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US Sanctions against Russia: The Forecast for 2018

Ivan Timofeev

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It must be clear that the letter and spirit of PL 115-44 define Russia in legislative terms as an adversary to the United States, which should be actively opposed and subjected to a comprehensive pressure. In fact, PL 115-44 sets the framework for US policies with regard to the Russian Federation, which to a great extent obviates opportunities for partnership and constructive cooperation. Russia should have no illusions about a reversal of course in the near future. We must also avoid underestimating the efficiency of the tools to pressure us. These trends need to be thoroughly analyzed and monitored.

So, the executive authorities will submit at least seven reports to Congress in 2018, which can be divided into three groups.

The first group includes reports drawn up mostly by the US Department of the Treasury. The U.S. Treasury is the key, if not the only, sanctions policy tool. Congress instructs the U.S. Treasury to work closely with the CIA, the Department of State and other agencies whose data may significantly expand capabilities of financial intelligence. The most expected document in this group is a report on Russian oligarchs and parastatal entities to be prepared by February 2018 and which contains a list of senior Russian political figures as well as oligarchs and entrepreneurs close to the “Russian regime.” Congress wants the submission of an assessment of the relationship between the said individuals and President Vladimir Putin or other members of the Russian ruling elite and an identification of any indices of corruption with respect to those individuals. The report should also include the estimated net worth and known sources of income of those individuals and their family members, including assets, investments, other business interests, and relevant beneficial ownership information and an identification of the non-Russian business affiliation of those individuals.

But being included in the report does not automatically mean that individuals or entities will face sanctions. Nevertheless, the Act unambiguously indicates that the report is a mechanism for their expansion. At least it is required to assess the potential impacts of imposing secondary sanctions with respect to Russian oligarchs, Russian state-owned enterprises, and Russian parastatal entities, including impacts on the entities themselves and on the economy of the Russian Federation, as well as on the economies of the United States and allies of the United States.

In theory, the report may include an unlimited number of Russian individuals and entities. But the algorithm and methodology of its compilation within so brief a timeframe is still a big question. It requires processing a huge amount of information, since, in fact, the case in point is Russia’s entire public sector. This significantly increases the risk of erroneous assessments, which may later affect the United States itself. In theory, the Americans may also choose to present a compact report that will include what they think are the most anti-Western figures. But one nicety involved is that the Act’s current wording does not imply that the report should be constantly updated and therefore the anti-Russia lobby can do what it will to expand the lists as much as possible.

The next report is to appear in February as well. It concerns opportunities for expanding sanctions against individuals or entities blacklisted by the Department of the Treasury under Presidential Executive Order No. 13662, which made it possible to impose sanctions to counteract Russian policies in Ukraine. The fine point is that the executive order imposed sanctions against Russia’s financial and energy sectors, while PL 115-44 added railways to the list, as well as the iron-and-steel and manufacturing industries. For the time being, the report is not to be expanded.

Unlike the previous two, the next report will require a longer preparatory period – until August 2018 – and is to be updated annually until 2021 (but there is nothing to prevent the timeframe from being extended). The report will concern any illicit financial transactions related to the Russian Federation or Russian nationals. It will contain data on specific violations, results of investigative actions, and outreach to the private sector to prevent these kinds of activities. Inclusion in the report involves criminal prosecution.

Importantly, it should disclose the outcome of US agencies’ cooperation with their counterparts in the EU and other countries. In other words, it internationalizes US practices. The report is also a mechanism for finding loopholes in law enforcement with regard to anti-Russia sanctions and has to include trouble-shooting proposals.

The next group is covered by the subtitle, Countering Russian Influence in Europe and Eurasia. The Act makes it incumbent on the US government to act as a protector of the sovereignty and security of all Eurasian countries that are or may become “victims” of Russian influence. The Department of State is the key agency responsible for this group. Policies in this area imply the broad use of soft power based on NGOs in the US and Eurasian countries (the Act lists some of these). The appropriations for these purposes in 2018 will add up to $250,000,000, a considerable sum given that it will be largely used for ideological and educational work rather than for infrastructure. At first glance, the money is spread across a wide spectrum of objectives and countries, such as protection of electoral infrastructure, the fight against corruption, legislative improvements, aid to NGOs and the media, and opposition to “propaganda.” However, given the low cost of these measures and their focus on countering Russia, they will become a serious source of pressure. At least this sum is much greater than Russia’s own “soft power” expenses. What’s more, Russian institutions are addressing the entire international agenda, while the West (let alone opposition to it) is not the first, nor the only target of its efforts.

