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Tuesday, January 26, 2010


“Democracy, Security and Stability: A Look at 2010 in Global and Turkish Foreign Policy”

Underscoring that the global arena should be a playfield for Turkish diplomats serving in outposts as well as in the capital, Ankara, Turkey's top foreign policy czar pointed out that the country no longer considers itself to be confined only to regional politics but rather aimed to be a major player among the 10 top-most effective countries in the world.

In a brainstorming session held in Ankara for about 200 current and former ambassadors under the auspices of the Foreign Ministry on Monday, Foreign Minister Ahmet Davutoğlu said Ankara needs to come up with a systematic and coherent vision unique to Turkey in its dealings with regional and international affairs, without forgetting public diplomacy, to draw support from the public audience both domestic and abroad.

“By 2023 when the country will commemorate the 100th anniversary of the foundation of the republic, I envision a Turkey which is a full member of the EU after having completed all the necessary requirements, living in full peace with its neighbors, integrated with neighboring basins in economic terms and for a common security vision, an effective player in setting orders in regions where our national interests lie, and active in all global affairs and among the top 10 economies in the world,” he said.

The conference, titled “Democracy, Security and Stability: A Look at 2010 in Global and Turkish Foreign Policy,” which will last until Jan. 8, will host the Japanese, German and Brazilian foreign ministers as well as two heads of state, from Palestine and the Turkish Republic of Northern Cyprus (KKTC). The purpose of the brainstorming session, Davutoğlu explained, was to exchange opinions in a free discussion environment and develop a cohesive and well-integrated approach in renewed Turkish foreign policy dynamism. It also plans to pinpoint problems and provide a venue for alternative solutions offered by the participants.

Davutoğlu stressed that a more effective and efficient coordination between the Foreign Ministry and its missions abroad on various issues is paramount to sustain the new Turkish foreign policy vision. “Because of our unique location, we should be all ears to any developments fostering in our region. Otherwise, any adverse effects from a lapse in the communication network or a weak link in the information channel will not only influence that country in question but will also hamper our overall foreign policy,” he noted.

Turkey’s top diplomat stressed that Turkey has been actively involved in relations with its neighbors, the European Union, the United States, the Gulf countries, Central Asia and the Middle East as well as its activities in various international bodies, and in its outreach to Latin America, the Pacific and the Caribbean region. In a reference to expanding Turkish interests in different regions, Davutoğlu said seven new embassies were opened in 2009 and they plan to add an extra 26 new embassies in 2010. Most of the new embassies are to be opened on African continent.

Understaffed and underfunded

Davutoğlu lamented the fact that his Foreign Ministry is understaffed and he said he had already brought the issue to the attention of the Cabinet and the prime minister. He said he hopes to beef up the ministry both in terms of new staff and fresh funds. While the Turkish Foreign Ministry has a little below 1,500 personnel in both the management and career services, in a sharp contrast, France employs 5,809 diplomats in its foreign service, UK has 5,700 and Germany has 3,865 staff. In terms of budget, the Turkish Foreign Ministry was also underfunded. In terms of index to the gross domestic product (GNP), Turkey allocates 0.07 percent of its budget to the Foreign Ministry while Germany provides 0.12 and France 0.23 percent.

In 2007, the budget allocated to the ministry was TL 690 million, and it increased to TL 707 million in 2008 and to TL 802 million in 2009. The ministry’s budget for 2010 was set at TL 920 million. The number of diplomatic officers in the foreign service was 712 in 1991; it increased to 875 in 1999 and is currently 970. Figures showing the increase in the number of Turkey’s missions abroad in the last few years may be more helpful in showing the urgency of this need. The number of Turkey’s missions abroad was 136 in 1991, when the Cold War ended with the collapse of the Soviet Union; it increased to 160 in 1999 and stands at 198 as of 2009. Out of those 198 missions, 114 are embassies, 11 are permanent representative offices and 73 are consulates. At present, 177 of those 198 missions are functioning. By 2010, the number is expected to increase to 203.

