In the waning days of 1991, Robert Strauss, the senior Democratic operative just appointed by George Bush to be ambassador in Moscow, was asked whether he would advise U.S. businessmen to invest money in post-Soviet Russia.
"If I had $100,000 and I was your age," he told a young reporter, "I'd be damn interested in coming over here and investing that $100,000. If I had $10 million and I was your age, I'd be interested in coming over here and investing $100,000 of it."
With Washington’s encouragement, what looked like a good, if cautious, bet on Boris Yeltsin’s Russia, soured over the last three decades and most spectacularly following Vladimir Putin’s invasion of Ukraine.
Capital is a coward. Boosting Russia today, as Strauss did in 1991, is unthinkable — verging on the unpatriotic. Indeed, the Wall that Ronald Reagan so famously called out is now being resurrected by Western leaders busy picking out the drapes of a new sanctions-heavy Iron Curtain aimed at destroying the economic foundations of Putin’s rule.
The very same companies that led the charge in the halcyon days of old — like Shell, BP, and MacDonald’s — are now running for the exits, closing shops and factories, winding down businesses, and liquidating assets at bargain basement prices. Volkswagen, BMW and Toyota have stopped production in their Russian plants. Renault, the most dependent of major automakers on the Russian market, has remained silent. The French automaker has lost around a quarter of its market value in the wake of Russia's invasion of Ukraine and ensuing economic sanctions.
Boardrooms from London to Berlin and Seattle are abandoning, most probably irrevocably, the broad structure of economic engagement and strategic security built with such enthusiasm — and success — in the seven decades following Germany’s defeat in World War II. A tidal wave of economic and security estrangement is unfolding, feeding on its own energy — and without any plan to restore a working semblance of the status quo ante.
Economic globalization, especially after the demise of the Soviet Union and the death of Mao, was embraced by an enthusiastic and solid international economic consensus and secured by pan-European agreements on military security. An ideological superstructure domesticated and championed its virtues. Indeed, was not the facile MacDonald’s rule — that countries where the franchise operates do not wage war on each other — self-evident?
This system was by no means perfect, but it was difficult to argue that there were better alternatives to a postwar structure that proved flexible enough to peacefully accommodate the end of Communism and China’s rise.
But now this system is now dying a painful and disruptive death. And unlike the previous era of globalization and democratization, no one is claiming that battling Russia’s hostile military occupation on NATO’s border and lose-lose beggar thy neighbor actions defined and limited by economic sanctions, mark an improvement over the ancien regime, or promise better strategic and economic security than the system built on the ashes of Dresden and Hiroshima.
There is a chance, however small, that leaders will have the foresight and confidence to begin the tortuous process of constructing a new, consensual security architecture in Europe — and beyond. As the Russian advance into Ukraine continues, however, the prospects for such a happy ending grow dimmer.
As Biden sees it, "You have two options. Start a Third World War, go to war with Russia, physically. Or two, make sure that the country that acts so contrary to international law ends up paying a price for having done it."
There is a third option — revisiting a diplomatic engagement that accommodates everyone’s red lines. For Putin that means formal acknowledgement of Ukraine’s status as a neutral state and closing the door on further NATO enlargement in his backyard. For Zelensky, it means preserving Ukraine’s territorial unity and economic freedom.
Both Kiev and Moscow offer tepid encouragement to a parade of self-interested do-gooders hoping to serve as mediators to halt the fighting. Bilateral sessions offer better prospects, but Putin and Zelensky alike see value (at least they are not shutting anyone down) in giving a nod to the efforts of outsiders — from French president Macron to Turkey’s president Erdogan and Israeli prime minister Naftali Bennett — to encourage a trend favoring dialogue.
The wannabe mediators are themselves not disinterested parties. For Macron, who not too long ago announced that NATO was “brain dead” and is running for re-election, a diplomatic process in which he — and France — play an important part has self-evident advantages. Likewise for Erdogan and Bennett, each of whom has vital equities to protect in both warring capitals, and sees dialogue as a way of escaping the zero-sum costs of continuing warfare and American demands to side with Kiev.