PL 115-04 makes it incumbent on the State Department to report to Congress annually, including its performance, spending efficiency, and results. A separate report will cover cooperation with foreign entities and their contribution. In other words, the Americans expect that their spending should be reinforced by that of their allies in the EU and other countries. The report is due to be submitted on April 1.

The next two reports also need to be submitted annually by the US President.

The first is on the media organizations controlled and funded by the government of the Russian Federation. It is also a black list of sorts involving at least reputation effects and due to stigmatize both Russian media proper and those supported by Russia in some or other form.

The other concerns Russian Federation influence on elections in Europe and Eurasia. This is important as a tool for internationalizing the American approach to supposed Russian “electoral interference.” Unlike the United States, people in Europe and elsewhere are more or less skeptical of the US position. The annual report will make it possible to perpetuate the focus on this subject by aggregating events of any importance and prodding the related Western discourse towards the US stance.

Finally, yet another report is linked to a law on Ukrainian and other countries’ energy security interpreted as reduced reliance on Russian distribution or any ties with Russia. It is speaking about facilitation of Ukrainian energy sector reforms, the sector’s liberalization, enhanced efficiency, etc. But in the same breath it mentions counteraction to Russian energy projects (Nord Stream, etc.) and what it calls “Russian aggression.” It also says directly that the US policy should be aimed at promoting US energy exports to Europe, among other things, to create jobs in the United States. (This means that the Americans are using this political tool in market rivalry.) The Secretary of State is to report on the implementation of the Ukraine Freedom Support Act and on achievements in this area in February, with subsequent updates to be submitted every six months.

The bottom line is that PL 115-04 prescribes a specific bureaucratic procedure and narrative that will largely define US policy with regard to Russia in 2018 and thereafter. There will be at least seven reports submitted next year, each of which will most likely provide a pretext for the further alienation of Russia and the United States from each other. Russia needs a well-considered policy of clever actions that will make it possible to control confrontation, minimize damage, and retain foreign policy initiative.

First published in Valdai Discussion Club

RIAC Director of Programs, RIAC Member, Head of "Contemporary State" program at Valdai Discussion Club, RIAC member.

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Don’t Kid Yourself, Russia will Never Abandon Belarus

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The world has been rivetted by the largest protests in Belarus’ history over the course of the past month. Dubbed “Europe’s Last Dictator” by former German Foreign Minister Guido Westerwelle, its President Alexander Lukashenko has ruled Belarus ever since winning the country’s first and only democratic election in 1994. But is this the end for Lukashenko? Certainly, some have already dubbed this as another “Color Revolution” moment in reference to similar civil society “People’s Power” protests that were able to bring down post-Soviet governments from Kyrgyzstan to Serbia, and most recently the pro-Russian administration of Viktor Yanukovych in Belarus’ multiethnic southern neighbor Ukraine in 2014. But that will not happen in Belarus. This article does not mean to be callous but frank. The stark reality is that Belarus is an ethnically homogenous country that is vital to Russia’s national security interests. It will never surrender that to the opposition in Minsk or the West and NATO.

First, culturally Belarus is overwhelmingly Russian. Belarus’ population of 9.5 million people, 84% are ethnic Belarussians and 70% are native Russian speakers, Belarus’ only official language. Unlike Ukraine or the Baltic countries, Belarus lacks a strong ethnic base to sustain a pro-European political movement. Moscow will never abandon these Russians either, if needed it will intervene militarily under the guise of securing their rights, as it has done already in Eastern Ukraine. Such a maneuver would lead to a devastating conflict, with serious regional implications, and could begin a cascade of interventions to protect Russian speaking minorities on its borders.

Moreover, Belarus’ location situated right on Russia’s western frontier makes it is too strategically important for Moscow to allow it to join the fold of NATO. The Belarussian steppe is an invasion and counterattack route that quickly conveys invading European armies to the gates of Moscow, or Russian forces into Western Europe. Belarus was the first to fall during Operation Barbarossa, Nazi Germany’s invasion of the Soviet Union, and it is in Belarus during Operation Bagration that the Red Army opened the road to Berlin. Today, Belarus’ existence within Russia’s political orbit is vital to provide it a buffer with NATO’s Eastern frontier. Without it, NATO could deploy forces just about 200 miles from Moscow. Thus, for Russia, any political change is a strategic threat. If Russia was willing to annex Crimea to, in part, protect its naval station at Sevastopol, after theUkrainians overthrew their pro-Russian leader Yanukovych, then it will do the same and more to Belarus in the event of Lukashenko’s ouster.

