“China is a sleeping giant. Let her sleep, for when she wakes she will move the world.”
On his information gathering tour in Europe in 1967, one year before being elected president of the United States, Richard Nixon went to see ailing Konrad Adenauer. Just one month before dying, the former Chancellor spoke bluntly to him:
“’Make no mistake about it,´ he said, ´they want the world. The whole world. Most of all they want Europe, and to get Europe they know they must destroy Germany. We need you to keep us strong and free. But you also need us.´ Adenauer urged – as he had de Gaulle four years before – that we tilt our policy toward Communist China to counterbalance the growing Soviet threat.”1
Before the end of the same year, Nixon published an article in Foreign Affairs arguing that the United States could not afford keeping China outside the “family of nations” forever. Four years later. on 15 July 1971, President Richard Nixon of the United States of America announced that he would pay a visit to China the following spring. The replacement of Sino-Soviet alliance by Sino-American alliance was the number-one prerequisite of American victory in the Cold War. While in the United States the 70s were a decade of disorientation, loss of confidence and shaken trust in the political elite and in China the Gang of Four went on rampage in an atmosphere of Civil-War-like terror, the might and the influence of the Soviet Union seemed unbroken. In the 80s however, both the United States and China found their legs again. The Reagan and Bush presidencies came out victorious from the Cold War that had started in 1917, giving back to Americans their traditional confidence and belief in their mission, while China entered an era of consolidation and outright economic miracle under Deng Xiao-ping. During the years when the Soviet Union disappeared from the scene and China was gathering strength, the leading role of the USA in world politics was not questioned by anyone.
Logic and emotions weigh precious little in the face of the realities of power.
At the beginning of the twenty-first century, the USA had to face several challenges in its role as the world’s leading power. The economic crisis following the financial crash of 2008 coincided with the emergence of new power centres. As it usually happens, all hotbeds of conflict started releasing pus and were in need of urgent therapy. It is up to the new American President Barack Obama who is still in office to shape new short and long-term strategies for the United States about how to face this set of issues each of which is of great gravity.
His main task is to revitalise the American economy while preventing the global leading role of the United States from being questioned. Let’s see what steps the president has taken in order to achieve that goal.
Let’s take as a starting point what Adenauer told Nixon and have a look at the USA’s policy towards Europe. It is important to understand that as seen from Washington, Europe does not look like a continent on its own but as part of Eurasia. Eurasia on the other hand, at least according to Zbigniew Brzezinski, is the centre of world power. If America is to keep its leading role in the world, it is of primary importance for her to prevent the birth of a hostile Eurasian power centre. 2 Eurasia means Europe Russia and China put together. It is therefore worthwhile to cast a glance at the conflict between Ukraine and Russia from this point of view, while keeping China in sight as well.
In the 1990s, after the Soviet Empire ceased to exist, Eastern Europe – or as we like to call it, Central Europe and the Baltic countries – as well as the Balkans became free and independent. They soon joined NATO and then, in the beginning of the new century, the European Union as well. Ukraine remained neutral – a sort of buffer country between Europe and Russia. Russia still remains a huge country but was by now also surrounded by independent countries in Central Asia. 3 The USA supported European unity without reservations as long as it was confined to Western Europe, for Europe was split in the middle by one of the most important frontlines of the Cold War and a strong and united European sphere of influence was needed in its duel against the Soviet Union. All-European unity after the fall of the Berlin Wall and the disintegration of the Soviet Union prompted US decision-makers new considerations. Where should the borders of the new united Europe to be drawn? In other terms, is Russia part of Europe? What should be done with newly united Germany? Its Western half, the German Federal Republic was already the strongest and most dynamic economy of the European Union in itself. It was hindered though in taking a political role by its World War II defeat and its responsibility for the Holocaust as well as by the fact that its eastern border was a demarcation line between Cold War opponents. In the wake of German unification that ultimately resulted in European unity as well, Germany was revalued both economically and geopolitically. Its economic strength and performance made it the engine of Europe while it found itself in the centre of the continent. All this contributed to accelerating the process during which France and Great Britain after still appearing important in the second half of the twentieth century were both economically and strategically devalued. 4 With its common market and common currency, European integration has appeared as a challenge to the United States. This is why the question whether Russia (and Ukraine) can join the community has become burning for decision-makers both in Europe and the USA. 5 What are the consequences if the answer is yes and what happens if the answer is no? Can the USA prevent rapprochement, economic and strategic cooperation between Germany and Russia? If Russia is isolated from Europe and thus will be compelled to reach out towards China whatever the cost, what will be the consequences for the European Union and for the United States? What is to be done in the case of rapprochement between Germany and China? Theoretically and in the long run is it imaginable for China, Russia and Europe to stand together and for Eurasia turning against the USA? And if it is, will the USA tolerate being crowded out from Eurasia?
