Global Strategic Review 2014 by International Institute for Strategic Studies (IISS)

The International Institute for Strategic Studies the 11th iiss global strategic review Oslo, 19â&#x20AC;&#x201C;21 September 2014

The Global Strategic Review

Geopolitical Risks & Geo-economic Opportunities

The International Institute for Strategic Studies the 11th iiss global strategic review Oslo, 19â&#x20AC;&#x201C;21 September 2014

The Global Strategic Review Geopolitical Risks & Geo-economic Opportunities

The International Institute for Strategic Studies Oslo, 19–21 September 2014

The Global Strategic Review The International Institute for Strategic Studies

© October 2014 The International Institute for Strategic Studies Director-General and Chief Executive Dr John Chipman Editor Adam Ward Contributors Dr Dana Allin, Noora AlSindi, Henry Boyd, Dr William Choong,

Virginia Comolli, Matthew Cottee, Dina Esfandiary, Dr Bastian Giegerich, James Hackett, Emile Hokayem, Nigel Inkster, Hervé Lemahieu, Antoine Levesques, Alex Nicoll, Giri Rajendran, Dr Nick Redman, Antônio Sampaio, Jens Wardenaer Editorial Dr Ayse Abdullah Editorial Research James Howarth Production and Design John Buck, Kelly Verity

All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the institute.

The International Institute for Strategic Studies is an independent centre for research, information and debate on the problems of conflict, however caused, that have, or potentially have, an important military content. The Council and Staff of the Institute are international and its membership is drawn from over 90 countries. The Institute is independent and it alone decides what activities to conduct. It owes no allegiance to any government, any group of governments or any political or other organisation. The IISS stresses rigorous research with a forward-looking policy orientation and places particular emphasis on bringing new perspectives to the strategic debate.

Contents Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Chapter 1

Agenda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Chapter 2

Executive summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Chapter 3

Press coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Selected IISS publications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 Chapter 4

Social media . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81

Contents

B책rd Glad Pedersen, State Secretary, Ministry of Foreign Affairs, Norway

Global Strategic Review 2014

Foreword

The international scene in 2014 has been marked by the emergence of simultaneous crises and tensions in Europe, the Middle East and the Asia-Pacific, the rise of new, more convoluted and hybrid emergencies in much of the developing world, flux and dissonance in the geo-economic domain, and the more pervasive and palpable subsidence of any sense of a coherent global system. To understand each of these challenges in isolation, to diagnose their immediate and contingent effects on each other, to assess their influence on the pace and direction of strategic change at the global level â&#x20AC;&#x201C; in short, to impose intellectual order on a most disorderly world: this was the task of the annual IISS Global Strategic Review. As with the GSR held in Stockholm in 2013, the Oslo meeting on 19â&#x20AC;&#x201C;21 September determinedly avoided any narrow or parochial approach. Among the nearly 300 delegates in attendance, some 58 countries were represented. Speakers were drawn from a variety of disciplines and backgrounds:

ministers

with

pressing

responsibilities;

historians placing the various crises of the day in broader context; politicians with an eye to the practicalities of the Foreword

policies that must flow from analysis; business representatives fusing economic considerations into traditional geopolitical concerns; and journalists and experts with essential on-theground knowledge to share. This book provides a sense of the richness and intensity of the discussions at a conference whose mission statement might be captured in the phrase â&#x20AC;&#x2DC;the World in a Weekendâ&#x20AC;&#x2122;. As in 2013, the GSR depended crucially on the support of two joint Host Nation Supporters in the shape of the Norwegian Ministry of Foreign Affairs and the Swedish Ministry of Foreign Affairs. The IISS is grateful for their commitment and engagement, and for providing a Nordic cockpit from which to survey the globe. Adam Ward Director of Studies

Global Strategic Review 2014

The International Institute for Strategic Studies Oslo, 19â&#x20AC;&#x201C;21 September 2014

CHAPTER 1

Agenda

The Global Strategic Review

Executive summary

Carl Bildt, Minister for Foreign Affairs, Sweden

Global Strategic Review 2014

Agenda

Friday 19 September 2014 Afternoon

Delegates arrive in Oslo; Registration

18:30–19:30

OPENING RECEPTION

19:30–22:00

WELCOME, KEYNOTE ADDRESS AND OPENING DINNER NORDIC PERSPECTIVES ON EUROPEAN SECURITY

Chair: Dr John Chipman, Director-General and Chief Executive, IISS Carl Bildt, Minister for Foreign Affairs, Sweden Bård Glad Pedersen, State Secretary, Ministry of Foreign Affairs, Norway

Saturday 20 September 2014 08:45–10:00

KEYNOTE SESSION THE INTERNATIONAL SYSTEM AND THE UKRAINE CRISIS

Chair: Adam Ward, Director of Studies, IISS Professor François Heisbourg, Chairman of the Council, IISS; Special Adviser, Fondation pour la Recherche Stratégique Dr Igor Yurgens, Chairman, Institute of Contemporary Development; Member of the Council, IISS Dr Samuel Charap, Senior Fellow for Russia and Eurasia, IISS–US 10:00–10:30

Coffee break

Agenda

10:30–11:45

FIRST PLENARY SESSION THE TRANSFORMATION OF THE GEOPOLITICAL AND GEO-ECONOMIC ORDER IN THE MIDDLE EAST

Chair: Dr Nicholas Redman, Director of Editorial; Senior Fellow for Geopolitical Risk and Economic Security, IISS Dr Barham Salih, Former Prime Minister, Kurdistan Regional Government, Iraq Professor Toby Dodge, Consulting Senior Fellow for the Middle East, IISS Roula Khalaf, Foreign Editor, Financial Times 11:45–13:00

SECOND PLENARY SESSION IRAN: TOWARDS AN ENDGAME?

Chair: Dr John Chipman, Director-General and Chief Executive, IISS Seyed Hossein Mousavian, Former Head, Foreign Relations Committee, Supreme National Security Council, Iran Professor Ghassan Salamé, Dean, Paris School of International Affairs, Sciences Po; Member of the Council, IISS Dr Gary Samore, Former White House Coordinator for Arms Control and Weapons of Mass Destruction 13:00–14:45

LUNCH

15:00–16:30

SIMULTANEOUS SPECIAL SESSIONS (FIRST SITTING)

Session 1:

THE POLITICAL, ECONOMIC AND STRATEGIC FUTURE OF UKRAINE

Chair: Dr Samuel Charap, Senior Fellow for Russia and Eurasia, IISS–US Oleksandr Chalyi, President, Grant Thorton Ukraine; former Deputy Minister for Foreign Affairs, Ukraine Dr Igor Yurgens, Chairman, Institute of Contemporary Development; Member of the Council, IISS Pavlo Sheremeta, Former Minister of Economic Development and Trade, Ukraine Dr Kataryna Wolczuk, Reader in Politics and International Studies, Centre for Russian and East European Studies, University of Birmingham Discussant: Dr Tor Bukkvoll, Senior Research Fellow, Norwegian Defence Research Establishment (FFI) Session 2:

EGYPT’S POLITICAL TRAJECTORY AND ECONOMIC PROSPECTS: REGIONAL EFFECTS

Chair: Emile Hokayem, Senior Fellow for Regional Security, IISS–Middle East Michael Wahid Hanna, Senior Fellow, The Century Foundation 10

Global Strategic Review 2014

Alia Moubayed, Senior Economist, Middle East and North Africa, Barclays Capital Islam El Tayeb, Research Associate, IISS–Middle East Session 3:

INTERNATIONAL EFFORTS TO SECURE THE CYBERDOMAIN

Chair: Eneken Tikk-Ringas, Senior Fellow for Cyber Security, IISS–Middle East Christopher Painter, Coordinator for Cyber Issues, US State Department Dr Jarno Limnell, Director of Cyber Security, Intel Sean Kanuck, National Intelligence Officer for Cyber Issues, Office of the Director of National Intelligence, US Bjørn Svenungsen, Coordinator for Cyber Issues, Ministry of Foreign Affairs, Norway Session 4:

SOUTHEAST ASIA’S ARC OF POLITICAL CONFLICT AND ECONOMIC RISK

Chair: Dr Tim Huxley, Executive Director, IISS–Asia Professor Joakim Öjendal, Professor, School of Global Studies, University of Gothenburg Hervé Lemahieu, Research Associate for Political Economy and Security, IISS Dr Panitan Wattanayagorn, Associate Professor, Department of International Relations, Chulalongkorn University Session 5:

THE CONSEQUENCES OF CRISIS: THE EUROZONE AND EUROPEAN STRATEGY

Chair: Sarah Raine, Consulting Senior Fellow for Geo-Economics and Security, IISS Camille Grand, Director, Fondation pour la Recherche Stratégique Nick Witney, Senior Policy Fellow, European Council on Foreign Relations Daniela Schwarzer, Director, Europe Program, German Marshall Fund of the United States Graham Muir, Head of Strategy and Policy, European Defence Agency Discussant: Ulf Sverdrup, Director, Norwegian Institute of International Affairs Session 6:

HYBRID CONFLICTS, NEW INSECURITIES AND THE DEVELOPING WORLD

Chair: Virginia Comolli, Research Fellow for Security and Development, IISS Agenda

Hanna Tetteh, Minister of Foreign Affairs and Regional Integration, Ghana Diana Quintero, Vice Minister of Defence for Strategy and Planning, Colombia Dr Alexander Evans, Coordinator, Al-Qaida and Taliban Monitoring Team, UN Fabrice Pothier, Head of Policy Planning, Office of the Secretary General, NATO 16:30–17:00

Coffee break

17:00–18:30

SIMULTANEOUS SPECIAL SESSIONS (SECOND SITTING)

Session 7:

RUSSIAN MILITARY MODERNISATION

Chair: Douglas Barrie, Senior Fellow for Military Aerospace, IISS Ruslan Pukhov, Director, Centre for Analysis of Strategies and Technologies Keir Giles, Director, Conflict Studies Research Centre Dr Kristian Åtland, Senior Research Fellow, Norwegian Defence Research Establishment (FFI) Dr Bettina Renz, Lecturer in International Security, University of Nottingham Session 8:

NUCLEAR POSTURES IN THE ASIA-PACIFIC

Chair: Alexander Neill, Shangri-La Dialogue Senior Fellow for Asia-Pacific Security, IISS–Asia Dr Michael Chase, Senior Political Scientist, RAND Dr Narushige Michishita, Director, Security and International Studies Program, National Graduate Institute for Policy Dr Tanya Ogilvie-White, Research Director, Centre for Nuclear Non-Proliferation and Disarmament, Australian National University Discussant: Brigadier Zahir Kazmi, Director, Arms Control and Disarmament, Joint Staff Headquarters, Pakistan Army Session 9:

COMPLEX INSTABILITY IN THE BROADER SAHEL: GEOPOLITICAL AND GEO-ECONOMIC IMPLICATIONS

Chair: Virginia Comolli, Research Fellow for Security and Development, IISS Ahmedou Ould-Abdallah, President, Centre for Strategies and Security for the Sahel Sahara; former Special Representative of the Secretary-General for West Africa, UN Jean-Claude Mallet, Special Adviser to the Minister of Defence, France; Member of the Council, IISS 12

Global Strategic Review 2014

Peteris Ustubs, Sahel Coordinator and Director for West and Central Africa, European External Action Service Dr Lori-Anne Théroux-Bénoni, Head, Institute for Security Studies, Dakar Session 10:

INTER-REGIONAL GEO-ECONOMICS: THE PACIFIC ALLIANCE AND THE ASIA-PACIFIC

Chair: Dr John Chipman, Director-General and Chief Executive, IISS José García-Belaúnde, Former Minister of Foreign Affairs, Peru Maria del Carmen Dominguez, Director of Strategic Planning, Ministry of Foreign Affairs, Chile Dr Wenguang Shao, Consulting Senior Fellow for China and International Affairs, IISS Session 11:

SYRIA: CONFLICT AND SPILL-OVER

Chair: Ellen Laipson, President and Chief Executive Officer, Henry L. Stimson Center; Member of the Council, IISS Sarah Birke, Middle East and North Africa Correspondent, The Economist Emile Hokayem, Senior Fellow for Regional Security, IISS–Middle East Dr Thomas Hegghammer, Director of Terrorism Research, Norwegian Defence Research Establishment (FFI) Session 12:

NARENDRA MODI’S INDIA

Chair: Dr Sanjaya Baru, Director for Geo-Economics and Strategy, IISS–Middle East Rahul Roy-Chaudhury, Senior Fellow for South Asia, IISS Teresita Schaffer, Non-Resident Senior Fellow, Brookings Institution Dr Habil Khorakiwala, Chairman, Wockhardt 18:30–19:30

RECEPTION

19:30–20:15

KEYNOTE SESSION STRATEGIC RISK: THE PERSPECTIVE FROM BUSINESS

Chair: Dr John Chipman, Director-General and Chief Executive, IISS Marilyn Hirsch, Global Head of Strategic Planning, AIG Andrés Rozental, Founding President, Mexican Council on Foreign Relations John Knight, Executive Vice President, Global Strategy and Business Development, Statoil 20:15–22:00

DINNER Agenda

Sunday 21 September 2014 09:15–10:30

THIRD PLENARY SESSION GLOBAL ENERGY: A STRATEGIC ASSESSMENT

Chair: Dr Pierre Noël, Sultan Hassanal Bolkiah Senior Fellow for Economic and Energy Security, IISS–Asia Dr Xavier Chen, President, Beijing Energy Club Tadashi Maeda, Senior Managing Director, Japan Bank for International Cooperation; Member of the Council, IISS Dr William Pizer, Professor of Public Policy, Duke University; former Deputy Assistant Secretary for Environment and Energy, US Department of the Treasury 10:30–11:00

Coffee break

11:00–12:15

FOURTH PLENARY SESSION A NEW COLD WAR IN ASIA?

