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Russia’s nuclear diplomacy has returned Moscow’s global strategic reach

Often overlooked by most observers of Russian foreign policy, Moscow’s skillful use of nuclear diplomacy has allowed the former superpower to once again have a global strategic reach.

Andrew Korybko

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Russian foreign policy has undergone a renaissance over the past couple of years as its “progressive” faction emerged at the fore of decision-making and bravely pioneered non-traditional partnerships all across the “Ummah” (global Muslim community). This took place concurrently with the country’s “Pivot to Asia”, more accurately described as a “Rebalancing to Asia”, which also saw Russia engage in a diplomatic balancing act with Japan, Vietnam, and India – all of which has been to its Chinese ally’s benefit. Both Eastern (or in the case of the Ummah, Southern) vectors of contemporary Russian foreign policy were greatly enhance by Moscow’s use of military diplomacy in selling (or seeking to sell) weapons to competing sides of any given rivalry in order to maintain the strategic equilibirum between them and therefore preserve the overall peace.

The Core Concept Of Nuclear Diplomacy

Lost amid the more “newsworthy” and “headline-grabbing” manifestations of Russia’s foreign policy resurgence has been its use of nuclear diplomacy as a means of regaining its global strategic reach. This concept can be described as Russia’s effort to clinch nuclear energy partnerships with countries all across the world, and considering that it’s the global leader in this field, it’s been highly successful in this regard. Nuclear energy deals are important for much more than “green”/”clean energy” considerations, as they imply a very high-level and trusted relationship between the two parties. Moreover, every agreement that Russia reaches with its partners includes educational and technical components, meaning that Moscow usually ends up training a new cadre of scientific elites in the partner countries and continues to provide assistance to them for years after the reactor is built.

These long-term and largely unseen elements of Russia’s nuclear diplomacy allow one to speak of this approach as being a highly strategic manifestation of Moscow’s future planning, and accordingly, it also has geopolitical dimensions as well. The countries with which Russia seals nuclear energy deals are presumed to also be pursuing a parallel track of diplomacy in improving the all-around nature of their relationship, with the inclusion of nuclear diplomacy serving both as a symbol of this and also a catalyst designed to speed up the process in taking it to the next level. The exact nature of how this works varies from country to country, but the model remains the same – nuclear diplomacy is an integral component of Russia’s foreign policy toolkit, and it invariably carries with it significant geopolitical dimensions which have allowed Moscow to once again have a global strategic reach.

Great Power Friendship

Russia’s nuclear diplomacy can be split up into two categories of partnerships, Great Powers and Pivot States (including both actual and intended projects). The first are Russia’s privileged partners given the “19th-Century Great Power Chessboard” paradigm that’s driving its “progressive” foreign policy leaders, which to summarize, is that Russia prioritizes the betterment of all-around relations with its similarly sized Great Power peers at the perceived (key word) expense of its smaller- and medium-sized partners in order to advance the “greater good” of multipolarity. Unlike with military diplomacy, it’s difficult for any observer to identify a potential “zero-sum” tradeoff regarding Russia’s nuclear partnerships with Great Powers and Pivot States, though the point in bringing up this stratagem is that it explains why Russia has clinched important nuclear energy deals with India, Turkey, and Iran.

In addition, Russia’s talks on this topic with Egypt, Ethiopia, and even its possible bid in building a nuclear reactor in Saudi Arabia make a lot more sense when viewed through this paradigm. Moscow was previously excited about building a nuclear power plant in fellow BRICS-member South Africa, but this ambition was regrettably sidelined by a “deep state” quasi-judicial plot earlier this year and remains in limbo at the moment. Altogether, however, these seven countries are Great Powers in their given geographic spaces, and Russia’s employment of nuclear diplomacy with each of them – regardless of the success achieved this far – showcases Moscow’s desire to use this as means of solidifying long-standing relations such as the one with India, or streamlining new ones with non-traditional partners such as Saudi Arabia and post-Cold War Ethiopia, all of which could endow Russia with valuable geostrategic benefits in the New Cold War.

Pivot State Partnerships

As for the Pivot States, notable examples to bring up are Bolivia, Paraguay, Hungary, Bangladesh, Myanmar, Laos, and Cambodia. The first two compromise part of the “Pivot Belt” that the author extensively analyzed in his book-length article series about South American geopolitics, and they allow Russia to importantly hold sway in the continent’s central heartland right near the middle of China’s planned Transoceanic Railroad. As for Hungary, this Russian-friendly country sits squarely in the center of Central Europe and endows Russia with a useful partner in the EU. Bangladesh and Myanmar, for their part, are indispensable components of the overland portion of India’s “Act East” policy of ASEAN engagement, and Russia’s desire to strengthen ties with them by means of nuclear diplomacy is a prudent move to give itself a strategic presence along this competitive connectivity route which could one day pave the way for future commercial ventures.

There’s also another reason why Myanmar is the focus of Russia’s nuclear diplomacy nowadays, and it’s because it pairs excellently with Laos and Cambodia in providing Moscow with a strategic “backdoor” to ASEAN via its poorest members. Although the author described the rationale behind this in a previous article elaborating on how Russia could take advantage of these three states’ special economic zones (SEZs), the same logic holds true for nuclear diplomacy and other forms of cooperation as well. Taken together, Russia’s nuclear diplomacy outreaches to pivotally positioned states such as the seven that were mentioned above demonstrates that Moscow is keenly aware of their strategic significance and is using this high-level track of diplomacy to comprehensively deepen its relations with them, focusing first on nuclear energy cooperation and then eventually expanding its ties to include economic, military, and political elements with time.

Concluding Thoughts

Russia is the world leader in the nuclear energy field, and it regularly uses this to its benefit in strengthening relations with Great Powers and Pivot States alike, whether long-running partners inherited from the Soviet period or non-traditional ones which have been reached out to recently. The clever use of nuclear diplomacy has seen Moscow expand its influence into regions of the “Global South” which it would otherwise be unable to compete in, such as South America, Africa, and South-Southeast Asia, and then leverage this advantage to promote its own multidimensional interests in the economic, military, political, and other spheres of bilateral relations. The impressive geographic scope of Russia’s nuclear diplomacy has allowed the country to regain its global strategic reach, but unlike in the Old Cold War when Moscow was exporting the communist ideology to these far-flung regions as a means of acquiring influence there, this time in the New Cold War it’s exporting nuclear energy technology there to do the same thing but in a much more sustainable way.

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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