Iranian Sanctions: Russia Makes A U-Turn
Not that some of us are at all surprised (for the umpteenth time, “Russia is not our friend”):
“At the current stage, all forces should be thrown at supporting the negotiating process,” he said. “Threats, sanctions and threats of pressure in the current situation, we are convinced, would be counterproductive.”
With that, Russian Foreign Minister Sergey V. Lavrov effectively killed any US hopes found in Russian President Dmitri A. Medvedev statement that “in some cases, sanctions are inevitable” of three weeks ago. As was predicted by many, the unilateral withdrawal of plans to base a missile defense in eastern Europe, an obvious attempt to better relations with Russia, yielded nothing.
Russia’s support is key to getting U.N. Security Council approval of any sanctions, but the country has traditionally been cautious on confronting Iran, a key trading partner and neighbor. In recent years, however, Russia has grown increasingly concerned about indications that Iran could be developing nuclear weapons, analysts say. Iran insists that its program is aimed only at producing energy.
Lavrov told reporters that Russia wants to focus on negotiations for now — particularly the concessions made by Iran this month, after the revelation that it had built a secret nuclear facility near Qom. Under heavy international pressure, the Islamic republic agreed to admit inspectors and send much of its uranium to Russia for enrichment.
Also key to any UNSC approval of sanctions is China – and they’re not at all sold on sanctions either.
However, as noted in the paragraph above, it is Iran which is in the driver’s seat here, not the US. Iran has again outmaneuvered everyone by officially revealing its “secret” nuclear facility near Qom and agreeing to allow it to be inspected. That move has effectively given the Russians the wiggle room they need to back away from imposing sanctions. Iran has years of experience manipulating this process and has once again had its way.
Meanwhile, as Marty Peretz says, Hillary Clinton’s team was engaged in trying to make a “cupcake out of a turd”:
Senior administration officials said that the differences are tactical rather than substantive. Both sides agreed that Iran would face sanctions if it failed to carry out its obligations, a State Department official said, speaking on the condition of anonymity.
Which, of course means that nothing of substance came out of the talks. Such an agreement is the same agreement they had going into the talks. In essence, Russia turned the clock back on this process. And again, a reminder that China, a country whose support would be critical if sanctions are to be imposed, is nowhere on the playing field at the moment.
Anyway, to claim that differences are “tactical rather than substantive” is to try to hand wave away the fact that Russia is not presently on board to increase sanctions anytime soon when everyone was led to believe, just three weeks ago, that it was. I think that truly does represent a “reset”, but not in the way the Obama administration had hoped.
~McQ
Iran, Nukes and Anti-Missile Shields
The IAEA announced, almost simultaneously with the US unilateral withdrawal of its planned eastern European anti-missile shield, that Iran now has the capability and materials to build a nuclear weapon. Why did the IAEA come to that conclusion?
• The IAEA’s assessment that Iran worked on developing a chamber inside a ballistic missile capable of housing a warhead payload “that is quite likely to be nuclear.”
• That Iran engaged in “probable testing” of explosives commonly used to detonate a nuclear warhead — a method known as a “full-scale hemispherical explosively driven shock system.”
• An assessment that Iran worked on developing a system “for initiating a hemispherical high explosive charge” of the kind used to help spark a nuclear blast.
Additionally it noted, “The agency … assesses that Iran has sufficient information to be able to design and produce a workable implosion nuclear device (an atomic bomb) based on HEU (highly enriched uranium) as the fission fuel.”
And it has enriched enough uranium for fuel that it could be turned into enough weapons grade uranium for a single nuclear weapon.
So we have the capacity for a nuclear weapon and apparently proof, or at least some pretty heavy indications, that Iran has been working assiduously toward developing a ballistic missile capable of carrying a nuclear payload as well as developing and testing an explosive trigger for such a device.
Obviously this didn’t come as a surprise to the US. Iran’s capability in both missiles and nuclear weapons technology continues to grow.
So excuse me if I don’t buy this “redefinition” of the threat the Obama administration is claiming is better addressed by its focus on short and medium range Iranian missiles. Any defense against missiles is a layered defense. That means you address all possible missile threats.