Moscow understands their interests and their concerns only too well. In recent days, Russian media published a video of Russian military units patrolling the Syrian side of the Golan Heights. For the last two years Russian forces have been present along the Israeli-Syrian frontier — part of Russia’s extensive military role in Syria precipitated by the 2011 campaign against the regime of Syrian president Bashar al Assad.
Israel hardly needs to be reminded that it relies on Russia’s forbearance to maintain its air campaign in Syria against Iran and its proxies. However, just in case it does, the video showed Russian soldiers patrolling Israel’s Golan border wearing combat fatigues bearing the letter “Z” — the symbol of the military campaign in Ukraine.
The effort to mediate -- or even to be seen as mediating — is not without costs. Bennett ran into trouble in Kiev after it was reported that his offer of tough love was not welcome. Erdogan’s reliability as a NATO ally could suffer further if he makes good on his promise not to join the US-led economic isolation of Russia.
Meanwhile, the Biden administration has pointedly distanced itself from such mediation efforts as incompatible with its campaign of maximum pressure against Putin and Russia.
Apparently the administration sees more utility to engage in some realpolitik with the likes of Maduro’s Venezuela — and pursue a hybrid strategy somewhere between war with Moscow and punishment in pursuit of Russia's "strategic defeat." There may be good reasons to rethink the U.S. campaign to crush Maduro, but there has been no debate whatsoever in Washington defining exactly what the “strategic defeat” of Russia and Putin means, or the costs that it entails.
Volodymyr Zelensky may be the one who brings us all back to Earth. The deal now being discussed with growing enthusiasm in both capitals will not be as generous to Ukraine as the one on offer before the invasion and Russia’s rolling occupation of its neighbor. Zelensky and Putin alike will have to make hard choices on the Donbas, Crimea and the size and mission of Ukraine’s armed forces — indeed the very issues that Ukraine, Russia and the international community confronted before the war.
At its best, the global order and its array of multilateral institutions now passing from the scene offered agreed upon mechanisms for addressing, limiting, and resolving conflict. Perhaps a new, and improved order will emerge from the destruction in Ukraine. For all of his enthusiasm, Strauss, were he around today, would probably say, “Don’t bet on it.”
Geoffrey Aronson is a writer and analyst, specializing in Middle East affairs. He was the director for Foundation for Middle East Peace and the editor of the bimonthly Report on Israeli Settlement in the Occupied Palestinian Territories until June 2014. His articles on a wide range of contemporary policy and strategic issues appear regularly.
January, 4, 2022: Macdonald's restaurant in Moscow. (Vereshchagin Dmitry/shutterstock)
With no ceasefire in the war between Israel and Hamas in sight and Houthi forces in Yemen still firing missiles and drones at commercial shipping in the Red Sea, the EU’s efforts at addressing conflict in Gaza and its broader regional ramifications keep flailing.
After weeks of discussions, the EU officially launched its naval operation in the Red Sea on February 19 to protect international commercial shipping from Houthi attacks. The Houthis claim they wantto force a ceasefire in Gaza. Yet, while the ceasefire remains elusive, the attacks impose real costs on EU members: the EU commissioner for economy Paolo Gentiloni recently estimated that the rerouting of shipping from the Red Sea has increased delivery times for shipments between Asia and the EU by 10 to 15 days and the consequent costs by around 400%.
Around 40% of the EU’s total trade with the Middle East and Asia passes through the Red Sea.
Protecting that shipping route thus is an important collective economic and security interest for the EU. Yet only four countries — France, Germany, Italy and Belgium — out of the 27 member states have agreed to provide warships for the new operation. Spain, which refrained from using its veto power to block the initiative, nonetheless declined to participate, having expressed concerns from the outset that any armed operation would reduce pressure on Israel to agree to a ceasefire in Gaza.
A bigger question is how effective this new EU operation will be in countering the Houthi threat given its purely defensive mandate to provide “situational awareness, accompany vessels and protect them against possible attacks at sea.” Accordingly, the participating EU warships will be authorized to fire on Houthi targets only if they themselves or commercial vessels they are to protect are attacked. That rules out pre-emptive action against Houthi missile batteries or related targets.
