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Vladimir goes global – Part 3

More friends?

In the last instalment of this three-part article we complete our survey of the states that are – or that Russian president Vladimir Putin might hope to have as – allies against the West, by considering Turkey. Saudi Arabia and Egypt. As with the friends considered in Part 2, we find that these are a good deal less promising than Mr Putin might hope, and tending to become less so with time and with the destablilsing tactics to which he has resorted latterly. We conclude with remarks on what the right approach for the West is in the circumstances, and with what may be a surprisingly upbeat assessment of the future of the international system – provided we get that approach right.

In the first part of this three-part article, we discussed the destabilising and diversionary tactics to which Mr Putin is resorting in the Middle East – and the notable resilience on the part of his opponents and in the world economic system that forced him to this resort. In the article’s second section, we analysed the reactions and motivations of three key allies and/or presumed beneficiaries of Mr Putin’s policies – China, India and Iran – finding them (even the last) more equivocal in their attitudes than might first have been expected. We will now repeat the exercise for another trio, and come to similar conclusions.

Mr Erdogan outsmarts his friend in a strategic chess match

Maybe it’s a little difficult to remember this now, but many Bulgarians, accustomed to viewing Russia and Turkey as historical and perennial rivals, were perplexed by the news a few years back of a strategic rapprochement between their respective presidents – then, as now, Vladimir Putin and Recep Tayyip Erdogan. And indeed it was a striking development, which has remained significant even since.

But four things should be noted.

  • First, there has been a transactional and tactical character to relations from the very beginning of the process.
  • Second, this has, in general, become more and more marked as time has gone on.
  • Third, throughout the current war, there have been limits on what Mr Erdogan has been prepared to do to oblige Mr Putin.
  • And fourth, recent events both suggest serious strains in the relationship and highlight the limitations to which it has been subject all along.

So, going back to 2016, that year saw a failed attempt by Turkey’s military to overthrow Mr Erdogan. Mr Putin swiftly capitalised on this, earning the trust of his fellow autocrat by offering him both intelligence data and personal protection. Riding the wave of Mr Erdogan’s mistrust of Turkey’s US-trained and US-equipped Air Force, the Russian president even sealed the sale of Russian-made S-400 anti-aircraft complexes to Turkey.

But, without delving into the historical intricacies – including Mr Putin’s pivotal Turk Stream project, which enabled his subsequent actions in Ukraine – it becomes apparent that, like Mr Putin’s other global allies, such as the rulers of China, India, and Iran, Mr Erdogan became accustomed over time to assessing each successive move by comparing tangible, immediate benefits with estimated costs.

And every move the Turkish leader has made vis a vis his Russian counterpart has been accompanied by a bill that demanded instant and tangible payment.

Consider recent events. In early May, 2023 – in the run-up to hotly contested presidential elections – Mr Erdogan secured a deferral on Russian gas payments until 2024, which was worth billions of dollars. And, when Mr Putin tried to demonstrate that he was not a pariah by means of a visit to Ankara, scheduled for early February this year, Mr Erdogan asked for new price concessions. These proved too much for the cash-starved man in the Kremlin, who responded with an embarrassing last-minute cancellation of the visit.

Negotiations over the Turkish Gas Hub (TGH) – an electronic trading platform that is to serve as a device for “anonymising” Russian gas prior to its sale to Europe – have followed a similar trajectory. The details are rather instructive on Russo-Turkish relations generally, so let’s pause to consider them.

There’s an ongoing conflict between Mr Putin and Mr Erdogan over how the TGH is supposed to work.

