Foundation for the Defense of Democracies CEO Mark Dubowitz is best known for his leadership in promoting “economic warfare” against Iran as a means to foment regime change in Tehran or outright war with the Islamic Republic.
Part of that campaign requires spreading a lot of mis- or disinformation, and Dubowitz himself has been a ferventparticipant in those efforts.
Over the weekend, Dubowitz tweeted a passage from a Wall Street Journal article that noted an IMF report that “predicts Iran’s economy will return to 3.2% growth in 2021, following a 5% contraction in 2020, on the back of expanded oil sales and a stronger domestic industry.” Dubowitz blamed President Biden’s failure to maintain his predecessor’s “maximum pressure” campaign for the IMF’s alarming forecast.
“The Biden [administration] is already giving major concessions,” he tweeted. “That’s why this is occurring.”
But that’s not true, as Sune Engel Rasmussen — the Journal reporter who wrote the piece Dubowitz cited — later pointed out.
“This is not accurate, Mark. The IMF estimate is from last year, months before Biden took office,” Rasmussen tweeted at Dubowitz. “The growth prediction is mostly based on Iran’s own economic performance under sanctions.”
Esfandyar Batmanghelidj, the founder of Bourse & Bazaar and a visiting fellow at the European Council on Foreign Relations, also noted the rather glaring misdirection of blame, tweeting that the IMF’s estimate was issued last October before the elections. “These figures don’t reflect concessions by Biden — there haven’t been any,” he said. “They reflect that Iran’s economy began to shrug off maximum pressure while Trump was still aimlessly pursuing that policy.”
Yet Dubowitz has yet to issue a correction or delete his tweet.
And that’s how it works: Iran hawks have created their narrative for the path to regime change or war — in this case to make it as politically difficult as possible for Biden to ease sanctions and restore U.S. compliance with the JCPOA. And no amount of facts or empirical evidence demonstrating what a bad idea that is will get in the way.
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Vladimir Putin has been humiliated in Syria and now he has to make up for it in Ukraine.
That’s what pro-war Russian commentators are advising the president to do in response to the sudden collapse of Bashar al-Assad’s regime, according to the New York Times this week. That sentiment has potential to derail any momentum toward negotiating an end to the war that had been gaining at least some semblance of steam over the past weeks and months.
“Mr. Putin could intensify his costly offensive in Ukraine to recover some prestige,” says the Times. And he appears poised to do just that. This week, a Pentagon spokesperson announced that the Russians are on the verge of launching its new lethal intermediate range ballistic missile on Ukraine once again, saying they’re “trying to use every weapon that they have in their arsenal to intimidate Ukraine.”
Some Russian analysts say Putin is unlikely to be influenced by outside events, and dismiss calls for him to escalate in Ukraine as “noise.” And those calling for escalating Russia’s war in Ukraine offer few details on how a depleted Russian army can achieve such maximalist aims. But, as the Times notes, “they are united in their calls for the army to step up its assaults.”
Meanwhile, however, Moscow appears to be keeping the door open to negotiations. The Kremlin said this week that Putin’s goals of preventing Ukraine from joining NATO and solidifying control of the four eastern regions it took from Ukraine will be accomplished militarily or diplomatically, with the country’s spy chief even suggesting those goals are within reach.
Regardless of whether Putin decides to escalate in Ukraine, President-elect Trump still appears determined to end the war quickly once he assumes office next month. “There should be an immediate ceasefire and negotiations should begin,” he said on his social media platform Truth Social. He also said in an interview with NBC that he would be prepared to reduce military aid to Ukraine and withdraw the United States from NATO.
And in a new interview with TIME magazine, Trump criticized the Biden administration for allowing Ukraine to use U.S. long-range missiles to attack targets inside Russia.
“I disagree very vehemently with sending missiles hundreds of miles into Russia,” he said. “Why are we doing that? We're just escalating this war and making it worse. That should not have been allowed to be done. Now they're doing not only missiles, but they're doing other types of weapons. And I think that's a very big mistake, very big mistake.”
But while Trump appears to want a quick end to the war, he apparently doesn’t want the United States to play a primary role in implementing any such resolution. The Wall Street Journal reported this week that the outlines of Trump’s plan are starting to emerge based on his trip to Europe last week: “Europe would have to shoulder most of the burden of supporting Kyiv with troops to oversee a cease-fire and weapons to deter Russia.”
