Hangover coming

The folks celebrating the referendum “no” vote in Syntagma Square tonight in Athens are going to have a bad hangover. The Germans will likely stand firm, since doing otherwise would risk undermining the euro’s credibility. If Prime Minister Tsipras respects the referendum, Greek banks are unlikely to have sufficient euros to reopen as scheduled Tuesday.

Athens will need to issue a new currency, which will take time. Once issued, it will fall rapidly in value, making repayment of euro-denominated debt even more difficult. Several debt payments are due during July. The biggest slice is, ironically, owed to Germany. Sixty per cent is owed to EU member states and the European Central Bank (ECB). The amount is however relatively small from their perspective, so the default is unlikely to affect the euro much, unless nervousness spreads to Portugal, Italy and Spain. The ECB will want to focus its resources on preventing contagion. Negotiation of the “haircut” on the existing debt, which is what Greece hopes for, will take months if not years, making lenders leery of pouring good money after bad.

Out of the euro and issuing its own currency, Greece will theoretically be able to increase its exports and decrease its imports. But austerity will not end. Greece’s government will be insolvent and not creditworthy, making it impossible to stimulate the economy (or even pay government workers and pensions, except by printing money). Russia may ante up, but with far less than the situation requires. It will also insist on tough terms. Religious orthodoxy is no substitute for repayment guarantees.

Politics could intervene at any point, forcing Prime Minister Tsipras out and leading to formation of a new government committed to cleaning up the mess. But it will be years before confidence is restored. Greece has chosen a hard road that leads to an uncertain destination. Greece used to think it could get the Elgin marbles back from London. Now it will be lucky if it doesn’t have to mortgage the Parthenon.

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Is there still independent media in Russia?

On Wednesday, the Carnegie Endowment for international peace hosted A Conversation with Alexei Venediktov, the editor-in-chief of Echo of Moscow, often described as Russia’s last independent journalism outlet.

Venediktov began by describing the state of US-Russia relations.  There is still no direct conflict between the citizens of Russia and the citizens of the US, but approximately 78% of Russians now view the US as an enemy, compared with 50% only a few years ago.  Any sanctions against Russia and negative statements by American journalists about Russia are viewed as a challenge.

In 2000,  Venediktov and Putin talked for a couple of hours after a press conference about the future of media in Russia.  Putin described two adversaries:

  1. enemies, who you fight with, make truces with, and then fight with again and
  2. traitors, who you think are on your side and then backstab you.

Putin asserted that he has no mercy for traitors, but Venediktov is just an enemy, and not a traitor.

Venediktov believes that the confrontation between the US and Russia was inevitable under Putin, who spent his younger years as a KGB officer, where there were clear-cut friends and enemies.  Perestroika unsettled him because it blurred these lines.  Now he is back to the days of his youth again. The enemies and the battle lines are clear.  This is his comfort zone.

Putin has aptly converted foreign policy into domestic policy.  The main claim against him is that he opposes competition in all aspects of life.  He is against political, economic, social, and moral competition.  Russia is becoming a nation incapable of competing and will therefore lag behind again.

The two main groups in Russia today are nationalists, who believe in the superiority of Russian ethnicity, and post-imperialists, who believe in restoring what they view as the greatness of the Soviet Union.  The post-imperialists encompass not only ethnic Russians, but also Tatars, Chechens and Ukrainians.  This is a pro-Putin movement.  He appeals to young people who want Russia to be rich, powerful, respected and feared once again.

Venediktov discussed the murder of Boris Nemtsov, stating that the investigators proved through technical means that those whom they arrested were the perpetrators.  He does not believe that someone ordered the crime at a high level.  Venediktov believes that the perpetrators felt that by killing an enemy of Putin that they would be treated with leniency. However, Putin knew Nemtsov personally and had a lenient approach to him.  When Nemtsov was killed, Putin was outraged.

Venediktov speculated that it may ultimately be shown that the CIA or the Ukrainian intelligence services ordered the murder to shake Putin’s grip on power, but there is currently no evidence to suggest this.  Venediktov has bodyguards because he has been declared an enemy of Islam and of Chechnya.

Venediktov believes that the conflict in Ukraine will not end in the next ten years.  It will become like the conflict in Nagorno-Karabakh. There will be daily casualties.  Venediktov believes that separatists shot down MH17 by accident but that we will never know for sure.  He noted that before MH17 was shot down, Western rhetoric against Russia was not militant but that it became militant afterward.

Venediktov stated that of the hundreds of POWs captured by the Ukrainian Army, only two have been Russian personnel, and they were intelligence officers, not soldiers.  He believes we need to be cautious in assessing the extent of Russian military involvement in Ukraine. Venediktov also believes that relations with Georgia will continue to deteriorate because Russia will annex South Ossetia.  This will lead to a rise in anti-Russian discourse in Georgia.

Asserting that ISIS is considered to be the top security threat by the Russian government, Venediktov said a high-level dialogue between US and Russian officials regarding ISIS is ongoing.  Putin recently held a press conference in which he devoted 3/4 of the time to discussing ISIS.  Ukraine is more about public relations.

