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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.

Naman Karl-Thomas Habtom is the Senior Vice President of the Cambridge Middle East and North Africa Forum and a writer with a focus on security policy.

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Russia, Turkey and the new geopolitical reality

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Putin erdogan sochi

The recent Russia – Turkey summit in Sochi, even though yielding no tangible outcomes (as became clear well before it, the summit would  not result in the signing of any agreements), has evoked a lot of speculation – ranging from assumptions of the “failure” of talks to fairly optimistic forecasts for the future of bilateral relations.

What can be seen as a clear result of the meeting is that the two sides acknowledged readiness for further dialogue. A dialogue is vital also in view of the fact that western countries have been curtailing their military and political presence in the region, which has thus led to the formation of a terrorist state in Afghanistan.

According to Sergei Lavrov, terrorist threat persists and has even been intensifying in Idlib: «Terrorist groups operating from beyond the Idlib de-escalation zone continue to attack the positions of the Syrian army, what’s more, they have been trying to act against the Russian contingent», – the Russian foreign minister told a news conference following talks with his Egyptian counterpart, after the summit in Sochi. A solution to the problem lies, he said, in “complete implementation of the agreements signed by Presidents Putin  and  Erdogan to the effect that terrorists, first of all, from Hayat Tahrir al-Sham, should be isolated regardless of whatever new slogans they might come up with and for the purpose of quelling all these terrorist groups”.

As a final agreement on de-escalation in Idlib is expected to be reached, sources report a build-up of Syrian army forces along the Syrian side of the demarcation line, on the one hand, and a concentration of Turkish military groups, on the other (whereas after talks in Sochi the Turkish military started to retreat to the north – A.I.) Opposition representatives have been making aggressive statements again, even though in Sochi, Dmitry Peskov said,  the two sides reiterated their “commitment to earlier agreements, underscored the need to implement  these agreements by clearing Idlib of terrorist groups which  were still there and which could pose a threat and  launch a fierce attack against the Syrian army”.

Turkey keeps accusing Russia of breaching a ceasefire agreement for the northwest of Syria of March 5, 2020, while Russia maintains that Turkey is not acting on its commitments and that it is unable (or unwilling? – A.I.) to separate terrorists from armed opposition. For these mutual accusations the two presidents use politically correct statements, while their discontent over the situation is articulated by foreign ministers, press secretaries and MPs.

In brief, Moscow’s position is as follows: Bashar Assad is a legally elected head of the Syrian Arab Republic, the territorial integrity of which is beyond doubt.  A compromise with Damascus calls for similar steps from the opponents, whereas confrontation in Idlib and in other hot spots across Syria should be the responsibility of countries whose troops are deployed there without the approval of the UN or without invitation from official Damascus. These countries are known – the United States and Turkey.

While Moscow and Ankara are often at odds over the Sunni opposition, their attitudes to Kurdish nationalists are less of a clash. Moscow sees them as “mere” separatists who “have not been lost” for Damascus, while Ankara describes them as terrorists that should be eliminated or neutralized by a buffer zone which Turkey has been building and strengthening for several years.

Some experts and politicians believe that this will last forever. In 1920, the already not quite Ottoman but not yet Turkish Parliament adopted the so-called National Vow, which specified that New Turkey would include Syrian and Iraqi territories, which currently border Turkey. Even though the move failed, the National Vow is still, if only unofficially, seen as a founding ideological document of the Turkish Republic, the implementation of which cements the authority of Recep Tayyip Erdogan.

Moreover, areas occupied by the Turkish army (which make up more than 10% of the Syrian territory) are used for accommodating Syrian refugees, of which there are over three and a half million in Turkey proper. Turks’ growing discontent over the presence of such “guests” is adding to social instability. A new influx could trigger a public outcry in the run-up to parliamentary elections scheduled for 2023.

In all likelihood, Ankara believes that any serious concessions in Idlib will entail the collapse of the entire “buffer zone” project and will invalidate three military operations and the multimillion investments. In addition, it will bring back “the Kurdish issue”, destroy the image of Turkey as a trustworthy ally, and will inflict irreparable damage on the reputation of the incumbent authorities.