There is no such thing as fighting on the winning side; one fights to find out which is the winning side.
”The chief business of the American people is business. They are profoundly concerned with producing, buying, selling, investing and prospering in the world,” President Coolidge said. 6 None of the American presidents of the twentieth and the twenty-first centuries thought it to be otherwise – they all spoke for free trade and the dismantling of other countries’ protective customs duties. For free and unfettered trade always favours the stronger, and since the beginning of the past century, America has been the strongest economy in the world. It still is, despite the credit crunch and financial crisis that hit in 2008. Even if the American economy suffered a hard blow and even if its structural and economic problems after being covered up for decades by abundant money supply have now come to the surface. On the other hand, shale gas technology has opened new prospects in front of America’s economy. 7 We should keep in mind that the USA was the first oil super power of the world. The first oil rigs were erected in Titusville, Pennsylvania in 1859. From that moment on, John D. Rockefeller’s Standard Oil was for a long time the number one oil exporter in the world. Oil was already indispensable in World War I and ensuring oil supply became a primary strategic objective during World War II. After D-Day, in the summer of 1944, when General Patton speared ahead into France, Texan pipeline building experts laid 80 kilometres of pipeline daily for his tanks. 8 Post-World War II reconstruction made Europe clearly dependent on oil – Middle Eastern oil to be precise. “Without Middle Eastern oil the European reconstruction programme runs hardly any chance of success,” Secretary of Defence James Forrestal warned President Truman in a memorandum in 1948. 9 Thus the United States immediately took control of the Middle East. Then this region became one of the conflict zones of the two opposing world powers during the Cold War. Middle Eastern oil was cheap and available in unlimited quantities right until the oil embargo of 1973. 10 By the time Middle Eastern oil producers forming OPEC got to that point, the USA had to become their largest market. In fact, from 1967 on, the four main oil producing countries, Iran, Iraq, Kuwait and Saudi Arabia combined produced more oil than the United States. OPEC increased the price of crude to $5.12 in September 1973 and to $11.80 in October. From that moment on, access to Middle Eastern oil became a key issue in Western economies. The United States took care of oil supplies through its allies in the Middle East – Iran and Saudi Arabia in the first place. In 1979 however, the USA left the Shah of Iran Reza Pahlavi to his fate and he was ousted from his country by the forces of radical Islam. 11 From that moment onwards, American influence in the Middle East was exerted through repeated Arab-Israeli wars as well as conflicts among other countries of the region. 12
The tools of American influence include the selective application of supplying military equipment, financial aid, technological support and trade embargoes. In a few cases however, responding to strategic and political needs, the USA opted for direct military intervention, as it did in the Gulf War in 1991 and the Iraq War in 2003.
Controlling Middle Eastern oil was of vital importance for the United States for several reasons, namely meeting its own needs, supplying Western Europe and influencing Russian oil export prices. In fact, by the end of the 70s Russia had also become a major energy exporter and its 3,000,000 barrel daily output provided half of its export revenue. President Reagan of the United States exploited Russia’s dependency on oil revenues and agreed with Saudi Arabia to push down oil prices and thus managed to corner the Soviet Union financially. Soviet export revenues decreased not only in the oil market but also in arms trade, Russia’s other major source of income, since its main customers, oil exporting countries saw their own oil revenues waning and therefore were compelled to spend less on military equipment.
