Issue 8

THE BRETON/GEROL NEWSLETTER

TRUMP'S PRESIDENCY: NON-STOP AGONY

Any hope that Donald Trump's presidency could have been, in the words of Conrad Black, a transformative one evaporated shortly after the election. So far Trump has failed to deliver on any of the campaign promises that propelled him into power, except for the appointment of a conservative judge to the Supreme Court and taking the US out of the Paris Climate Change Agreement.

Obamacare, which he intended to crush with one blow while replacing it with "something much better", continues to function. The Republicans in Congress cannot agree among themselves on that "something much better", mainly due to the pressure from their constituencies be they conservative or moderate.

The so-called "travel ban" on visitors from certain Muslim countries had been persistently overruled in courts, until the Supreme Court recently allowed some of it to apply to inviduals who lack any "bona fide relationship with any person or entity in the United States”.

Constantly fettered by allegations of undue Russian influence during the election, Trump's loud pronouncements of radical improvement of relations with Russia turned into what Rex Tillerson, his State Secretary termed as "the lowest point in relations between US and Russia since the end of World War II".

In the Middle East, his trip to Saudi Arabia seems to have ignited the previously latent row between Qatar on one side, Saudi Arabia, Egypt and the Gulf States on the other. With respect to Syria, he has blown hot and cold, leaving a room for manoeuvre to his generals on the ground, not an indication of clear strategic thinking.

Furthermore, the highly advertised intention to move the American embassy from Tel-Aviv to Jerusalem right away after being elected was shelved.

Relations with Europe and consequently with NATO are also at its lowest point in decades. If one adds to that a nuclear quagmire around North Korea with its crazy teenage-like leader at the top, it clearly makes the first 6 months of Trump's presidency the worst in modern history.

If there is a ray of light in this bleak picture it is the appearance and hopefully rapid maturity of new Western leaders like Emanuel Macron and Justin Trudeau as well as the resilience of an older, wise guard leader like Angela Merkel, that serve to offset the unpredictability and turmoil in Washington.

--o--

SANCTIONS AS A NORM OF ECONOMIC DEVELOPMENT

President Putin at the naming ceremony for the Arctic LNG tanker Christophe de Margerie
St. Petersburg, June 3rd, 2017
© kremlin.ru

In late June the EU confirmed the extension for another 6 months of anti-Russian economic sanctions, mainly for reasons of Russian annexation of Crimea and support for separatists in Donbass.

On June 20^th the US administration had introduced additional sanctions against 38 personalities and organizations in Russia. While this Washington's move was aimed at pre-empting a much harsher package of sanctions being prepared by the US Senate, it seriously contributes to the general burden for the Russian economy.

Nevertheless, the recession in the Russian economy is over and the record-low inflation will fall further to 4 percent this year, President Vladimir Putin said on June 15th during his annual televised news conference.  A late May  World Bank report suggested that the Russian Federation is indeed showing encouraging signs of overcoming the recession it entered in 2014. The economy is projected to grow 1.3% in 2017, and then 1.4% in both 2018 and 2019.

Independent analysts have concluded that, in some peculiar way, sanctions have been instrumental in improving the Russian economy. The ban on Western food imports as a counter measure against Western sanctions has stimulated Russian agriculture to the point that the country has become a major exporter of wheat and other food products, while preparing for the great export leap in meat and vegetable oils among other things. As far as the industrial sector is concerned, cooperation with China, South Korea and more quietly, yet effectively, with Japan was helpful as well.

As Russian representatives led by president Putin at Economic Forum in St. Petersburg emphasized Russia had always, in one way or the other, existed under sanctions. For example in 1970's and 1980's the whole range of advanced Western technologies were closed for the USSR for political reasons - for example production of pipes for oil and gas pipelines. After suffering for a while the Russians not only began producing their own pipes, but became major exporters of it.

What really hurts the Russian economy and where there is no efficient remedy are international credits and banking sanctions. The St. Petersburg Economic Forum where every industrial country, including the US, was represented by an impressive team of investors, was discussing ways for economic cooperation with Russia, not waiting for sanctions to be lifted anytime soon, a new trend for a new reality. Canada was also represented in St.Petersburg, but not anywhere near the numbers of its main trading partners and allies.

Indian PM Modi, President Putin and Austrian Chancellor Kern
St. Peterburg Economic Forum, June 2nd 2017
© kremlin.ru 

--o--

IS IT ALWAYS BETTER IN PARIS?

