Should probably be at half mast.

Just wanted to draw the attention to two excellent pieces on Europe’s Greek Tragedy – David Ignatius ‘European Union Ripping at the Seams‘ and Walter Russell Mead’s ‘The Greek Tragedy Unfolds‘. Here’s an excerpt from Ignatius:

The European Union has been a defining achievement of the post-1945 generation. It reconciled ancient enemies, dismantled trade barriers, helped topple communism and created unimagined prosperity. But it didn’t establish the one thing it implicitly promised — a real union — and now it is paying the price.

And one from Mead:

But whatever happens in Greece, we need to remember that its problems are not unique, and the clash between those who like the world that capitalism has made and those who hate it is not going away.  The global capitalist revolution offers the best and indeed the only hope that I see for the relief of poverty, the advance of human rights and the protection of the environment worldwide.  Like all great revolutionary movements, however, it creates divisions, inequalities and resistance.  Revolts against the liberal capitalist world system — fascism and communism above all — shaped the history of the twentieth century and inflicted unprecedented misery and harm until they were defeated.  The radical terrorist movement led by Islamic renegades has more recently inflicted grave harm in many places and its violent course has not yet come to an end; we are likely to see more crises and conflict in the twenty first century as the anti-capitalist counter-revolution finds new forms and new allies.

Like most Presidential forays overseas, Barack Obama has had some good and bad moments.  His appearances in Turkey and the Czech Republic seem to have soothed fears (for instance about backing out of the MDS in Prague) and built upon already strong, but still nevertheless shaky alliances.  The two biggest criticisms I have so far are his lack of progress in getting the Europeans to contribute more to the conflict in Afghanistan and what is starting to look like an ‘apology‘ tour.  

On the latter, I have seen a pattern where on every stop Obama is either apologizing for American ‘ignorance’, ‘arrogance‘, or ‘mistakes.’  Now don’t get me wrong, leaders need to play to their audience and it is also true that most of Obama’s criticisms about the US have at least a grain, if not a pile, of truth, but it is also disparaging to the great amount of good this country has given to an often thankless world.  I mean he was talking about American ‘arrogance’ in France!  Of course without the United States’ resources and sacrifices, Obama might have had to speak to a room full of Nazis instead.  (I know, I know, bringing up the Nazi’s and WWII, how ‘cheap’)  How many leaders come to the US and talk about their mistakes or arrogance?  

But that is not really what I want to talk about.  The real issue is the Europeans lack of real support for NATO’s efforts in Afghanistan.  The Obama administration has committed to increasing the US troop level in Afghanistan from about 38,000 to almost 68,000 by the end of this year.  After making this unilateral move, Obama was no doubt hoping for an increase from NATO’s other members.  What we got from the rest of NATO this week was 3,000 short-term troops to help out with security during the crucial August presidential election and another 1,400-2,000 that would assist the training of Afghan police and army forces.  Now those troops will indeed help and their targeted purposes are valuable, but it pales in comparison to what is starting to look more and more like the American-war it was in the beginning.  

This is not an acceptable commitment by NATO’s European partners.  The leaders of Germany, France, etc. praised Obama’s new Afghan-Pakistan strategy, of which a key part was more troops to provide security to Afghan civilians and government, and respond with just this?!  No lessening of restrictions on troops nor anymore to do the hard fighting.  

Even more disturbing is the trend that this chosen action, or one might say lack there of, for the Europeans portends.  This lack of commitment is just the latest acknowledgement that many of these NATO partners lack just that, a commitment, to the Afghanistan conflict.  The New York Times quoted these disheartening words from an autonomous European diplomat;

“No one will say this publicly, but the true fact is that we are all talking about our exit strategy from Afghanistan.  We are getting out. It may take a couple of years, but we are all looking to get out.”

Though this needs to be taken with a grain of salt as well, when combined with the lack of hard resources provided to the conflict, one has to think that this statement might be shared by many others in Europe. Though, I have always been a strong supporter for NATO and continue to believe in its relevance, this is a sad and divisive moment in its history.

I definitely put most of the blame on the Europeans for this weak display of burden-sharing in Afghanistan, but Obama needs to take criticism as well.  One of the promises of his presidency was that he could get our allies to work with us to a greater degree, in other words turning soft power into hard power.  In my mind, Afghanistan and NATO was a key cog in this declaration and so far the results have been poor.  That being said, there is still time and the US part of the new strategy has barely begun to be implemented.