Chair: Dr Tim Huxley, Executive Director, IISS–Asia Eric Li, Chairman, Chengwei Capital; Member of the Council, IISS Sarah Raine, Consulting Senior Fellow for Geo-Economics and Security, IISS Ichita Yamamoto, former Minister in charge of Ocean Policy and Territorial Issues, Japan 12:15–13:30

FIFTH PLENARY SESSION THE PURPOSES AND EXTENT OF WESTERN STRATEGIC AND MILITARY CAPACITY

Chair: Professor François Heisbourg, Chairman of the Council, IISS; Special Adviser, Fondation pour la Recherche Stratégique Ine Eriksen Søreide, Minister of Defence, Norway Michael Rich, President and Chief Executive Officer, RAND; Member of the Council, IISS Professor Sir Hew Strachan, Chichele Professor of the History of War, All Souls College, University of Oxford; Member of the Council, IISS 13:30–13:45

ENVOI Professor François Heisbourg, Chairman, IISS

13:45–15:00

CLOSING LUNCH

Global Strategic Review 2014

The International Institute for Strategic Studies Oslo, 19â&#x20AC;&#x201C;21 September 2014

The Global Strategic Review

CHAPTER 2

Executive summary

Ine Eriksen SĂ¸reide, Minister of Defence, Norway

Global Strategic Review 2014

Executive summary

The last time the IISS convened in Oslo, 25 years ago, coincided with the opening of the Hungary–Austria border to East Germans pushing West and the breach of the Berlin Wall. A quarter-century later, comparable questions concerning an upended European if not global order were once more the subject of discussion at the 11th Global Strategic Review (GSR), convened on 19–21 September 2014 under the rubric ‘Geopolitical Risks and Geo-economic Opportunities’.

Keynote Session on Nordic Perspectives on European Security Both Sweden and Norway are Host Nation Supporters of the GSR, which in 2013 took place in Stockholm. This year’s opening keynote session was held at the imposing Oslo City Hall and chaired by Dr John Chipman, IISS Director-General and Chief Executive. Carl Bildt, Minister for Foreign Affairs of Sweden, and Bård Glad Pedersen, State Secretary, Ministry of Foreign Affairs of Norway, presented Nordic perspectives on European security. Glad Pedersen pointed to rapid change in Europe’s security environment in both its southern and eastern Executive summary

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Bård Glad Pedersen gives his keynote address

neighbourhoods. At a time when fundamental elements of Europe’s security order are under threat because of Russia’s actions in Ukraine, it is up to NATO and EU member states to ‘safeguard the basic pillars of the international security order’, and not to abandon them. A crucial pillar is respect for international law, from which both small and large states benefit. According to the state secretary, the High North, an area of strategic interest from a Nordic perspective and one that involves Russia, shows that through cooperation, trade and confidence-building measures, conflict and a ‘race for resources’ can be avoided. However, Glad Pedersen stressed that the West must react assertively to Russia’s intervention in its Western neighbour: Ukraine was not a pawn in a game of chess but a sovereign nation with the right to determine its own path. Bildt argued that persistent instability in Europe’s neighbourhood and beyond is reordering the strategic priorities for Europe. Governments must realise that Russia has become, and will remain for the time being, a revisionist power. The implications are not limited to Europe, Bildt said. Rather, the legitimacy of the global security order is at stake

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and the foreign minister believed that addressing ‘the return of geopolitics’ and avoiding the ‘spread of global disorder’ is destined to be a long-term task. With regard to the Russia– Ukraine crisis, Bildt insisted that sanctions against Russia had to be matched by strong support for Ukraine as the country goes about economic and political reform and attempts to battle corruption. Bildt concluded that strategic realities have

(l–r) Carl Bildt, Minister for Foreign Affairs, Sweden; Dr John Chipman, DirectorGeneral and Chief Executive, IISS; and Bård Glad Pedersen, State Secretary, Ministry of Foreign Affairs, Norway

created a ‘new sense of exposure and vulnerability’ in Europe. On balance, Europe is heading towards a more difficult security future.

Keynote Session on the International System and the Ukraine Crisis The Ukraine keynote session was chaired by Adam Ward, Director of Studies of the IISS. Professor François Heisbourg, Chairman of the IISS Council, argued in his address that the Ukraine crisis is fundamentally different from other post-Cold War crises because the formal incorporation of territory by a predator state was an ‘exceedingly rare act’, signalling that Russia is exiting the post-Cold War system. In Heisbourg’s opinion, this emanated from the widely held Executive summary

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(l–r) Dr Igor Yurgens, Chairman, Institute of Contemporary Development; Member of the Council, IISS

view in Moscow of the ‘Versailles-like punishment of Russia’ following the collapse of the Soviet Union. In Moscow’s act of rebellion against this punishment, the ‘West’s rulebook no longer applies’. The crisis would likely last for a long time because, ‘it is not about [Russian President Vladimir] Putin, not even about the regime, it is about Russia’. The West’s strategy should be to strengthen Ukraine just as Finland and Yugoslavia were supported by the West in the Cold War. The analogy also suggests one important concession: the ‘goal should be a strong neutral Ukraine’. Ruling out NATO membership just might be part of a solution that Moscow could accept. Heisbourg added that leaving the NATO question ‘in abeyance … can only worry the Russians without reassuring the Ukrainians’. Samuel Charap, IISS Senior Fellow for Russia and Eurasia, agreed with Heisbourg on the problematic nature of a sanctions strategy: it ‘focused largely on punishing Russia rather than addressing problems that led to this impasse’. There is a need for balance between sanctioning bad behaviour and leaving doors open to a solution. IISS Council Member Igor Yurgens, who is Chairman of the Moscow-based

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Institute for Contemporary Development, assessed the pluses and minuses of the crisis from Moscow’s perspective. On the positive side, the possibility of ruling out NATO membership for Ukraine might be on the table, and Putin has boosted his popularity and consolidated his leadership. On the negative side, this has come at a huge economic price – possibly $200 billion in 2014 alone. There will be a creeping renationalisation

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(l–r) Professor François Heisbourg, Chairman of the Council, IISS; Special Adviser, Fondation pour la Recherche Stratégique; Adam Ward, Director of Studies, IISS; and Dr Samuel Charap, Senior Fellow for Russia and Eurasia, IISS–US

of oil and gas industries, further damaging the economy, as a consequence of sanctions. Russia meanwhile finds itself in a weak overall position: it has 200 million people and 2% of global GDP, compared to the ‘consolidated West’s’ 1bn people and 40% of global GDP. Comments from the floor were balanced between those who doubted that anything like a no-NATO-membership guarantee would stop Russia’s depredations, and those who wondered if such a concession offered much earlier could have headed off the conflict. There was also a question of whether the eastward expansion of EU influence is considered, by Russia, to be as threatening as NATO expansion. In response, Yurgens reiterated that any revived Association Agreement between the EU and Ukraine needed to include special Executive summary

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(l–r) Dr Barham Salih, Former Prime Minister, Kurdistan Regional Government, Iraq; Dr Nicholas Redman, Director of Editorial and Senior Fellow for Geopolitical Risk and Economic Security, IISS

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provisions for the exchange of goods, capital and people across the Ukraine–Russia border. More broadly, the West might contain Russian adventurism, but it should shed any illusions about solving Russia’s internal problems.

First Plenary – The Transformation of the Geopolitical and Geo-economic Order in the Middle East The rise of the Islamic State of Iraq and al-Sham (ISIS) has both exposed and exacerbated the grave structural weaknesses and political contradictions of Middle Eastern states. The crisis of legitimacy of governing Arab elites and the weakening of states have created vacuums increasingly filled by extremist, revisionist actors. Former Iraqi deputy prime minister Dr Barham Salih noted that the challenge to post-First World War borders in the Middle East did not come from communities with old grievances but from a new, extremist Islamist movement, namely ISIS. Roula Khalaf, Foreign Editor of the Financial Times, reflected on the dashed hopes of the Arab uprisings and referred to the region as a ‘comprehensive mess’. Failing states such as Syria and Iraq are cohabiting with the

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increasingly autocratic Gulf states and regional dynamics, she explained, are shaped by an Iranian–Saudi cold war. This is taking dangerous and enduring sectarian forms and is exacerbated by the nuclear talks. The struggle over the future of political Islam – with Saudi Arabia, the UAE and

(l–r) Professor Toby Dodge, Consulting Senior Fellow for the Middle East, IISS; and Roula Khalaf, Foreign Editor, Financial Times

Egypt vying against the Qatar- and Turkey-backed Muslim Brotherhood – is also a key factor. Such fault lines complicate any sustainable response to ISIS. Toby Dodge, Senior IISS Consulting Fellow for the Middle East, insisted that the combination of weak, failing and failed states was the defining strategic issue in the Middle East. As a case in point, he detailed the failings of the Iraqi state since the US invasion of 2003 and explained how key Sunni communities, having lost trust in the central government, turned to sectarian and communal players for protection, order and services. Rather than hard partition into homogenous states, he predicted that no new, homogenous state would emerge from the current turmoil. Salih, Khalaf and Dodge agreed that ISIS was a symptom of the failure of state-building, ailing societies and Western policies in the Arab world. Corruption, crises of institutions and Executive summary

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(l–r) Seyed Hossein Mousavian, Former Head, Foreign Relations Committee, Supreme National Security Council, Iran; Professor Ghassan Salamé, Dean, Paris School of International Affairs, Sciences Po; Member of the Council, IISS; and Dr Gary Samore, Former White House Coordinator for Arms Control and Weapons of Mass Destruction

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lack of services have shaken the trust of citizens in their states and benefitted extremist players. ISIS’s rise was no surprise. The response to ISIS will be challenging: Salih described the coalition against ISIS as ‘the alliance of the unwilling and the hesitant’. Khalaf described ISIS as a virus and Syria as its biggest victim but recognised the complexity of fighting ISIS in Syria. Intervention in Iraq was relatively easy given the request of the government and the presence of local partners, two ingredients sorely missing in Syria. Dodge advised that the solution in Iraq requires inclusive governance and the decentralisation of power, not just resorting to force.

Second Plenary – Iran: Towards an Endgame? The Second Plenary Session assessed the prospects of converting the interim nuclear deal between Tehran and the P5+1 powers – composed of China, France, Germany, Russia, the United Kingdom and the United States – into a final one. The speakers held contrasting views on how achievable a goal this is. However, all agreed that the complexity of events in the region is such that war against Iran over its nuclear capacity and ambitions is now less likely. For now, no major player, 24

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including Israel, has a clear interest in initiating a major stateto-state armed confrontation in the region. Seyed Hossein Mousavian, the former Head of Iran’s Foreign Relations Committee, stated that a return to sanctions

Dr Gary Samore, Former White House Coordinator for Arms Control and Weapons of Mass Destruction

policy would result in failure. By contrast, the interim deal has delivered remarkably positive results which must be safeguarded, including Iran’s moves to convert enriched uranium to oxide fuel, halt the installation of centrifuges, and commit to no further reprocessing of nuclear fuel rods. Mousavian went on to explain that a broader dialogue, on the basis of a common agenda with the West over the security deterioration in Iraq as well as Afghanistan, might help bridge deep-rooted mistrust between the parties. He stressed the political nature of the impasse with regard to the nuclear negotiations. Professor Ghassan Salamé, Dean of the Paris School of International Affairs at Sciences Po and Member of the IISS Council, reminded delegates that one of the key tenets that had helped negotiators reach an interim agreement was the decision to isolate nuclear talks from other geopolitical concerns. Any linkage would be anathema to the way in Executive summary

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(l–r) Oleksandr Chalyi, President, Grant Thorton Ukraine; former Deputy Minister for Foreign Affairs, Ukraine; Dr Igor Yurgens, Chairman, Institute of Contemporary Development; Member of the Council, IISS; and Pavlo Sheremeta, Former Minister of Economic Development and Trade, Ukraine

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which the nuclear talks have been conducted so far and largely superficial. More fundamentally, competing interests and visions over developments in Syria, Gaza and Yemen are not favourable to a broader US–Iran strategic reconciliation in the region. Salamé concluded that a deal was still possible but the more likely alternative would be a decision to roll over negotiations or, short of this, a return to sanctions policy. Dr Gary Samore – Former White House Coordinator for Arms Control and Weapons of Mass Destruction – lauded the ‘sensible ways’ in which negotiators have learned to engage with each other over the course of the negotiations. This includes a shift towards US–Iranian bilateral meetings because the P5+1 format was too cumbersome. Any deal would therefore have to be between Washington and Tehran and subsequently ratified by the broader P5+1 grouping. However, the two countries are still very far apart on agreeing Iran’s status as a ‘threshold state’ in the non-proliferation regime. Washington has demanded Iran reduce its existing enrichment capacity and cap it for 20 years. Iran continues to insist on building its civilian nuclear capacity through a much larger industrial-scale programme. A compromise is still possible, but in Samore’s view neither side is in a position to make fundamental concessions in order to achieve a final

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deal. The status quo is not perfect, but remains tolerable for all sides. We may therefore expect to see a renewal of an interim agreement involving additional actions for Tehran in return for further sanctions relief.