Nevertheless, Cumhuriyet observer Mehmet Ali Guller argues that Erdogan suggested readiness to make concessions when he said: «We agree that the time has come to secure a final and lasting solution to the Syrian issue. We announced that we are open for any realistic and fair steps in this direction».

From our point of view, there is nothing about “concessions” in what Erdogan says but what is clear is that he is, if only unwillingly, beginning to accept The Syrian reality. After years of demanding the removal of Bashar Assad, the Turkish leadership no longer issues statements to this effect, though it refuses to acknowledge the legitimacy of the incumbent regime (contacts at intelligence agency level do not count), promising to withdraw troops only after the establishment of “democratic rule” in Syria. But democracy as seen through the Middle East realities is something vague and unclear.

Furthermore, Erdogan is forced to “re-evaluate values” by a growing tension in relations with western allies. The Turkish president, after years of speaking strongly in favor of American presence in Syria, is now calling for the withdrawal of the  American contingent from the country.

A consolidated position of Ankara’s western partners on Russia-Turkey relations was formulated by Die Zeit: during talks with the Russian leader in Sochi Erdogan played the role of a “requestor”, since he “missed a decisive factor – the West”, which he needs as “a critically important partner, which makes it possible for Ankara not to bow to Russia”. Turkey’s Foreign Minister Mevlut Cavusoglu did not agree to that: «We are a NATO member, on the one hand, but on the other hand, our relations with Russia are progressing…..Why should we make a choice [between them]?».

«It’s no secret that Ankara’s and Moscow’s interests in the region do not  coincide…..[but] The positive responses of the two countries’ leaders on the results of talks in Sochi suggest that Moscow and Ankara are prepared to remove all misunderstandings by dialogue», – Ilyas Kemaloglu, political analyst with Marmara University, says. Haberturk Media Holding observer Cetiner Cetin argues that American troops’ “flight” from Afghanistan and their gradual departure from other regions is creating a new geopolitical reality, which means that “Turkey might continue to distance itself from NATO in order to find itself among top players within the Shanghai Cooperation Organization”.

While economic ties between Russia and Turkey are mostly problem-free, the political relations are often an issue. However, every time they meet, Putin and Erdogan manage not only to “quell” conflict, but to make a way for cooperation. The reason is that the two countries, despite their tactical differences, share the strategic goals: diktat of the West is unacceptable, the leading role in the East should belong to regional powers. As long as we share these goals, a Russia-Turkey alliance will be beneficial for both parties.

From our partner International Affairs

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The 30th Anniversary of the Renewal of Diplomatic Relations Between Russia and Israel

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Minister of Foreign Affairs of the Russian Federation Sergey V. Lavrov’s article for the Israeli Newspaper “Yedioth Ahronoth” dedicated to the 30th Anniversary of the Renewal of Diplomatic Relations Between Russia and Israel, October 15, 2021.

On October 18, Russia and Israel celebrate the 30th anniversary of the renewal of full-fledged diplomatic relations – the beginning of a new era of common history.

Turning to the pages of the past, let me recall that the USSR was the first country to recognize de jure the State of Israel back in May 1948. Of course, there were ups and downs in the chronicle of our relationship. Today, it could be assessed with confidence that Russian-Israeli mutually beneficial cooperation has stood the test of time and continues to actively develop in all directions.

Its foundation is formed by an intensive political dialogue, foremost – at the highest level. Inter-parliamentary contacts are progressing, bolstered by Friendship Groups established in the legislative bodies of our countries. Inter-ministerial communications are carried out on a regular basis.

Over the past decades, a solid experience of diversified cooperation has been accumulated in such spheres as economics, science and technology, healthcare and education. More than twenty acting intergovernmental agreements reflect the richness of the bilateral agenda.

Our mutual practical cooperation has significant potential. A number of joint projects are being successfully implemented. Many initiatives have received the support of the President of the Russian Federation and the Prime Minister of the State of Israel. The interest of Israeli business circles in entering the Russian market continues to grow. Despite the consequences of the coronavirus pandemic, by the end of 2020 trade between Russia and Israel decreased by only 3.9%, and in January-July this year it increased by 51.8% over the previous year’s period. The key coordinating mission in these common efforts is fulfilled by the Joint Russian-Israeli Commission for Trade and Economic Cooperation, founded in 1994. We are interested in the early resumption of its work in full.