The defensive nature of the operation, however, may not be enough to convince the Houthis to refrain from attacking the European ships. In fact, Houthi leaders warned Italy, one of the new operation’s chief promoters, that it will become “a target if it participates in attacks on the Houthis.”
If this threat comes to fruition, will the EU authorize offensive action against the Houthis, potentially drawing itself into a wider conflict? Will it rely on U.S. hard power for protection given that Washington is already engaged against the Houthis through “Operation Prosperity Guardian,” in which a few EU nations – Denmark, Netherlands and Greece, as well as non-EU NATO members Britain and Norway -- are also participating?
Would such developments not lead to a de facto merging of the U.S. and EU-led operations under Washington’s lead — an outcome Europeans sought to avoid and which is the very reason why they launched their own mission in the first place?
That these are not abstract questions is underscored by the failure, so far, of scores of U.S.- and UK-led strikes to degrade the Houthis’ capabilities to the point where they would no longer pose a significant threat. Indeed, just as the EU announced its mission, the Houthis hit a British cargo ship which was at risk of sinking in the Gulf of Aden in what the Yemeni rebels claimed was their biggest attack yet. The United Kingdom Maritime Trade Operations confirmed the incident, though it did not name the ship.
Ironically, the safest way for the EU to avoid a direct military engagement with the Houthis, apart from testing their vow to stop attacking shipping if Israel ends its Gaza offensive, would be to reduce the number of targets in the Red Sea by encouraging ships to reroute. But such an outcome would, of course, vindicate the Houthi strategy to impose costs on the Western powers for the failure to stop the war in Gaza.
And that brings us back to the mother of all conflicts in the Middle East: the continuing war in Gaza. The EU’s approach so far has been to delink Gaza from the crisis in the Red Sea and the broader escalation in the region, including clashes between Israel and Lebanon’s Hezbollah. Yet mounting tensions on that front show that its approach is not working.
Some actors in the EU understand the urgent need for a ceasefire in Gaza as a necessary condition for regional de-escalation. The EU high representative on foreign policy Josep Borrell has been particularly vocal in his criticism of Israel. He suggested limiting arms sales to Tel Aviv on the grounds that such transfers violate EU guidelines that ban sales to countries accused of violations of the international humanitarian law.
A Dutch appeals court recently ordered a halt to exports of F-35 jet parts to Israel on the same grounds. However, it is highly unlikely that the EU as a whole would adopt such a position, given that a number of countries – especially Germany, Austria, Czech Republic, Hungary – strongly support Israel.
A stronger point of leverage could be to suspend fully or partially the association agreement between the EU and Israel. The EU is Israel’s largest trading partner. In 2023, that agreement enabled 46.8 billion euros worth of bilateral trade. The prime ministers of Spain and Ireland, Pedro Sanchez and Leo Varadkar, respectively, asked the president of the European Commission, Ursula von der Leyen, to “urgently review” whether Israel is violating the human rights clauses included in that agreement. On February 19, the Spanish foreign minister, Jose Manuel Albares, insisted that the review should be completed in time for the next EU foreign ministers meeting on March 18.
A full suspension of the agreement seems very unlikely even if the Commission finds Israel to have violated its human rights obligations because that would call for a unanimous decision by all member states. A partial suspension would require a qualified majority: 55% of member states (or 15 out of 27) representing 65% of the EU’s total population.
Notably, the only precedent for taking such an action came in 2011 when the EU suspended an association agreement with Syria in response to mass violations of human rights by the Bashar al-Assad regime.
Meanwhile, the EU proved unable last week to issue even an official appeal to Israel not to follow through with its plans to carry out a ground invasion of Rafah, the southernmost city in Gaza, which has become the last refuge of nearly a million refugees from elsewhere in the enclave. In the face of a veto threat by Hungary, the other 26 member states instead issued a joint statement warning of the catastrophic humanitarian consequences should Israel move ahead with such an invasion.
Notably, however, Hungary was isolated in its opposition to the appeal as Germany and other member states that have traditionally been reluctant to criticize Israel’s conduct of war were on board. That is a step forward, but it’s too little and it comes too late. As long as the EU keeps avoiding imposing real consequences on Israel for its conduct, it will keep losing influence in the Middle East.