The Russian leader has consistently argued, ever since he floated the idea of the Hub in a tete a tete with Mr Erdogan in mid-October 2022, that Gazprom should sell its gas directly on TGH to European buyers. It’s logical that he should be taking that line. Not only would it minimise the cut that Turkey can take, thus leaving more for Gazprom (and Russia – and Mr Putin). It would also serve a purpose that verges on the geopolitical: if Gazprom is selling a lot of gas on the TGH, it can determine gas prices in the region. And it might even establish a TGH price benchmark that could pull the rug from under the feet of the Netherlands-based TTF (which provides the benchmark for the EU market) and other bourses. Which is heady stuff for a despot bent on aggrandisement or destabilisation,

Mr Erdogan, however, has begged to differ. From the start, he has insisted that Russia must sell its gas first to Turkey’s national oil and gas company Botas, which would then blend it with a certain quantity of non-Russian gas and handle sales to the EU, exporting the resultant blend as a “Turkish gas mix” – pocketing a middleman’s premium. Mr Erdogan, in other words, will be calling the tune, while the impecunious Mr Putin will be playing second fiddle.

There’s quite a lot at stake.

True, the volumes currently being sold for export via Bulgaria are not impressive. A daily flow of 5-7 million cubic metres is at present passing through the Strandzha entry point to the Bulgarian transit system (not, incidentally, to be confused with the adjacent Strandzha-2 entry point, through which exclusively Russian gas enters Balkan Stream, the continuation on Bulgarian soil of the Turk Stream pipeline).

Since capacity at Strandzha began to be offered in July 2023, interest among EU-based companies in booking it has grown significantly. Provisional applications so far, indeed, suggest that, within three years, cross-border flows could exceed 10 billion cubic metres (bcm) a year – assuming (rather plausibly) that Gazprom’s transit contract with Ukraine is not extended when it runs out at end-2024. That’s around five times the annual volume at the current rate of flow. So it’s a lot of gas. And it would potentially be either entirely Russian if Mr Putin got his way, which is unlikely, and/or probably still mainly Russian if the Erdogan option of a “Turkish gas mix” were adopted.

Quite how things stand at present isn’t clear. But it looks, from Russian officials’ statements in the run-up to the abortive visit, as if Mr Putin had been hoping that one result of his trip would be a settlement of the issue in his favour. And, in an interview with me at the time – on A&A’s Youtube channel AlternativataBG, of course! – Mikhail Krutikhin speculated that the reason for the visit’s cancellation was that it had become clear that such a settlement wasn’t going to happen. Since Mr Krutikhin is possibly Russia’s top energy expert, his opinion deserves to be taken seriously.

At any rate, there seems to be a lot still to talk about, and it isn’t being done in haste: both Moscow and Ankara are referring to end-April as the expected date for the next round of talks on TGH. Meanwhile, both sides are keeping their cards close to their respective chests. Quite intelligibly: European (specifically Hungarian and Romanian) companies actively engage with Botas and Azerbaijan’s Socar Enerji in signing contracts for delivery of the “Turkish mix” gas. And it wouldn’t do to talk up the fact that an issue as fundamental as this has not yet been settled.

On matters other than gas, too, cooperation between Ankara and Moscow appears to be on a downward trend:

  • Certainly, there’s no talk of new military deals in the pipeline. And it would be strange if there were. Given Russian armaments’ underperformance in the war in Ukraine, Turkish officials must be wondering whether the S-400 purchase of 2016 has much geopolitical or military value now.
  • The value of the link between the two countries in routine diplomacy has probably diminished too. Since cancelling his visit, Mr Putin seems to have abandoned Turkey in favour of Qatar, as Moscow’s preferred mediator in the negotiation of prisoner-of-war exchanges and (so far unsuccessful) attempts to reach a ceasefire between Ukraine and Russia. 
  • The Akkuyu NPP repeats the asymmetric nature of interdependence – Russia is the primary source of funding for the Akkuyu NPP construction through direct investment and loans from sanctioned Russian banks, not exactly helping Mr Putin’s war chest.
  • Conversely, Mr Erdogan has poured cold water on Russian oil exporters’ expectation of selling more crude oil to Turkey. And since the beginning of February, Turkey has ceased payments for cargoes of crude oil already delivered to the country – citing its banks’ need to comply with Western sanctions on bank transactions.

