Ya think?! A Machiavellian plan against Russia?


© Unknown
Just 'cause yer machiavellian don't mean yer smarter than yer opponents, Barry.

MOSCOW - To the Kremlin, recent events in its backyard have proved once and for all that the amorphous body known as 'the West' - its politicians, institutions, media, diplomats, armies, financial architecture and governance bodies - are not to be trusted. The charge sheet is long and contested: it starts with NATO's 'out of theater' bombing campaign in Yugoslavia in 1999, includes broken promises over eastern European integration into the EU and NATO in the early 1990s, color revolutions in neighboring states, botched interventions in Afghanistan and Iraq, destabilization in Libya and Syria, repeated attempts to find common security architecture rebuffed, and leads to the revolution/coup that took place in Kiev in March 2014, breakaway regions in eastern Ukraine, subsequent political and economic sanctions against Russia and, most recently, threats to remove Russia's FIFA World Cup hosting rights in 2018. Whether all of this is part of some long-term, Machiavellian plan to destabilize Russia - an entirely uncontroversial view at all levels of society here - is questionable, but calls to mind the famous quote from Catch-22: 'Just because you're paranoid, doesn't mean they're not out to get you.'

And Russia is not alone. That other great misunderstood Eurasian civilization, China, shares many of these concerns. The Bretton Woods institutions have proven incapable of self-reform, subject to the narrow influence of just a few countries and shareholders, and ignored calls to restructure. When, last year, the US Congress blocked IMF reform plans that had been agreed among the G20, it was to many the most visible sign yet that internal reform could not be expected. As a result, competitor institutions have been created - the BRICS development bank, the Asian Infrastructure Investment Bank (AIIB) - whose priorities, it is claimed, will more closely match 21st century realities.

It is against this backdrop that Russian President Vladimir Putin next month will play host to two of the most significant—and least trumpeted—global meetings of the year. In the remote industrial city of Ufa, located some 1000km east of Moscow in the southern Urals, the leaders of the BRICS nations and the Shanghai Cooperation Organization (SCO) will convene separately, potentially heralding a new dawn in global summitry.

The BRICS Summit brings together the leaders of Brazil, Russia, India, China and South Africa for the seventh time in its history (and second time in Russia). President Vladimir Putin has been a strong proponent from the start, encouraging the initial ministerial meeting in New York in 2006 and hosting (with former President Dmitry Medvedev) the bloc's first full summit in Ekaterinburg in 2009. It is unusual for institutions to be born as shorthand acronyms created by investment bankers, and, as a result, the organization struggled initially to develop traction. But those early days seem to be behind it, and the organization is now busy creating an alternative international financial and regulatory framework to replace what it sees to be the outdated Bretton Woods model. The Ufa meeting represents the beginning of Russia's year-long presidency, which will culminate in next year's China summit. Reportedly, a 130-item discussion agenda has been created based on proposals presented to the Kremlin by all federal agencies.

The Shanghai Cooperation Organization (SCO) was created in 2001 by China, Russia, and the Central Asian states Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan. Its initial focus was on counter-terrorism and extremism, but as its membership has grown (observers now include Afghanistan, India, Iran, Mongolia and Pakistan, and 'dialogue partners' Belarus, Turkey and Sri Lanka), its objectives have broadened accordingly to include political, trade, economic, scientific, and cultural aims.

So far, real progress has been limited, but the ambitions are clear. Infrastructure projects have been inked valued in the hundreds of billions of dollars. Oil and gas pipelines, LNG ports, power plants, road links, fast rail, all are present in China's 'One Belt, One Road' (or 'Silk Road') project, a strategic initiative underpinned by the new governance structures. A $40 billion investment fund has already been created, with many times that amount in bilateral deals agreed across Central and South Asia. The AIIB alone has initial capital of $100 billion. Small wonder, then, that many citizens of EU and NATO member Greece, distressed and disillusioned after years of austerity economics, see a possible future in these new institutions.

No one doubts that there will be huge challenges. Institutional capacity, relationships based on rather than shared values, overlapping organisational structures (for example, the much-touted Eurasian Economic Union that Russia has created also includes Belarus, Kazakhstan, Kyrgyzstan and Armenia), low levels of trust between the parties, and competition for influence over Central Asia could all lead to institutional impasse.

But it is hard to deny that the momentum is on their side. Mechanisms to present alternatives to the ubiquitous US dollar are being created, with a $25 billion credit swap facility opened between Russia and China last year, maiden yuan-denominated letters of credit recently agreed between Russia's Sberbank and China's Export-Import Bank, and a proposal for a BRICS alternative to the international payment mechanism SWIFT, access to which Russia was threatened with losing last year. In the meantime, the central banks of a number of regional economies, including China, Russia, and Kazakhstan, are purchasing gold bullion in unprecedented volumes, suggesting preparations are in place to create some kind of gold-backed financial instrument in the medium term.

Russian officials have been keen to point out that the BRICS and SCO meetings will not overlap. At this stage, this is almost beside the point; the symbolism of simultaneously hosting a group that combines the world's largest economic growth markets as well as a group that seeks to secure national sovereignty and territorial security over the largest landmass, Eurasia, will not be lost on their populations. Meanwhile, in the West, US President Obama's jibe about recreating the 'glories of the Soviet empire' is consistent with an approach and narrative that look backwards rather than forwards. Western 'isolation' of Russia is inspiring the country to create new economic realities that should create the growth towards a more balanced and sustainable economy for decades to come.