The fact remains that the only threat to Europe, for whom the Bush-era anti-missile shield was intended, is ballistic missiles. Iran (or Russia) must use them to reach that continent. Iranian short and medium range missiles are not a threat Europe.
The point, of course, is should Iran develop an ICBM, Europe would be defenseless because the systems which are designed for the short and medium range missiles aren’t designed to go after ICBMs.
Or said another way, the proper announcement would have been “the US is adding the missing two layers to the anti-missile defense system, thereby making the system complete.”
Instead we pulled the long-range system. Why?
Well that’s the $64,000 question, isn’t it? Most feel it was a capitulation in answer to Russia’s fears of the system. Russia had claimed that the small and supposed defensive system could be turned into offensive system aimed at them. Of course that would require a completely different sort of missile than would have been deployed there, and, probably, a different sort of radar system as well.
Speaking of the radar system, Russia objected to the sophisticated X-band radar saying it would be able to look in 360 degrees and would be monitoring Russian missiles much too closely. Seems a bit absurd to make that claim when Russia knows we have satellites that can read the bumper numbers off their mobile missile launchers at will.
Then there was the claim that the US and Russia had an agreement that US troops and weapons wouldn’t be stationed or deployed in the former Warsaw Pact nations. The US doesn’t seem to remember that, but Russia claims its the case. That certainly can’t be the concern since Obama has said that in the future the new anti-missile systems might be deployed in Poland and the Czech Republic.
Obama says his decision was driven by the “unanimous advice” of the Secretary of Defense and the Joint Chiefs of Staff. Said the man who recommended the deployment of the missile shield to President Bush three years ago:
“Those who say we are scrapping missile defence in Europe are either misinformed or misrepresenting the reality of what we are doing in Europe,” said Robert Gates, US defence secretary.
In a word: nonsense!
Someone please explain the spurious claim that the best missile defense system for Europe – which can only be hit by an Iranian ICBM – is one which targets short and medium range Iranian missiles. It makes absolutely no sense.
It makes no sense until Russia is dragged into the equation. Then it starts to become somewhat clear. This is a risky bet meant to appease Russia while at the same time hoping Iran is unable to develop a long-range nuclear capable missile before its nuclear weapons program can be stopped. It is also clearly a bow to Russia and a part of the Obama administration’s unilateral attempt to “reset” relations with that country. And it is a display of weakness.
What about our allies? How do they feel about this? Well perhaps the best way to answer that is to understand why they were so interested in the anti-missile system promised by the Bush administration:
During negotiations with the Bush administration, Warsaw pushed hard for a missile defence agreement that would reward them with a Patriot short-range air defence unit supported by US troops. In the end, Poland agreed in principle to host the US base during last year’s war between Russia and Georgia, which sparked fears about Russian intentions towards central Europe.
Eastern Europe doesn’t trust Russia as far as they can throw them (a lesson we should have learned as well). The invasion and virtual annexation of two provinces of Georgia underscored Russia intent to dominate what it calls it’s “near abroad” (or Post-Soviet Space). Russia literally thumbed its nose at the US and the rest of the world with its military incursion there. Poland and other former Warsaw pact nations took the lesson for what it was – a declaration that Russia was back and intended to play hardball.
Max Boot reminds us of the last time this sort of thing happened:
That Obama has now bowed to Putin’s demands sends a dangerous signal of irresoluteness and weakness—similar to the signal another young president sent when he met with a Russian leader in Vienna in 1961. Nikita Khrushchev emerged from his summit with John F. Kennedy convinced that the president was “very inexperienced, even immature” and that he could be rolled. We all know the result: the Cuban Missile Crisis.
Except this time we’re playing in Russia’s backyard, not our own. Again, leadership is absent in a very critical area of national security.
~McQ
Meanwhile On The Foreign Policy Front …
A lot is happening, not that you’d know it unless you’re paying attention.
The North Koreans are happily enriching uranium again, as are the Iranians. We’re in the middle of completely screwing over Honduras while ignoring what Venezuela is in the middle of doing.