President Obama arrives in London for the G20 Summit and Michele Obama is having a horrible hair day.

President Obama and the rest of the G20 leaders sure have quite the task ahead of them during their summit in London this week: To Save the World!  While I guess it isn’t that dramatic, but there are some pretty big expectations for this meeting, ones that go beyond what Barack Obama will be wearing.  Here’s a short list of issues on the agenda:

A coordinated global response to the worldwide economic crisis, building consensus on an international financial regulatory framework, adoption of international accounting standards, coordinating Central Banks policies, curtailing any talk or movements toward protectionist measures, saving capitalism, and avoiding these guys….

These protesters are scarier than bankruptcy!

The last major economic summit in DC to work out these problems did not breed much concrete success nor calm global markets, so we must temper our expectations.  In fact, though there were calls for diligent openness in terms of global trade during the Fall conference, the World Bank recently reported that 17 of the 20 countries had imposed a total of 47 trade-restrictive measures, a bad sign to say the least.  However, Daniel Drezner of Newsweek argues that the G20′s last summit should receive a ‘mulligan’ and offers hope that with a newly instated and popular US President, 6 months more of the global crisis to sober up the skeptics, and more time for those involved to come up with possible financial solutions something could be done.

I am far from an economic expert and am loath to recommend specific proposals to solve this economic downturn, but I have some thoughts.  President Obama needs to lead the charge of anti-protectionism at this conference and show the world that we can’t tariff our way out of this mess.  I am already concerned about this occurring as Obama and the EU are already bickering over the breadth of a European stimulus package.  (Americans telling the Euros to spend more!).  I believe these heads of state of the world’s largest economies also need to come to this conference with a sense of urgency, but not a sense of emergency.  I do not think we need to tear apart a global economic system (World Bank, World Trade Organization, IMF) that has led to the prosperity we have taken for granted, in order to solve this crisis, nor do I believe we can ‘regulate’ our way to solvency and growth.  These institutions need to be reformed and re-legitimized in the eyes of the world so they can continue to help bring the benefits of free trade to all states.

Conflict occurs at all times in world politics, but at times of economic distress it becomes even more likely and acute.  The world must not repeat mistakes made during the Great Depression, where states looked only inward to solve their problems.  We need calm, yet energetic world leadership to help get us all through this current economic crisis.  Let us hope we find some this week in London.

It was just last week that I put in a column that the EU’s chances of diversifying their gas supplies were extremely poor. Even though the Georgia-Russian war and even more recent Ukraine-EU gas pipeline was shut off by Moscow, seemingly bringing Europe to their energy knees once again, I pretty much agreed with expert John Daly that the EU did not have the stomach or ‘the goods’ to diversify their energy supplies through a Southern Corridor near the Caspian Sea and Central Asia already dominated by Russia. Has anything changed?  

Lovely Budapest

A high-level meeting of active and potential participants in the Nabucco gas transport project being held in Budapest, Hungary yesterday and today may, I repeat ‘may,’ lead to an answer. The meeting which will be attended by officials of supplier, transit, and consumer countries (Azerbaijan, Turkmenistan, Kazakhstan, Turkey, Bulgaria, Romania, Hungary, Austria; international financial institutions; the European Union, will explore the remaining issues holding up the giant project which would bring a fair amount of gas reserves from the Caspian Sea and possibly Kazakhstan through a corridor avoiding Russian authority (but not influence).

The goal of the Budapest meeting is to demonstrate support for the project from all players in terms of ‘political backing, capital investment, and supply commitments’ for Caspian gas to Europe.  The pipeline system would be centered around the Nabucco line, but also be complimented by many other smaller lines, and would first be supplied by Azerbaijan with hopefully and crucially, Turkmenistan following suit.  

There are many hang ups to such a deal occurring as Moscow is and will continue to put huge pressure on the the supplying states, especially Turkmenistan and Kazakhstan, to avoid such a deal unless it desires to worsen its relations with the Mother Bear.  Another major stop sign for the project, and one that is very connected to Russia’s strong influence in the Caspian, is that financial investors from Europe and beyond needed to get this project off the ground and convince the supplying states that it would be worthwhile, have been difficult to find.  It is hoped that in this meeting, enough will be convinced that the project is viable.  Countries like Azerbaijan, Turkmenistan, and Kazakhstan would really have to stick their necks out to make this EU Southern Corridor plan come to fruition, and their leaders will need to see it as worth the costs of alienating Moscow.