Recent advances in shale gas technology make the United States largely independent from Middle Eastern oil. 13 The implosion of the Soviet Union left the Americans without rivals in this region as well. They have mostly played an active role in letting the so-called Arab Spring loose. Destabilising Egypt in a way that resembled the events in Iran as well as the developments in Lebanon and Libya can also be explained assuming that the US intends to make middle eastern oil supplies insecure for the main importers in the Far East and in Europe. They could of course logically opt for Russian oil which would re-evaluate Russia in Europe, while keeping energy prices so vital for the Russian economy high. This might be one of the reasons behind the escalation of the Ukraine crisis.
Russia and Ukraine
Don’t push anyone to the wall
Russia is never as weak as you would like it to be nor is it ever as strong as you fear.
The Soviet Union collapsed like a house of cards. It buried under its rubble its Empire which disintegrated into its components; its economy was in ruin and its citizens impoverished. Although it was secured a “soft landing” by president H.W. Bush of the United States, who was careful not to humiliate the Russians more than necessary, 14 under President Clinton the “democracy project” put forward by the Americans created and oligarchic rule which allowed a small number of their business partners to get super rich and possess Russia’s raw material resources and public wealth. They used American subsidies to buy out key industries through an exceptional feat of “democracy” – a series of presidential decrees produced by Prime Minister Anatoly Chubays, their business partner and signed by President Yeltsin. They were of course linked to the upper crust in the United States as well, for their mentors included Larry Summers, Undersecretary (1991 to 1993), then Secretary of the Treasury under the Clinton administration (1999 to 2001), one of the main promoters of financial deregulation, who would later become President Obama’s chief economic adviser and candidate for the post of chairman of the Federal Reserve. 15
Thus Russia was exceptionally plundered even as compared to the rest of the former socialist countries. (Some Westerners certainly feel free to carry things ever farther as they move further Eastwards. Be they Germans, Britons or French, Swedes, Austrians, Dutch or again Americans etc.) Yeltsin was despised therefore was liked by the West. Putin makes it feel unsafe and therefore is disliked. According to Western commentators Yeltsin was a democrat, which makes one smile. The same people do not consider Putin a democrat although there are many countries, Georgia or Azerbaijan for instance, which are not any more democratic than Russia and are still not criticised as much as Putin is. Russia’s historical traditions are different from those of the United States and its public administration can only be organised, its political institutional system can only be renewed taking into account Russian roots. It is unreasonable to expect it to copy the Western model, although this is precisely why Russa is being often blamed. 16
Russia finds itself in a difficult position. Its historical traditions make it part of Europe. 17 Europe however doesn’t dare or doesn’t want to accept Russia as part of itself. What is it afraid of? Does it consider Russia too big? Does it fear its different socialisation? Is it afraid of its past aggressive nature? 18 Do we fear it to turn aggressive again in the future? All these fears are well founded. But what will be the consequences for the European Union if it declines rapprochement with Russia? What will be the advantages and disadvantages? These are the questions on the agenda today and that European public opinion refuses to discuss.
Let’s examine some of them. Russia is a huge country with significant raw material resources that are badly needed by us. Unlike Europe, it has defence capability. Demographically speaking, its situation is even more hopeless than that of Europe. 19 Europe is about to link its destiny to the United States as negotiations behind closed doors on the trade and customs union are well underway. Finalising such an agreement could be one of the reasons for swiftly trying to isolate Russia from Europe.