Additionally, a stable Belarus is vital to Russia’s core economic interests. It is through Belarus that major oil and gas pipelines transit from Russia to Eastern Europe, Central Europe, and the Baltic States. At least 10% of Europe’s oil needs come through the Druzhba pipeline in southern Belarus. And although Russia has also worked to diversify its avenues to export gas directly to the energy consuming countries of Europe, including with the construction of the Nordstream II and Turkstream pipelines, Belarus’ central location will always remain important as the most direct route to transport gas to Europe. In fact, Russia is already in a contentious dispute with Ukraine over gas pipelines, and it will not stand to also lose Belarus as a stable gas corridor.

And if that was not enough, one must remember Belarus is institutionally tied to Russia. It was at a hunting lodge in the Belarussian forest that in 1991, the leaders of the Soviet Union’s three Slavic republics: Belarus, Russia, and Ukraine came together to formally end the Soviet Union by declaring their independence together in the Belzahevy Accords. Five years later, Belarus then reversed its separation from Russia when it formed a Commonwealth in 1996, and finally the “Union State of Russia and Belarus,” or simply the “Union State” in 1999. This experiment in reestablishing the Soviet Union as a unitary political entity includes Schengen Area-style freedom of movement and a single executive that until a recent constitutional referendum, Russian President Vladimir Putin looked prepared to strengthen and assume the leadership of in order to stay in power. Now, Putin has raised the possibility of further integration as an antidote to the current protests. Belarus’ fate is thus closely tied to Russia’s own future as a nation state.

Notably, Belarus is also a party to the Collective Security Treaty Organization (CSTO), a Russian led security alliance of regional states including Armenia, Kyrgyzstan, Kazakhstan and Tajikistan. From the CSTO countries, Belarus can request an international (albeit Russian-led) “Collective Rapid Reaction Force,” to intervene and stabilize the country. As an elected leader, Lukashenko would be well within his rights to request the CSTO to intervene, and Russia already noted weeks ago that it forces remained ready in “reserve” at Belarus’ request. This would be an entirely legal use of military force to quell the domestic unrest and secure Lukashenko’s rule.

Lukashenko is the human embodiment of Russia’s interests in Belarus. He has made possible the expansion of Russia’s influence in the country since his election in 1994 and has had the unenviable task of placating Russia, balancing Europe and preserving his own independence, to some degree, from Moscow. He is the only ruler modern Belarusians have ever known, and the only one who can be trusted to steward the interests of Moscow and ethnolinguistic Russians. He is therefore the lynchpin of any strategy to preserve Russia’s interests in the country. Whether Moscow likes it or not, Lukashenko is irreplaceable. Frankly, sanctions will not convince him to retire, but only remind him that to fail, to lose power, will lead to his demise, and possibly his imprisonment or death for only Russia can affect the situation on the ground in Belarus.

Most of all, Lukashenko is the only one trusted by the military. As noted by Belarus’ Soviet-era leader Stanislav Shushkevich, the Belarussian army is manned and led by Lukashenko loyalists, it is one of the largest military force per-capita for its population, and its general staff leadership are well paid for their service to the state. Their fates are inexorably tied: a large, well-paid, ethnically homogenous military and their patron leader President Lukashenko. It is highly unlikely they will defect to the opposition, but even if so, that will only lead to a civil war and a Russian intervention. The presence of Lukashenko loyalists in the military ensures buttressed by the Russian speaking population ensures he will always have a strong power base in the country.

There may be a tendency in the West to think the Belarussian opposition will win. This belief is what guided overwhelming international support for Juan Guido in Venezuela to take power from the government of Nicholas Maduro. But Maduro held firm, knowing his allies in the military will decide his and the country’s future. They stayed in lockstep with the government, and despite massive opposition protests and the defection of much of Maduro’s political base, his government did not yield. They mortgaged the country’s future to survive –but survive they did.

The US especially must learn from Venezuela, or for that matter the rest of the interventions on its diplomatic resume. It is not a simple matter of course to remove governments even when the population is resoundingly opposed to their rule. Unless NATO, the US, and Europe plan on supporting a military opposition against Russia (which nobody is proposing), risking a direct confrontation with Moscow as well, there is little to no chance of changing the rulers in Minsk.