In a major bid to transform the Foreign Ministry and diplomatic service commensurate with the rising Turkish engagement in the region and the world, Davutoğlu listed the parameters of a new foreign service as a general outline in his opening speech: an ideological dimension which envisions a promising future place for Turkey, a psychological dimension which reinforces self-confidence, a communication dimension which merges both national and international messages in a coherent way, a national dimension which coordinates overlapping policies among different agencies and ministries, an international dimension which operates on both horizontal and vertical platforms especially by deepening high-level strategic coordination among countries, and lastly an institutionalization dimension which ensures sustainability of the policy in the quality of services rendered, and in human resources.

The first session was held in Ankara in July last year and was widely regarded as a great success. Encouraged by its positive results, the Foreign Ministry decided to repeat the session each year, inviting several foreign ministers to this year’s session. The conference will assess the current status of Turkish foreign policy and draw conclusions as to its future situation.

Given the dynamic conditions in which international relations are conducted today, Ankara does not think it is possible to pursue a static and single-parameter policy. A multidimensional and multi-axial structure is often cited as the best option for Turkish foreign policy. Diplomats point out that the range of issues that fall inside Turkey’s sphere of interest is gradually increasing, with an implied increase in the work its Foreign Ministry must conduct. In this context, the Turkish Foreign Ministry places great importance on bringing its ambassadors together to exchange their experiences and discuss recent developments throughout the world.

As they will be on official visits to Ankara between Jan. 4 and 8, Japanese Foreign Minister Katsuya Okada, Brazilian Foreign Minister Celso Amorim and German Foreign Minister Guido Westerwelle will attend the conference. Palestinian President Mahmoud Abbas and the president of the KKTC will also address the audience. An assessment session on the results of the conference will be held in Mardin on Jan. 9 and 10.

05 January 2010, Tuesday




Saturday, January 16, 2010


Bulgaria Must Stay away from Russian Energy Projects

Interview with Rumen Kanchev, Associate Professor in Geopolitics and Strategic Studies at New Bulgarian University, who recently published the book "Why Russia Does Not Pursue a Western-Style Democracy: Kremlin's Geopolitical Ambitions at the Beginning of the 21st Century".
Professor Rumen Kanchev is the Director of the Center for European and Security Studies, an independent Sofia-based think-tank. He is a former Deputy Minister of Defense (1997-1999), and a Senior National Security Adviser (1999-2003), and has been involved in developing Bulgaria's post-Cold War "Military Doctrine" (1992) and "National Security Strategy" (1998). Rumen Kanchev has specialized at the Center for Strategic and International Studies in Washington, DC, among others.

Did the West handle Russia's post-communist transition in the right way? Why doesn't Russia pursue a Western-style democracy?

The main aim and desire of the West after the end of the Cold War and the breakup of the Soviet Union was to integrate Russia with the Western democratic values and economic model, turning it into a free and democratic state from the Western family of democracies.
The West used this approach towards all of the former Warsaw Pact states, including those who split off from the USSR. The administration of President Yeltsin accepted it, and was generally trying to steer Russia into this direction. The Kremlin was trying to become a partner of the Western states, while building a strategic cooperation with Washington.
A whole range of events within just a few years led to an abrupt change of this strategy, and marked the beginning of a new trend in Russia's relations with the Western world: the coming to power of President Vladimir Putin in 2000; the re-nationalization of large economic entities and the chasing away of powerful Western investors, especially in the energy sector; the establishment of a new strictly hierarchical "vertical structure" of power; the centering of the military reform around the development of the strategic nuclear forces as the only element that could guarantee the sovereignty and integrity of the Russian state, in the view of Russian experts; the creation of a special strategy turning the production, transportation, and sale of energy resources into an instrument for exerting pressure in the foreign policy field, to name a few.
When put together as a coherent and consistent policy, all these elements gradually led to Russia's confrontation with the USA and the Western democracies. Meanwhile, NATO's expansion to Russia's borders, the rise of the USA as the sole global leader, the treatment of Russia by neoconservative Western circles as a second-rate power, and the collapse of its international prestige created a favorable environment for revanchist geopolitical sentiments among the Russian political elites, and for a sharp turn of the political system towards a more or less authoritarian style of government that the Kremlin ideologies tried to present as a democratic alternative of the Western democracy.
The last months of the term of US President George W. Bush marked the lowest point in the US-Russia relations since the Cold War which gave the new Obama Administration the grounds to speak of the need to "restart" the Washington-Moscow relations.