Russian troops are close to taking the strategic eastern city of Pokrovsk, according to Ukraine’s top general, the New York Timesreported. Gen. Oleksandr Syrsky said “unconventional decisions” would have to be made to bolster Ukrainian defenses although he did not specify what such actions would be.
U.S. Treasury Secretary Janet Yellen announced the disbursement of a $20 billion loan to Ukraine this week. Former UK diplomat Ian Proud writes in Responsible Statecraft that “the issue of how this latest $20 billion handout to Ukraine will be paid seems entirely secondary to the point that it won’t be the end of U.S. funding to Ukraine.”
The Pentagon announced a new security assistance package for Ukraine worth nearly $1 billion this week as, according to the Associated Press, “the Biden administration rushes to spend all the congressionally approved money it has left to bolster Kyiv before President-elect Donald Trump takes office next month.”
From State Department Press Briefing on Dec. 9
Asked about U.S. pressure on Ukraine to expand the pool of eligible draftees from 25 years old to 18, spokesman Matthew Miller said, “the decisions about the composition of its military force are – those are decisions that the Ukrainians have to make for themselves. What we have made clear is that if they produce additional forces to join the fight, we and our allies will be ready to equip those forces and train those forces to enter battle.”
On Tuesday December 10, Treasury Secretary Janet Yellen announced the disbursement of a $20 billion loan to Ukraine. This represents the final chapter in the long-negotiated G7 $50 billion Extraordinary Revenue Acceleration (ERA) loan agreed at the G7 Summit in Puglia, in June.
Biden had already confirmed America’s intention to provide this loan in October, so the payment this week represents the dotting of the “I” of that process. The G7 loans are now made up of $20 billion each from the U.S. and the EU, with the remaining $10 billion met by the UK, Canada, and Japan.
To be clear, this U.S. loan represents no additional funding for Ukraine beyond what had already been agreed by the G7; it doesn’t raise the bar on the $50 billion pledged so far. The European Union had already made provision to fill the gap, had the U.S. not provided this lending. In that regard, it is encouraging that the U.S. is doing the right thing by following through on its earlier commitment.
The U.S. loan cannot be allocated to the war effort, as it has been transferred into the World Bank which does not permit funding of military activity. This is a roll back from the U.S. position in October when it was hoped that around half of the $20 billion loan might be diverted towards Ukraine’s struggling military.
In her remarks, Yellen said, “we are sending an unmistakable message of resolve by making Russia increasingly bear the costs of its illegal war, instead of taxpayers in our coalition.”
But the notion that this loan won’t ultimately sit on the shoulders of U.S. taxpayers is highly speculative, and dependent on actions outside of America’s control.
Repayment of the U.S. loan relies on the resilience of an EU instrument called the Ukraine Loan Cooperation Mechanism (ULCM). The ULCM disburses profits from $270 billion in frozen Russian assets in Belgium, so that Ukraine can make repayments to G7 creditor countries, including the U.S.. However, the ULCM can only do that for as long as EU sanctions maintain the freeze on Russia’s assets. In other words, once the Russian asset freeze ends, loan repayments to the U.S. will stop.
U.S. officials tried to mitigate this financial risk by urging the EU to extend its sanctions renewal process against Russia from six months to three years, but failed in the teeth of a Hungarian veto. That puts repayment of the U.S. loan at the mercy of EU member states agreeing to extend the Russian asset freeze over the long-term which seems optimistic, at best.
The equivalent EU loan of $20 billion includes a clause that Ukraine may ultimately have to repay the capital if the proceeds from frozen Russian assets or war reparations from Russia are not forthcoming. Yellen’s statement, therefore, that U.S. taxpayers won’t ultimately foot the bill for this $20 billion loan rests on shaky ground.
Ukraine also has a track-record of not repaying its international debts. In July, Zelensky signed another declaration to defer payments on foreign debts, while a restructuring was underway. A Ukrainian agreement in July to restructure $20 billion in loans led to creditors writing off 37% of their capital.
The much bigger problem, of course, is that the $50 billion G7 loan, which took six months to finalize, is just a band-aid on what Ukraine needs, just to keep the lights on in its flagging economy. According to the IMF, Ukraine’s budgetary situation is so dire that it will need between £122-£141 billion in external financing to meet its fiscal needs between 2023-2027. So, at best, the G7 loans meet 41% of that need.