And what is that you ask? Well the Washington Post fills us in:
But Mr. Chavez has clearly forged a bond with one leader who is as reckless and ambitious as he is: Iran’s Mahmoud Ahmadinejad. The growing fruits of this relationship, and its potential consequences for U.S. security, have not gotten as much attention as they deserve.
Mr. Chávez was in Tehran again this week and offered his full support for Mr. Ahmadinejad’s hard-line faction. As usual, the caudillo made clear that he shares Iran’s view of Israel, which he called “a genocidal state.” He endorsed Iran’s nuclear program and declared that Venezuela would seek Iran’s assistance to construct a nuclear complex of its own. He also announced that his government would begin supplying Iran with 20,000 barrels of gasoline a day — a deal that could directly undercut a possible U.S. effort to curtail Iran’s gasoline imports.
But remember, it is much more important that we punish Honduras for living by their Constitution. Meanwhile:
Such collaboration is far from new for Venezuela and Iran. In the past several years Iran has opened banks in Caracas and factories in the South American countryside. Manhattan district attorney Robert Morgenthau, who has been investigating the arrangements, says he believes Iran is using the Venezuelan banking system to evade U.S. and U.N. sanctions. He also points out that Iranian factories have been located “in remote and undeveloped parts of Venezuela” that lack infrastructure but that could be “ideal . . . for the illicit production of weapons.”
“The opening of Venezuela’s banks to the Iranians guarantees the continued development of nuclear technology and long-range missiles,” Mr. Morgenthau said in a briefing this week in Washington at the Brookings Institution. “The mysterious manufacturing plants, controlled by Iran deep in the interior of Venezuela, give even greater concern.”
Big deal. I mean, look at what Honduras has done.
Mr. Morgenthau’s report was brushed off by the State Department, which is deeply invested in the Chávez-is-no-threat theory. State “will look into” Mr. Morgenthau’s allegations, spokesman Ian Kelly said Wednesday. Meanwhile, Mr. Chávez is off to Moscow, where, according to the Russian press, he plans to increase the $4 billion he has already spent on weapons by another $500 million or so. Mr. Chávez recently promised to buy “several battalions” of Russian tanks. Not a threat? Give him time.
And, of course, as a little jab at the US, Chavez recognized South Ossetia and Abkhazia and buying tanks in Russia.
North Korea, as mentioned, is back to building nuclear bombs. But don’t worry, all the signs are present that they’re willing, once again, to do a little bartering. They’ve announced they’re open to two-party talks with the US. That means, they’ll talk and the US will pay for them to quit making bombs. And they’ll agree until the next time they need a little cash.
Afghanistan? Going swimmingly, haven’t you heard?
But don’t worry – Honduras is going to pay the price for their constitutional misbehavior. And besides, our president gets to play “King of the World” in a couple of weeks might even have the chance to give Moammar Qaddafi a hug while he is at it.
Yup – it’s looking good out there.
~McQ
Podcast for 05 Apr 09
In this podcast, Bruce, Michael and Dale discuss the G-20 Summit, Pres. Obama’s foreign policy, and the Geithner Plan.
The direct link to the podcast can be found here.

The intro and outro music is Vena Cava by 50 Foot Wave, and is available for free download here.
As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2007, they can be accessed through the RSS Archive Feed.
Russia’s New Found “Comrade”
A couple of paragraphs from a story about Obama and Russia’s Medvedev which seem pretty telling to me:
Russia’s Dmitry Medvedev hailed Barack Obama as “my new comrade” Thursday after their first face-to-face talks, saying the US president “can listen” — even if little progress was made on substance.
The Russian president contrasted Obama as “totally different” to his predecessor George W. Bush, whom he blamed for the “mistake” of US missile shield plans fiercely opposed by Moscow.
Of course many on the right are making a big, if sarcastic, deal about Medvedev calling Obama “comrade”. To many that seems more than appropriate. However, there’s a lot of diplospeak in this which seems key.
First, although not much of substance was accomplished, note the Medvedev says that unlike Bush, Obama “can listen”. In diplospeak, that means he thinks he can roll Obama, while Bush, not so much.
Note too that it appears that Obama has caved on the missile defense. In his desire to reduce nuclear stockpiles, he’s given up something which our allies such as Poland and the Czech Republic were keen for in order to see warheads dropped from 2,200 to 1,500. That’s a laughably cheap price for Russia to pay to kill the missile defense they opposed so adamantly.