Today’s Ukraine was established from 1989 to 1991 because the only opponent of Ukrainian national rebirth, the utterly exhausted Soviet Union was facing numerous strong opponents. In December 1991, over 90% of Ukrainian voters opted for secession and independence. The two decades that have passed since are the longest chapter of independent Ukrainian statehood for several centuries. Ukraine is the Western gate to Russia. As seen from Moscow it is as important for Russian national security as Mexico is for the USA. As far as we are concerned, it is one of our most important neighbours, perhaps the most important, whose independent statehood makes our fears of Russia subside. As seen from the West, it is important if there is an intention to isolate or weaken Russia. 20 The commercially and militarily crucial Black Sea ports of Odessa and Sebastopol are (were) controlled by Ukraine. Vital oil and gas pipelines supplying Europe pass through Ukraine, and control over energy supplies, as we have said more than once, is a vital strategic and economic issue for Russia. 21 Ethnic Russians add up to 17.3% of Ukraine’s population and most of them live in a compact community in Eastern Ukraine. 22
Since the beginning of the new millennium, more precisely since the day when the victory of pro-Russian Viktor Yanukovich was declared null and void because of fraud in 2004 and a pro-Western president was put in charge by the orange revolution”, 23 Russia has always been convinced that the West and the United States in the first place of course, intend to use Ukraine as an anti-Russian base. As Putin sees it, the USA wants to isolate Russia from Europe and intends to break its backbone. From 2004 to 2010 the Russians “rebuilt” Yanukovich, which was not a hard job, since living conditions in the Ukraine had not improved under the pro-Western government either. Life had not become either easier or more secure for Ukrainian citizens. In 2010 when voters fell back again on Yanukovich, 24 the USA was busy with Iraq and Afghanistan 25 and needed Russian cooperation in both those war theatres before it resigned itself to the outcome of the election.
Yanukovich was indeed pro-Russian but did make moves towards the West, that is Europe, in order to broaden his elbow room that is Ukrainian independence. He made it clear on several occasions that he wanted to become a member of the Union, but the EU did not show signs of being receptive. By 2013, as a result of European reticence and of the developments described above, Moscow turned towards Eurasian integration. It is concluded a free trade agreement with Belarus and Kazakhstan, while trying to torpedo joint European action for instance on the energy front by financing anti-integration, radical left-wing and right-wing movements and parties within the Union. 26
The latest Ukraine crisis broke out when President Yanukovich was about to sign a customs union agreement with the European Union and therefore urgently needed money to settle the gas supply debt he had accumulated vis-a-vis Russia. The European Union did not put that amount to his disposal. Therefore he was left with no option but to accept Russian credits, coupled with a promise of substantially reduced gas prices and to turn eastwards and join the Russian led economic and trade Alliance. This is when the spontaneous revolution in which the pro-Western part of the divided nation intended to prevent Ukraine joining the Russian led economic and trade alliance. The West realises at last that it had to take a stance and both the Union, that is the Germans and the Poles and the United States stood behind the forces gathering in the central square of Kyiv. 27
President Yanukovich was toppled and a new, pro-Western president was elected. 28 Russia could not remain idle, given that its oil exports to the West were passing through Ukraine. It would be at the mercy of the Ukrainians and could not be sure when they would block oil supplies or when they would decide to siphon them. Europe is also dependent on gas supplies through Ukraine, especially since the Middle East has become unstable. (It would perhaps be worth asking why the planned Nabucco gas pipeline project was foiled at an early embryonic stage, 29 and to what extent that plan pushed for years by the Union was realistic and mature. While the Northern Stream is already in operation and several southern pipeline routes are still seriously considered.) Europe was undecided and impotent during the Ukraine crisis and just like during the Cold War, ceded the initiative and the decisions to the United States. 30 As for the USA, it turned Ukraine from a neutral and pro-Russian country into a pro-American one in a few months, while further increasing Russia’s feeling of being cornered. 31 Ukraine triggered Russian action in the Crimea by floating its consent to the stationing of the Russian fleet there. Russia was so the more confident in launching its adventure in the Crimea, 32 since it wasn’t its first successful military enerprise, given that a similar one had taken place against Georgia in 2008, 33 without entailing any consequences at all, on the contrary president Obama dismantled the anti-missile systems deployed under George W. Bush in Poland and in the Czech Republic. 