Which suggests a general point. While Turkey has officially refrained from endorsing international sanctions against Russia, it has so far consistently (and rather lucratively) served Russia’s import and export needs for strategic goods and raw materials. That’s still true. But it has done so – and continued to do so — only to the extent that it doesn’t threaten the direct access of Turkish companies to Western markets, including the revenues they derive from it. And that proviso has become increasingly restrictive. As Western sanctions have progressively tightened, Turkish banks have, at each stage, promptly scaled back their involvement in transactions with Russian companies affected by those sanctions well beyond the crude oil and gas sector.

Finally, Turkey has consistently been applying a specific but significant restriction on the Russian war effort. Rather impressively for a country which hardly has a navy, Ukraine has managed to inflict serious losses on Russia’s Black Sea Fleet during the war. And Turkey has tended to exercise the considerable discretion it enjoys under the 1922 Montreux Convention to prevent Russia using the Bosphorus to replace these losses with warships from its Pacific, Baltic or Northern Fleets. Since the Bosphorus is the only possible route for such replacements, that’s quite an important restriction.

In short, the cancellation of Mr Putin’s visit serves as a clear indication of the ever-shrinking character of the anti-Western common denominator in Turkey-Russia relations, highlighting a diminishing role for Ankara in Moscow’s anti-Western actions.

The case of Saudi Arabia

Mr Putin appears to have had high hopes of the House of Saud, the dynasty that rules the Kingdom of Saudi Arabia (KSA), as a potential element in an anti-Western “Autocrats’ International”. But he doesn’t seem to have had much luck so far. Cooperation between the man in the Kremlin and the KSA’s effective ruler, Crown Prince Mohammed bin Salman (“MBS”), within the OPEC+ framework has been genuine but limited – and, moreover, has had very little effect on oil prices, which had been the point of that cooperation.

And Mr Putin’s recent antics are unlikely to endear him to MBS, or persuade the Crown Prince to distance himself from the West. MBS has his own long-term goals to pursue. And hardly any of them are compatible with those of Mr Putin, or served by the means that the Russian ruler has chosen to advance them.

Notably, MBS is unlikely to abandon the multi-year project of modernising his country and normalising relations with Israel for the sake of Mr Putin’s hankerings after global war. He is almost certainly annoyed that events in Gaza and the Red Sea have, at best, put this project on hold. As to the BRICS grouping – which is perceived (somewhat hopefully) by Russia as largely anti-Western – MBS seems lukewarm, and is in no apparent hurry to confirm membership of it and accept the invitation.

Nor, surely, can the Saudi Crown Prince welcome an escalation of hostilities on his own doorstep and in the waters through which he sends at least some of his oil to Europe. It’s difficult to find an authoritative figure for the percentage of Saudi oil affected by Houthi attacks in the Red Sea. Some sources say it’s negligible, while others estimate that disruptions will cause diversions or delays for 5-10% of the Saudi crude destined for Europe. An east-west pipeline within the country means that many Europe-bound cargoes do not pass through the Bab al-Mandeb Strait and are therefore not affected by the Houthi attacks. But that may not be the point. MBS needs that money for his modernisation drive – and even if he wasn’t modernising, he would still want the money. Moreover, there’s regional peace and stability to be considered. Until recently, MBS had seemed to be moving patiently towards a delicate rapprochement with the Houthis. So he is most probably not very happy with Mr Putin for stirring things up.

The Russian president is clearly concerned, making a one-day snap visit to the United Arab Emirates and Saudi Arabia on December 6 last year. But there was little sign that this had much effect.

As to the Palestinian question – symbolically significant for Arab leaders, including MBS, and of visceral importance to the “Arab street” – beleaguered Israeli prime minister Benjamin Netanyahu, now apparently on a collision course with US president Joe Biden, may be unable to prevent the realisation of a functioning Palestinian state once Hamas has been contained. So MBS may not be forced into any unwelcome choices. Instead, he may manage to work fruitfully with both Israel and the eventual Palestinian state – while remaining clear of close entanglements with Russia.