A special role in strengthening the unifying baselines of our relations as well as ensuring their stability and continuity belongs to humanitarian contacts. We appreciate the high level of mutual understanding between the peoples of Russia and Israel, connected by a common historical memory and convergence of cultures. It is encouraging that this thread, which has no geographic boundaries, is only getting stronger in course of time.

There are millions of Russian-speaking compatriots living in Israel, including descendants both from the former Republics of the USSR and from the Russian Federation. Veterans of the Great Patriotic War, survivors of the siege, former prisoners of concentration camps are among them. The fate of these people is of major interest to us.

Most vigorous rejection of the attempts of historical revisionism, combatting the distortion of the genesis, course and generally recognized international legal outcomes of the World War II have always united Russia and Israel. We will continue to coordinate our efforts, and specifically at the UN, to counter this shameful phenomenon.

While in some countries of Central and Eastern Europe Nazi henchmen are being brought to the level of national heroes and neo-Nazi tendencies are being revived, the memory of the decisive contribution of the heroic soldiers of the Red Army to the Victory over Nazism, the saving of Jews and other peoples from extermination, the liberation of the world from the horrors of the Holocaust is sacred in Israel. We see how Israeli colleagues – at the state and public levels – encourage the activities of the veterans and compatriots movements, conduct active work to educate the younger generation.

It is difficult to overestimate the significance of the law on Celebrating the Victory Day over Nazi Germany on May 9, approved by the Israeli parliament in 2017. It is particularly telling that on the 76th anniversary of the Great Victory, celebrated this year, festive events and commemorative parades along with the Immortal Regiment march were held in more than 45 Israeli cities. Thousands of Israelis of all ages as well as officials participated. This scale speaks for itself.

Cooperation in the field of education and science – whether through student and academic exchanges or joint scientific research continues to move forward. Every year, students from Israel get an opportunity to receive higher education in Russian universities. All of them are sincerely welcome there.

We hope that it will be possible to restore mutual tourist flows as soon as the sanitary and epidemiological situation improves. Russia is traditionally one of the top three countries in terms of the number of visitors to Israel.

The Russian-Israeli dialogue is vigorously advancing through the foreign ministries. It is obvious that without constructive interaction of diplomats it is impossible to solve a number of international and regional problems that are of paramount importance both for ensuring the prosperous future of the peoples of Russia and Israel just as for strengthening international and regional security and stability. From this perspective, diversified contacts between the Security Councils and the defense ministries of our countries have also proven themselves well. On a regular basis it allows us to compare approaches and take into account each other’s legitimate interests.

Russia is pursuing an independent multi-vector foreign policy, contemplating pragmatism, the search for compromises and the observance of balances of interests. Creation of the most favorable external conditions for our internal socio-economic development remains its backbone. We have no ideological likes and dislikes, or any taboos in relations with our foreign partners, therefore we can play an active role in the international arena and specifically through mediation in the settlement of conflicts.

We are interested in continuing consultations with our Israeli partners on security and stability issues in the Middle East. We always draw attention to the fact that comprehensive solutions to the problems of the region must necessarily take into account the security interests of Israel. This is a matter of principle.

At the same time, we are convinced that there is no alternative to the two-state solution of the Israeli-Palestinian conflict on a generally recognized international legal basis. We strongly support direct negotiations between Israelis and Palestinians. A comprehensive solution to all issues of the final status is possible only through it. We are ready to work with Israeli colleagues, including multilateral formats, primarily in the context of the renewal of work of the Middle East Quartet of international mediators in close cooperation with representatives of the Arab League.

I am convinced: it is in the common interest to maintain the momentum. Ahead of us are new milestones and additional opportunities not only to continue, but also to enrich the positive experience of multifaceted cooperation for the benefit of our states and peoples, in the interests of peace and stability.