34 The methods had been similar. A limited target was set and violence was reduced to a minimum in order to prevent the West from mobilising its public opinion behind potential military countermeasures to the fait accompli. The Crimea peninsula had been given to Ukraine as a gift by Nikita Khrushchev, and after the dissolution of the Soviet Union the Russian leadership was still on the floor and did not renegotiate the borders. At first, the Black Sea fleet remained in joint property, then it was split and the Sebastopol Navy base was leased to Russia for twenty years in 1997. The lease was then extended in 2010 for another 25 years. 35 The West did not accept the “reoccupation” of the Crimea. But it doesn’t seem able – or willing – to reverse it. In fact, as President Obama said in March 2014, “We will not launch military operations in Ukraine”. 36 The countries of the region are therefore rightly worried, for they cannot rule out being left on their own in case of a similar attack. Not even if they are members of NATO. 37
Europe proved to be paralysed as usual, but when the United States started talking about sanctions, so did European leaders in its wake. Investors turned their backs on Moscow; Russian capital started looking for escape routes. Meanwhile, followers of the example set by the Crimea created separate ‘peoples republics’ in Eastern Ukraine which merged into a federation and even adopted their own joint constitution. The outcome was not a carbon copy of the solution adopted in the Crimea. The insurgency was supported by Russia, but only to the extent indispensable for preventing an immediate crackdown. The Western media took sides against Putin, especially when Air Malaysia flight MH17 from Holland was shot down over Eastern Ukraine by what they claimed were Russian surface-to-air missile launchers operated by the insurgents. None of the 298 passengers survived. 38 More serious sanctions started being applied. 39
Putin was left with no other choice than to accept an offer by China which had been a silent observer throughout the Ukraine conflict. With an anti-Russian Europe emerging into a Euro-Atlantic customs union, Russia was bound to turn towards Asia, no matter how high the price set by China would be. Even if at a depressed price, it could still sell its oil and gas to China. 40 The main issue therefore was to isolate Europe from Russia or the other way around. Even at the price of pushing Russia towards China. 41 Russia is leaving a serious hotbed of conflict behind. In their present state, the integration of Georgia, Ukraine and Moldova into NATO and the European Union will be job enough for any man. 42
Foreign policy based on ideology is an invention by clever countries for dumb ones.
Viktor Orbán, 2014
The USA could win the Cold War because following Adenauer’s advice, president Richard Nixon broke the Eurasian alliance already bleeding from a thousand wounds and won over China to its own side. America supported China’s technological and modernisation revolution because it considered China since the beginning a huge potential market and a most important ally against Moscow.
When the Soviet Union crumbled, global markets were confronted with unprecedented opportunities, which resulted in a huge wave of economic prosperity. Led by its well-conceived interests and in the spirit of realpolitik, the United States never insisted on exporting democracy to China. It soon left the Tiananmen square bloodbath of June 1989 behind it and took note of the fact that Western type democracy would not be introduced in China any time soon. From that moment on, Chinese citizens could not regard the United States anymore as a power they could count on for supporting their strife for liberty. 43 Anti-American feelings were also aroused by consistent US action in defence of patent and trademark rights against small and medium size Chinese enterprises which made a living out of copying Western merchandise and flooding the fast expanding domestic market. Their livelihoods were protected by the Chinese government against Western authorities. There were also two further factors that strengthened anti-Western prejudice in China. In 1999, the Americans bombed the Chinese embassy in Belgrade by mistake, then on 1 April 2001 an American reconnaissance plane made an emergency landing on Hainan Island, in Chinese territory.
President Boris Yeltsin signed a trade agreement with China on the sale of energy sources as early as in 1994, but that intention never materialised. Moscow is deeply concerned by sharing the longest border line of the world with China and was exasperated by the continuous flow of Chinese citizens into scarcely inhabited Siberia. Fears for Siberia and oil prices being curbed as a result of conflict in the Middle East 44 froze the expansion of oil and gas drilling in Siberia for twenty years, but nowadays those projects can go ahead unhindered.
The sharpening of the situation in Ukraine as well as the appearance of shale gas with the American-European trade and customs union in the background have shed a new light on Sino-Russian relations. 45 As it has been mentioned above, with shale gas at its disposal, the USA cannot only dispense with Middle Eastern oil imports, but by defining the price of shale gas it will become able to determine on its own the world price of crude oil as well, on the condition that it will be able to deprive markets of the access to other energy resources. (By prolonging insecurity in the Middle East and isolating dictatorial Russia.) If it opts for the use of the oil weapon so successfully employed by Ronald Reagan, it can force Russia again on its knees.