In short, Mr Putin is pursuing a constant escalation of regional tensions until they create a critical mass for global conflict. And that runs counter to everything that KSA and its effective leader want: regional stability; rapprochement with the Houthis; a normalisation with Israel that doesn’t leave the Palestinians out in the cold; ample funds for modernisation and diversification (and luxurious living for the elite); and a reasonably stable world economy to provide the context for that modernisation. Mr Putin is set to jeopardise the lot! And he’s onto a loser.

Egypt – the loser

For the sake of completeness, let’s conclude this “A&A Grand Tour” with some remarks on Egypt.

Now, Egypt is hardly to be classified with the other countries discussed above. It hasn’t, in recent times, been a close ally of Russia: its crucial strategic relationship has been with the US, the main arms supplier to the military which dominates Egyptian politics. And, even though Washington has obvious reservations about the regime, it’s unlikely that Mr Putin has any high hopes about Egypt’s potential value as an asset in global confrontation with the West. True, he seems to get on well personally with the country’s military ruler Abdel Fattah al-Sisi. But their relationship is reminiscent of the Erdogan-Putin “friendship”. It’s basically instrumental. And Mr Putin has, in the end, little to offer Mr al-Sisi.

To take the most obvious example, the Egyptian leader is interested in getting Russia to finance and build a proposed new nuclear power plant (NPP) at Dabaa. But there’s not much prospect of that, and presumably Mr al-Sisi has got the message by now. The project would require $30 billion and Russia’s nuclear company Rosatom just hasn’t got it. For a start, its global list of projects includes 25 reactors and, in almost all instances, it’s Rosatom that would need to fund both construction work and the procurement of the reactor and other equipment. So it is hardly going to take on a new project at Dabaa. Besides that, there’s the war in Ukraine. Russia is cash-strapped as a result of it and Mr Putin has almost drained his last source of cash – the National Welfare Fund.

In short, the question of alienating a close ally doesn’t arise. Egypt isn’t one.

However, something else should be considered.

In demographic, geographical and geostrategic terms, Egypt – whose fast-growing population is now thought to be nudging, or even to have exceeded, 113 million – is central to the Arab world and its stability. It is also true that Egypt stands to lose most from the current situation.

The country receives $7-10 billion annually from Suez Canal transit fees. As long as there’s trouble at the southern end of the Red Sea, these will be affected. And affected they certainly have been so far: revenues dropped by a scary 46% y/y in January 2024, with fee hikes in mid-month apparently (and predictably) failing to compensate for reduced traffic – and quite possibly adding to the disincentives entailed by increased risks, higher insurance costs, etc. February is unlikely to look much better, with Mr al-Sisi mentioning a (presumably year-to-date) figure of 40-50% in a speech on February 19.

All this is a serious matter, since Canal revenues account for a substantial portion of the country’s overstrained budget and, via heavy subsidies (notably on bread), the budget is key for social stability.

In addition to this, the crisis in Gaza, on Egypt’s border, entails the possibility of a massive refugee influx – while its proximity and visibility means obvious political problems for a government perceived by “the street” (with reason) to be hand-in-glove with Israel.

Two comments suggest themselves.

First, insofar as Mr Putin has – or is perceived to have – instigated Hamas and the Houthis, he will not have endeared himself to Egypt’s rulers. Nor, perhaps, to the less militant sections of Egyptian public opinion. Granted that he is not alienating important allies, he may be in the process of making enemies of people who were not especially hostile before. Where a country as important as Egypt is concerned, that may not be a clever move.

Second, both budget shortfalls and the consequences of turmoil in Gaza could have serious implications for Egypt’s stability. Whether Mr Putin has factored this into his apocalyptic plans must remain a matter of speculation. If he has, it makes the plans that much more alarming. But either way, he is playing with fire. Or, to switch metaphorical elements, he has, deliberately or not, sown the wind – and may eventually reap the whirlwind.