Source: Minister of Foreign Affairs

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The Emerging “Eastern Axis” and the Future of JCPOA

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Iranian Foreign Ministry spokesperson, Saeed Khatibzadeh recently said that Tehran would further strengthen its ties with Moscow via a strategic partnership. Said Khatibzadeh  ‘The initial arrangements of this document, entitled the Global Agreement for Cooperation between Iran and Russia, have been concluded’

    This agreement will be similar in nature to the agreement signed by Iran with China in March 2021, dubbed as the strategic cooperation pact, which sought to enhance economic and strategic relations (China would invest 400 Billion USD in infrastructure and oil and gas sector while also strengthening security ties). Commenting on the same, Khatibzadeh also said that an ‘Eastern axis’ is emerging between Russia, Iran and China.

    Closer ties with Russia are important from an economic, strategic point of view, and also to reduce Iran’s dependence upon China (many including Iran’s Foreign Minister had been critical of the 25 year agreement saying that it lacked transparency). Iranian Foreign Minister, Hossein Amir-Abdollahian on the eve of his Russia visit from October 5-6th, 2021 also stated that Iran while strengthening ties would not want to be excessively dependent upon either country.

Iranian Foreign Minister’s visit to Russia

    Iranian Foreign Minister, Hossein Amirabdollahian  during his Russia visit  discussed a host of issues with his Russian counterpart, Sergey Lavrov including the current situation in Afghanistan, South Caucasus, Syria and the resumption of the Vienna negotiations.

Russia and Iran have been working closely on Afghanistan (on October 20, 2021 Russia is hosting talks involving China, India, Iran and Pakistan with the Taliban).

It is also important to bear in mind, that both Russia and Iran have flagged the non-inclusive nature of the Taliban Interim government. Russia has in fact categorically stated that recognition of Taliban was not on the table. Said the Russian Foreign Minister, Sergey Lavrov on the sidelines of the United Nations General Assembly,   ‘the whole gamut of Afghan society — ethno-religious and political forces — so we are engaging in contacts, they are ongoing.’

China’s approach vis-à-vis Afghanistan

Here it would be pertinent to point out, that China’s stance vis-à-vis Afghanistan is not identical to that of Moscow and Tehran. Beijing while putting forward its concerns vis-à-vis the use of Afghan territory for terrorism and support to Uyghur separatist group East Turkestan Islamic Movement (ETIM), has repeatedly said that there should be no external interference, and that Afghanistan should be allowed to decide its future course. China has also spoken in favor of removal of sanctions against the Taliban, and also freeing the reserves of the Afghan Central Bank (estimated at well over 9 Billion USD), which had been frozen by the US after the takeover of Afghanistan by the Taliban.

If one were to look at the Joint Comprehensive Plan of Action JCPOA/Iran Nuclear deal, Russia has been urging Iran to get back to the Vienna negotiations on the one hand (these negotiations have been on hold since June), while also asking the US to return to its commitments, it had made under the JCPOA, and also put an end to restriction on Iran and its trading partners.

Conversation between US Secretary of State and Russian Foreign Minister

The important role of Russia is reiterated by the conversation between US Secretary of State Anthony Blinken with Russian Foreign Minister. Angela Merkel during her visit to Israel also made an important point that both China and Russia had an important role to play as far as getting Iran back on JCPOA is concerned. What is also interesting is that US has provided a waiver to the company building the Nord Stream 2 pipeline connecting Russia and Germany. The US has opposed the project, but the Department of State said waiving these sanctions was in US national interest. Both Germany and Russia welcomed this decision.

In conclusion, while there is no doubt that Russia may have moved closer to China in recent years, its stance on Afghanistan as well as it’s important role in the context of resumption of Vienna negotiations highlight the fact that Moscow is not keen to play second fiddle to Beijing. The Biden Administration in spite of its differences has been engaging closely with Moscow (a number of US analysts have been arguing for Washington to adopt a pragmatic approach vis-à-vis Russia and to avoid hyphenating Moscow with Beijing).  In the given geopolitical landscape, Washington would not be particularly averse to Tehran moving closer to Russia. While the Iranian spokesperson, Saeed Khatibzadeh spoke about a Eastern axis emerging between Moscow, Tehran and Beijing, it would be pertinent to point out, that there are differences on a number of issues between Moscow and Beijing. The Russia-Iran relationship as well as US engagement with Russia on a number of important geopolitical issues underscores the pitfalls of viewing geopolitics from simplistic binaries.

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