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Mike Shoemaker VP F35 customer programs, FMS, Domestic and Partners talks during the inauguration ceremony of Sabca's new production hall for the horizontal tailplane of the F-35 fighter aircraft, in Lummen, Thursday 10 March 2022. T BELGA PHOTO JOHN THYS.
Instead of reevaluating its maximalist national security strategy, the Biden administration is doubling down. It is proposing a generation of investment to expand an arms industry that, overall, fails to meet cost, schedule, and performance standards. And if its strategy is any indication, the administration has no vision for how to eventually reduce U.S. military industrial capacity.
When the Cold War ended, the national security budget shrank. Then-Secretary of Defense Les Aspin and deputy William Perry convened industry leaders to encourage their consolidation in a meeting that later became known as the “Last Supper.” Arms makers were to join forces or go out of business. So they ended up downsizing from over 50 prime contractors to just five. And while contractors needed to pare down their industrial capacity, unchecked consolidation created the monopolistic defense sector we have now — one that depends heavily on government contracts and enjoys significant freedom to set prices.
In the decades since, contractors have leveraged their growing economic power to pave inroads on Capitol Hill. They have solidified their economic influence to stave off the political potential for future national security cuts, regardless of their performance or the geopolitical environment.
Growing the military industrial base over the course of a generation would only further empower arms makers in our economy, deepening the ditch the United States has dug itself into for decades by continually increasing national security spending — and by doling about half of it out to contractors. The U.S. spends more on national security than the next 10 countries combined, outpacing China alone by over 30%.
Ironically, the administration acknowledges in the strategy that “America’s economic security and national security are mutually reinforcing,” stating that “the nation’s military strength depends in part on our overall economic strength.” The strategy further states that optimizing the nation’s defense needs typically requires tradeoffs between “cost, speed, and scale.” It doesn’t mention quality of industrial output — arguably the biggest tradeoff the U.S. government has made in military procurement.
Consider, for instance, the B-2 bomber, the F-35 fighter jet, the Littoral Combat Ship, the V-22 Osprey, and many other examples of acquisition failures that have spanned decades. More recently, the Government Accountability Office has reported that while the number of major defense acquisition programs has fallen, both costs and average delivery time have risen.
So what is the military really getting from more and more national security spending? Less for more: Fewer weapons than it asked for, usually late and over budget, and, much of the time, dysfunctional. Acquisition failures are a major reason the Congressional Budget Office projects that operations and maintenance spending will significantly exceed the rate of inflation for the next decade — a considerable budgeting issue for a military that seemingly has no plans to reduce either its force structure or its industrial capacity. Quite the opposite, in fact.
Biden’s new National Defense Industrial Strategy specifically states there is a need for the U.S. to “move aggressively toward innovative, next-generation capabilities while continuing to upgrade and produce, in significant volumes, conventional weapons systems already in the force.” Ironically, the military has spent over two decades developing the F-35, next-generation technology that the Pentagon still hasn’t greenlit for full-rate production.
Throwing more money at an industrial base comprised of businesses too big to fail won’t increase the quantity or quality of its output. But that’s exactly what the strategy urges. One of the priorities is to “institutionalize supply chain resilience.” It’s an important goal, but one the administration proposes the Pentagon tackle, in part by investing in “spare production capacity,” what the strategy defines as “excess capacity a company or organization maintains beyond its current production needs.”
But building factories to sit empty is not supply chain resilience. It’s wasting money on unnecessary infrastructure, creating a profit motive for arms makers to make more weapons. And for an industry constantly sounding the alarm about the need for consistent “demand signals” from Congress, the Pentagon’s plans to invest a generation of U.S. taxpayer money in “spare production capacity” sounds a lot like throwing the demand-supply principle out the window. In that case, the U.S. might as well consider nationalizing the defense industry, which already lacks competition and relies almost entirely on the government. Why not eliminate the profit motive? It’s not like making money drives contractors to produce quality products on time or within budget.