In your book, you talk about Russia's "imperial complex" and "civilization complex". What do these "complexes" consist of?

The imperial and civilization complexes of Russia reflect two different aspects of the same phenomenon: the Kremlin's ambition to restore Russia's geopolitical significance as a first-rate world power. The first complex is based on the geostrategic realities, the second is related to Russia's actual place in the context of the European history, culture, and civilization.
After the breakup of the USSR, Russia continues to have the largest territory in the world with one-eighth of the landmass. In addition, it has enormous deposits of strategic resources, oil, natural gas, and a perfect geographic location on the globe. Russia still has the second largest strategic nuclear potential after that of the USA.
Since 2000, Putin has consolidated a very specific political elite recruited primarily from officers of the KGB, today's secret services, and some of the Russian oligarchs. This elite is rich, well-educated, controls the instruments of power, and is not happy with today's place and role of Russia on the world stage. This is where the renaissance of this type of imperial complex comes from, which was first instilled into the political thinking by Emperor Petar I.
At the beginning of the 21st century this complex feeds upon several factors: nostalgia for the past when Russia was one of the two superpowers; economic revival resulting from the favorable condition of the energy resource markets until 2008; the existing semi-authoritarian regime controlling key elements of the system; the "state militarism" incorporated within the hierarchy of power through the mentality of strict military subordination. All these factors are "working" for Russia's new role on the geopolitical scene.
The civilization complex is formed on the basis of the paradoxical situation of Russia in Eurasia, which creates the question: Which civilization trend does Russia belong to - the European or the Asian? For instance, Russia hasn't had Europe's historic development. Such important European cultural periods as the Antiquity, the Middle Ages, the Enlightenment, the Renaissance, etc, economic stages such as capitalism, political models such as the Athens democracy, the Roman Republic, the medieval city-states that evolved into nation-states are all foreign to the Russian history. The Russian religious tradition is also very different from that in the West. A large portion of the Russian population is immobile, conservative, and adverse to change.
Russia's civilization problem that emerged as a result of these developments consists of how it must behave towards the European identity, and the no less powerful civilization impulses coming from Asia. This attempt to synthesize the European and the Asia identity puts Russia in a paradoxical situation.
The inability of the Russian political and intellectual elite to bring the country closer to the Western values has affected negatively both Russia and the West. Even today Russia is a capitalist state with a functioning market economy but the political model it is constructing corresponds with the model of Western democracy only on paper.
These facts have created a very distorted image of leadership and historical consciousness among the Russians, and an equivocal attitude towards the West - of admiration for its glorious history and culture, and a political complex fueled by geopolitical pride coupled with a lack of desire to follow the Western development models. While today's real intellectual elite of Russia is very committed to Western democratic values, the elite that is consolidated around the government is trying to construct Russia's 21st century strategy based on its differences with the West. The first group sees the West in terms of values, the second one - in terms of geopolitics.
The thinking of the first group is dominated by the idea to integrate Russia in Europe; to the contrary, the thinking of the second is dominated by the idea to restore the past geopolitical influence. Of course, the politicians are the ones who are the decision-makers.

Is there a deterministic relationship between the price of energy resources on the world market, and the aggressiveness, i.e. pro-activeness of the Russian foreign policy? Which are the weaknesses of the Russian strategy to use energy in order to exert pressure? Why do you think that this could not work out as a long-term strategy?

There is definitely a deterministic relationship here. But if one strategy is only based on one element, the element's removal leads to the destruction of the strategy. It is clear that the sharp decline of the prices of energy resources after 2008 has created huge problems for the Russian economy. And the Russian political leadership knows that without the help of the highly technologically developed West it would not be able to diversify its economy, and to achieve a long-term economic growth.
Meanwhile, the strategy to use the energy resources to pressure Europe is practically consolidating the Europeans and motivating them to seek a way out of this dependence. Geopolitically, this leads to a more flexible policy of the EU and USA in Central Asia and the Greater Caspian and Black Sea Region where a large part of the energy resources that Russia buys in order to sell them to the Europeans come from.
This has unfavorable effects for Russia since the energy-rich Central Asian states may start to sell their energy resources directly to the Europeans without Moscow as an intermediary. Another negative consequence has to do with creating tension over energy between Russia and the EU since Kremlin's attitude is turned against EU's unity, which is a strategic element of the development of the EU in the 21st century.