Yup, after a capitulation like that, I’d be clapping Obama on the back and hailing him as my comrade too, if I were Medvedev.
Nothing, apparently was mentioned about Russia’s plan to rearm its military, its pending sale of the S-300 air defense missile system to Iran or it’s bluntly worded warning about Georgia:
Russia sent a strong warning to the United States Thursday about supporting Georgia in the U.S. ally’s efforts to rebuild its military following last year’s war.
The Foreign Ministry said helping arm Georgia would be “extremely dangerous” and would amount to “nothing but the encouragement of the aggressor.”
Nope, apparently Obama just listened. That’s a comrade any Russian could love.
~McQ
Crisis For The Dollar? Is This The Calm Before The Storm?
A week or so ago, I mentioned the fact that Russia was lobbying for a new international currency to replace the dollar and opined that it most likely wouldn’t have any legs. By itself, Russia just didn’t have enough clout to bring about such a change. But apparently Russia was only the beginning. Later that same week, the UN came out in favor of a new currency option:
A U.N. panel will next week recommend that the world ditch the dollar as its reserve currency in favor of a shared basket of currencies, a member of the panel said on Wednesday, adding to pressure on the dollar.
Currency specialist Avinash Persaud, a member of the panel of experts, told a Reuters Funds Summit in Luxembourg that the proposal was to create something like the old Ecu, or European currency unit, that was a hard-traded, weighted basket.
Persaud, chairman of consultants Intelligence Capital and a former currency chief at JPMorgan, said the recommendation would be one of a number delivered to the United Nations on March 25 by the U.N. Commission of Experts on International Financial Reform.
“It is a good moment to move to a shared reserve currency,” he said.
But does the UN have enough leverage to push something like this through? Probably not without some fairly powerful backers of the idea. And speaking strictly of the UN, any such proposal would have to pass through the Security Council, and it’s unlikely the US would sanction such a change.
Today, though, China came out in favor of doing exactly what Russia and the UN recommend:
China’s central bank on Monday proposed replacing the US dollar as the international reserve currency with a new global system controlled by the International Monetary Fund.
In an essay posted on the People’s Bank of China’s website, Zhou Xiaochuan, the central bank’s governor, said the goal would be to create a reserve currency “that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies”.
As was noted last week, China has some concerns about the US economy:
“This is a clear sign that China, as the largest holder of US dollar financial assets, is concerned about the potential inflationary risk of the US Federal Reserve printing money,” said Qu Hongbin, chief China economist for HSBC.
And that’s a valid concern. With the Fed pumping out trillions of freshly printed dollars, inflation is almost assured.
In case you haven’t noticed, Russia and China are two of the four countries known as BRIC (Brazil, Russia, India, China). These emerging economies feel they deserve more clout than they now enjoy. And they’re meeting in advance of the upcoming G20 meeting in April of this year:
Finance ministers and central bankers from Brazil, Russia, India and China will convene ahead of the Group of 20 finance chiefs’ meeting in London on Friday, a Russian delegation source told Reuters on Thursday.
The source said the four will discuss the reform of international financial organizations such as the International Monetary Fund and the Financial Stability Forum, anti-crisis policies and preparations for the G20 summit in April.
Take a look again at China’s proposal for basing the international reserve currency in the IMF and the topic of their upcoming meeting in advance of the G20. Suddenly Russia’s proposal has some legs.
What clout does BRIC bring to the proposal? Well they are the holders of vast portions of the currency reserves around the world:
China runs the world’s biggest reserves, Russia comes 3rd, India 4th and Brazil 7th, as of last autumn.
Keep an eye out for Brazil and India weighing in on this. Should they come out in favor of such a change, as has China, it could portend some fireworks at the G20.
In the meantime, read this by Mikkel Fishman. It will explain some of the deeper and less evident problems we face. Then take a moment to look around and reflect. In my estimation, this truly is the calm before the storm.
~McQ
Russia: The New Military and The New Currency
Russia is our friend. Don’t believe it? Well let’s look at a couple of things.