Special Session One – The Political, Economic and Strategic Future of Ukraine Four themes dominated the discussion of Ukraine’s strategic future. Firstly, it was argued that reconciliation between the east and west of the country is imperative to overcome long-standing divisions in society and to transfer

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(l–r) Dr Samuel Charap, Senior Fellow for Russia and Eurasia, IISS–US; Dr Tor Bukkvoll, Senior Research Fellow, Norwegian Defence Research Establishment (FFI); and Dr Kataryna Wolczuk, Reader in Politics and International Studies, Centre for Russian and East European Studies, University of Birmingham

the conflict we have witnessed in 2014 from the military to the political realm. The second theme was the need for fundamental political and economic reform. Arguably, the authorities have a unique chance because the Maidan protests were mainly against the corrupt political model; society has thus far shown tolerance or even appetite for change. However, Ukraine seems to lack the capacity and strategy to effect a fundamental overhaul of the oligarchic and political model. The best prospect seems to rest with the EU: Ukrainian negotiators requested that the Association Agreement (AA) and the Deep and Comprehensive FreeTrade Agreement (DCFTA) commit Ukraine to legally Executive summary

(l–r) Islam El Tayeb, Research Associate, IISS–Middle East; and Alia Moubayed, Senior Economist, Middle East and North Africa, Barclays Capital

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binding change, because they recognised that external pressure was needed to overcome resistance to reform. Implementation of the agreements, which will be delayed and may never be completed, would bring Ukraine into line with up to 90% of the single market’s rules. However, there is concern that the EU is not ready to extend the assistance that Ukraine will need to implement the AA in crisis conditions. The third theme was urgent challenges. Ukraine is unprepared for winter. It has stopped importing gas from Russia and has barely enough in storage or domestic production to meet internal demand. One solution would be to burn more coal, but 80% of the country’s coal comes from the Donbas. Electricity imports will also be needed but Europe cannot provide them. Thus there is a pressing need to resolve energy-trade disputes with Russia. Beyond the winter, Ukrainian and EU officials have until the end of 2015 to reach agreement with Russia on how Ukrainian–Russian trade will be conducted once Ukraine opens to EU goods under the DCFTA. Without this, many Ukrainian enterprises will be cut off from their traditional market in the east. This relates to the final theme: the need for reconciliation between Ukraine and the EU and US on one hand, and Russia on the 28

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(l–r) Emile Hokayem, Senior Fellow for Regional Security, IISS–Middle East; and Michael Wahid Hanna, Senior Fellow, The Century Foundation

other. Ukraine cannot be stabilised without a constructive contribution from Russia – economically, financially and politically. This in turn seems unlikely without some agreement that would address Russia’s concerns about the possibility of further NATO enlargement.

Special Session Two – Egypt’s Political Trajectory and Economic Prospects: Regional Effects Participants depicted the current political mood in Egypt following the 2011 revolution and subsequent military takeover as one of fatigue and disillusionment with the democratic process. The speakers agreed regime stability is presently considered the most important priority. Although the Sisi regime is still in the process of consolidation, it is not in danger of being overthrown. Power brokers are divided on the future role of Islamist players, with one camp calling for their total eradication and another demanding their gradual political integration. It was noted that political repression, which initially targeted the ousted President Muhammad Morsi and Muslim Brotherhood supporters, is now expanding to other opposition and civil activists. The overthrow of old operators has also led to a fractured security landscape. In Executive summary

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(l–r) Eneken Tikk-Ringas, Senior Fellow for Cyber Security, IISS–Middle East; Bjørn Svenungsen, Coordinator for Cyber Issues, Ministry of Foreign Affairs, Norway; and Christopher Painter, Coordinator for Cyber Issues, US State Department

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particular, there is growing insecurity along the borders with Sudan, Libya and Gaza because of discontent among border communities: this is reflected in increased trafficking of humans, arms and illicit goods. Delegates agreed it is too early to predict the success of Egypt’s recent economic reforms. Gains from the energy subsidy reform could be channelled toward health and education. Other fiscal reforms, such as imposing the 5% income tax on high earners, are significant and reflect the regime’s commitment to a new paradigm: enshrining social justice in economic development. In the long term, Egypt’s two main challenges consist of tackling its high levels of poverty and food insecurity.

Special Session Three – International Efforts to Secure the Cyber Domain The cyber domain now stands at a critical juncture in terms of technology and policy, with technological developments outpacing policy. Speakers agreed that decisions taken now in both arenas and in the intersection between them would have an impact for decades to come. There have never been a greater number of damaging cyber incidents, with more actors and more targets demonstrating sophisticated attack 30

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(l–r) Dr Jarno Limnell, Director of Cyber Security, Intel; and Sean Kanuck, National Intelligence Officer for Cyber Issues, Office of the Director of National Intelligence, US

tools and vectors. The cyber domain is becoming militarised with a trend towards more strategic use of military cyber tools amid a climate of mistrust. The current inability of states to determine adequately what military cyber capabilities other states possess creates conditions for an escalatory spiral with implications far beyond the purely military dimension. On a more positive note, there is now more top-level policy understanding of cyber issues, which are no longer seen as matters purely for the technical community, and there has been progress in international negotiations on cyber governance and cyber security. There are still major differences of approach between the US and its allies who argue for the status quo and states such as China and Russia advocating a top-down governance model focused on information security – i.e. control of online content. Progress had been made at the UN where the Governmental Group of Experts had been able to agree on the applicability of existing international law to the cyber domain. A key concern would be to determine what constitutes acceptable conduct in peacetime and how behaviour could be monitored and policed – such as not targeting another state’s critical national infrastructure or Computer Emergency Response Teams. Executive summary

(l–r) Professor Joakim Öjendal, School of Global Studies, University of Gothenburg; and Dr Tim Huxley, Executive Director, IISS–Asia

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International diplomacy still hankers after treaties but a pragmatic approach aimed at building consensus on specifics and the voluntary adoption of emerging best practice seems a more realistic aspiration. No state can secure the cyber domain on its own and the cyber domain now affects all aspects of human life.

Special Session Four – Southeast Asia’s Arc of Political Conflict and Economic Risk The speakers at this session addressed political changes in three countries in mainland Southeast Asia: Cambodia, Myanmar and Thailand. As well as the nature of the changes – embedded, it was argued, in a regional political paradigm of constrained democracy – the discussion centred on their impact on relations with external powers, and implications for investment risk. Thailand faced its 13th successful coup in May. Local opinions on the coup have not been as condemnatory as in the West: many Thais see the military’s reputation for efficient reform and restoration of order as part-justification for its intervention in public life. However, a second stage of political reform could be at risk if the economy fails to improve next year – economic stimulus is thus likely. On a more fundamental level, the re-instatement of military rule may 32

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(l–r) Dr Panitan Wattanayagorn, Associate Professor, Department of International Relations, Chulalongkorn University; and Hervé Lemahieu, Research Associate for Political Economy and Security, IISS

do little to quell the divisions and political malaise afflicting the country. While the coup’s full impact on relations with external powers is not yet clear, it is unlikely that it will lead to a substantial deterioration in its relationship with Washington – such as a cancellation of next year’s joint military Cobra Gold exercise – as this could open the door for China to build a stronger relationship with Thailand. Myanmar’s transition from a military dictatorship to a more democratic state has been ongoing since 1993, a fact often forgotten when assessing the reform trajectory of the present government. Expectations that a true democracy will emerge soon should be tempered by the existence of fairly intractable constitutional red lines limiting the extent of political participation. Nevertheless, reforms have had a profound impact on the rebalancing of Myanmar’s foreign relations, with Western powers lifting most sanctions. China remains a hugely important neighbour, but both the extent of its influence under military rule and subsequent decline have been overstated. In Cambodia, the 1990s post-conflict democratic transition stalled, enabling a system where the ruling Cambodian People’s Party (CPP) integrated itself deeply into the economy and bureaucracy. Despite a controversial 2013 election, Cambodia is currently stable due to a CPP deal with the Executive summary

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(l–r) Graham Muir, Head of Strategy and Policy, European Defence Agency; Daniela Schwarzer, Director, Europe Program, German Marshall Fund of the United States; and Sarah Raine, Consulting Senior Fellow for GeoEconomics and Security, IISS

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opposition. The CPP is unlikely to give up power if defeated at the ballot box at the next election in 2018, given the country’s ‘winner takes all’ political culture. However, the country has a strong interest in a safe investment environment despite potential political turmoil in 2017–18. Although the CPP was installed by Vietnam, Phnom Penh has more recently sided with China against ASEAN over the South China Sea, where Beijing and Hanoi are adversaries.

Special Session Five – The Consequences of Crisis: the Eurozone and European Strategy Participants heard a familiar listing of the challenges facing Europe, but were also able to identify some positive indicators for the future. On the financial front, the Eurozone crisis has left a divisive legacy and substantial risks remain: debt levels are high and economic growth has been slow with high levels of youth unemployment. The crisis has both occupied leaders’ attention and restricted resources. As a result, the EU was accused in the session of turning its so-called ‘comprehensive approach to crisis management’ into an excuse to give up on a greater strategic vision. In defence and foreign policy, Europe has persistently failed to meet its own targets in terms of defence spending, capabilities and coordination. A Europe 34

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resting on these unsound foundations suddenly had to face the Ukraine crisis and a Russia that could no longer be viewed as a strategic partner. Previously, Europe had proceeded on the basis that its neighbours, whether to the east or south, wanted to be ‘like us’. Sanctions on Moscow have added to Europe’s economic and financial woes. It was felt that NATO’s recent Wales summit had made important decisions to improve military readiness and

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(l–r) Camille Grand, Director, Fondation pour la Recherche Stratégique; Nick Witney, Senior Policy Fellow, European Council on Foreign Relations; and Ulf Sverdrup, Director, Norwegian Institute of International Affairs

flexibility, and to bolster both reassurance and deterrence, while also seeking – less convincingly – to reverse the downward trajectory of defence spending. Earlier, the EU’s December 2013 summit had been significant in reasserting a defence focus. In a broader sense, participants were reminded that Europe had pulled together – albeit in crisis mode – to save the euro. Moreover, a new team of top officials in Brussels had begun a ‘reboot’ of EU foreign policy. However, the sense of the session was that much more action is needed to improve European cooperation in all areas of policy. There remains a contradiction between the combined clout that could be gained from strengthening Europe-wide institutions and the tendency of governments to cling on to what one participant called ‘the illusion of sovereignty’ – an arresting phrase guaranteed to provoke euro-sceptics across the continent. Executive summary

(lâ&#x20AC;&#x201C;r) Hanna Tetteh, Minister of Foreign Affairs and Regional Integration, Ghana; and Diana Quintero, Vice Minister of Defense for Strategy and Planning, Colombia

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Special Session Six â&#x20AC;&#x201C; Hybrid Conflict, New Insecurities and the Developing World This session explored the ways in which different types of nonstate armed groups have interacted and increasingly merged in Africa, Latin America and Eastern Europe. Globalisation has allowed activities such as drugs and human trafficking, the spread of militant radicalisation and cyber crime to take on an increasingly transnational dimension which threatens regional security and stability. Islamist groups display increasing hybridity and have successfully involved a greater number of nationalities in their core operations. This international dimension has been used to good propaganda effect by groups such as ISIS. The use of the Internet as a means of radicalisation has also increased the exchange of tactics and funding mechanisms between different Islamist groups. Panellists agreed that hybrid conflict is more likely in countries with weak or divisive economic and state structures, such as Ukraine. It was pointed out that the use of proxy nonstate armed groups by state actors is a long-standing issue in international affairs, but one that has acquired new relevance as a form of hybrid warfare that expands options to surprise adversaries and avoid detection. 36

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Panellists emphasised development as a necessary condition for defeating hybrid armed groups. It was noted that political reforms, inclusive civilian partnerships and improved infrastructure have been used successfully in some states affected by hybrid conflict.