Of course, for the West, it still makes sense to support the opposition vocally, even if their defeat is inevitable. At the very least, it is a chance to draw attention to a crisis on Russia’s doorstep, at most, it will grant it an ally in a revolutionary Belarussian government –for all of five minutes that is, before Russian soldiers duly force it from office and restore Lukashenko to power. Belarus is in Russia’s backyard. The West should not forget that as it watches events unfold in Minsk.

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Navalny, Nord Stream 2 and Moscow’s Response

Kester Kenn Klomegah

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As expected, Alexei Navalny’s case is seriously tearing apart relationship between European Union and Russian Federation. The alleged “poisoning” of the opposition leader Alexei Navalny, on August 20 in Tomsk (Siberia), has similarities to the murder of former Russian spy Alexander Litvinenko, and that of Sergei Skripal, a former Russian military officer and double agent for the UK’s intelligence services, and his daughter, Yulia Skripal, in the city of Salisbury, England. Russia’s political history is dotted with that well-colored inerasable image.

Navalny is a Russian opposition politician and anti-corruption activist. He came to international prominence by organizing demonstrations and running for political office, to advocate reforms against corruption in Russia. As a citizen, he has the fundamental right to freedom of expression and to associate with social and political groups. But his activities has angered the officialdom and becomes most hated politician. He has been detained several times by Russian authorities.

Now Navalny, who was “allegedly poisoned” in August, stands a determining factor shaping the relationship between Western world and European Union and Russia. Sanctions are the punitive measures against Russia. When he was first treated in a Russian hospital in Omsk, the doctors claimed that there were no traces of poison in his body, a claim that Russian authorities continue to endorse.

Specialist labs in France and Sweden have confirmed Russian opposition leader Alexei Navalny was poisoned with the Soviet-era nerve agent Novichok, the German government Spokesman Steffen Seibert said mid-Sept, and confirmed that the Hague-based Organization for the Prohibition of Chemical Weapons had also received samples and was taking steps to have those tested at its reference laboratories.

According to Seibert, the European Union’s summit, set to take place on September 24-25. The world would be looking for what measures be collectively adopted with regard to Navalny and against Russia.

On Sept 17, Russian Foreign Ministry spokesperson Maria Zakharova told the local media that there were another series of anti-Russian sanctions being initiated by the West amid the situation involving Russian opposition politician Alexei Navalny, all these designed to deliver a blow to relations between Russia and the European Union.

“The main goal today, at least it appears to be this way, is to deliver a blow to the relations between our countries and the European Union, and countries that are part of the union. Everything is going in this framework,” Zakharova said in the 60 Minutes show on the Rossiya 1 (VGTRK) television channel.

On Sept 15, during its session the European Union planned to create a global regime sanctioning human rights violations around the world and the intention to name it after Alexey Navalny. The Russian Foreign Ministry believes that will erode the basic principles of international law and undermines the prerogatives of the UN Security Council through endless illegitimate unilateral sanctions imposed by Brussels and Washington.

As for whether it would be advisable to name this sanctions regime after Alexei Navalny, it viewed  “this exclusively as an undisguised attempt to give a manifestly anti-Russia tonality to the new EU restrictions. At the same time, Berlin persists in brushing off proposals to work together in order to get to the bottom of what happened, using clearly far-fetched pretexts. We hope that common sense will prevail in the European Union and our partners will renounce the arbitrary practice of assigning blame and in the future will draw conclusions based on real and confirmed facts.”

That however Moscow readies to hit back on EU sanctions. Local daily newspaper Izvestia also wrote that Russia vows to retaliate against potential European Union sanctions. Even though the European Union is trying to elbow Russia out of the gas market, it is unlikely that the Nord Stream 2 gas pipeline project will be abandoned over the incident with Russian opposition figure Alexey Navalny, quoting sources in the Russian Federation Council (Upper House of Parliament).

The resolution approved by the European Parliament (EP) stresses the need for an international investigation into the alleged poisoning of Navalny with a Novichok-type toxic agent. European MPs called for suspending Nord Stream 2 and slapping sanctions on Russia. Meanwhile, Moscow is urging Berlin to cooperate in the investigation of what happened to Navalny. If the EU levies sanctions on Russia, Moscow can provide a tit-for-tat response, Russian MPs told the paper.

“I don’t think this option will come to life, because it is difficult to connect the situation with Navalny to the construction of Nord Stream 2. This is just an excuse to push Russia out of the gas market. We need to react calmly and not be dragged into those discussions,” Deputy Chairman of the Russian Federation Council’s Committee on Foreign Affairs Vladimir Dzhabarov told Izvestia, commenting on the resolution.