Just as the US starts talking about cutting defense spending and axing weapons systems and programs, what are our friends in Russia doing?
President Dmitry Medvedev on Tuesday announced a “large-scale” rearmament and renewal of Russia’s nuclear arsenal, accusing NATO of pushing ahead with expansion near Russian borders.
Meeting defence chiefs in Moscow, Medvedev said he was determined to implement reforms to streamline Russia’s bloated military and stressed Moscow continued to face several security threats needing robust defense capacity.
“From 2011, a large-scale rearmament of the army and navy will begin,” Medvedev said.
He called for a renewal of Russia’s nuclear weapons arsenal and added that NATO was pursuing a drive to expand the alliance’s physical presence near Russia’s borders.
“Analysis of the military-political situation in the world shows that a serious conflict potential remains in some regions,” Medvedev said.
So, new nukes and large-scale rearmament in the face of US defense cuts. As the article asks “reset” or new Cold War?
And then, just to really upset the apple cart, how about a new currency?
The Kremlin published its priorities Monday for an upcoming meeting of the G20, calling for the creation of a supranational reserve currency to be issued by international institutions as part of a reform of the global financial system.
The International Monetary Fund should investigate the possible creation of a new reserve currency, widening the list of reserve currencies or using its already existing Special Drawing Rights, or SDRs, as a “superreserve currency accepted by the whole of the international community,” the Kremlin said in a statement issued on its web site.
The SDR is an international reserve asset, created by the IMF in 1969 to supplement the existing official reserves of member countries.
The Kremlin has persistently criticized the dollar’s status as the dominant global reserve currency and has lowered its own dollar holdings in the last few years. Both President Dmitry Medvedev and Prime Minister Vladimir Putin have repeatedly called for the ruble to be used as a regional reserve currency, although the idea has received little support outside of Russia.
Now there’s not much “there” there as it pertains to this initiative, but it another indicator, among many, that the “Joe Biden Challenge” is alive and well and Russia is in the running to bring it to fruition.
Russia Freezes Iranian Missile Sale
An interesting story out of Russia via the Jerusalem Post. And while good news, albeit of a temporary nature I’m sure, I’m betting there is much more to this than meets the eye. This is about positioning in upcoming missile defense talks with the US:
Russia has frozen the sale of the state-of-the-art S-300 anti-aircraft missiles to Iran, the Russian newspaper Kommersant reported Wednesday.
Iranian Defense Minister Mostafa Mohammad Najjar was reportedly informed of the decision by his Russian counterpart Anatoly Serdyukov on his visit to Moscow on Wednesday.
Russia said the delivery of the systems would be delayed at least until the upcoming meeting between President Dmitry Medvedev and his US counterpart, Barack Obama. Kommersant cited Russia’s wish to prevent hindering dialogue with the new US administration.
Military diplomatic sources were quoted by Kommersant as saying that the issue had been the focus of Najjar’s visit.
Of course the important point is the sale is frozen, not canceled. While that’s good news for both the US and Israel (the S-300 system is reported to be a very good air defense system against not just aircraft, but cruise missiles), it may not be any more than a temporary sop to the Americans and a reminder to the Iranians that Russia is their major backer and can pull that backing at any time. And, interestingly, there’s one other reason (or at least so Israel claims):
Israel Radio quoted Moscow sources as saying that apart form the gesture to the Americans, Russia also wanted to avoid ruining a $100 million drone purchase from Israel.
I say interesting because the S-300 sale is an $800 million sale. You jeopardize an 800 million sale for a 100 million purchase? Or do you grab the 100 mil buy because you know the 800 mil sale is in the bag? I’d say the latter, meaning the freeze is most likely for show only. Unless, of course, the Russians are just incredibly stupid businessmen.
I don’t think they are, although they’re not as clever in other areas as they sometimes think. This seems to me to be a very crude (but probably effective) set up for an “aw gee and here we made this great gesture toward working with you and this is how you act?” result of our first meeting with Russia. Absolute world opinion gold for Putin and the boys if they manage it correctly and, of course, the perfect opportunity to then unfreeze the sale. Can anyone guess who’d end up being embarrassed by such a scenario?
~McQ



