THE BRETON/GEROL NEWSLETTER
NO END TO THE DEMOCRATS' WAR AGAINST TRUMP
As if his
report was not enough in itself the US House of representatives led by
Democrats invited the retired FBI director Robert Mueller to a marathon of
testimonies in front of two committees. His testimony basically repeated the
main points of his report's 444 pages that Donald Trump or people close to him
were not guilty of colluding with Moscow during the 2016 presidential campaign.
On the question of obstruction of justice, Mueller testified that the President
could not be totally exonerated. He even made it clear that the President could
be indicted once he leaves office. There may have been too much legal nuance in
this for the full meaning of that statement to register with the audience.
Members of
Congress continued to demand from White House the full of disclosure of Trump's
one on one conversation with Putin during their summit in Helsinki last year. The
White House refused to provide the content. The Congress for the third time
tabled a Trump impeachment resolution. Though only 90 or so members voted for
it, it shows that the crusade against Trump has become an obsession of the
Democratic political establishment. This strategy is unlikely to help the Democratic
party reclaim the White House in 2020. A credible candidate from a new
generation of politicians might do that.
--o--
UKRAINE
THAT WAS NOT, UKRAINE THAT COULD BE
The
significance of the overall victory of President Zelensky’s party in the July
21st parliamentary elections cannot be overestimated. For the first time since
Ukrainian independence in 1991, there will be political alignment between the
Presidency and the Parliament. Admittedly, there was a relatively low turnout
on July 21st, just below 50%. There are many possible explanations for such a
low participation, from voter disaffection to the summer timing of the poll.
Clearly though, the issue was not the popularity of President Zelensky who
continues to keep a very high public opinion rating.
The results
of the elections are an unmistakable rejection of the professional political
class that essentially controlled the outgoing Parliament. Previous
parliamentarians may have been duly elected, but they clearly no longer
reflected the preoccupations of the electorate. The verdict is clear and, in
some cases, brutal.
The mass
arrival of new parliamentarians with limited political or even public life
experience may cause the new assembly to go though unavoidable growing pains.
This will be a small price to pay to have a parliamentary majority that focuses
on the interest of the country and is not beholden to any oligarch.
To Russia,
there may be a temptation of reading too much in the fact that the nationalist
tendency in the new parliament will be greatly diminished. This in no way
implies that there is a return to the “good old days”. Zelensky and his party
may not define their objectives as against Russia, they will no less defend
Ukrainian interests. They may, however, do so in a more pragmatic way, not only
to spite the other side. The possible discussion about the reinstatement of
direct flights between Ukraine and Russia is a case in point.
The fact
that an openly pro-Russia party did well in the Eastern regions that border on
the conflict area in the Donbass should neither be discounted nor exaggerated.
These regions would still perceive a normal relationship with Russia as
important for their long-term prosperity, but it does not alter their sense of
belonging to a different country. They do not seek to rejoin the Russian
Federation. There is nevertheless some irony in the fact that the pro-Russia
party did better at the national level overall than former President Poroshenko’s
party.
Poroshenko’s
party did however gather slightly more votes than Zelensky’s among Ukrainian
voters outside of Ukraine. The diaspora may not be so comfortable with Zelensky
as it was with Poroshenko. Zelensky may be saying all the right things when it
comes to the conflict with Russia, as he did during his early July visit to
Canada, but he clearly does not have the same nationalist credentials or
inclinations. His first language is Russian, his Ukrainian not so strong. His
statement on the 1031st anniversary of the Christianization of Kievan Rus
called for dialogue between churches “so that faith would unite Ukrainians
rather than divide them”. This is very different from Poroshenko’s rhetoric.
The statement was immediately welcomed by a representative of the Church
supported by the Moscow Patriarchate.