Special Session Seven – Russian Military Modernisation In the context of concerns over Russia’s military actions in

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(l–r) Virginia Comolli, Research Fellow for Security and Development, IISS; Dr Alexander Evans, Coordinator, Al-Qaida and Taliban Monitoring Team, UN; and Fabrice Pothier, Head of Policy Planning, Office of the Secretary General, NATO

Ukraine, this session on Russian military modernisation generated a wide-ranging, detailed and energetic discussion. The current round of military-reform initiatives began after the short 2008 war with Georgia; this exposed Russia’s forces to combat against troops equipped with modern equipment and armaments. Improved finances after the mid-2000s spurred the current reforms. Russia’s forces are now very dissimilar to those before 2008. Moving away from ambitions to deploy far out-of-area, Russia’s armed forces are instead being shaped for regional and local contingencies as the result of key developments in terms of personnel, training and equipment. Russia is thought to have between 800,000–850,000 personnel in its armed forces, comprising a mixture of conscripts and contract personnel. However, the country is still grappling with the effects of the demographic slump Executive summary

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(l–r) Ruslan Pukhov, Director, Centre for Analysis of Strategies and Technologies; Keir Giles, Director, Conflict Studies Research Centre; and Douglas Barrie, Senior Fellow for Military Aerospace, IISS

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of the 1990s; this reduced the available pool of manpower. The aspiration is to recruit more contract-service personnel, though recruitment targets have so far remained simply that. Personnel are now better paid and there is renewed pride in military service; however, the management of conscript personnel remains an issue. The armed forces are receiving more capable and modern equipment, but problems remain in the defence industry’s capacity to deliver the numbers planned. Air and naval forces have seen new capabilities introduced, as have Russia’s strategic rocket forces. With personnel being a key objective of the reform process, personal military equipment has seen substantial change, and there have been notable developments in personal load-carrying equipment, body armour and personal communications, among others. However, the benefits of these reforms for the broader armed forces are not as readily apparent as they are for Russia’s rapid-reaction forces. With rising wages, young people are being attracted to the defence-industry sector; the gap is in the middle, reflective of problems inherited from the 1990s. The focus is on increasing the ability to serially produce advanced equipment and also introduce modern processes, such as modular construction in shipbuilding, to better match building techniques common elsewhere.

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(l–r) Dr Kristian Åtland, Senior Research Fellow, Norwegian Defence Research Establishment; and Dr Bettina Renz, Lecturer in International Security, University of Nottingham

Special Session Eight – Nuclear Postures in the Asia–Pacific This session addressed the principle nuclear-proliferation challenges in Asia. In particular, it examined China’s technological advance and doctrinal inflections; Pakistan’s nuclear programme, which is the fastest growing in the world; and ongoing concerns regarding North Korea’s nuclear trajectory. It was suggested that, paradoxically, US President Barack Obama’s promulgation of a world without nuclear weapons has been met with increased nuclear developments in Asia. The expansion and modernisation of nuclear-weapons programmes is occurring against a backdrop of rising regional tensions, doctrinal dissonance, weak command and control systems and a worrying absence of crisis-stability mechanisms. The speakers highlighted several situations in which strategic miscalculation could lead to a troubling escalation. The first of these potential flashpoints to be explored was the relationship between China and the US. China is undertaking to modernise its nuclear arsenal, seeking to develop a lean and effective deterrent force. However, there is a lack of communication between the US and China on doctrinal issues. The US discredits China’s no-firstuse policy and criticises what it perceives to be excessive Executive summary

(l–r) Brigadier Zahir Kazmi, Director, Arms Control and Disarmament, Joint Staff Headquarters, Pakistan Army ; and Dr Narushige Michishita, Director, Security and International Studies Program, National Graduate Institute for Policy Studies

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secrecy. Questions were also asked about US commitment to its security guarantees in the region. China’s growing conventional assertiveness is combined with a bellicose North Korea, where capabilities are also difficult to assess. Since its third nuclear test in 2013, North Korea has been presumed capable of weaponising its stockpile of nuclear material, although any device may have low reliability. Capabilities in India and Pakistan are more transparent, but there is an urgent need for risk reduction: nuclear rivalry is driven by declaratory policies and neither side has the other’s measure. A key theme throughout the session was the clear gaps in bilateral and multilateral dialogues on these issues. Habits of communication and interchange need to be enhanced in Asia, possibly in the form of an Asian nuclear dialogue. Definitions of deterrence and how the concept is perceived by different parties in the region also need to be addressed.

Special Session Nine – Complex Instability in the Broader Sahel: Geopolitical and Geo-economic Implications Although Mali returned to civilian rule following the coup in 2012 and a civil war in the north, the country has yet to see stability. The conflict there has required a regional and international response which, albeit partly successful, has 40

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revealed a number of shortcomings, not least the dichotomy between rhetoric and practice, the political limitations of cross-departmental AU–ECOWAS cooperation, and the need for a much-awaited African rapid-response force. It was made clear in the session that, although Mali is the epicentre of instability, the Sahel faces a growing, regionwide problem linked to the failure of public institutions, underdevelopment, unresolved ethnic-minority grievances, and the cultural and social divides relating to North and

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(l–r) Dr Michael Chase, Senior Political Scientist, RAND; Alexander Neill, Shangri-La Dialogue Senior Fellow for Asia-Pacific Security, IISS–Asia; and Dr Tanya Ogilvie-White, Research Director, Centre for Nuclear Non-Proliferation and Disarmament, Australian National University

sub-Saharan Africa. The Sahel is not insulated from events unfolding further afield, such as in Somalia, Egypt and even Syria. In particular, the crisis in Libya has acted as an accelerant of insecurity across the broader region – not least because many militants have relocated to its southern region. This trend reflects the broadening of the jihadi threat, a concern that is increasingly widespread across North and West African countries. Pre-existing tensions among key regional players, such as between Morocco and Algeria, are undermining prospects for stabilisation. The EU – the region’s largest donor – faces the challenge of coordinating its own Sahel strategy at a time when insecurity in Ukraine, Iraq and Syria has overshadowed the Sahel crisis. There is a risk that regional leaders will Executive summary

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(l–r) Virginia Comolli, Research Fellow for Security and Development, IISS; Ahmedou OuldAbdallah, President, Centre for Strategies and Security for the Sahel Sahara; former Special Representative of the Secretary-General for West Africa, UN; and Jean-Claude Mallet, Special Adviser to the Minister of Defence, France; Member of the Council, IISS

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not implement promised reforms in the face of diminishing Western interest. Going forward, the following were deemed to be key factors in determining the stability of the region: the ongoing talks in Algeria, continuing attacks against peacekeepers, the expansion of Boko Haram, instability in Libya, elections in Burkina Faso and Niger and the risk of Ebola spreading northward.

Special Session Ten – Inter-Regional Geo-Economics: The Pacific Alliance and the Asia–Pacific This session analysed the growing links between the four countries of the Pacific Alliance trade bloc – Chile, Peru, Colombia and Mexico – and the Asia–Pacific. It was argued that previous integration projects in Latin America have failed because of a prioritisation of proximity over affinity of political and economic strategies. Crises in the vicinity of the Andean countries were cited as examples of why the principle of proximity is not enough to form strong integration movements. Pacific Alliance countries, on the other hand, have common ideas about globalisation and are among the most open and fastest-growing economies in the region. It was pointed out that the integration being pursued by the Pacific Alliance is broader than just trade, also encompassing

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(l–r) Peteris Ustubs, Sahel Coordinator and Director for West and Central Africa, European External Action Service; and Dr Lori-Anne Théroux-Bénoni, Head, Institute for Security Studies, Dakar

people, services and the increasing competitiveness of the bloc’s small and medium companies – for example through visa wavering and integration into global value chains. To develop competitiveness, the countries of the bloc are also investing in infrastructure projects such as ports, airports and railways. The participants agreed that the Pacific Alliance is working towards becoming a hub of interaction between Latin America and Asia. This is attracting growing interest from neighbours – not only Costa Rica and Panama, who are on their way to becoming members of the new bloc, but also among private-sector companies in Brazil. The largest economy in the Asia–Pacific, China, sees the Pacific Alliance as a business opportunity. Latin America as a whole has already seen substantial Chinese investments in the agriculture and infrastructure sectors. Chinese firms have committed to investing in transportation infrastructure in a bid to reduce shipping costs and diversify trade with the regional bloc.

Special Session Eleven – Syria: Conflict and Spill-Over The rise of ISIS is a symptom of a multi-front war in Syria and a polarised regional landscape. The brutality of the Assad regime, the failure of the mainstream Syrian opposition Executive summary

(l–r) Dr Wenguang Shao, Consulting Senior Fellow for China and International Affairs, IISS; and Maria del Carmen Dominguez, Director of Strategic Planning, Ministry of Foreign Affairs, Chile

(l–r) Dr John Chipman, Director-General and Chief Executive, IISS; and José García-Belaúnde, Former Minister of Foreign Affairs, Peru

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and the rapidly shrinking space for grassroots activism have created a power vacuum increasingly filled by radical forces. Where support for the Assad regime remains, it is largely attributed to the lack of viable alternatives. Similarly, increased support for the Jabat al-Nusra, ISIS and others is largely a result of their superior funding and organisation, rather than ideological commitment. The role played by Iran and the Gulf states in supporting their respective local partners leaves little prospect for a clean victory. Nonetheless, panellists agreed that the primary drivers of the conflict remain local. For now, ISIS is primarily 44

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(l–r) Dr Thomas Hegghammer, Director of Terrorism Research, Norwegian Defence Research Establishment (FFI); and Sarah Birke, Middle East and North Africa Correspondent, The Economist

(l–r) Ellen Laipson, President and Chief Executive Officer, Henry L. Stimson Center; Member of the Council, IISS; and Emile Hokayem, Senior Fellow for Regional Security, IISS Middle East

concerned with local consolidation rather than attacks against the far enemy, but Western strikes may compel the group to refocus. Western involvement has often validated the jihadi narrative and motivated new recruits to join the fight. Policy options, including containment in Syria and creating an offramp for the end of a mission in Iraq, were deliberated.

Special Session Twelve – Narendra Modi’s India This session took stock of Prime Minister Narendra Modi’s first 100 days in power and assessed prospects for change and continuity to 2019. For the first time in three decades, Executive summary

(l–r) Dr Habil Khorakiwala, Chairman, Wockhardt; and Dr Sanjaya Baru, Director for Geo-Economics and Strategy, IISS–Middle East

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India is ruled by a single, absolute-majority government, under the right-of-centre Bharatiya Janata Party (BJP). While the full scope of Modi’s reforms will only take shape in 2015, his first step has been to deflate unreasonable expectations. He has staked his success on incremental results, rather than untenable promises and quick fixes. The government’s liberalisation programme aims to restore annual GDP growth to over 7% by promoting investment and manufacturing, as well as consumption and the welfare of the rising middle class. However, it remains to be seen whether bureaucracies and union states can work alongside, and not against, the administration to bring about this change. Tactical, rather than strategic, shifts will likely characterise the Modi government’s outreach to South Asian neighbours. India remains committed to normalising ties with Pakistan. However, the government has signalled that it will only revive a dormant dialogue on its own terms, and at a time and pace of its own choosing. In practice, Pakistan’s internal turmoil and rising ceasefire violations in Kashmir, coupled with security uncertainties in Afghanistan, will continue to shape India’s most important bilateral relationship. Further afield, Modi has travelled to Japan and Australia, hosted China’s president, and travelled to Washington at the 46

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(l–r) Teresita Schaffer, Non-Resident Senior Fellow, Brookings Institution; and Rahul Roy-Chaudhury, Senior Fellow for South Asia, IISS

end of September. This ‘foreign-policy blitz’ signals Modi’s efforts to portray India as open for business, especially since trade now accounts for half of its GDP. India will continue to assert its strategic autonomy by leveraging its position in the Indo–Pacific, particularly in the context of a renewed Western focus on Asia. The US has lowered its short-term expectations and now looks for convergence rather than a meeting of minds on regional strategy. Conversely, Western diplomats can only support – not promise – the inward investment Modi seeks for India.