Unlike the EU loan, intricate details of which can be found on the Commission website, the U.S. Treasury has not revealed the details of how its loan is structured. The U.S. Treasury has simply paid the full $20 billion into the World Bank and appears to be hoping for the best. Just to be clear, loan repayments will need to be made to the U.S. government; the World Bank has pointedly made clear that it “does not handle or deal in any way with immobilized Russian assets or any investment earnings on those assets.”
Where does this leave us?
Self-evidently, with 61% of its planned budget for 2025 earmarked for defense spending, the best way to relieve Ukraine’s dire budgetary situation (not to mention to stop the needless loss of life) will be to end the war.
Setting aside the war itself, a decade of conflict has had a devastating effect on ordinary Ukrainians. According to the World Bank, “more than a fifth of adults who were working before the invasion reported losing their jobs; some two thirds of households have neither savings nor labor income. A third of surveyed families reported modifying or skipping meals altogether. Three of every 10 Ukrainians now live in poverty.”
Anyone who thinks that Russia will simply forego its frozen $300 billion in assets in the interests of filling Ukraine’s huge fiscal gap is sorely mistaken. Russia continues to pursue through UK courts repayment of the $3 billion Eurobond paid to Victor Yanukovych’s government in December 2013, after Ukraine stepped back from signing the EU Association Agreement. Russia has consistently made it clear that it will not meet the cost of reparations as it considers that the war was precipitated by the West’s encouragement of Ukraine.
Rating agencies downgraded Ukraine into default territory in July, meaning that it is effectively cut off from access to new lending from international investors. Once the $50 billion from the G7 runs out, Zelensky, or whoever replaces him after a ceasefire and elections that he seems likely to lose, will need to come back for more.
So, the issue of how this latest $20 billion handout to Ukraine will be paid seems entirely secondary to the point that it won’t be the end of U.S. funding to Ukraine. Despite what Secretary Yellen says, that means no end in sight to the financial burden on U.S. taxpayers from Biden’s war.
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Top image credit: U.S. President Donald Trump greets Uzbekistan's President Shavkat Mirziyoyev at the White House in Washington, U.S. May 16, 2018. REUTERS/Jonathan Ernst
When President-elect Donald Trump starts his second term January 20, he will face a full foreign policy agenda, with wars in Ukraine and the Middle East, Taiwan tensions, and looming trade disputes with China, Mexico, and Canada.
At some point, he will hit the road on his “I’m back!” tour. Hopefully, he will consider stops in Central Asia in the not-too-distant future.
The “United States Strategy for Central Asia 2019-2025: Advancing Sovereignty and Economic Prosperity,” says all the right things like supporting regional sovereignty, independence, and territorial integrity; promoting the rule of law; and encouraging U.S. investment. But it was released when U.S. forces still occupied neighboring Afghanistan. Eighteen months later, those forces were gone.
So, what should President Trump do about Central Asia?
First, show up!
No sitting U.S. president has ever visited Central Asia. Russian President Vladimir Putin has made 73 visits to the five republics, while China’s Xi Jinping has made 13 visits to four of the republics since he ascended to the presidency in 2012.
President Joe Biden met the presidents of the five former Soviet republics – Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan -- during last year’s “C5+1” meeting of the U.N. General Assembly. The unprecedented summit, while described by the president as “historic,” actually lasted less than one hour, making the gathering more of a photo-op. By the time everyone gave their remarks, it was on to the next event.
No matter how good your diplomats, nothing greases the wheels like a face-to-face meeting of the bosses.
Second, understand that the republics think multipolarity is a good thing.
The republics are finally free of the Russian Empire (1721-1917), Soviet empire (1917-1991), and the American empire (2001-2021) and are not interested in any arrangement that limits their ability to balance between the major powers, or play them off one against the other. And getting directions from faraway Washington and Brussels will remind them of the Soviet era.
The republics have language and business ties with Russia, have received significant investment from China, see Iran as a beckoning market and the host of needed transport routes, and are investing in Taliban-controlled Afghanistan. The republics soberly understand they are all “neighbors forever” and have no interest in serving as launchpads for attacks on Iran or Afghanistan.
Third, hands off the culture.
The republics are old cultures, but young nations. They are still engaged in state formation and are open to technical support on various issues such as World Trade Organization accession, but they are not interested in changing their culture to accommodate foreigners. And if the West can’t restrain its tendency for social engineering, they can always deal with China, which is run by a Communist Party but isn’t exporting Communism.
Their concern with defending cultural sovereignty isn’t a reaction to Western culture and pushy NGOs. During the Soviet era, Moscow took a keen interest in Islam in Central Asia and made a concerted effort to control Islamic education and appoint imams in the interest of revolutionary Socialism in recognition of the religion’s continuing influence in the officially atheistic Soviet Union.