Is the EU more dependent on Russia, or Russia is more dependent on the EU? Could Russia "turn", i.e. direct the gas to the East?

Russia is not at all indifferent towards the EU market. To the contrary - today as well as in the long run the Kremlin will not find a partner that is more honest and fair than the Europeans. The European market takes in 54% of the Russian export including 84,8% of the total quantity of natural gas that Russia produces. About 75% of Russia's total annual state export revenue depends on the European market.
"Turning" the natural gas to the east would have serious economic and geopolitical consequences. First of all, it would mean entering a much less profitable zone since China would not be able to pay for the energy resources the same price paid by the Europeans. Second, in order to "direct" the gas to the east, Russia would need to build a transport network - something that can't happen in the next 15 years since it is technologically hard, and requires hard negotiations with a number of transit countries, whose interests will not coincide with the Russian ones.
Third, even though China and Russia have good relations, Beijing is setting extremely ambitions geopolitical goals for itself. At the beginning of the new century China crafted a long-term strategy for its development (for the period around 2050), according to which by the end of that period it must turn into a world power dominating economically and politically the Asia-Pacific.
The Chinese economy is ranked third after the economies of the USA and Japan; after 2000, it has been growing at about 10% a year; China has a population of over 1,3 billion, whereas the Russian population is about 140 million. In the recent years China has increased steeply its defense spending, and is ranked fourth in the world by its official defense budget. The Russian economy is still underdeveloped. It is ranked 58th in the world on the key "global competitiveness" criteria, and 71st on the business competitiveness criteria. Russia is ranked 79th in her GDP per capita, and 13th in terms of foreign investment. On all these criteria, the USA, for example, is ranked first.
This brings the question if the re-orientation of the Russian policy to the east is worth it. This is a rhetorical question since a new economic colossus is being born in the east; at some point China might be tempted to declare its global geopolitical claims and (in the long run) to even seek the change of the geostrategic status quo that has been established after the end of the Cold War.

Is the political elite in Moscow going to agree to follow these very likely ambitions of its southeast neighbor? Is the Kremlin going to turn its back to the honest and peace-loving Europe in the name of a far more complex and unpredictable geopolitical game in the East? Here starts the answer of another question that you probably will not ask me - why a month ago the Russian President Dmitry Medvedev invited President Barack Obama in Moscow for a "restart" of the US-Russian relations.

What is the difference before the accession of the Baltic States to NATO and the potential accession of Georgia and the Ukraine? Why do you say in your book that the Ukraine should be admitted to the EU before it is admitted to NATO?