Keynote Session on Strategic Risk: The Perspective from Business The Saturday-evening keynote featured three global business leaders: Marilyn Hirsch, Global Head of Strategic Planning at AIG; John Knight, Statoil Executive Vice President for Global Strategy and Business Development; and Andrés Rozental, Founding President of the Mexican Council on Foreign Relations. Each shared his or her perspective on crafting a robust corporate foreign policy to deal with the exigencies and demands posed by changing patterns in international relations. Marilyn Hirsch emphasised AIG’s need for real-time and forward-looking evaluation of political and economic risk, Executive summary

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(lâ&#x20AC;&#x201C;r) Marilyn Hirsch, Global Head of Strategic Planning, AIG; Dr John Chipman, DirectorGeneral and Chief Executive, IISS; AndrĂŠs Rozental, Founding President, Mexican Council on Foreign Relations; and John Knight, Executive Vice President, Global Strategy and Business Development, Statoil

a lesson underlined during the 2008 global financial crisis, which necessitated a multi-billion-dollar US government takeover of the company. Since then, the global insurer has returned to profitability but remains, according to Hirsch, a complex international business exposed to both countrylevel and transnational risks through its operations in over 90 countries. The company has had to develop a corporate strategy for crises and political transitions as varied and geographically dispersed as those taking place in Egypt, Thailand, Russia and Ukraine, to name a few. Enhanced due diligence, if managed correctly, can also serve to identify geopolitical opportunity. In this regard, Hirsch reflected on the potential opportunity to insure an aspiring, well-educated and growing market of potential customers in Iran, should the country continue to normalise its relations with Western powers and re-engage with international markets. John Knight acknowledged a growing consensus among Statoil executives that heightened geopolitical and investment risk, volatile energy costs and prices, and the emergence of new global players with ever-larger energy and geopolitical footprints are profoundly reshaping the industry. The

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rise of unconventional hydrocarbons and the uncertainty generated by the prospect of US energy self-dependence have furthered that belief. Statoil has set about restructuring its strategy department with an emphasis on optionality and resilience to better cope with the ‘age of the unthinkable’. The energy major now has teams in place to assess threats to its

(l–r) Andrés Rozental, Founding President, Mexican Council on Foreign Relations; and John Knight, Executive Vice President, Global Strategy and Business Development, Statoil

business operations and market capitalisation in terms of country and transnational risk, and deploys a third unit to develop a geopolitical strategy tailored to these assessments. Significantly, Statoil has also undertaken to externalise its risk analysis to challenge and cross-check its views of strategic change in the world. This priority was reflected in Statoil’s decision to become a corporate member of the IISS. Andrés Rozental spoke of the top-ten risks of conducting business globally, and approached these thematically. At the global level these included, in his view, an emerging power vacuum marked by the increasing absence of an efficient ‘global crisis manager’ in the shape of the United States and set in parallel with the rise of China as a great power. At the local level, substantial risks emanate from the rising number of young people in the world. This demographic trend Executive summary

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(l–r) Dr Xavier Chen, President, Beijing Energy Club; Dr Pierre Noël, Sultan Hassanal Bolkiah Senior Fellow for Economic and Energy Security, IISS– Asia; Tadashi Maeda, Senior Managing Director, Japan Bank for International Cooperation; Member of the Council, IISS; and Dr William Pizer, Professor of Public Policy, Duke University; former Deputy Assistant Secretary for Environment and Energy, US Department of the Treasury

presents both a market opportunity and a potential source of further global political volatility. Social unrest in authoritarian countries, problems related to cyber attacks and espionage, religious extremism and the consequences of a slowdown in growth in key emerging markets could all exacerbate these overarching trends.

Third Plenary – Global Energy: A Strategic Assessment The panellists explored opportunities and hurdles faced by the two emerging strategic energy relationships facing Northeast Asia: that with Russia and that with North America. Dr Xavier Chen analysed the potential role of Russian energy in the region, focusing on the question of why the energy trading links between Russia and Northeast Asia have traditionally been weak, despite geographic proximity and demand–supply complementarity between the two regions. This complementarity has recently taken on greater significance for Russia, which faces the prospect of economic sanctions over its actions in Ukraine. Dr Chen suggested three factors limiting the rapid acceleration in intra-regional energy relations. The first of

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these was the limited pipeline network between Russia and Northeast Asia: currently, bilateral pipelines only exist between Russia and China, with territorial disputes and the instability of North Korea impeding pipeline construction with Japan and South Korea, respectively. The second was Russia’s limited domestic technical and production capacity in ramping up supply – production levels are declining in Russia, and questions have been raised over Gazprom’s ability to build processing plants and construct pipelines in a timely manner. Finally, as a late entrant to the Asian energy market, Russia has to compete with alternative energy sources in the region, among them the oil and gas pipelines from Central Asia and Myanmar, cheap and abundant domestic coal in China, and rising liquefied natural gas (LNG) supplies from the Middle East, Australia and, in future, the United States and Canada. Tadashi

Maeda

pointed

out

that,

although

the

United States could probably commence unconventional hydrocarbon exports to Japan around the same time as the new Russo-Chinese pipeline is completed (around 2018), an outdated 1938 legal framework for US gas exports, along with the additional costs of delivering shale gas using the US’s existing pipeline distribution network – which would force exports via the Gulf of Mexico and the Panama Canal rather than via newly constructed pipelines to the West Coast – could pose regulatory and cost hurdles. Potential LNG exports from Canada were being hindered by First Nations and tax issues, while Alaskan LNG supply to Asia was unlikely to come on-stream before 2023. Nonetheless, Maeda noted that the gradual restarting of Japan’s nuclear power plants following the Fukushima nuclear accident would act against Russian supply prospects, as would the Japanese domestic energy-distribution monopoly, which has impeded pipeline construction in the past. Dr William Pizer added that renewable energy was set to play an increasing role in the Executive summary

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(l–r) Ichita Yamamoto, former Minister in charge of Ocean Policy and Territorial Issues, Japan; and Eric Li, Chairman, Chengwei Capital; Member of the Council, IISS

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region, with half the capacity additions in China over the past year coming from non-fossil sources, along with the potential imposition of a cap on energy production using coal in 2015.

Fourth Plenary – A New Cold War in Asia? The question posed in the fourth plenary threw up several imponderables in Asia-Pacific security: the conundrum posed by China’s rise, the sustainability of the US rebalance to the region, and Asian countries’ ability to adjust to major shifts in the regional security environment. The three panellists – Eric Li, Chairman of Chengwei Capital and Member of the IISS Council; Sarah Raine, IISS Consulting Senior Fellow for Geo-Economics and Security; and Ichita Yamamoto, former Japanese minister in charge of Ocean Policy and Territorial Issues – were generally agreed that a contemporary parallel in Asia to Cold War-era bipolar competition does not exist. Nonetheless, each warned of systemic shifts that might raise tensions and even spark outright conflict. According to Yamamoto, Asia stands at a ‘fork in the road’: the region must choose either to cooperate to build a new regional order or to allow some states to undermine

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that order. He proposed three ‘Yamamoto principles’ for the fostering of regional collaboration: emphasising the rule of law, promoting bilateral relationships with Japan’s neighbours and strengthening the regional community. Li stressed that the post-Cold War global architecture was

(l–r)Sarah Raine, Consulting Senior Fellow for Geo-Economics and Security, IISS; and Dr Tim Huxley, Executive Director, IISS–Asia

under pressure, given the decline of the United States and the ‘rise of the rest’. But a new Cold War is not emerging, he said. China is engaged on all fronts with its neighbours, even Japan – a country with which it has had difficult relations. China, Li said, wants to be a pre-eminent power in Asia, a goal which would at times raise tensions in the region. While Western entreaties that China become a ‘responsible stakeholder’ are ‘correct in principle’, China is being asked to participate in the building of a regional order that does not take Beijing’s interests into account. In the end, the most important bilateral relationship is the one between China and the US; both great powers are involved in a ‘long and complex negotiation’ in the search for a new power configuration. Raine’s take on the situation was less sanguine. She observed that China’s strategy is effectively to seek a de facto hegemony in the region – a process that is contested and might Executive summary

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Ine Eriksen Søreide, Minister of Defence, Norway

result in the establishment of deterrence policies. Chinese attempts at changing facts on the ground in its maritime disputes with various Asian countries could have serious escalatory ramifications. To provide the stability needed for a regional order, Japan needs to deal with the country’s historical issues to build strategic trust. In such a fluid environment, observers of Asia-Pacific security cannot rely on the axiom that complex economic interdependence precludes conflict. History has proven that the obverse is possible.

Fifth Plenary – The Purposes and Extent of Western Strategic and Military Capacity The concluding plenary of the GSR brought together Ine Eriksen Søreide, Norwegian Minister for Defence; Michael Rich, President and Chief Executive Officer of RAND; and Professor Sir Hew Strachan, Chichele Professor of the History of War at the University of Oxford. Søreide set out the consequences for NATO of the changing European security environment. The relative predictability of the threat of high-intensity conflict was contrasted with a more diverse range of contemporary threats, including cyber 54

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attacks and long-range precision firepower. Meanwhile, the confluence of falling defence budgets and rising costs, she predicted, will push more Western states towards multinational cooperation to fulfil defence capabilities. She noted that, while NATO has once again begun to focus on territorial defence, it is unclear whether societies in member states have fully grasped the significance of this. Rich, in turn, focused on identifying what he believed were the highest-priority areas of interest for American foreign and security policy. Chief among these were the preservation of a liberal international order, the development of a constructive

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(l–r) Professor François Heisbourg, Chairman of the Council, IISS; Special Adviser, Fondation pour la Recherche Stratégique; Michael Rich, President and Chief Executive Officer, RAND; Member of the Council, IISS; and Professor Sir Hew Strachan, Chichele Professor of the History of War, All Souls College, University of Oxford; Member of the Council, IISS

relationship with China and the containment and eradication of the most violent anti-Western extremists in the Middle East. Secondary goals fit within these broader themes, such as tackling the root causes of sectarian disputes in the Middle East, supporting the liberal-democratic orientation of former Soviet states in Eastern Europe, preventing the spread of nuclear weapons into unstable regions, and the development and adoption of clean energy. Professor Strachan began by articulating a number of lessons of the First World War that are relevant to the Executive summary

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current environment: that economic interdependence does not guarantee peace; that local conflicts can aggregate into larger ones; and that rhetoric can often get in the way of crisis management. With these in mind, he suggested that the West needs to build a vocabulary for war that contains, rather than magnifies, conflict. He also identified particular areas in need of improvement: urging decision-makers to see strategy as more than simply reacting to threats; to avoid undermining deterrence through over-promising; to recognise that military advisers and proxy local forces are not distinct from â&#x20AC;&#x2DC;boots on the groundâ&#x20AC;&#x2122;, nor a reliable policy instrument; and to stop substituting labels for proper analysis. The IISS is grateful to the Ministries of Foreign Affairs of Sweden and Norway for their generous support of the GSR, Statoil for support of the Opening Dinner, and the following Corporate Patrons: Statoil, BAE Systems, Lockheed Martin, Northrop Grumman, Orascom Construction Industries and Reliance Industries Limited.

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The International Institute for Strategic Studies Oslo, 19â&#x20AC;&#x201C;21 September 2014

The Global Strategic Review

CHAPTER 3

Press coverage Selected IISS publications

Marilyn Hirsch, Global Head of Strategic Planning, AIG

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Press coverage

Carl Bildt Blog 20 September 2014

Heldag med IISS och världen By Carl Bildt OSLO: Här har det varit en dag helt och hållet med diskussioner om de olika utmaningar i fråga om fred och säkerhet som vi står inför i världen i dag. IISS:s årliga Global Strategic Review, som vi stod värd för i Stockholm för ett år sedan, samlar ju ett antal hundra av världens ledande tänkare och tyckare när det gäller dessa frågor. För min del – och jag tillhörde ju inledningstalarna i det ståtliga Rådhuset i Oslo i går kväll – har det blivit mycket om säkerheten i Europa i ljuset av den fortsatta konflikten mellan Ryssland och Ukraina.