Similarly, Deputy Chairman of the State Duma’s Foreign Affairs Committee Alexei Chepa explained to Izvestia that in the event of any real anti-Russian sanctions, Russia could provide a tit-for-tat response. For example, if the European Union approves personal restrictions and a sanctions list, Moscow will do the same.

“Of course, we will respond. However, this will impact both our economy and the economy of Germany and the European Union. No one wins here. However, there may be a tit-for-tat blacklist that would include, for example, the MPs that called for anti-Russian sanctions or for the suspension of Nord Stream 2,” the MP said, stressing that Moscow will only retaliate if the European Union introduces real sanctions against Russia.

Russian newspaper Kommersant wrote that European Union to loosen legal mechanism for new sanctions against Russia. It said that the European Commission is working on broadening its legal instruments that would enable the introduction of personal sanctions against human rights violators in different countries, counting Russia among them. President of the European Commission, Ursula von der Leyen, has announced plans to adopt Europe’s version of the Magnitsky Act and suggested adjusting the mechanism for approving sanctions in such a way that does not require the support of all European Union member states.

According to Kommersant, this amendment, if adopted, will no longer allow Moscow to count on friendly European countries that have called on European Union allies not to impose tough sanctions on Russia. According to von der Leyen, the proposals for a European ‘Magnitsky Act’ will be ready soon. She explained the European Union should be able to respond clearly and quickly to what is happening anywhere, whether in Hong Kong, Moscow or Minsk.

The German Council on Foreign Relations, does not believe that the European Union will be able to agree on an extensive package of sanctions against Russia soon. Rather, an agreement on a blacklist similar to the ‘Magnitsky list’ could be expected. According to experts, regarding the Nord Stream 2 pipeline, Germany and the European Union would rather allow the project be implemented in full, and then introduce some measures to restrict or prohibit transportation of gas through the pipeline.

“With the crises around Navalny and Lukashenko unfolding, the freezing of Nord Stream 2 seems to be in the cards. Nevertheless, we are not talking about a complete breakdown of relations. Even during the Cold War, economic ties between the USSR and the West were not completely severed,” Head of the European Political Studies Department at the Institute for World Economy and International Relations (IMEMO),Nadezhda Arbatova, told Kommersant newspaper. “Today’s confrontation between Russia and the West is a struggle of ideology and real politics. Minimal interaction will be maintained, but this will not change the quality of relations between Russia and the EU,” she predicted.

European Union and Russia have strategic partnership agreement signed in 2011 but that was later challenged following the annexation of Crimea and the war in Donbass. Russia has five member states: Estonia, Finland, Latvia, Lithuania and Poland share its border. The relations are determined by European Union member on bilateral basis, but all the members adopt common or collective policies toward the Russian Federation.

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Forgiving Old Debts: Russia’s Diplomatic Maneuver

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With economies experiencing contractions across the globe and with governments in the third world most vulnerable, discussions of debt relief have been revived. Yet, forgiving old debts is nothing new to the Kremlin. For the Russian government, it has been just one part of a wider diplomatic toolkit to rekindle ties that have faltered since the end of the Cold War.

Once the primary backer of numerous states over large swathes of the globe, Moscow largely retreated from the non-Soviet space during the presidency of Boris Yeltsin and it continued to not be a primary concern during Vladimir Putin’s first two terms as head of state. However, Russia’s resurgence on the international arena over the past few years has not only made the country more willing to re-engage with the region but also more capable.

International media has primarily viewed this through the lens of military strength. Whether it is sending trainers and advisors to the Central African Republic, allegedly supporting rebels in Libya, or deploying Wagner Group forces to fight an Islamic State-offshoot in Mozambique, the focus has primarily been conflict-oriented. However, less explored is the quieter and more economic measures that the Russian government has taken in order to win hearts and minds outside of the West.

As part of a debt-for-development programme, Russia has forgiven approximately $20 billion worth of debt to various African governments that was accrued during the Soviet period. Beneficiaries include the Commonwealth nation of Tanzania and Francophonie member Madagascar, along with others. In forgiving these loans, the Kremlin has acknowledged a reality that many countries continue to deny: such debts are unpayable. At the first ever Russia-Africa Summit, Putin stated explicitly that “It was not only an act of generosity, but also a manifestation of pragmatism, because many of the African states were not able to pay interest on these loans.”