Most
important, the two main tasks now awaiting Zelensky are fighting corruption and
ending the war in Donbass.
 |
| President Zelensky during a working visit to the Cherkasy region, July 31st ©President of Ukraine Website |
On
corruption, the work has already started. Within the limit of his
constitutional authority, the President has already released some senior
officials from their duties. He also made several visits to the regions, taking the opportunity to chew out local politicians for their ineffectiveness. Once the new Parliament is functioning, he will be
able to move more broadly and appoint new personnel to key top positions,
including that of Procurator General. The Presidential Administration has
already prepared an anti-corruption strategy that will include the digitization
of government work (to reduce the occasions for corruption) and a public
education program that will promote zero tolerance to corruption.
 |
| President Zelenskyy and EU Council President Tusk visiting Stanytsia
Luhanska in Luhansk region, July 7th ©President of Ukraine Website |
As for ending
the war in Donbass, a ceasefire is already in effect since July 21st. There
have of course already been numerous violations, but the tendency is towards
less military activity. There have already been some efforts to bring new life
to the discussions under the Normandy format (Ukraine, Russia, France,
Germany). Exchange of prisoners may be in the works. Even more important,
however, will be what can be done to remove the blockade and re-establish the
exchange of goods between rebel regions and the rest of Ukraine. This is part
of Zelensky’s first objective of winning back popular support in rebel regions.
Altogether,
the stage is set for Zelensky to carry out reforms that could substantially
transform Ukraine as well as to create the conditions for ending the armed
conflict in the Eastern rebel regions. From what has been accomplished so far,
there is ground for optimism.
--o--
PERSIAN GULF-GULF OF TROUBLE
The conflict
between Iran and the West is quickly becoming the most poignant conflict of our
times. It is not only that the war may flare up at any time, but also that the
Iranian drive to make a bomb and the crippling sanctions it is are under, are
dividing the West. The European Union has already created new trade structures
to circumvent the US sanctions against Iran and purchase Iranian oil through
multiple intermediaries using various other currencies, but not US Dollars.
 |
| British ship seized by Iranian Navy on July 19th in the Strit of Hormuz |
Russia
meanwhile formally supports Iran, but does not associate itself with Tehran too
closely. One of the possible outcomes of the current crisis could be a popular
uprising of the Iranian population against the theocratic regime due to severe
economic situation inside Iran. If this were to occur, it would change the
whole situation in the region and beyond.
--o--
TRADE STATISTICS QUESTIONS
US
President Donald J. Trump is the living proof that a misreading of trade
statistics can lead to unfounded conclusions. In the case of the author of the
“art of the Deal”, this may well reflect the view, based on his own business
experience, that in any trade relation one of the parties gets done in by the
other e.g. China versus the US. It may also reflect the prejudice that the only
good deal is the one he himself negotiated e.g. NAFTA versus its expected
replacement, the USMCA.
Trumpism
aside, a careful reading of diverse trade statistics can offer interesting
insights. Put together, the following three observations are of interest:
• Between 2016 and 2018 Canada-Russia
overall trade increased by 36%
• Between 2016 and 2018 EU-Russia
overall trade increased by 32%
• Between 2016 and 2018 overall
Russia world trade increased by 37%
The
interpretation that might be offered on the basis of the above is that, after
the 2012 recession and the impact of the imposition of Ukraine-related
sanctions on Russia beginning in 2014 had a negative impact on trade with
Russia, the tendency has now been reversed. Trade with Russia is inching its
way back to the maximum level reached in 2012.
The related
conclusion one might also be entitled to draw from the above is that sanctions
imposed against Russia and counter-sanctions imposed by Russia are no longer
having much real impact on trade flows. On the basis of the strong attendance
by businesspeople from all over the world at the June 2018 St.Petersburg
International Economic Forum and other similar business events, it seems that
such a conclusion is already broadly shared.
--o--
PERSON OF THE MONTH,
BORIS JOHNSON
Boris
Johnson has become the United Kingdom’s new prime minister — and is poised to
lead the country out of the European Union.
Johnson was
born in 1964 in New York City. He graduated from Eton and attended Oxford and
other prestigious schools. Johnson had a successful career in journalism
working for The Times, Daily Telegraph and finally as an editor of The
Spectator (until 2005), before becoming the former mayor of London from 2008 to
2016.
Boris
Johnson is a modern, British conservative. He is an obvious Eurosceptic, but
socially a liberal. His extravagant behavior and his wit served him well and
for that reason his popularity goes well beyond strictly conservative
constituencies.