Den fortsatta och nu än mer formaliserade vapenvilan är självfallet positiv, men det är viktigt att inte förväxla denna med en fred eller en lösning av konflikten. En vapenvila är en vapenvila – vare sug mer eller mindre. Och också mot den bakgrunden har det, också med tänkare från Ryssland och Ukraina, blivit åtskilliga samtal om möjliga vägar framåt. Men konflikterna är många, och mycket här har självfallet handlat om de olika utmaningarna i Iran och Mellersta Östern. Jag hann dock med att sitta med i en diskussion om utmaningarna i Sahel-regionen också, och jag gjorde det inte minst not bakgrund av Sveriges kommande engagemang i FNoperationen i Mali. I början av nästa år kommer vi ju att ha svenska soldater i Timbuktu i Sahara, och då är det ju bra att vi vet vad det

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egentligen handlar om i denna region. Det har varit en mycket bra konferens, och jag var hedrad över att de nu bett mig att komma tillbaka som en av de internationella ledamöterna i den Council som är IISS:s politiska styrelse. Tack och lov blev dock också lite tid över till att besöka en av stadens bättre bokhandlar. Och jag hittade och inköpte tre intressanta böcker. En handlade om vikingar i österled. Normalt här ligger ju fokus naturligt nog på vikingar i västerled, men anknytningarna till det som då kallades Gårdarike, och i dag kallas Ryssland och Ukraina, är trots detta påfallande starka. En annan var en här nyutkommen bok om Armfeldts fälttåg mot Trondheim 1718 och dess tragiska öde i snöstormen på fjällen vid återtåget till Sverige. Jag hade för ett antal år sedan anledning att intressera mig för detta, och det skall bli spännande att läsa denna lite modernare skildring från ett norskt perspektiv. Och den tredje boken var en nyutkommen bok om den 9 april 1940. Det finns frågor som inte upphör att fascinera och intressera en nation – och i grunden är det nog bra att så är fallet. I morgon lämnar jag så IISS och sätter mig på planet först till New York och därefter till Boston för att avsluta dagen med middag i Cambridge. Där blir det så på måndagen olika arrangemang i anslutning till det välkända Harvard-universitetet innan det är dags att bege mig vidare till middag i New York. ©2014 Carl Bildt Blog Reprinted with permission

Global Strategic Review 2014

IISS Voices 20 September 2014

Ukraine brings cool wind to the Arctic By Christian Le Mière One of the pervasive themes of this year’s Global Strategic Review is, unsurprisingly, Ukraine. The annexation of Crimea and conflict in the east of the country resonates through conversations on Europe’s security, the role of NATO and the international order. For this reason, both the keynote session and the first plenary were focused on this most strategic of issues. But sitting here in Oslo, it is difficult not to consider not only the effects of the Ukraine crisis on the security of Europe’s eastern frontier, but also its repercussions in the north. In his keynote speech last night, Norwegian State Secretary Bård Glad Pedersen reiterated his country’s focus on the High North and the centrality of the Arctic to Norway’s security. He also underlined the fact that despite the conflict, confrontation and coercion occurring between Europe and Russia around the Ukraine issue, political cooperation with Russia continues apace through the Arctic Council. Yet, as I suggested in a question last night, the ripples from the Ukraine crisis do in fact touch the shores of the Arctic Ocean. This year, the annual chiefs of defence meeting among Arctic states has been cancelled for

the first time and the Arctic Security Forces Roundtable (ASFR) is without Russian participation (the last ASFR meeting in Sortland, Norway in August, involved 11 countries – 7 of them nonArctic states – but not the largest Arctic country, Russia). Both of these factors demonstrate that military–military relations with Russia in the Arctic have effectively disintegrated. At the same time, just this week Russian Su-24 aircraft trespassed into Swedish airspace following three incursions into Finnish airspace in August. Such events, and a growing concern among Scandinavian populations and political elites, are fuelling increased defence spending in the north, after more than two decades of steady, post-Cold War declines. Does this mean that there is a new Cold War in the Arctic? Of course not; Russian force levels and activities remain far below their Cold War level, and increasingly the Russian Navy is shifting its historic over-emphasis on the Northern Fleet to a greater balance with, for example, the Pacific and Black Sea fleets. Nonetheless, it is also undeniable that the Ukraine crisis has had effects on relations not just in eastern Europe, but further afield, and seems to be contributing to a renewed military competition in the Arctic. ©2014 IISS Voices Reprinted with permission

Hugh Hewitt 22 September 2014

“At a Global Conference, Rumblings of Much Bigger War” By Clark S. Judge “At a Global Conference, Rumblings of Much Bigger War” By Clark S. Judge: managing director, White House Writers Group, Inc.; chairman, Pacific Research Institute This past weekend the International Institute of Strategic Studies held its annual Global Strategic Review Conference in Oslo, Norway. Because of its elite membership and closeness to a wide range of global players, the conference is a good place to take the pulse of the global policy community. Five years ago, at my first of these sessions, I was surprised at the unease so many expressed about the new American president. I thought that outside the United States everyone was more or less gaga over Barack Obama. Instead, I found concern about whether the new American leader was up to managing America’s pivotal role in the world. Now five years later, the conference had a more ominous subtext. By this time in 1914, the guns of August had opened fire. A century later, their ghostly boom echoed through the Norwegian conference hall. The remarks of two speakers — the Institute’s chairman,

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Francois Heisbourg, and a Shanghaibased Chinese venture capitalist, Eric Li — jump out from my notes. Heisbourg focused on Russia. He talked about Russia, the Ukraine and the Crimea in terms with which we are all familiar – a seizure of territory by one European power from another unprecedented since the end of the Second World War. Indeed with the exception of China’s seizure of Tibet, he noted, no country in the last 70 years has done what Russia has done. What was new, striking and unsettling was Heisbourg’s report on his discussions with Russian officials. Policymakers around Putin, he said, do not see the West’s rulebook for international relations as applying to them. They reject the idea of rule of law in global affairs. They see themselves as in the same position as Germany struggling under sanctions imposed on it following World War I. Like the Germans, they believe they had unjust penalties imposed upon them in their weakness following the Cold War. Heisbourg termed this interpretation of recent history as “bizarre.” In fact, Russia had received major financial and other aide from the West following the collapse of the Soviet Union. But this view of humiliation and penalization is “deeply entrenched in the Russian elite’s psyche.” So our problems, he continued, are not just with Putin but the Russian elite as a whole. That means that destabilizing the Russian president – the focus of sanctions — will not work. Indeed despite sanctions beginning to

Global Strategic Review 2014

bite, opinion polls have recently found that Putin’s approval ratings among the Russian people as a whole has risen from 80 to 85 percent. These polls came from real pollsters. There is no offramp to this crisis. It will continue for a long time. And if people are careless, Heisbourg warned, things could end up as they did in 1914, only worse. A graduate of Berkley and Stanford, Eric Li – in addition to his place in the senior ranks of Chinese business – is an apologist for China’s ruling elite. Listening to him, I felt I could have been hearing China’s president, Ji Xinping, in a candid moment. The architecture of the international system is coming apart, Li asserted, as it must. It centers around the United States, which is in trouble, thanks to internal contradictions and external overreach. When the U.S. had 80 percent of global GDP at the end of World War II (though the real number was actually in the neighborhood of 20 percent), others could count on it to act in the national interest. Now that it has shrunk to 30 percent (in fact last year it was about 23 percent), it will act in its own interests alone. In any event, Li continued, China is a rising power that may have been helped by the current system but that had no role in constructing it. So the system is not in its interest. China’s objective is to reclaim its traditional strength in Asia. It wants a bigger share of the pie, and if others don’t like that, too bad. The world’s choice is simple, he announced: a bigger share of the pie for China or “a total breakdown of the international

system,” meaning “war.” So here is what I took away from Oslo. On the centennial of a conflict that in many ways destroyed a civilization, both Russian and Chinese elites see themselves in exactly the same place that Germany saw itself after the Versailles Treaty (and, in fact, before the war itself, which was a major driver of Germany and Austro-Hungary’s move to war). They are, in their own eyes, part of an international system that they did not make and that is stacked against their nations’ interests. And they want out. Even without ISIS and global terrorism, the world has become a very dangerous place. ©2014 Hugh Hewitt Reprinted with permission

Interfax 22 September 2014

Russia/Ukraine deal likely before arbitration ruling – Swedish minister By James Byrne Russia is afraid of facing international arbitration in Stockholm and could reach a gas deal with Ukraine before winter, Sweden’s Minister of Foreign Affairs Carl Bildt told Interfax in Oslo on Saturday. “I think both [Russia and Ukraine] have an incentive to settle. The Ukrainians are willing to pay,” said

Bildt during the Global Strategic Review, organised by the International Institute for Strategic Studies. “[Ukraine is] not willing to pay this particular price, which I have a certain amount of sympathy for. But I think the Russians are fearful of arbitration, because they fear they’re going to lose it,” Bildt added. Both Moscow and Kiev have filed cases with the Stockholm Court of Arbitration after last-minute talks in June this year failed to resolve disagreements over the gas price and Ukraine’s outstanding debt, which now runs into billions of dollars. Gazprom cut off deliveries to Ukraine on 16 June and implemented a pre-payment system. Since then, multiple rounds of discussions have failed to settle the dispute, leaving Ukraine without Russian supplies as it approaches winter. But while Ukraine faces being left without fuel during the heating season, Gazprom saw net profits plunge by 41% during the first quarter of the year. This was partly attributable to a $2 billion write-off of debt related to Ukrainian gas payments, although a $4.5 billion exchange rate loss also affected the headline earnings figures. Gazprom says Naftogaz Ukrainy still owes $5.4 billion. However, with three-way talks ongoing between the EU, Russia and Ukraine, Bildt hopes EU Energy Commissioner Günther Oettinger could close a deal before the dispute significantly affects European supplies. “I would give [the talks] the time

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necessary. There’s a fair possibility of the settling the issue. No one has an interest in that particular conflict,” Bildt said. “I don’t know if they’d reach an interim agreement or settle the issue – they can do that either way. “ Analysts have previously suggested an interim deal could be reached that would restart Ukrainian deliveries while both sides await a verdict in Stockholm, which is expected to take at least a year and not be settled till the end of 2015. Naftogaz Ukrainy’s Chief Executive Andriy Kobolev told Ukraine’s Channel 5 news channel earlier this month that his company is asking the court to review historical gas prices from Gazprom back to 2011. Naftogaz is claiming $6 billion from Gazprom, while the Russian company’s countersuit is for $5 billion, he added, although these figures could change. The arbitration will take place at the Stockholm Chamber of Commerce – a venue regularly used by energy companies for its independence and privacy. Alternative supplies Irrespective of the outcome in Stockholm, Russia’s position as a key supplier to Europe will likely be eroded in coming years, Bildt argues. “I think there will be a gradual transition away from Russian gas, but for market reasons,” he said. “With the shale gas and other things, there’s going to be an abundance of gas on the market. We now see LNG and we have reverse flows in pipelines, so there’s going to be price competition. “We’ve already seen prices coming

Global Strategic Review 2014

down for gas. Whether Russia will remain competitive on the Western European gas market remains to be seen. They will not be as dominant as they used to be,” Bildt added. Sweden is relatively underexposed to any potential disruption to Russian gas supplies. The country only consumed 1.1 billion cubic metres of gas last year, with the fuel accounting for less than 5% of its total electricity needs and primary energy requirements. The country’s gas market is served by the Dragor pipeline from Denmark, which connects it with the European gas transmission system. ©2014 Interfax Reprinted with permission

Le Temps 23 September 2014

Le paysage sécuritaire en Europe a changé By François Nordmann De l’Ukraine à l’Irak, état des lieux d’un climat international qui se détériore. C’est à l’Hôtel de Ville d’Oslo que s’est ouverte, le week-end dernier, la conférence sur la situation mondiale de l’Institut international d’études stratégiques de Londres, dans les salles d’apparat où a lieu chaque année la remise du Prix Nobel de la paix. Plusieurs participants se sont demandés qui en serait le prochain lauréat. La tâche du jury paraît en effet particulièrement difficile: l’accumulation des conflits

armés et des menaces dans toutes les régions du globe rend la liste des candidats œuvrant pour la paix particulièrement courte cette année. En Europe, c’est tout le paysage sécuritaire qui a changé. L’annexion de la Crimée et la tension dans l’est et le sud de l’Ukraine ont créé un sentiment de volatilité et d’imprévisibilité. La règle de droit, en vigueur jusqu’alors, a été violée, et la relation de confiance avec la Fédération de Russie en a été durablement atteinte. Aux frontières sud du continent, les menaces terroristes, en Libye et au Sahel par exemple, pèsent aussi sur la sécurité européenne. La crise a déjà provoqué un sursaut de l’OTAN, selon Mme Ine Eriksen Soreide, ministre norvégienne de la Défense. Les chefs de gouvernement réunis à Cardiff au début du mois ont décidé d’en finir avec la réduction des budgets militaires et de les porter à 2% du PNB d’ici à 2024. Pour son collègue suédois, M. Carl Bildt, ministre des Affaires étrangères, la réponse au défi lancé par la Russie réside moins dans l’application de sanctions que dans la volonté de consolider l’Ukraine. Il s’agit de faire de ce pays un état moderne, fonctionnant selon les règles de la démocratie, de l’Etat de droit, des droits de l’homme et du marché, à l’instar de ses voisins avant leur adhésion à l’Union européenne. Si l’Ukraine est maintenue dans un état de faiblesse, qu’elle est assistée, rongée par la corruption et le clientélisme, elle continuera à représenter une proie facile pour la Russie. L’effet de la crise ukrainienne se

répercute ailleurs aussi: en Asie, où la Chine a raillé le Japon pour avoir dû appliquer les sanctions des Occidentaux contre la Russie, alors même qu’il cherchait à se rapprocher de M. Poutine. Le Japon – qui ne fait que suivre les décisions du G7 dont il est membre – reproche en retour à la Chine, imitant M. Poutine, de ne pas respecter la règle de droit et d’entraver la liberté de navigation en mer de Chine orientale. La Chine, explique M. Li, un des principaux hommes d’affaires de Shanghai, s’est pliée aux règles d’un système international dont elle a bénéficié, mais qu’elle n’a pas contribué à façonner et qui est dominé par les Etats-Unis. Devenue pratiquement la première puissance économique, elle entend maintenant atteindre une certaine prééminence dans les affaires du monde. Elle ne veut pas la guerre, et sa relation avec les Etats-Unis est la plus importante qui soit, également pour les générations à venir. Mais la paix, c’est l’absence de guerre, pas l’absence de tensions! En affirmant sa puissance et ses intérêts, la Chine prend en compte la réaction négative de ses partenaires. C’est normal: quand on veut une plus grande part du gâteau, les autres en reçoivent de plus petites… Mais la Chine respecte le droit international, même si elle en fait parfois une lecture différente de celle du Japon. La Convention sur le droit de la mer à laquelle les Japonais, Vietnamiens et autres Philippins la renvoient volontiers ne règle pas les questions de souveraineté. Or, l’établissement si critiqué d’une zone de défense d’identification aérienne