The Kremlin: Grand designs, little substance

The reigniting of these regional conflicts is ultimately a derivative of what is at stake in the war in Ukraine, where Vladimir Putin is cornered, seemingly with no prospect of peace, let alone victory. Russia’s economy is strained by the war, with sanctions depriving its budget of critical revenues and the cost of conflict impacting critical infrastructure and living standards. Those who have lived in Russia at the turn of last century and today will understand the difference that makes – what it means to have no heat or light in mid-winter because all the cash has gone to Mr Putin’s war and there is no money for repairs and maintenance on heating and power grids.

The man in the Kremlin realises that neither victory in Ukraine nor a resolution of the social discontent over shortages is likely any time soon. And this is what has prompted him to globalise the war, turning the entire world into his arena of epic gladiatorial struggle with the West. Even if he loses, that would not be a defeat by little Ukraine – which would be humiliating in the extreme – but instead a “strategic retreat” in a global exchange in which the forces of the West are arrayed against him.

The question arises: What should be the response of the EU and the US?

Well, let’s take a medical analogy. Look at these regional conflicts as metastases of the primary malign tumour – in this case, Mr Putin’s regime and his war in Ukraine. Where do you start the cure? Obviously, with a focused reaction that deals with the basic problem.

That is: concentrate on defeating Mr Putin – the core tumour in Ukraine.

Given that Russia is inciting regional conflicts to engage local autocrats’ resources on a low-cost, high-impact basis, it would be a significant mistake for the West to accept these regional conflicts as the main theatres of confrontation with Russia. In terms of the ultimate effect – pacifying the world by depriving the man in the Kremlin of a global resource for destabilisation – there would appear to be no alternative to investing politically, economically, financially, and militarily in Ukraine. Call it “brinkmanship” if you like. But it’s the sort of reverse-engineered brinkmanship that we need, the kind that would work.

Even before the outcome of the war in Ukraine becomes clear, the perception of systematic and total support from the West will strip the Kremlin of influence and credibility with the non-state actors that it relies on to destabilise the Middle East and the world.

This is also a lesson for Mr Netanyahu’s Israel, which, for years, declined to support Ukraine for the sake of an imaginary friend – “friend Vladimir”. Until, that is, Israel was hit by the repercussions of Mr Putin’s real friendship: his friendship with Hamas.

“Brinkmanship” might involve a willingness to escalate Western military involvement in Ukraine – akin to Ronald Reagan’s escalation of the arms race in the 1980s by means of his Star Wars programme – in acontext of low or falling crude oil and natural gas prices.

That’s not a fanciful scenario. Other things being equal, it’s entirely possible that crude oil and natural gas prices will fail to spiral out of control as they did in 2022. And a large-scale arms race through defence industry investment is still being shaped, as the GDP share of defence spending among European states continues its sustained growth to levels well beyond the NATO minimum of 2% – and as the concept of “forward collective defence” in Ukraine comes to the fore.

Mr Putin has invested heavily in the US presidential election and may even find that this investment pays off. Presidential hopeful Donald Trump has deployed his pet talk-show host, Tucker Carlson, to interview the Russian president, embroiling him directly in the US presidential race and in the sovereign decision-making process of the US Congress on military aid to Ukraine. And, obviously, Mr Putin’s statement in that interview that he would prefer a Biden victory was no more than a none-too-subtle diversion tactic to damp criticism of Mr Trump’s blocking military aid to Ukraine.

However, it’s probably not the US political process that concerns the Russian leader most. His  vulnerabilities lie elsewhere – in China, India, and the Middle East. The interests of the first two, and many countries within the third, differ significantly from those of Russia—especially a Russia obsessively focused on military objectives that disrupt the status quo.