These measures have yielded concrete benefits for the previously indebted countries. For example, the decision to forgive Mozambique’s $40 million debt was done in conjunction with the United Nations World Food Programme, with the money that was intended for debt repayment instead being used to provide free school meals for 150,000 children over the course of five years.

While Russia will potentially be losing some money in the short term, debt forgiveness is likely to open new doors moving forward. Many of the countries that have seen their debts written off have significant economic and geopolitical potential. With improved political relations as a consequence, it is hoped that Russian companies will get preferential treatment should contracts be offered to international firms. This could help explain the Kremlin’s decision to forgive 90% of North Korea’s $11 billion debt despite the latter’s weak position. Russia has been eager to develop a trans-Korean gas pipeline that would transport fuel to South Korea. While the likelihood of this being realised remains slim, in the context of Pyongyang’s inability to repay the debt in any case, it is a reasonable gamble to make on the part of the Russian government.

This is somewhat similar to China’s efforts over the past few years, albeit in an inverse form. With Beijing less cash-strapped than Moscow, it is able to invest directly whereas Russia is using debt forgiveness to redirect cash payments away from servicing old debts and instead towards domestic reinvestments. Free projects, such as the Chinese-funded and constructed headquarters of the African Union, have been followed by ever-growing economic and political relations.

Russia’s debt policy has been used to strengthen existing alliances and partnerships. While not all Soviet-era allies have retained close ties to Moscow, many have done so continuously since the Cold War. One of the biggest beneficiaries of Russian debt forgiveness has been Cuba. In July 2014, ahead of a visit to the island nation by Putin, the Russian government wrote off 90% of Cuban debt. Though Russia was not only the country that showed willingness to restructure Cuba’s debt obligations at the time, it was by far the most generous. China restructured approximately $6 billion while Japan and Mexico forgave $1.4 billion and $478 million, respectively; Russia forgave $32 billion.

The decision did reaffirm the close relations between Moscow and Havana. Cuba has repeatedly voted in support of the Russian Federation at the United Nations on sensitive topics, such as Crimea, and Russian firms have received multiple drilling and mining contracts from the Caribbean country.

However, this strategy has its limitations. The overwhelming majority of these debts date back to the Soviet era and are therefore limited in scope. Some countries, such as Angola and Ethiopia (which saw most of their debts forgiven in the 1990’s), were primarily recipients of military support during civil wars so their debts were not as vast as other heavily indebted countries with other creditors. Since then, despite respite from Moscow, such countries have continued to become increasingly burdened by growing debts. While Ethiopia is often heralded as an example of rapid economic growth, its debt, both in total but also has a percentage of GDP, has grown considerably during the post-Soviet era.

While debt relief is undeniably beneficial to the third world, the fact that Russian-owned debts constitute a mere fraction of all foreign-owned debts in most cases means that the act of writing debts off cannot achieve much in of themselves. Consequently, in several countries, the gesture is mostly a PR move. In the case of Afghanistan, where Russia was the largest creditor due to loans handed out during the 1980’s, Kabul had for decades refused to recognise the debt. The decision to forgive the debt was therefore more of a signal of a desire to improve relations than any hope to achieve instantaneously tangible rewards.

The largest stumbling block for the Kremlin’s efforts remain structural issues afflicting the indebted nations, the nature of which vary considerably from country to country. For example, while Russia has forgiven a majority of Iraq’s debt to the country, which in turn helped revive talks over potential oil contracts, the continued instability in the Middle Eastern nation makes it difficult to reap many benefits. Though it is true that Baghdad has continued to purchase Russian T-90 tanks and attack helicopters, this is more of a sign that Russia has partially managed to pivot Iraq away from the United States’ sphere of influence as opposed to gaining economically.

With the onset of coronavirus, however, Russia might not be the leading debt forgiver for very long. In places such as sub-Saharan Africa, where economies are expected to continue shrinking while deficits are set to grow, other creditors could potentially step in and likewise forgive debts. In April of this year, G20 leaders agreed to extend debt relief in the form of a moratorium on debt repayment yet this can only serve as a short term solution. With many governments already increasing their borrowing, creditor nations are well positioned to leverage their position in order to improve geopolitical relationships as well as set the stage for favourable contracts for their firms. If more countries follow Moscow’s path, then the significance of what the Kremlin has done will only recede and lose much of its relevance.

Debt forgiveness can win friends but can only go so far. For Russia’s diplomatic maneuvers to stick, they will need to continue complementing it with other efforts, such as improving trade and boosting security partnerships, in order to truly make the most of its financial generosity.

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