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par la Chine relève de la souveraineté; le Japon en fait de même, et la sienne est plus grande que celle décrétée par la Chine… Certes, relèvera l’ancien ministre japonais Yamamoto, la Chine atteint ses objectifs sans guerre mais elle exacerbe le nationalisme et refuse les mécanismes qui permettraient d’éviter une confrontation accidentelle entre les marines des deux pays. La détérioration du climat international affecte également la négociation d’un règlement sur le nucléaire iranien, qui a repris ces jours à New York. L’accord intérimaire et le plan d’action conjoint signés à Genève l’an dernier ont été mis en œuvre comme convenu. Le contexte régional s’est cependant modifié: la situation en Ukraine, les attaques de l’Etat islamique contre l’Irak et la Syrie sont devenues des préoccupations majeures des protagonistes. L’an dernier, on avait pu isoler les pourparlers avec l’Iran de toute interférence avec les problèmes de Syrie et du Moyen-Orient. Cette année, ce sera plus difficile; mais il serait erroné de croire qu’une apparente convergence d’intérêts entre les Etats-Unis et l’Iran sur le problème de l’ISIS soit de nature à faciliter un accord sur le nucléaire. Trop de sujets de discorde subsistent dans d’autres domaines – Syrie, Yémen, Irak, Gaza… De plus, ni les Etats-Unis, ni l’Iran ne sont prêts à faire des concessions sur le nombre de centrifugeuses autorisées, ni sur les inspections de l’Agence atomique. Dans ces conditions, le plus probable est que l’on s’achemine non pas vers un accord global et définitif, ni vers une rupture fracassante, mais vers

Global Strategic Review 2014

Interfax 25 September 2014

Despite challenges, Iran pushes for EU export corridor By Leigh Elston, Tom Hoskyns, James Byrne and Joshua Posaner Prospects for Iranian gas exports to the EU took a step forward this week, with signs Tehran and Brussels are seeking to open up a new supply route as the impasse with Russia over Ukraine continues. With world leaders meeting in New York this week at the UN General Assembly, a summit between Iranian President Hassan Rouhani and his Austrian counterpart Heinz Fischer on Tuesday made direct reference to prospects for a new gas corridor. “Iran enjoys a unique status in the energy provision field and can therefore be a reliable energy source for Europe. We are ready to implement the network to transfer gas to Europe through Austria,” Rouhani said. Austria’s flagship energy company OMV was a founding member of the consortium behind the defunct Nabucco pipeline project, which aimed to ship Iranian gas through Turkey and into the Baumgarten gas hub.

A source involved in talks on Iran at the European Commission told Interfax exports could still be possible without Nabucco if sanctions are removed. The entry-exit Turkish system would allow for swap deals, meaning Iranian gas could be traded through to Greece – albeit in low quantities at first, the source said. But Iranian officials are understood to be against re-exports – preferring instead to use Turkey as a transit space. Even if a new transport route is established, there are doubts Iran has the gas available for major exports. Despite holding the largest gas reserves in the world, sanctions have suppressed output growth and the country is struggling to meet domestic demand. But local needs could be temporarily sacrificed for the sake of Tehran’s top priority – encouraging new investment. “They would hurt their own economy to get a foot into the European economy. If they can get small volumes [for export west] by reducing internal demand, I am quite sure they will,” the commission source said. Iran’s new ambassador to Berlin, Ali Majedi, was formerly the deputy petroleum minister for international affairs, and his embassy is traditionally used to coordinate Europe-wide activities, Interfax understands. Doubts over sanctions But despite the appointment and obvious rationale for an Iranian gas deal, questions remain over how quickly the sanctions regime could be dismantled, even if a nuclear deal is signed this year. “From a technical point of view it

will require quite some time to abandon the complex net of sanctions imposed on Iran. Likewise, the establishment of infrastructure to transport Iranian gas to the European market is likely to take years,” David Ramin Jalilvand, author of an Oxford Institute for Energy Studies paper on Iran and a research fellow at the Berlin Centre for Caspian Region Studies, told Interfax. Tehran and the P5+1 – the United States, UK, France, Germany, Russia and China – are continuing negotiations over Iran’s nuclear programme; however, the prospect of reaching a final deal before the 24 November deadline are looking increasingly bleak. “Unfortunately, the two sides remain very far apart on the most contentious and the most important issue in the negotiations, which is Iran’s status as a nuclear weapons threshold state,” Gary Samore, former White House coordinator for arms control and weapons of mass destruction, told delegates at the International Institute for Strategic Studies (IISS) Global Strategic Review in Oslo on Saturday. The rise of Islamic State may offer a further reason to cooperate, but the prospect of Iran and the US rallying against a common enemy may be hindering, rather than helping, chances for a nuclear settlement. One of the key factors that pushed world powers towards an interim agreement last year was the fact both sides decided to isolate nuclear negotiations from other issues, Ghassan Salamé, professor of International Relations at Sciences-Po, told the IISS delegates.

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“[But] we have to recognise that the firewall that has been established between the technical nuclear negotiations on the one hand and the geopolitical issues on the other hand is falling before our eyes… and we don’t know what kind of effect it will have on the negotiations.” However, the shifting geopolitical landscape is also reducing the likelihood of a US-Iran war, said Salamé, meaning an extension to the November deadline is the most likely scenario. While an extension is not the ideal solution, the situation is tolerable, said Samore – who has advised the Obama administration on the deal. Delayed entrance For Iran, the status quo of a limited reduction in sanctions offers the chance to stabilise its economy and start new conversations with European and US energy investors. For the US, the agreement freezes or limits most of Iran’s nuclear activities without sacrificing the overall sanctions regime, he added. So while the latest statements from Rouhani show Iran is still openly preparing for its return to the oil and gas stage, its grand entrance looks likely to be delayed. The Iranian Petroleum Ministry was planning to unveil the draft of its newly structured petroleum contract (the Iran Petroleum Contract: IPC) and details of a new oil and gas licensing round at a conference in London in early November, in anticipation of sanctions being lifted. However, after speaking to Iran’s Foreign Ministry, conference organisers CWC postponed the conference for a

Global Strategic Review 2014

second time, until 23 February 2015. The four-month extension allows the small team in Tehran tasked with drawing up the new draft IPC in preparation for this delayed launch “a little breathing room”, said one source. While a lot of progress has been made on the draft, there are still several outstanding clauses that need to be addressed, particularly in regards to the constitution, Interfax understands. None of the IOCs have seen the draft IPC, nor is there any intention to show it to them before the conference. After the initial burst of IOC interest following the announcement of the interim deal in November 2013, momentum has slowed as companies realise the huge investments and time needed to revive the country’s ageing energy infrastructure, said the source. ©2014 Interfax Reprinted with permission

Interfax 25 September 2014

Western route to China the holy grail for Moscow By James Byrne, Colin Shek and Zhang Yiping Moscow is forging ahead with plans to close a second gas pipeline agreement with Beijing, in a strategic deal that aims to link Siberian supply bases to western China and reduce Russia’s dependence on Europe.

Talks over a western route were on hold until the two sides reached an agreement on the eastern route. However, with the eastern route now secured and the Ukraine crisis souring relations between Europe and Russia, Gazprom is under increasing pressure to gain greater access to China’s growing gas market. “We are planning to sign a contract for 30 billion cubic metres of gas for 30 years. The possibility of sending 60-100 bcm of gas is being considered [via the western route],” Gazprom’s Chief Executive Alexei Miller said last week during a meeting with Russian President Vladimir Putin. “First, a gas transportation system will be put into action, which at present has already been created in Western Siberia; and second, there is no need to create facilities for gas processing, and in this connection, of course, the amount of investments that are needed are smaller than for the eastern route,” Miller added. An additional 60-100 bcm of Russian exports to China could revive the flagging fortunes of Russia’s largest gas producer, which has been pummelled by changes in the European market and the Ukrainian gas crisis. Miller’s comments signal the possibility a deal for western route supplies could be struck while Putin and United States President Barack Obama are in Beijing for the Asia Pacific Economic Cooperation summit in November. “That would be a good place to really embarrass Obama, given the US

sanctions on Russia,” Gordon Kwan, head of Asian oil and gas for Nomura, told Interfax. “There is a possibility western route supply will arrive before [volumes from the] eastern route, especially if the EU sanctions continue to escalate. The EU would import less gas from Russia, which makes it imperative for Moscow to send gas to China as quickly as possible,” said Kwan. Sanctions bite However, despite Russia’s ambitious plans to pivot towards Asia, the country’s largest energy companies and its banks are beginning to feel the pinch from Western sanctions. Last week, ExxonMobil and Rosneft announced they were winding down their Arctic drilling campaign, while Rosneft’s $2 billion deal with Vitol was scrapped this summer. This week, officials from Gazprom and Rosneft said they were having problems securing critical technology for their LNG projects in the Far East, an admission that could signal the beginning of wide-ranging impacts for the Russian economy and its drive to diversify into Asian markets. “The gas pipeline is not a done deal yet. The contract was signed, but uncertainties abound regarding the financial and engineering capability of Gazprom to deliver the gas and also to construct the pipeline in time for 2018 deliveries,” said Xavier Chen, president of the Beijing Energy Club, during the International Institute of Strategic Studies’ Global Strategic Review in Oslo.

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With Gazprom facing an $80 billion bill for the development of eastern fields, infrastructure and the Power of Siberia pipeline, some analysts have questioned its ability to finance another large project. The Russian gas giant is also yet to reach an agreement on advance payment from China, an idea floated as a way to reduce the cost at the border and bring the parties closer together on price. “There is no need for the advance,” the Russian gas giant’s Deputy Chief Executive Alexander Medvedev said at a press conference in Yuzhno-Sakhalinsk. “Potentially, the advance could benefit both parties, but there’s nothing critical in applying or not applying the advance, and Gazprom – not waiting for the final opening or not opening of the issue – has begun construction of the gas pipeline,” Medvedev said. While many are sceptical a deal on the western route will be closed anytime soon, the favourable geography and logistics have made some Chinese analysts more optimistic about a quick resolution to the discussions. “It is very likely the contract will be inked in November. If not, it will definitely be signed by early 2015, because both countries have a strong need for this contract,” Xia Yishan, a senior research fellow at the China Institute of International Studies and an expert on Russia, told Interfax. “The discussion on the western line has been ongoing for a long time and China would like to wrap up the deal as soon as possible,” Lin Boqiang, director of the China Centre for

Global Strategic Review 2014

News International (Pakistan) 30 September 2014

Era of strategic adjustment By Dr Maleeha Lodhi At a time of shifting global power dynamics, a conference organised by the London-based International Institute for Strategic Studies (IISS) offered an instructive tour d’ horizon of the world’s strategic challenges. Held this time in Oslo, the annual global strategic review assembled experts and officials to debate key geopolitical challenges and geoeconomic opportunities at an unsettled global juncture. With the post World War II international system undergoing transformation, the sense at the conference was that ‘strategic adjustments’ to the balance of power were underway in key regions across the world. This echoed a central point made by the Institute’s recently published annual survey, which saw this trend intensifying in the year ahead. An important theme at the conference was the hardening of the strategic environment. The revival of major-power geopolitics was seen as a

growing trait of the global environment. The other prominent feature was turmoil in the Middle East. Also, hybrid forms of insecurity were challenging many developing countries. The plenary session on the Middle East attracted much interest and revealed diverse views about the prospects for stability. The regional order was being reshaped by bloody turmoil. But it was the rise of the Islamic State in Iraq and Syria (Isis) that shook the region and forced a policy reappraisal by the US-led West. There was agreement among a distinguished line up of speakers that the drivers of present instability was a crisis of legitimacy of governing elites, breakdown of institutions, as well as weak and failing states. Speakers also pointed to the West’s missteps and interventions, which had compounded the situation. So had regional rivalries and competition for influence. An Arab speaker drew a parallel between the situation in Iraq/ Syria and the anti-Russian campaign in Afghanistan in the 1980s, when the West armed and funded the mujahideen and empowered extremists there. The spread of Isis, said one speaker, was the result of multiple failures: failures of government, institutions, and Western attempts to reshape the region. Roula Khalaf of the Financial Times described the region as a “comprehensive mess” with a “high risk of contagion”. The very existence of several states – Iraq, Libya, Syria, and Yemen – was in question, she said. The most damaging cleavage today

was sectarian, fuelled by the cold war between Saudi Arabia and Iran. Western moves towards rapprochement with Tehran had widened this cleavage, she argued. A second cleavage was between pro and anti-Islamist forces. If Tunisia had achieved relative stability, this was because of its culture of compromise, not evident elsewhere. Most participants agreed that the present crisis in the Middle East could not be resolved by military force alone. The main battle, declared an Arab speaker, is political, and involves “tying people back to the state”. Also, without a regional consensus, no ‘solution’ could be found. The session ‘A new cold war in Asia?’ was just as engaging. This focused on rising strategic tensions in Asia-Pacific driven by competing maritime claims but also, as the session moderator said, by China’s interpretation of America’s ‘rebalancing’ strategy. A Japanese speaker and former minister drew a parallel between the Russian action in Ukraine and Beijing’s moves in the South China Sea. But he dismissed the notion of a new cold war. What was happening, said another speaker, was more like a football game than a boxing match. It was the speaker from China, Eric Li, who stole the show. A venture capitalist and political scientist, he offered a lucid assessment of China’s objectives. The cold war framework was not useful to understand ongoing developments, he argued. Rejecting parallels with US-Soviet competition, he said China is deeply integrated into the