Sino-Russian rapprochement, the first sign of which was the energy deal struck a few months ago, 46 may have at least as big an impact as Nixon’s visit to Peking had over four decades ago. China is to buy Russian energy because it is unable to influence either events in the Middle East or the American plans in connection with shale gas. 47 America has both the new technology in its hand and the necessary military capabilities. China has a huge market, enormous monetary reserves and a huge energy demand. Russia is being pushed towards Asia by the West, although this serves the interests of the USA in the first place much more than those of Europe. Europe would also need Russia in order to strengthen its position vis-a-vis the USA, and likewise, Russia can only feel safe vis a vis Asia if it can remain part of Europe. Russia and Europe together could be a strong partner in negotiations both with the United States and with China. 48 Zbigniev Brzezinski, president Carter’s national security adviser who is still an authoritative observer and whose advise are held in esteem by President Obama himself, told CNN recently that China cannot afford a slowdown in the world economy as a result of Russian-American-European conflicts, because it would cause grave political difficulties at home, and consequently China must be persuaded to support the USA in the conflicts over the Ukraine and the Middle East. 49
Only recently, China has founded a joint bank and monetary fund with the BRIC countries (Brazil, Italy, India, South Africa) as a counterweight to US dominance in world finances ever since World War II (through the IMF, the World Bank). It is planning to make the Yuan, convertible within a decade which could weaken the position of the dollar. 50
Europe, i.e. Germany
The supreme art of war is to subdue the enemy without fighting.
Europe was shaken by the crisis of 2008 which amplified contrasts of interests within the European Union. Germany and the Union survived under the guidance of strong-fisted and soft-spoken German Chancellor Angela Merkel. She is not a woman of words. She hardly ever speaks about vision or long-term strategy. Her main political weapon is anaesthesia. She drowns politics in Germany and in Europe in boredom, only to advance towards her goals behind closed doors, taking well planned steps one after the other ¬– an accomplished camarilla politician.
During the most recent German electoral campaign there was not one single event that could have kept citizens awake for more than three minutes. This is why the totally unsurprising discovery that the Chancellor’s phone had been continuously tapped by competent US agencies and her outraged reaction made such noise. That fake outrage as well as the subsequent spectacular unmasking of a few American agents were probably motivated by the intention to win over the public in Germany and in Europe against the too pro-American German media elite 51 in case the debates going on behind closed doors for the moment over the American-European talks on free trade and customs union would reach the larger public. What is at stake in fact is nothing short of the future of Europe, the European Union and Germany in it. (And our future as well, needless to say.) 52 Is Europe strong enough, will it remain strong enough to preserve its own foreign political, geopolitical profile? Does it have any trump cards to be shown during the negotiations with the USA? No surprise therefore if the otherwise not to loquacious Chancellor elaborated in front of her party folks on the necessity for Europe to enhance its own defence capability within the foreseeable future. Although it would be very much unlike the Chancellor to quote historical examples, it is obviously not unlike her to share Bismarck’s wisdom in believing that the key to Germany’s destiny is a good contract with Russia. Chancellor Merkel also laid great emphasis this time on good German Russian relations. Not to speak about Social Democrat Schroeder who since the day of his resignation has been one of Putin’s main Western lobbyists and by the way chairman of the Gasprom Supervisory Board. Thus the escalation of the Ukraine-Russia conflict was in no way in harmony with Germany’s interests. A clear example of the extent to which German and American interests were conflicting is a tapped and then posted telephone conversation between the competent Assistant US Secretary of State and the US ambassador to Kiyv. 53 The economic sanctions urged by the United States against Russia will be gravely detrimental to the economic interests of Germany and Europe as a whole. 54 Some representatives of German big business even went so far as arrogantly calling on their elected leaders through the media to abstain from anti-Russian punitive measures which would have an unfavourable impact on their interests. 55 Anti-Russian economic sanctions certainly do tremendous harm to economic