An audience member if Venediktov is truly an enemy of Putin, or more of a Putin apologist, given some of his positions. Venediktov replied that he is just a journalist, not a politician.  He opposes Putin’s policies and he is the only journalist that Putin publicly criticizes.  He joked that it would be easier to present Putin with horns and a tail to this audience, but all journalists have horns and a tail so that would just make Putin one of them. Venediktov stated that Echo of Moscow is an open forum for diverse opinions. As such, it attracts criticism from much of the political spectrum.

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Independence and interdependence

It is Independence Day in the US, which marks 239 years since the representatives of the thirteen colonies declared in 1776:

That these United Colonies are, and of Right ought to be Free and Independent States; that they are Absolved from all Allegiance to the British Crown, and that all political connection between them and the State of Great Britain, is and ought to be totally dissolved; and that as Free and Independent States, they have full Power to levy War, conclude Peace, contract Alliances, establish Commerce, and to do all other Acts and Things which Independent States may of right do.

The war that had begun the year before at Lexington and Concord (Massachusetts) continued, ending only in 1781 at Yorktown (Virginia). The peace was signed only in 1783 in Paris.

The United States and the United Kingdom fought again in 1812-15, but the UK did not intervene in the American civil war. By then British sentiment was mainly anti-slavery but the UK still relied on cotton produced in the Confederacy and feared industrial competition from the American north. It was only in the 1890s, more than a hundred years after the revolution, that America’s familiar friendly ties with the UK began to be established.

I tell this story not only because it is July 4, but also because it provides perspective on some of today’s problems. Kosovo and South Sudan are the world’s newest “independent” states. It would be easy to bemoan their current situations. Kosovo is suffering from economic doldrums and serious corruption. South Sudan is suffering a ferocious civil war that overshadows the economic doldrums and corruption that would otherwise be much in evidence.

Neither country is yet 10 years old. Kosovo has made good progress in normalizing its relations with Serbia, which is potentially Kosovo’s biggest market and its most obvious security threat. Khartoum may be aggravating South Sudan’s problems, but they are mainly internal. If only because of the Nile, which flows through both, Sudan and South Sudan will need eventually to establish what the Europeans like to call “good neighborly relations.”

Other trouble spots in the Middle East are also relatively young independent states: Libya (1951), Egypt (nominally 1922, but British troops didn’t leave until 1956), Yemen (British soldiers left in 1967, but the current state dates from the unification of north and south in 1990), Syria (1945) and Iraq (1932). They are suffering mainly from internal conflict, all too often precipitated or aggravated by outside powers. It is tempting to think that 100 years is still a reasonable time frame for state consolidation. Some of these states may not make it to that milestone.

Ukraine is in a similar situation. It achieved independence only in 1991 after the collapse of the Soviet Union. It would have had internal problems in any event, but Russia has aggravated them by annexing Crimea and invading two of Ukraine’s eastern provinces.

Independence is hard, but many countries figure out how to govern themselves if left to their own devices. It is the interdependence dimension that often causes problems. The Saudi/Iranian rivalry has aggravated internal conflicts in Yemen, Syria and Iraq. Egypt and Libya have generated most of their own problems, which Islamic State affiliates are exploiting.

I can only wish that the evolution in the Middle East will follow the course that US/UK relations took, with many ups and downs, during the 19th century. Iran and Saudi Arabia, which are doing so much to fuel conflict today, have good reason to come to terms. Both are spending too much to achieve too little in Syria, Iraq and Yemen. ISIS challenges them both. It is not hard to imagine a positive-sum outcome to their current negative-sum rivalries. Interdependence may be hard, but it is a lot better than war.

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The devil is in the details

My current Middle East Institute interns Maithili Bagaria and Eddie Grove have combed through the many publications asking questions about the impending Iran nuclear deal. Here is their matrix indicating the main issues that need to be resolved:

 

Joint Comprehensive Plan of Action Parameters

Contentious Points

Reducing Breakout Time

Natanz will be the only uranium enrichment facility for the next 10 years. Enrichment levels will not exceed 3.67% — insufficient for a bomb, but useful for civilian purposes. The number of centrifuges will be reduced by ⅔ to 5,060, as well as the stockpile of low-enriched uranium from 10,000 to 3,000 kg.

How exactly will Iran reduce its uranium stockpile? Will it ship it to another country or reduce it through some mechanism domestically?

The Arak and Fordow nuclear facilities will be converted into research sites for 10 years.

What are the restrictions on the scope of research and whether these restrictions will remain after 10 years?

Redesigned Arak reactor that will not produce weapons-grade plutonium.  

What will the details of the remodeling be and what will be the level of reduction in plutonium production?

Byproducts of fission from the Arak reactor will be shipped out.

How will this be verified?

Iran has committed to not pursue reprocessing indefinitely and to not conduct reprocessing R&D.

What does indefinitely mean? Does this mean for the duration of the deal?

After 10 years, Iran will be bound by a long-term enrichment and R&D for enrichment program shared with the P5+1.

Most of the restrictions on Iran’s nuclear enrichment program are lifted after 10-15 years.  Iran’s breakout time beyond this point will be contingent on the details of this long-term program, which have not been announced.