Lithuania, Latvia, and Estonia have always been a part of Europe. Because of some unlucky circumstances, these countries ended up in the Soviet Union but their historical roots and traditions are far from the Russian ones. After the disintegration of the USSR, the peoples of those countries expressed their enormous desire for integration with Europe, and their NATO membership could not be disputed in any reasonable or legitimate way.
Ukraine's situation is different. It is known that a large part of the population of this country is ethnically Russian. Only about a third of the population favors a membership in NATO, and therefore the nation is not consolidated on this matter.In Article 23 of the Declaration of the NATO meeting in Bucharest in April 2008, the Alliance assured the Ukraine that "those countries (i.e. the Ukraine and Georgia) will become members of NATO".
However, with regard to the key strategic importance of Ukraine's territory, I believe that it would be better if its integration started with a EU membership which is going to make the Ukraine a factual member of the family of Western democracies. This will give it the opportunity to add its military capacity to the efforts for the creation of a common European defense and security policy. The Ukraine has made important contributions to NATO missions, and that is why I believe that its EU accession is not only going to assert its international weight and self-confidence but it is also going to play to the role of a preliminary condition that will lead to a consensus in favor of the country's membership in NATO.
The Declaration of the Bucharest meeting confirmed that Georgia was also going to become a member of the Alliance. The problem there is a different one. It is clear that after the war with Russia from August 2008 Georgia's NATO membership will be delayed since many of the member states of the Alliance think that its admission would drag NATO into a conflict with Russia. The most notable proponent of this viewpoint is the German chancellor Angela Merkel who has put forth the argument that countries with unregulated conflicts with their neighbors cannot be members of the Alliance. I believe that this argument is wrong since it gives Russia the actual right of veto on Georgia's membership in NATO.
The potential conflicts in Abkhazia and South Ossetia are a convenient foreign policy instrument that the Kremlin is using to pressure Georgia and to block its NATO accession. A few years ago Russia had the same approach towards the Baltic States. The Russians refused for a long time to ratify the agreements for their borders with Latvia and Estonia which hindered those countries' membership in the EU and NATO. The moment these states were admitted to the EU and NATO, the Kremlin was no longer in any position to use this problem for its foreign policy goals, and the treaties were soon ratified by Moscow.
The potential conflicts in Abkhazia and South Ossetia are a convenient foreign policy instrument that the Kremlin is using to pressure Georgia and to block its NATO accession. A few years ago Russia had the same approach towards the Baltic States. The Russians refused for a long time to ratify the agreements for their borders with Latvia and Estonia which hindered those countries' membership in the EU and NATO. The moment these states were admitted to the EU and NATO, the Kremlin was no longer in any position to use this problem for its foreign policy goals, and the treaties were soon ratified by Moscow.
The potential conflicts in Abkhazia and South Ossetia are a convenient foreign policy instrument that the Kremlin is using to pressure Georgia and to block its NATO accession. A few years ago Russia had the same approach towards the Baltic States. The Russians refused for a long time to ratify the agreements for their borders with Latvia and Estonia which hindered those countries' membership in the EU and NATO. The moment these states were admitted to the EU and NATO, the Kremlin was no longer in any position to use this problem for its foreign policy goals, and the treaties were soon ratified by Moscow.
Finally, the longer this situation continues, the more time the Kremlin is going to have in order to destabilize the government in Georgia. That is why today more than ever Georgia needs the support of the Western democracies. I think that his was the major political message of US Vice-President Joe Biden during his visit to Tbilisi last month.
There is also another idea regarding the Ukraine and Georgia which has been floating around, mostly in the analytical circles - associated membership in NATO. The associated membership can turn into a full membership depending on whether the respective applicant is able to fulfill the procedures and criteria required for a full membership.

Should Bulgaria terminate its participation into the large-scale Russian energy projects?

Russia has turned the production, transportation, and sale of energy resources into a specific type of strategy for exerting geopolitical pressure. There are enough examples for that. The termination of the gas supplies for Europe through the Ukraine last winter was very indicative. Bulgaria is 90% dependent on Russian energy resources. We should also add the Kozloduy Nuclear Power Plant, which was constructed as a Russian project and operates fully with Russian nuclear fuel. Bulgaria has no alternative sources of oil and gas, and our deposits are negligible.
Therefore, the priority of Bulgaria's energy policy should be the finding of energy sources that can reduce as much as possible the country's dependence on the Russian state monopolist Gazprom, governed by the Kremlin. In this context, we need to point out that the support for the Nabucco pipeline project, for example, does not mean that Bulgaria is giving up the Russian energy projects, it means seeking an alternative in order to reduce the above-mentioned dependence.
As far as the Burgas-Alexandroupolis oil pipeline project is concerned, according to environmentalists and business experts it is going to create a real environmental catastrophe, and is completely going to destroy tourism on Bulgaria's southern Black Sea coast.
There is one thing about these large-scale energy projects that is extremely important - the full lack of transparency of the negotiations that the previous government had with the Russian side about our participation in them. These projects are often described as being of great strategic importance. That might be true but only the full transparency of those projects is going to show for who they are of such great strategic importance. I don't think that is for Bulgaria.