Boris faces
perhaps the most daunting and immediate challenge of any British prime
minister since Winston Churchill during World War II.
Aside form
the Brexit saga, the U.K. has been pulled headfirst into a standoff with Iran,
and with it a delicate balancing act between Washington and Europe in terms of
how to respond to Iran. So far, exploiting UK's political mess and Brexit
quagmire, as well as a very uncharacteristic passivity of the famed British
Navy, Iran had the upper hand. The whole world is watching what, if anything
will be done with the new PM at the helm.
There are
four items on the new PM's short work list:
1. Iran
2. Brexit
3. Beating Labour Leader Corbyn at the upcoming elections (which will be hard without scoring the first
two),
and distant
4th would an attempt to slightly improve relations with Russia.
He has a
fan at the White House who already described Boris Johnson using his trademark
phrase "great guy".
Others, on
a slightly more intellectual side, for example Conrad Black who was Boris' boss
at one time predict that he will be an excellent PM. The media and the
left-leaning political circles are obviously not crazy about Boris. For them he
is too unpredictable, too free with his language or using the Orwellian
newspeak, not a "good thinker". The fact that he is liked by Trump
also does not sit well with many Brits.
One thing
is to win your party. Quite the other is to win the country.
It will be
exciting right out of the gate.
--o--
MOSCOW PROTESTS AND ARRESTS
From 3,500 (according to the authorities) to 20,000 (according to protesters) people participated on July 27th in an “unauthorised" protest
against the exclusion of opposition candidates from city of Moscow elections to
be held on September 8th. More than 1,000 people were detained during the protest.
The reaction of the authorities has been to initiate criminal cases against some
of the participants in order to discourage further protests. In response to the
widespread Western criticism of Moscow police actions against the protesters,
Russia Today compared these actions to the ones taken by the French police against
the “gilets jaunes”. More than an actual
threat to the prevailing political system, the Moscow events may be a
prefiguring of upcoming challenges during any power transition at the national
level that should take place in 2024.
The Central Election Commission is now reviewing the controversial applications and may find a way to reverse the previous exclusion of some opposition candidates.
--o--
UKRAINE SHIPPING
Ukraine’s
Security Service (SBU) has arrested a Russian tanker that Moscow allegedly used
to block three Ukrainian naval vessels before detaining them and 24 Ukrainian
sailors in November near Crimea.
According
to the SBU July 25th statement,
the tanker was detained by Ukrainian authorities after it arrived under the
Russian flag at the Ukrainian port city of Izmail on the Danube River on July
24.
The 15
Russian citizens on board were released and sent back home. The ship itself was
formally seized under a July 29th Court order. It will now likely become another
item on the long Kyiv-Moscow negotiating list.
--o--
CHINA'S NEW MILITARY DOCTRINE
Beijing
issued a so-called 'White Book' where it spells out the main points of its new
military doctrine. For the first time the doctrine mentions the nuclear weapons
as an integral element of China's defense system while stressing that China
will never be the first to use nuclear weapons. The doctrine also emphasizes
Beijing's intentions to further develop its Pacific fleet and make it one of
the most powerful in the world.
 |
| The first iteration of China's military doctrine... |
China said
it will require sustainable development of its military industrial complex
based on its own resources. For the
first time within its military doctrine it stated that China will continue to
increase military cooperation with Russia.
--o--
SOUTH KOREA-RUSSIA
Russia says
it has carried out its first ever joint air patrol with China, prompting both
South Korea and Japan to send jets in response. The Russian defence
ministry announced that four bombers, supported by fighter jets, patrolled a
pre-planned route over the Sea of Japan and the East China Sea.
South
Korean jest jets fired flares and machine-gun warning shots when Russian planes
intruded.
Japan has
protested both to Russia and South Korea over the incident.
 |
| LiancourtRocks, in Japan called Takeshima, in South KoreaDokdo |
The alleged
incursion happened over the disputed Dokdo/Takeshima islands, which are
occupied by South Korea, but also claimed by Japan. Russian and
Chinese bombers and reconnaissance planes have occasionally entered the zone in
recent years, but this is the first incident of its kind between Russia and
South Korea.