Eliminating Sneakout Possibility

Suspected breaches in the agreement by Iran will lead to sanctions snapback.

What is the time frame and mechanism for the snapback sanctions? How will the P5+1 members prevent any of the UN Security Council’s permanent members from vetoing a snapback of UN Security Council  sanctions?

Architecture of US Sanctions will be maintained for much of the duration of the deal to allow for snapback sanctions.

What does “much of the duration of the deal” mean and why not the entire duration?

The IAEA will have regular access to all of Iran’s nuclear facilities and the supply chain that supports Iran’s nuclear program.

Given the resistance within the Iranian leadership to international inspection, how will the IAEA and P5+1 enforce regular access? How frequently will “regular access” take place?

UN Security Council Resolutions regarding Iran’s Nuclear Program will be voided and replaced with a new Security Council Resolution that will endorse the JCPOA, and keep core provisions from previous Resolutions that deal with transfers of sensitive technologies and activities.

Given that previous Resolutions called on Iran to cease enrichment entirely and to not build heavy water reactors, what “core provisions” are going to be retained in this new resolution?

 

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Unfuck Greece

It is difficult to write anything about Greece in the current confused course of events, but I thought this Guardian video captured the situation well:

Unfucking Greece will not be easy. I take it this is the International Monetary Fund report the government is relying on to claim that austerity won’t work. But what the report says is that the debt is unsustainable because of Greek government policy failures.

Later today the Greek Council of State is supposed to rule on the validity of Sunday’s referendum. If it goes ahead, it will be a referendum on staying in the eurozone, though the question posed is not about that but rather about the austerity package the European Union has been pressing.

If I were betting, it would be on a Greek exit from the eurozone, which seems to be the only way to force its creditors into restructuring and reducing its debt. But anyone expecting the good life to return with the drachma is fooling themselves. Devaluation will impoverish Greeks even further.

 

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Kurdish advances, Turkish concerns

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Last week, the Syrian Kurdish fighters of the YPG (People’s Protection Units, the paramilitary wing of the Democratic Union of Kurdistan or PYD) captured the strategic town of Tal Abyad, on the Syrian-Turkish border, which lies 30 miles East of Kobani, and 65 miles north of Raqqa, ISIS’s Syrian capital.

This is a significant, as Tal Abyad sits at the center of the previously non-contiguous PYD controlled territory in Syria—known as Rojava. Rojava had been split into three cantons: Afrin (an area north-west of Aleppo), Kobani (west of Tal Abyad) and Al Jazira (in the north-east of Hasakeh Province). If the YPG keeps control of Tal Abyad, this will create a route from Kobani to al Jazira, facilitating Coalition efforts as well as laying the groundwork for Syrian-Kurdish self-governance in northeastern Syria. The loss of Tal Abyad deals a heavy blow to ISIS, as this town was used as a smuggling route for the group, as well as an entrance for foreign fighters.

Amidst these recent Kurdish gains, Turkey has been weighing the option of creating a buffer zone along the Turkish-Syrian border, in order to thwart the ambitions of the Syrian Kurds as well as provide a safe haven for Syrians. This is not the first time such buffer zones have been proposed; yet now the proposition has taken on a new attraction. Kurdish gains in Syria pose more of a threat to Turkey than ISIS.

The Kurds have a difficult history with Turkey. The PYD’s mother organization, the PKK (Kurdistan’s Workers Party), has been engaged for decades fighting against the Turkish state. Yet, the creation of such a buffer zone would require a major ground incursions of Turkish military forces—an unpopular and extremely dangerous scheme, as it would mean fighting both ISIS and Kurds.

Erdogan reiterated his position towards the formation of a possible Kurdish state on Turkey’s southern border last week, with a resounding “no.” A recent article in Yeni Safak, a pro-Erdogan newspaper, suggests that  Kurdish gains in northern Syria represent a plot by the West to destroy Turkey.

The Kurdish gains have complicated the US-Turkish relationship. The United States has increased its support for the Syrian Kurds since the January liberation of Kobani, where American airstrikes helped dislodge ISIS from the besieged city and cost the jihadi group thousands of fighters. The YPG’s victory at Tal Abyad would not have been possible without US-led, anti-ISIS Coalition airstrikes. America has given increased attention and support to the Kurdish fighters, as they are one of the only truly capable fighting forces more interested in fighting ISIS than Assad.

The question of whether Kurdish forces will continue the push towards Raqqa remains open. Some speculate that the Kurds are unlikely to take such a gamble. In Iraq, Kurdish peshmerga forces have successfully defended their region, but are unlikely to lead the effort to recapture Arab lands, such as Mosul or Anbar.

ISIS has responded to the recent Kurdish success with retaliation attacks on Kobani—purportedly entering from the Turkish border dressed in Free Syrian Aarmy and YPG uniforms. The ISIS attacks have left around 200 citizens dead.

The pictures below are from the Barzani Charity Foundation’s recent trip to Tal Abyad to deliver diesel and food aid.

 

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Inside the city of Tal Abyad, smoke rising to the East
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River crossing at the Syrian-Iraqi border
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Food aid ready to be delivered to the residents of Tel Abyad

 

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