Vice President Mike Pence and President Petro Poroshenko of Ukraine, June 20th, 2017
Facebook/Official White House Photo by Joyce N. Boghosian

After his discussion with Vice-President Pence, President Poroshenko eventually got to have a short meeting with President Trump during his June 20th stay in Washington. The preceding uncertainty about the likelihood of a meeting and, ultimately, its low-key nature and its brevity left a less than favourable impression, no matter the subsequent spin attempts (Poroshenko meets Trump before Putin does). This, however, is not a reflection of an official US policy toward Ukraine or Poroshenko. It is very personal. President Trump would not have forgotten that Poroshenko and his team would have preferred Hillary Clinton as President and that, thanks to documents coming from Ukraine and connecting Paul Manafort  to former President Yanukovich, Trump had to fire Manafort, a long-time associate, as his campaign manager. Vindictive can now also be used to describe Donald Trump. This being said, it is not surprising either that the US authorities from the president down re-affirmed their full support for Ukraine and Poroshenko in their conflict with Russia. In the context of the unending entanglement of the Trump administration in the undue Russian influence affair, the Administration could not afford to appear to weaken its support for Ukraine, for fear of feeding even more the allegations of partiality to Russia.

Presidents Poroshenko and Macron, Paris, June 26th, 2017
© President of Ukraine Website

In contrast, President Poroshenko got the full presidential treatment during his June 26th visit to Paris for a meeting with President Macron. For Poroshenko, this visit was a success since Macron said all the right things, both about Crimea and about the conflict in Eastern Ukraine, so much so that the Kremlin had to react officially to Macron referring openly to Russian aggression.

The more interesting element is the reiteration by Macron of his determination to give new life to the Normandy format discussions (France, Germany, Russia and Ukraine) in support of the Minsk process, as he had already noted during the May 29th visit of President Putin to Versailles.

Macron insisted on the fact that it is unacceptable to settle for lack of progress and that the issues are not the principles underpinning the 2015 Minsk Accords, but their practical implementation. To advance the discussions, Macron has suggested that the discussions focus on “pre-conditions” that could lead to practical steps, including breakthroughs on removing troops from borders, greater monitoring by international observers, progress on the humanitarian and prisoner situation, as well on the lifting of the blockade on economic exchanges between the rebel regions and the rest of Ukraine. A first phone call between Normandy Four leaders might take place before the G20 meeting in early July.

Macron admitted that a few months might be needed “to succeed within the framework of the Minsk process”. He also took a direct swipe at Secretary of State Tillerson who on June 13th this month had stated that the US did not want to be handcuffed by the Minsk process and that it was possible that the Ukrainian government could come to an agreement with Moscow outside the structure of the 2015 Minsk accord. Macron rather curtly commented: “I have not seen a better solution being offered or rather I have not understood it”.

Alluding to the fact that both sides of the conflict constantly allege violations by the other side, Macron emphasised the need for the OSCE to play a greater role and to be in a position to offer an “objective” assessment of the situation through its observation mission. This is very logical, but hardly new. The questions is: can Macron can use his new impatience to force some movement on that crucial part of the process?

While Poroshenko can be happy with the outcome of his two visits, the follow up to the more pleasant Paris meeting may be more challenging. There are indications that Macron intends to apply his logic and display his impatience equally to all parties. On the practical steps that Macron has in mind to move the process along there are some issues, such as for instance the blockade of rebel regions, where Poroshenko may have to re-adjust his position and contend with strong internal turbulence. 

--o--

PERSON OF THE MONTH

PM Theresa May, Facebook profile

Theresa May’s long-term political prospects may not be the brightest, but her resilience and the impact of her actions deserve some attention. Having survived losing her party’s House of Commons majority and getting into a public relations disaster following the Grenfell Tower fire, May is still Prime Minister of the United Kingdom. Considering the traditional ruthlessness of the Conservative Party toward its leaders, including even Margaret Thatcher, this is no minor accomplishment. The “confidence and supply “agreement just concluded with the Democratic Unionist Party of Northern Ireland (DUP) formally allows May to win key upcoming votes in Parliament, but comes at a hefty price for Her Majesty’s Treasury (£1billion extra  for Northern Ireland over the next two years). The agreement may allow for some stability, but its horse-trading aspect neither strengthens May’s image nor her position within her own party.

May called the early elections because she knew that managing Brexit would not be easy with her then relatively small majority in the House of Commons. Managing it as a minority could well become a nightmare. This is even more so as European Union negotiators can draw some comfort from renewed European cohesion in reaction to Brexit prospects and following the election of a pro-Europe President in France.