Russian
Defense ministry said two of its Tu-95 strategic missile-carriers had joined
two Chinese Hong-6K strategic bombers on the pre-planned route over
"neutral waters". They were
supported by fighters and A-50 and Kongjing-2000 airborne early warning and
control aircraft.
--o--
BELARUS
Russian
President Vladimir Putin held talks with his Belarusian counterpart, Aleksandr
Lukashenko, in St. Petersburg on July 18 to discuss further integration within
the Russia-Belarus Union State, a grouping that has existed mainly on paper
after it was established in the 1990s.
In recent
months, Putin and Lukashenko have held several rounds of talks on the
integration, with the latter stressing that the partnership should be equal.
Russia has been Belarus's main lender for many years and Minsk still owes
Moscow large sums of money. Belarus's economy remains largely inefficient, and
its external debt increased by $3.4 billion from July 2016 to October. In June, Finance Minister Siluanov said Moscow will lend more money to Belarus only after the two
countries agree on furthering their integration.
 |
| President Lukashenko, Nikolai Lukashenko and President Putin at Valaam Monastery, July 17th ©President of Belarus Website |
Lukashenko said after talks that he and Putin reached "agreements in principle on
several issues hindering the integration between the two countries,"
including the price of Russian gas sold to Belarus. Earlier this year, Lukashenko told reporters Russia and Belarus still need to sort out a
number of problems before talking about integration, adding that "the
Russian leadership, especially the government, are not ready to go that
way." In other words, despite recent positive statements, a lot remains to be done.
--o--
GEORGIA
Russian
President Vladimir Putin has rejected a parliamentary call to impose sanctions
on Georgia, saying patching up strained relations was more important than
reacting to provocations by "scumbags.” Talking to reporters in St.
Petersburg, Putin said he would stay away from "sanctions against Georgia
out of respect for the Georgian people."
"For
the sake of restoring full ties, I would not do anything to complicate our
relations," Putin added.
In what
appeared to be a reference to a crude verbal attack on him by a Georgian TV
presenter, the Russian president said there was no point in taking seriously
what he called the outbursts of "some scumbags."
Putin was
speaking shortly after the Russian parliament unanimously backed a resolution
urging the government to draw up economic sanctions on Georgia for his
approval, a move that would have sharply escalated tensions between the two
countries.
On July 7,
Giorgi Gabunia, a host of a news-analysis program called Postscript on the
Georgian opposition-run Rustavi-2 television channel, called Putin a
"stinking occupier" and a "walrus c***" and vowed that he
would defecate on Putin's grave.
Gabunia's
tirade against Putin came at one of the most tense periods in relations between
Russia and Georgia since they fought a five-day war in 2008.
--o--
MONGOLIA
Populist President Khaltmaa Battulga, who won an early July run-off election, is a real estate
tycoon who has a Genghis Khan-themed amusement park as one of his assets.The
leader of the opposition Democratic Party won just under 51% of the vote,
giving him the majority needed to overcome parliament speaker Miyeegombo Enkhbold
of the ruling Mongolian People’s Party.
 |
| President Battulga |
Some
investors have been wary of a Battulga presidency because of his calls for more
state control of some mines and his suspicions of China, Mongolia’s biggest
trade partner. Despite
past protests, he has said he will stand behind plans to build a key railway to
China from the enormous Tavan Tolgoi coal mine and has praised China’s Belt and
Road pan-Asian infrastructure initiative.
Battulga
captured the attention of voters who feel Mongolia received a bad deal on
investments, promising greater government control of strategic mines, such as
Rio Tinto’s, Oyu Tolgoi copper mine.
Mongolia is
a parliamentary democracy. The government is run by a prime minister, but the
president has powers to veto legislation and make judicial appointments.
--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.
Gilles Breton also currently serves as Chairman of the National Board of the Canada-Eurasia-Russia Business Association. The views expressed in this newsletter exclusively reflect the opinion of the authors.