“All those countries that would contribute to Nabucco would have to jeopardise their relationship with Russia,” said Tanya Costello, a director at Eurasia Group in London.  ”I don’t think Turkmenistan has enough commitment from the EU that it’s really going to happen, that you can really consider taking that risk.”

Another problem is transition fees and demands as the gas has to go through several states before reaching Austria, Germany.  This prickly matter has already become a political football regarding Turkey’s demand for keeping 15% of the gas that moves through its territory and in its connection to the deal’s follow-through and its own ascension to the EU.  Turkey is playing power politics here and it is moves like these that may further delay/cancel the project.  Lastly, another major concern, voiced by John Daly and many others, is that the supplying states, especially Turkmenistan, just don’t have enough gas to make this whole process worthwhile.  Moscow has done whatever it can to buy all of the oil and gas reserves in its ‘near abroad’ with great success.  However, Vladimir Socor at Georgian Daily, asserts that Turkmenistan does in fact have plenty of untapped gas reserves:

A potential breakthrough occurred in Turkmenistan for Nabucco and the Southern Corridor. The recent Gaffney Cline audit of Turkmen gas deposits reported immense reserves of 4 trillion cubic meters of gas at the low estimate, 6 trillion at the best estimate, and 14 trillion cubic meters at the high estimate at the South Yoloten-Osman gas fields alone. Other Turkmen onshore and offshore fields have yet to be audited.

So this Budapest meeting may have a chance after all, but it will take an amazing amount of will for all of these parties to work together for communal interests.  Will they be able to put together a package so enticing for Azerbaijan, Turkmenistan, and Kazakhstan to jump on the Nabucco pipeline for what will surely be a wild ride?  We’ll see.

Right after Russia’s successful ‘endeavor’ into Georgia last August, its leaders attempted to consolidate their geopolitical position with other former Soviet states, with a decent amount of success.  Medvedev, Putin, and other Moscow high officials visited Azerbaijan, Kazakhstan, Turkmenistan, Uzbekistan, and Tajikistan, mainly solidifying and enhancing prior energy, military strategic deals.  In Azerbaijan for instance, Moscow offered to buy all of the gas rich country’s energy reserves.  These efforts by the Russians threaten to further the energy stranglehold on Europe, which receives about 30% of its gas reserves from Moscow, while increasing Russia’s geopolitical clout and position.

2009 Stare Contest Winner

However, all is not right with Russia as energy prices are (were?) dropping to dramatic lows and the nation was fighting a geopolitical battle for regional dominance with the US and NATO over Ukraine, Georgia, and the missile defense system in the Czech Republic and Poland.  One would think Moscow’s latest gas spigot choke off of Ukraine, and therefore Europe, would exemplify Russian strength, and in some ways of course it does, but in reality I believe Russia to be in a weak, or struggling position.  NATO’s expansion, combined with the Bush administration’s continual pressure for Ukraine and Georgian admission, US/EU encroachments into Central Asia and the Caucasus’s (weak as these efforts have been), VP Cheney’s visit to Azerbaijan and Georgia (with a $1 billion dollar pledge of aid promoted by current VP Biden) and the official signing of missile defense deals with Czech and Poland all have moved the West closer and closer to Russian territory and within what Russia believes is its ‘sphere of influence.’

Peter Zeihan of Stratfor agrees, calling the possible loss of Ukraine into NATO and the EU as the ‘kiss of death’ for Moscow.  Zeihan correctly asserts that this strategic loss would transform Russia into a purely defensive power with little ability to project its power outward.  It is in this context that we should see Moscow’s current gas cutoff efforts, as they seek to reel Ukraine back in and threaten the EU to back off. This type of strategy has major benefits for Moscow, the aforementioned and extra revenues from charging higher and higher prices and transit fees, and very little costs.  The EU just does not have that many alternative energy suppliers.  The BTC pipeline, which goes through Georgia-Azerbaijan-Turkey, is the only serious pipeline to the EU that does not go through Russian territory.  The Trans-Caspian and Nabucco pipelines are also alternatives, but have consistently run up against numerous hurdles that Central Asian energy expert John Daly sees as too high to cross.  Daly actually calls the current energy supply situation for Europe a ‘high water mark’!  So in other words, Moscow does not have to fear its trapped customers from getting free anytime soon.  

Russia's Transnational Pipeline Empire

How do you see Russia’s geopolitical situation?  Weak? Stable? Strong?  What about Europe’s gas supply situation?  Can they find away out of Moscow’s grasp?  What about this idea?