Besides supply chain resilience, another priority laid out in this strategy is “flexible acquisition.” The stated goal is to reduce costs and development times while increasing scalability. In pursuit of that goal, the administration proposes “a flexible requirements process” for multiyear contracts, and the expansion of multiyear contracting writ large. It reasons that as priorities shift in an “evolving threat environment,” so too should contractors’ deliverables. But pairing flexible requirements with an increasing number of multiyear contracts is a recipe for disaster.
Before Russia attacked Ukraine, multiyear contracts were relatively rare — limited to major aircraft and ships. The Congressional Research Service notes that estimated savings on these programs have historically fallen within the range of 5% — 10%. But those are estimates, and they may not apply to other munitions now produced under multiyear contracts. The report also confirms that actual savings are “difficult to observe,” in part because the Pentagon does not track the cost performance of multiyear contracts.
Just because multiyear contracting is more common doesn’t mean it’s cheaper. And while the Pentagon argues that multiyear contracts give contractors the so-called demand signal they need to ramp up production, contractors don’t usually spend their extra money on identifying efficiencies or making capital investments to increase output at a lower cost — and the Pentagon isn’t checking.
The strategy also proposes “aggressive expansion of production capacity.” It notes that during peacetime, weapons acquisition tends to focus on “greater efficiency, cost effectiveness, transparency, and accountability.” Taking caution not to assert that the United States is in wartime, the strategy contrasts peacetime acquisition policy with “today’s threat environment,” calling for “crisis period acquisition policy” that revitalizes the industrial base and shifts focus from efficiency and effectiveness to ensuring that military contractors are “better resourced.” But contractors don’t have a resource problem, and “crisis acquisition policy” puts the United States on a “permanent war footing.”
Lawmakers must challenge the administration’s maximalist national security strategy by interrogating its push to expand military industrial capacity so drastically. It’s critical that they do, not only because the U.S. is limited in what it can produce and provide to other countries but also because arms industry greed is boundless — and without off-ramps or constraints, the U.S. government may find in 20 or 30 years that it’s in a ditch it can’t get out of.
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Israeli soldiers operate next to the UNRWA headquarters, amid the ongoing conflict between Israel and the Palestinian Islamist group Hamas, in the Gaza Strip, February 8, 2024. REUTERS/Dylan Martinez
The U.S. intelligence community has found Israel’s claims that employees of a U.N. aid agency took part in Hamas’s Oct. 7 attack to be plausible, but it cannot conclude more definitively because it has not been able to independently verify the charges, according to new reporting from the Wall Street Journal.
The Israeli government charged last month that 12 staffers at the United Nations Relief Works Agency (UNRWA) — which facilitates humanitarian aid to Palestinains throughout the region — either participated or assisted in the Hamas-led atrocities and that others have close ties to the terror group.
UNRWA fired the 12 employees and donor counties, including the United States, have since paused funding, moves that have increasingly become more controversial as the Israeli government has yet to provide clear evidence for its claims. The agency says it will soon run out of money amid the humanitarian crisis in Gaza.
According to the Journal, the U.S.’s National Intelligence Council assessed with “low confidence” that a small group of UNRWA staffers participated in the attack. The intel assessment, the Journal reports, “doesn’t dispute Israel’s allegations of links between some staff at Unrwa and militant groups” and that, according to U.S. officials, “Israel hadn’t shared the raw intelligence behind its assessments with the U.S., limiting their ability to reach clearer conclusions.”
"This assessment casts further significant doubt on the veracity of Israel's claims against UNRWA, which remain allegations without confirmed substantiating evidence,” Chris Gunness, a former UNRWA spokesman and now Director of the Myanmar Accountability Project, told RS. "If Israel has allegations against UNRWA, it should hand them over to the internal and external investigations currently underway: one by the U.N.'s Office of Internal Oversight and the other headed by a former French minister. Only when the information has been authoritatively assessed should anyone draw conclusions.”
For years, factions on the right in Israel, along with their supporters in the United States, have been working to close down UNRWA with the apparent belief that the U.N. agency lends credibility to Palestinians' assertions of ownership over land Palestinians argue was taken by Israel. UNRWA also regularly submits a roster containing the names of its staff to the Israeli government, which in turn signs off.
“Those donors who based their decisions to defund UNRWA on unconfirmed information should restore funding and only take a decision when they have a proper understanding of what took place,” Gunness added.