Fourth, Afghanistan is part of Central Asia.
The Central Asian countries are interested in reducing tensions and instability in the region, and that requires developing common approaches to maintaining peace in neighboring Afghanistan.
For example, the Trans-Afghan Railway, a 357-mile connection from Central Asia to the Pakistani seaports of Karachi, Gwadar, and Qasim, is a long-term contribution to stabilizing Afghanistan. In addition to contributing to the development of a sustainable Afghan economy, the project will hopefully create thousands of jobs and reduce the social base of support for extremist groups in the region.
The construction and operation of the corridor will provide opportunities for American contractors, equipment manufacturers, engineers, and logistics companies. Direct or indirect U.S. participation in the project will support job creation and income for American business, which should find favor with Trump.
And, as an alternative to China’s “One Belt, One Road” projects, the Trans-Afghan Railway will also serve to diversify Central Asian trade in world markets and reduce the region's dependence on Beijing, which also serves long-term U.S. interests.
Andrew Korybko, an American political analyst at the Peoples’ Friendship University in Moscow, notes that even partial completion (due to security challenges in Pakistan) of the railway may still benefit the republics if they can backhaul Afghanistan’s minerals for processing in Russia or China. (The republics themselves aren’t able to process the minerals due to water shortages.) Completion of the railway could also bring Afghan minerals to the Western markets via Pakistani ports, but that would require a relaxation of banking and financial sanctions against the Taliban.
In addition to Afghanistan’s mineral wealth, valued at over $1 trillion, the five Central Asian republics hold a significant share of the world’s critical minerals, including manganese, chromium, lead, zinc, and titanium. Some of the republics “sit among the world's top 20 producers for critical minerals which are most essential to the development of green technology,” according to British solicitors Herbert Smith Freehills.
Mostly-landlocked Central Asia has been “out of sight, out of mind” in assessments of supply chain opportunities and vulnerabilities as the world plans for the energy transition. China has recently banned the export to the U.S. of the critical minerals antimony, gallium and germanium, which are used in semiconductors, infrared technologies, and electric vehicle batteries, so Washington may need to use the C5+1 Critical Minerals Dialogue as a way to return to the region in order to secure long-term access to its mineral wealth.
Last, think about economics.
The U.S. does little trade with Central Asia, but the region is key to East-West trade between Europe and China, as it has been since before Marco Polo’s famous adventures.
The Middle Corridor, also known as the Trans-Caspian International Transport Route, is a trade route that links China and East Asia with Europe via Central Asia. This route has seen a substantial volume. It aims to reduce transit time between East Asia and Europe to as little as 12 days.
The China-Kyrgyzstan-Uzbekistan (CKU) railway finally started construction in October and will help isolated Kyrgyzstan “go out into the world.” China is also working with Kazakhstan to upgrade existing rail infrastructure and, in 2022, “the railway freight volume between China and Kazakhstan reached 23 million tons, marking a 20 percent year-on-year increase.”
Should the Trump administration be so inclined, there are also two major opportunities to link Washington’s crusading impulse to significant environmental efforts in Central Asia: the drying up of the Aral Sea and methane emissions in Turkmenistan.
The desertification of the Aral Sea, now known as the Aralkum Desert, has had profound economic effects on the region: fishing industry collapse and resulting widespread unemployment, and agricultural decline and increased salinization of the soil, not to mention adverse health effects, including increased infant mortality, growth retardation and anemia in children, respiratory disease, and elevated occurrences of cancers. The environmental and economic hardships have forced people to migrate in search of better living conditions, leading to depopulation of the region, further economic decline, and pressure for jobs and housing in urban centers.
Turkmenistan is a significant emitter of methane, a potent greenhouse gas. Methane leaks from Turkmenistan's gas fields are substantial: over 2.9 million tons of methane, equivalent to more than 403 million tons of carbon dioxide, more than the annual carbon emissions of the United Kingdom. Given Washington’s own experience with reducing methane emissions, the U.S. could offer meaningful technical assistance.
While Trump has regularly bashed the United Nations, he might now consider partnership with the Central Asian governments through the UN Multi-Partner Human Security Trust Fund for the Aral Sea Region, the Global Methane Pledge, and UN Water to flow the money, technology, and political support needed to help the region repair the adverse effects of these environmental catastrophes.
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