--o--

NORTH KOREAN JUGGERNAUT: LOOKING FOR SOLUTIONS 

The recent tests of a new ICBM rocket engine in North Korea have confirmed the worst fears of international experts: by the end of Trump's first term as president North Korea could have capability to strike not only American forces and its allies in the area but also the West Coast of the United States. It seems that altogether there are 4 possible solutions-equally dangerous and difficult:

The first is to launch a full blown war using all might of American and South Korean military forces. Supposedly such war could last 1 to 2 months, beating the rogue country into submission. This could literally mean hundreds of thousands of civilian casualties - something unacceptable in the 21st century.  

Experts are looking into a possibility to launch limited punishing strikes against nuclear and long range rocket sites in North Korea or, in a sudden operation, to eliminate Kim Jung-un and his inner circle. There is a very good chance, however, that a limited operation would quickly become unlimited with the same disastrous results.

Another option has already proved itself unworkable: to continue sanctions and applying pressure on Kim Jong-un via China and its economic levers. This hardly worked before and is unlikely to work in the future. China will not miss an opportunity to play the North Korean card against the United States.

The last option is psychologically the most difficult; to accept Kim's desire to have direct negotiations with the US in exchange for the moderation of his nuclear ambitions. The problem with this option is the sheer impossibility of trusting Pyongyang. 

--o--

BRIEFLY NOTED

BELARUS

Minsk, the capital of Belarus, has a reason to celebrate. Canada is yet another Western country to lift sanctions imposed on Belarus 10 years ago for human rights violations and for the oppressive character of Lukashenko's authoritarian regime. Its not that the regime has become less authoritarian, but there are some substantial improvements. Political prisoners were released, dissent and protest are better tolerated while the government in Minsk has chosen a political course more balanced in relation with Russia and the West. As it was mentioned in Ottawa, Canada especially appreciated Belarus’ role in mediating and accommodating the complex negotiations regarding the Ukrainian crisis (Minsk 1 and 2 accords). Another notable aspect of the current development in Belarus is that Russia tacitly refrained from the previous practice of barring re-exports of Western goods and products flowing into Russia from Belarus. 

KAZAKHSTAN

The Canada-Kazakhstan business council held its second conference in Astana on June 22^nd and 23rd. Over 150 Canadian delegates met with representatives of all sectors of the Kazakhstan economy. Cooperation in agriculture, mining and high-technology was on top of the agenda. Canadian investors are now more optimistic about the opportunities provided by Kazakhstan with its wide-spread program of privatization and modernization. The only cause for concern among investors is stability in the country after the 76-year old President Nursultan Nazarbayev leaves the scene.

LATVIA

Municipal elections in Latvia brought  an interesting result : the Russian-speaking mayor was elected for the third time in a row in the capital city of Riga with his Harmony Centre party receiving over 58% of the vote. The Harmony Centre party has campaigned on a platform of bringing together the Latvian speaking majority and the Russian speaking minority. The upcoming parliament elections, to be held before October 2018 could, according to observers, bring victory to that party. In such a case, Nils Ushakovs, the mayor of Riga, whose mother tongue is Russian, has a good chance of becoming the next Prime Minister. This in itself highlights the durability of Latvian democracy.

CYBER WARS ARE HERE

Ukraine, Italy and Israel were the most affected by the unprecedented cyber-attack which was attributed to the virus Petya, an advanced modification of the previously known and destructive virus Wannacry. Among other targets were also major companies and entities in the US, Denmark, Netherlands, France, Russia and India. According to Ukrainian PM Vladimir Groysman, the attack damaged communication systems at Kiev and other airports causing major disruptions. Also affected were military and police infrastructures, health care system and even the operation centers at Chernobyl nuclear power station known for humanity's worst nuclear disaster in 1986. At some point, Chernobyl's technical personnel, with computers down, had to operate the station manually.

--o--

THE AUTHORS

Ilya Gerol, former foreign editor of the Citizen in Ottawa, syndicated columnist in Canadian, US and European media specializing in international affairs. His particular area of expertise includes Russia, Eurasian Economic Union, Eastern and Central Europe.  Ilya Gerol has written several books, one of them, The Manipulators, had become a textbook on relations of media and society.

During his career in the Canadian Foreign Service, Gilles Breton had three assignments at the Canadian Embassy  in Moscow. His first posting there began during the Soviet period, in 1983. His last was from 2008 to 2012 as Minister-Counsellor and Deputy Head of Mission. He also served as Deputy Director responsible for Canada’s relations with Russia from 2000 to 2008. As an international civil servant, he was Deputy Director of the OSCE Office for Democratic Institutions and Human Rights in Warsaw from 1994 to 1997.