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global economy and China and America so economically interdependent as to rule out any confrontation. Because Li’s was a well-argued summation of China’s aims it is useful to recall its main points. The first was this. “The US is the current dominant world power, which shaped the post World War II and post cold war global architecture, encompassing all aspects of world affairs.” Asia-Pacific too formed part of that architecture. China, on the other hand, was a rapidly rising power, set to surpass the US as the world’s largest economy. But China did not participate in the design and establishment of this global architecture. It benefited from it but its interests were never accommodated by this arrangement. The second part of his argument was that this post cold war architecture was “breaking down” for two main reasons. One, what Li described as America’s troubles, brought on by internal structural problems and by “external overreach”, which produced “failures and exhaustion”. And two, the rise of the rest, with China being the most prominent. This led to his third point, that the existing global architecture cannot be sustained, being inherently rigid and unable to adapt to change. Despite its declared pivot to Asia, America has had to direct its attention in many areas – Ukraine, Middle East. This, he said, made it difficult for it to sustain a longterm strategy in any particular region. But China, according to him, is pursuing a longer-term strategic

Global Strategic Review 2014

objective to “reclaim its preeminent role in Asia”. To do that it must seek “adjustments” to the “current global architecture”. This has given rise to tensions, which however was “natural” when anyone sought “a bigger share of the pie”. Li conceded that assertive behaviour risked “destroying the pie” itself – by which he meant military conflict. But China had been careful in “realizing adjustments in the status quo in its favour” without risking war. He characterised this as the essence of China’s strategy and predicted that “short of accidents”, a “new configuration will emerge peacefully” through adjustments from a “long and complex” process of negotiation between China and the US. This notion of the ‘normality’ of tension at a time of global transition also echoed in other sessions, even though varying views were voiced about its implication for global stability. The session on Iran, titled ‘Towards an endgame?’ examined whether current nuclear negotiations might yield a deal by this year’s end. An Iranian speaker spelt out his country’s position, indicating that a deal could “open the door for broader engagement” on other challenges facing the Middle East. But the consensus among speakers was that the nuclear talks were “not at an endgame stage”. Substantial obstacles remained, with the two sides still far apart on fundamental issues. The likelihood was that negotiations would be extended beyond the November 2014 deadline.

Among issues raised in this debate was whether the Middle East’s new geopolitical landscape had made a nuclear agreement more or less difficult. A former American official made the point that neither Washington nor Tehran were at present prepared to make fundamental nuclear concessions. While the Iranian delegate confidently proclaimed that even if the 5+1 talks fail, America was in no position to orchestrate more sanctions against Iran. A lively discussion took place on the Russia-West confrontation over Ukraine. The institute’s chairman, Francois Heisbourg, raised a slew of important questions. Was Europe’s purpose in responding to Russia aimed at regime change in Moscow or preserving the post Second World War order and freedom of choice for former Russian republics? Strategy and purpose were out of sync if the tools deployed against Russia reflected the former aim. Punishing Russia without resolving the problems that led to the present standoff was hardly prudent strategy. A Russian speaker pointed out that the perception among Russians and President Putin himself is that Europe is pursuing ‘regime change’. He also insisted that the US was following a ‘dual containment’ strategy against Russia and China, but this would only drive the two powers closer. Important questions were raised in this debate. Was the standoff beyond the point of no return? Could the post cold war order in Europe be preserved or was it up for negotiation? Why has dialogue been so limited?

There were no ready answers. But then good conferences almost always raise more questions than they answer – especially at a time of flux and unpredictability in a fast moving world. ©2014 News International (Pakistan) Reprinted with permission

Straits Times 07 October 2014

Regionalism with Chinese Characteristics By William Choong In recent months, China has been lining up its own franchise of multilateral organisations in Asia. Speaking in May, President Xi Jinping told delegates at a security summit in Shanghai that Asia’s problems should be solved by Asians. The Conference on Interaction and Confidence Building Measures (CICA) is a group of more than 20 mostly Asian countries. Japan and the U.S. were observers but not full participants at CICA. In September, China invited the defence ministers of South Korea, North Korea and Japan to attend the Xiangshan Forum (XF) in November. When the XF last held its meeting in November 2012, it mostly involved defence scholars. Chinese defence officials plan to transform the event into a high-end security and defence forum. In essence, this would present the XF as the Chinese analogue to the Shangri-La

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Dialogue, an annual meeting of defence ministers held in Singapore. China is working hard not only in the security sphere. China is leading discussions among more than a dozen Asian countries to create a US$50 billion Asian infrastructure development bank. To be mostly funded by China, the new body is seen to be a challenge to the role of the Asian Development Bank (ADB), which is dominated by the United States and Japan. All such efforts underpin China’s so-called “Asian security concept” - or what I would term regionalism with Chinese characteristics. The Chinese strategy is not to usurp the role of established multilateral bodies such as the Shangri-La Dialogue, the East Asia Summit or the ADB, but to create new bodies or refashion existing ones so that China has a dominant role in them. Regionalism with Chinese characteristics involves the doing away with what China deems to be the region’s “Cold War mentality” - a mindset that it argues has led to America’s “exclusive” network of military alliances surrounding continental China. China’s complaints about “exclusive” arrangements sound pretty rich. CICA and the XF lack the inclusive character of the East Asia Summit and the Asean Defence Ministers MeetingPlus - organisations which comprise Asean, Australia, China, Japan, India, New Zealand and South Korea. Seen from Chinese eyes, however, the new thrust is totally logical. It is an open secret that China is not entirely enthused by the Shangri-La Dialogue,

Global Strategic Review 2014

which it sees to be a forum for delegates to fire provocative questions at its officials. Speaking at the Dialogue in June, Lt-Gen Wang Guanzhong, a top Chinese military officer, railed against the U.S. and Japan for teaming up against Beijing. China’s attempt at carving up geopolitical space is also getting more sophisticated. In the past, Chinese officials were seen to be less articulate than their Western counterparts in international fora. Now, many of them have been trained in the West, speak impeccable English and can hold their own in the thrust and parry of debate. Speaking at the Shangri-La Dialogue in June, Major-General Yao Yunzhu was feted in the media for standing up to U.S. Secretary of State Chuck Hagel for his criticism of China’s establishment of an Air Defence Identification Zone in November 2013. At the Global Strategic Review, an Oslo conference organised by the International Institute for Strategic Studies last month (Sept), Eric Li, a venture capitalist and political scientist, gave a tour d’horizon of China’s strategy. China, he stressed, wants to reclaim a pre-eminent position in Asia. “In my 25 years as a capitalist, I have never walked into a boardroom and said ‘I think I deserve a higher percentage share in this company,’ and everyone claps and say ‘wonderful, take some more’. It doesn’t happen. Tension is natural,” he argued. And contrary to conventional wisdom, Beijing’s assertiveness has not hurt its position, Mr Li said. Rather,

if the essence of strategy is balancing upsides and downsides as well as the optimisation of interests, China has “performed brilliantly,” given that it has managed to realise adjustments to its status without leading to war. Whether Chinese strategy would work going forward, however, is not assured. While China’s assertiveness has not led to war, it has not led to peace breaking out all over, either. Indeed, China’s assertiveness in the East China and South China Seas is precisely the reason why Asia’s “Cold War mentality” (read: US-led alliances) will endure, and even be strengthened. One senior Asian diplomat has even suggested to me that the U.S. should lead a countervailing coalition of the willing to block Chinese assertiveness in the two seas. Faced with China’s assertiveness, smaller Asian countries are resorting to self-help behaviour. Vietnam, for example, is acquiring Kilo-class submarines from Russia and is reported to be interested in buying older P-3C

Orion maritime patrol aircraft from the United States. Mr Bilahari Kausikan, formerly the permanent secretary at Singapore’s Ministry of Foreign Affairs, wrote recently that the maritime disputes in Asia are merely the symptoms of a more fundamental problem - the sheer disparity of size between Asean and China. Big countries, he wrote in The American Interest, would always provoke a “degree of anxiety” among smaller countries in their periphery. “Unless we address the core issue of asymmetry squarely and sensitively, I fear they may well have unintended consequences,” he added. This dynamic does not only apply to China and Asean; it also applies to all of China’s relations with other Asia-Pacific countries outside Asean. At this rate, regionalism with Chinese characteristics might soon lead to a region with contested characteristics. ©2014 Straits Times Reprinted with permission

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Strategic Dossiers www.iiss.org/publications/strategic-dossiers The Strategic Dossier series harnesses the Institute’s technical expertise to present detailed information on key strategic issues, including weapons programmes in North Korea and Iran, nuclear proliferation networks, nuclear programmes in the Middle East and Southeast Asia and Australasia, and European military capabilities.

Strategic Survey: The Annual Review of World Affairs www.iiss.org/publications/strategic-survey Strategic Survey is the annual review of world affairs from the International Institute for Strategic Studies. It is an invaluable tool for interpreting worldwide strategic developments. Since 1966, it has provided the essential one-volume analysis of the year’s key events in international relations for government policymakers, journalists, business leaders and academics. The resurgence of major-power geopolitics was the striking feature of international affairs in the year to mid-2014. Russia and Europe competed for influence in Ukraine, where a revolution in support of closer integration with Europe was followed by Moscow’s annexation of Crimea and a pro-Russian insurgency in eastern regions. Tensions rose between China and Japan as the leaders of both countries stepped up their assertive nationalism. However, progress was made in nuclear negotiations between Iran and the world’s major powers. The year’s developments heralded a period of heightened strategic change that would sharpen the challenges facing the United States in maintaining global influence. Strategic Survey 2014: The Annual Review of World Affairs argues that changing patterns in international relations make it vital for the world’s businesses to carry out geopolitical due diligence. Strategic Survey 2014: The Annual Review of World Affairs analyses the events and themes of the year region by region. It includes essays on cybersecurity and privacy, on assessing drivers of strategic change, and on hybrid forms of insecurity in the developing world. The Strategic Geography section includes maps on the humanitarian disaster in Syria, France’s role in Africa and the Pacific Alliance trade bloc in Latin America. The book contains a chronology of key events around the world. According to Bronwen Maddox, Editor of Prospect magazine, Strategic Survey: The Annual Review of World Affairs ‘has become a landmark of the think tank landscape: a handbook for what to worry about for the coming year’.

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Global Strategic Review 2014

The International Institute for Strategic Studies Oslo, 19â&#x20AC;&#x201C;21 September 2014

The Global Strategic Review

CHAPTER 4

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special session ONE:

special session TWO:

special session THREE:

The Political, Economic and Strategic Future of Ukraine

Egypt’s Political Trajectory and Economic Prospects: Regional Effects

International Efforts to Secure the Cyber Domain

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special session FOUR:

special session FIVE:

special session SIX:

Southeast Asia’s Arc of Political Conflict and Economic Risk

The Consequences of Crisis: the Eurozone and European Strategy

Hybrid Conflict, New Insecurities and the Developing World

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special session SEVEN:

special session EIGHT:

special session NINE:

Russian Military Modernisation

Nuclear Postures in the Asia–Pacific

Complex Instability in the Broader Sahel: Geopolitical and Geo-economic Implications

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special session TEN:

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special session ELEVEN:

Inter-Regional GeoSyria: Conflict and Spill-Over Economics: The Pacific Global Strategic Review 2014 Alliance82and the Asia–Pacific

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special session Twelve:

Narendra Modi’s India

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The 11th IISS Global Strategic Review

The Global Strategic Review The 11th IISS Global Strategic Review was held in Oslo on 19–21 September 2014 in partnership with the joint host nations of Norway and Sweden. Some 300 delegates from over 50 countries – experts and policymakers from the worlds of business, government and research – convened under the rubric ‘Geopolitical Risks and Geoeconomic Opportunities’.

Hybrid conflict and a resurgence of major-power geopolitics herald a period of heightened strategic change globally. The GSR once more aptly proved itself as the leading annual conference on global geopolitical and geo-economic affairs, devoted to fresh policy thinking on long-term strategic challenges at the global level.

The opening keynote dinner at Oslo City Hall and the plenaries and sessions that followed, addressed considerable dislocation and flux in the international system – including the effects of the Ukraine Crisis, the rise of the Islamic State in the Middle East, and great power antagonisms in East Asia.

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