EastNorth Africa region.

DISCLAIMER: The author writes for this publication in a private capacity which is unrepresentative of anyone or any organization except for his own personal views. Nothing written by the author should ever be conflated with the editorial views or official positions of any other media outlet or institution. 

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EU and Japan ink free trade deal representing over 30% of global GDP

The free trade agreement represents a victory for free trade in the face of growing protectionism

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In a bid to preserve free trade and strengthen their trade partnership, the European Union and Japan have finished a free trade zone agreement that has been sitting in the pipeline for years.

The present global economic outlook provided the needed spur to action to get the ball rolling again and now it has finally reached the end zone and scored another point for free and open trade against the growing influence of protectionism, which has been creeping up with alarming rapidity and far reaching consequences in recent months.

Under the deal, Japan will scrap tariffs on some 94% of goods imported from Europe and the EU in turn is canning 99% of tariffs on Japanese goods.

Between the European Union and Japan, the trade deal impacts about 37% of the world’s GDP, making it one of the largest and impactful of such agreements.

The Japan Times reports:

Top European Union leaders and Prime Minister Shinzo Abe signed an economic partnership agreement Tuesday in Tokyo, a pact that will create a massive free trade zone accounting for 37 percent of the world’s trade by value.

European Council President Donald Tusk and European Commission President Jean-Claude Juncker hastily arranged their visit to Tokyo after Abe was forced to abruptly cancel plans to attend a July 11 signing ceremony in Brussels in the aftermath of flooding and mudslides in western Japan.

Japanese officials said the signing is particularly important to counter intensifying protectionism worldwide triggered by U.S. President Donald Trump.

Negotiations on the pact between Japan and the EU, which started in 2013, had stagnated for a time but regained momentum after Trump took office in January 2017.

“We are sending a clear message that we stand together against protectionism,” Tusk said at a joint news conference with Abe after they signed the agreement.

“The relationship between the EU and Japan has never been stronger. Geographically we are far apart, but politically and economically we could be hardly any closer,” Tusk said. “I’m proud today we are taking our strategic partnership to a new level.”

Tusk stressed that the EU and Japan are partners sharing the same basic values, such as liberal democracy, human rights and rule-based order.

Abe also emphasized the importance of free and fair trade.

“Right now, concerns are rising over protectionism all around the world. We are sending out a message emphasizing the importance of a trade system based on free and fair rules,” he said.

The pact will create a free trade bloc accounting for roughly 30 percent of the world’s gross domestic product. Japan and the EU hope to have the agreement, which still needs to be ratified by both parties, come into force by March.

Under the EPA, tariffs on about 99 percent of Japan’s exported goods to the EU will eventually be eliminated, while duties on 94 percent of EU’s exported items to Japan will be abolished, according to the Foreign Ministry.

The EPA will eliminate duties of 10 percent on Japan’s auto exports to the EU seven years after the pact takes effect. The current 15 percent duties on wine imports from the EU will be eliminated immediately, while those on cheese, pork and beef will be sharply cut.

In total, the EPA will push up domestic GDP by 1 percent, or ¥5 trillion a year, and create 290,000 new jobs nationwide, according to the government.

“The world is now facing raging waves of protectionism. So the signing ceremony at this time is particularly meaningful,” a senior Foreign Ministry official said earlier this month on condition of anonymity.

“The impact for Japan is big,” the official said.

Fukunari Kimura, an economics professor at Keio University, said the EU is now trying to accelerate the ratification process.

“This is a repercussion of President Trump’s policies. They will try to ratify it before Brexit in March of next year,” he said in an interview with The Japan Times last week.

But the deal has raised concerns among some domestic farmers, in particular those from Hokkaido, the country’s major dairy producer.

According to an estimate by the Hokkaido Prefectural Government, the EPA will cut national production in the agriculture, fishery and forestry industries by up to ¥114.3 billion a year, with Hokkaido accounting for 34 percent of the predicted losses.

“The sustainable development of the prefecture’s agriculture, forestry and fisheries industries is our top priority. We need to make efforts to raise our international competitiveness,” Hokkaido Gov. Harumi Takahashi said during a news conference July 10.

Japan and the EU had reached a basic agreement on the EPA in December.

Tokyo also led negotiations on the Trans-Pacific Partnership free trade pact after Trump withdrew the U.S. from the deal in January 2017.

In March, 11 countries including Japan signed the so-called TPP11, or a revised TPP pact that does not include the U.S.

“The Japan-EU EPA is another important step for Japan to strengthen its trade relationship with key trading partners, and demonstrate that trade liberalization is alive and well, even if the United States is taking a different stance,” wrote Wendy Cutler, a former acting deputy U.S. Trade Representative, in an email sent to The Japan Times last week.

“The EU deal also reduces Japanese dependence on the U.S. market and thus increases its leverage to resist unreasonable trade demands by the United States,” she wrote.

According to the Foreign Ministry, the EU, which accounts for 22 percent of the world’s GDP, was the destination for 11.4 percent of Japanese exports in 2016. In the same year, the figure for the U.S. was 20.2 percent and 17.7 percent for China.