What is the strategic benefit for Bulgaria to invest EUR 4 bn in the construction of the Belene Nuclear Power Plant in a time of severe global economic crisis, especially if it has to borrow the money, i.e. to go into a large-scale debt? We should note here that according to experts on economic analysis of such nuclear projects, the price of the Belene NPP will reach EUR 12-14 bn.

a time of severe global economic crisis, the South Stream gas pipeline, the Belene NPP, and the Burgas-Alexandroupolis oil pipeline should be the last thing that the newly elected government in Sofia should be dealing with. The EU is working very seriously on trying to figure out how to rid itself of the monopoly of the Kremlin-controlled Gazprom because it can see very clearly the geopolitical motives behind this company's actions. As a EU member, Bulgaria is obliged to follow this European position.
Finally, I would like to point out one more thing - neither South Stream, nor "Burgas-Alexandroupolis" are economically sound projects. The Russian economic experts know this very well, the politicians in Kremlin know it, too. Moscow put forth these projects during the term of a weak and corrupt government in Sofia that did not have a clear strategy for the development of Bulgaria, and for its European identity.
I am convinced that the main motive that can be seen behind the propaganda in favor of these projects is a geopolitical one.

After the warm relations between the Russian leadership and the government of Sergey Stanishev, supported by President Parvanov, what sort of a policy towards Russia do you expect from the new government of Boyko Borisov? How can this "warm" connection between Bulgaria and Russia be explained to the Western audience?

I expect that the policy towards Russia of the government will be pragmatic and will be based on Bulgaria's national interests. Bulgaria has two key foreign policy priorities for which is has signed treaties turning it into a full-fledged member of two organizations - NATO and the EU. They define fully its foreign policy including its relations with Russia.
The Western democracies are not interested if we have a "warm", "historic" or any other sort of a connection with Russia; they are interested to know if they can rely on Bulgaria as a strategic ally in NATO, and as a stable economic and political partner in the EU. This is why Bulgaria was admitted to those organizations, not because it had "warm" or any other relations with Russia.

Source: Sofia News Agency



Wednesday, January 06, 2010

Monetary Policy and the Housing Bubble BY Chairman Ben S. Bernanke At the Annual Meeting of the American Economic Association, Atlanta, Georgia





More regulation to control bubbles

Bubbles are popping up everywhere. The rally in the stock market is only one. Others include China, gold, renewable energy, the prices of junk financial stocks like Fannie, Freddie, AIG, Citi and Bank of America getting pushed up in the rush to buy cheap, education, repackaged subprime mortgages, securitised life insurance schemes and emerging markets in developing countries. All bubbles burst and I look at them 

(All bubbles lead to a meltdown. This is what's so alarming in this Business Insider piece that talks about 10 bubbles in the making: China; gold; renewable energy; the Fed snapping up $1.25 trillion of mortgage backed securities; the prices of junk financial stocks like Fannie, Freddie, AIG, Citi and Bank of America getting pushed up in the rush to buy cheap; education; repackaged subprime mortgages; securitised life insurance schemes; commercial real estate (definitely popping now) and emerging markets in developing countries.If the piece is right, the next meltdown could make what we have just gone through look like a picnic.

As I pointed out in one of my columns, we need a system to anticipate and manage bubble because they're inevitable.
"The forces that create bubbles are only partly to do with economics. The big drivers are social and psychological. We need an infrastructure that can anticipate our thinking, inhibit the growth of bubbles and stop the damage, not only to the economy but to the social fabric.")

Now, Federal Reserve chairman Ben Bernanke has flagged that the Obama administration will introduce more regulation to control bubbles. The bottom line: more government intervention to protect markets.

In a speech to the American Economic Association, Bernanke says more regulation is the big lesson to draw from the meltdown.

"Even as we continue working to stabilize our financial system and reinvigorate our economy, it is essential that we learn the lessons of the crisis so that we can prevent it from happening again,'' Bernanke said."Having experienced the damage that asset price bubbles can cause, we must be especially vigilant in ensuring that the recent experiences are not repeated. All efforts should be made to strengthen our regulatory system to prevent a recurrence of the crisis, and to cushion the effects if another crisis occurs."

Still, he did not rule out higher interest rates although he conceded monetary policy is a blunt tool.

For that matter, so is regulation. We need other methods to inhibit bubbles. We can start with improved disclosures and enhanced financial data bases, so investors have a better idea of the risks ahead.

In his book, The Subprime Solution, Yale University professor of economics Robert Shiller says we need market based mechanisms to stop bubbles. These would include new markets in government securities, real estate and occupational income. He says it's more a case of risk management than risk avoidance. If you don't take risks, nothing grows. The challenge is doing it from a position where you don't damage yourself in the process.

SOURCE     http://www.soxfirst.com/