Chinese exporters are already facing losses, and the prices of Chinese stocks on the Hong Kong exchange are approaching 2005 lows, amid fears of further Western investment pullouts. Mr Putin’s attempt to force Power of Siberia-2 on Mr Xi is likely to provoke an adverse reaction, particularly considering the implied uncertainties for Chinese exports to the EU and the US, causing delays and billions in losses.

And even if the Trump victory on which Mr Putin is banking actually materialises, that probably won’t make as much difference as he hopes. To suppose otherwise will be a gross overestimation of the US elite’s inclination to withdraw within its borders and isolate itself from global affairs.

These matters extend beyond the whims of individual politicians, even one as wayward and unpredictable as Mr Trump, and beyond mere principles. The United States maintains global interests and commitments for a specific reason—not an abstract dream of world domination or a mere sense of obligation to overseas allies. The reason lies in sustaining the US as an economic, financial, commercial, technological, and political leader, which requires a global presence and global projection of power.

Accusations of imperial ambitions aside, only the US and NATO can ensure the freedom of navigation through waters that are critical for world trade and the world economy – such as the Arabian Gulf, the Arab and the Red Sea. And it’s the US, and no other power, that is the leader in this process. In its own interests, to be sure. But also in the interests of many, many others. Not least China, India, and the oil-rich Arab countries of the Gulf.

The same general principle applies to the war in Ukraine. Its outcome is crucial not only for Ukraine and Europe, but also for the US, China and the world. A Putin victory would mean a regression of the entire system international relations.

We would be stepping back two centuries to the days of the 19th century “balance of power”. Or 80 years, to the “spheres of influence” arrangement that seemed to be emerging in the final period of World War II, under agreements in 1944 and early 1945 between Soviet dictator Joseph Stalin, US president Franklin Roosevelt, and British prime minister Winston Churchill.

The sentiment expressed today in the Putin playbook involves establishing control over Eastern Europe and negotiating from a position of strength, leaving Western Europe abandoned by the US. Mr Putin intended Ukraine to be the initial step and the first test of his strategy to transform Russia into a new Soviet Union, dealing a strategic blow to NATO. True, things haven’t gone as planned by him so far. But if we lose our nerve, resolve, and focus now, they still might. Accepting Mr Putin’s notion of spheres of influence would signal the end of the Atlantic Alliance and the European Union as we currently understand them.

The global landscape is shifting towards a multipolar order, characterised by the decline of US dominance and a potential reluctance to bear the cost of balancing regional and international power dynamics. This creates the necessity for other powers which aspire to leadership to assume some portion of the responsibilities previously held by the US. Their failure to do so could lead to increased entropy in the international system, a vulnerability that Russia could well exploit.

Top of Form

In this new environment, states may increasingly fall into two broad categories: those promoting stability (the net donors) and those seeking to exploit instability (the disruptors).

  • States with strong economic and technological foundations, motivated by an inherent aversion to chaos, are likely to seek cooperation with the US and a newly assertive Europe, primarily in their own self-interest.
  • The other potential power centre may consist of autocratic regimes lacking robust economic strength. These actors may be more inclined to disrupt the international order and exploit vulnerabilities for financial gain, reflecting the historical pattern of certain imperial ambitions.
  • Stable states will most likely seek cooperation with the US and Europe to secure their own interests and a predictable security environment for their economic growth and welfare.
  • Autocratic regimes may exploit vulnerabilities to further their goals and form ad-hoc coalitions.
  • In an international system that operates along these lines, the troublemakers are unlikely to have the upper hand, as atavistic anti-Westernism is a self-inflicted constraint which will tend to translate into a net geopolitical loss.

The law of unintended consequences, ever-present since Mr Putin’s incursion into Ukraine, may deliver another surprising outcome. Beyond NATO’s eastward expansion, potentially including Ukraine, we could witness the unexpected emergence of the EU as a military power, led by Germany in partnership with France, in tandem with the UK. This united front represents a military and economic force that Mr Putin stands little chance of defeating or even parrying.

Part one & Part two

Ilian Vassilev

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