In 2016, Japan’s exports to the EU totaled ¥8 trillion, while reciprocal trade was ¥8.2 trillion.

The deal provides tariff relief for both parties and can improve the quantity of trade between them, expand the economy and create many jobs. It also helps to further diversify their trade portfolios in order to mitigate the prospect of a single global trade partner wielding too much influence, which in turn provides a certain amount of cover from any adverse actions or demands from a single actor. In this way, current trade dependencies can be reduced and free and diversified trade is further bolstered.

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The man behind Ukraine coup is now turning Greece against Russia (Video)

The Duran – News in Review – Episode 57.

Alex Christoforou

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On July 11, Greece said it would expel two Russian diplomats and barred the entry of two others.

The Duran reported that the formal reason is alleged meddling in an attempt to foment opposition to the “historic” name deal between Athens and Skopje paving the way for Macedonia’s NATO membership. Moscow said it would respond in kind.

Nothing like this ever happened before. The relations between the two countries have traditionally been warm. This year Moscow and Athens mark the 190th anniversary of diplomatic relations and the 25th anniversary of the Treaty of Friendship and Cooperation between the Russian Federation and the Hellenic Republic. They have signed over 50 treaties and agreements.

Greek news daily, Kathimerini says the relationship started to gradually worsen behind the scenes about a couple of years ago. What happened back then? Geoffrey Pyatt assumed office as US Ambassador to Greece. Before the assignment he had served as ambassador to Ukraine in 2013-2016 at the time of Euromaidan – the events the US took active part in. He almost openly contributed into the Russia-Ukraine rift. Now it’s the turn of Greece. The ambassador has already warned Athens about the “malign influence of Russia”. He remains true to himself.

The Duran’s Alex Christoforou and Editor-in-Chief Alexander Mercouris connect the dots between the Ukraine coup and Greece’s recent row with Russia, and the man who is in the middle of it all, US Ambassador Geoffrey Pyatt.

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Via Sputnik News

Actions similar to the expulsion of Russian diplomats from Greece do not remain without consequences, said spokeswoman for the Russian Foreign Ministry Maria Zakharova.

“We have an understanding that the people of Greece should communicate with their Russian partners, and not suffer from dirty provocations, into which, unfortunately, Athens was dragged,” Zakharova said at a briefing.

“Unfortunately, of course, we are talking about politics. Such things do not remain without consequences, do not disappear without a trace. Of course, unfortunately, all this darkens bilateral relations, without introducing any constructive principle,” she added.

On July 11, the Greek Kathimerini newspaper reported that Athens had decided to expel two Russian diplomats and ban two more from entering the country over illegal actions that threatened the country’s national security. The publication claimed that the diplomats attempted to intervene in a domestic issue, namely the changing of the name of the Former Yugoslav Republic of Macedonia (FYROM) to the Republic of North Macedonia, the agreement for which was brokered by Skopje and Athens last month.

The Russian Foreign Ministry has vowed to give a mirror response to Greece’s move.

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Russia just DUMPED $80 billion in US debt

The US Treasury published a report naming those countries that are the largest holders of US bonds. The list includes 33 countries, and for the first time Russia is no longer in it.

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Russia has stopped “inching towards de-dollarization” as I wrote about on July 3rd, and has now energetically walked out of the list of largest holders of US government bonds, hence this update. For the two months ending in May 2018, Moscow has offloaded more than $80 billion in US Government debt obligations.

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The $30 billion “minimum” listing Rubicon has been crossed by Russia.

As of the end of May, Russia had bonds worth only $ 14.9 billion. For comparison: in April, Russia was on the Treasury list with bonds totaling $48.7 billion. Even then it was offloading US$ debt securities as Russia owned in March over $96 billion. At the end of 2017, Russia had US treasury securities worth $102.2 billion. It is anyones guess what Russia will own when the June and July figures are released in August and September – probably less than today.

This simply serves as a confirmation that Russia is steadfastly following a conservative policy of risk diversification in several areas such as financial, economic, and geopolitical. The US public debt and spend is increasingly viewed as a heightened risk area, deserving sober assessment.

So where have all the dollars gone? The total reserves of the Russian Central Bank have not changed and remain at approximately the equivalent of $ 457 billion, so what we are seeing is a shift of assets to other central banks, other asset classes, just not US$ government bonds.

During the same time (April-May) as this US$ shift happened, the Russian Central Bank bought more than 1 million troy ounces of gold in 60 days, and continues.

For comparison sake, the maximum Russia investment in US public debt was in October 2010 totaling $176.3 billion. Today it is $14.9 billion.

The largest holders of US government bonds as of May are China ($ 1,183.1 billion), Japan ($ 1048.8 billion), Ireland ($ 301 billion), Brazil ($ 299.2 billion), Great Britain ($ 265 billion).

Using the similar conservative metrics that the Russian Central Bank has been rather successfully applying through this geopolitically and economically challenging period with the US and the US Dollar, it may not stretch the imagination too much that other countries such as China may eventually follow suit. Who will finance the debt/spend then?

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