Open letter from Politico about US-russian relations

[Tomasz + 1,608]

I will only note that the following open letter appeared in Politico magazine today.

A letter like a letter, but please note the list and ranks of its signatories on the American side.

The fact that Donald Trump inevitably ends his reign as US president is probably decisive here because it is a very toxic element in Russian-American relations.

I do not know personally whether something will come out of this letter, but looking at how many well-positioned people signed it, it is in my opinion a serious voice in the discussion.

It’s Time to Rethink Our Russia Policy
America’s current mix of sanctions and diplomacy isn’t working. An open letter on how to reconsider our approach to Putin—and whoever comes next.

By ROSE GOTTEMOELLER, THOMAS GRAHAM, FIONA HILL, JON HUNTSMAN JR., ROBERT LEGVOLD and THOMAS R. PICKERING

08/05/2020 11:00 AM EDT

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The following open letter was signed by 103 foreign-policy experts, whose names and affiliations appear below.

U.S.-Russia relations are at a dangerous dead end that threatens the U.S. national interest. The risk of a military confrontation that could go nuclear is again real. We are drifting toward a fraught nuclear arms race, with our foreign-policy arsenal reduced mainly to reactions, sanctions, public shaming and congressional resolutions. The global Covid-19 pandemic and the resulting serious worldwide economic decline, rather than fostering cooperation, have only reinforced the current downward trajectory.

Meanwhile, the great challenges to peace and our well-being that demand U.S.-Russia cooperation, including the existential threats of nuclear war and climate change, go unattended. Because the stakes are so high, both in the dangers they entail and the costs they contain, we believe that a careful, dispassionate analysis and change of our current course are imperative.

We go into this open-eyed. Russia complicates, even thwarts, our actions, especially along its extended periphery in Europe and Asia. It has seized territory in Ukraine and Georgia. It challenges our role as a global leader and the world order we helped build. It interferes in our domestic politics to exacerbate divisions and tarnish our democratic reputation. At best, our relations will remain a mix of competition and cooperation. The policy challenge will be to strike the most beneficial and safest balance between the two. To this end, we offer six broad prescriptions for U.S. policy.

• We must first find a way to deal effectively with Russian interference in U.S. elections and, most important, block any effort to corrupt the voting process. Hardening our electoral infrastructure, sanctioning Russians who weaponize stolen information and countering Russia’s capacity to hack our systems are all necessary measures. So is exposing Russian disinformation. We must, however, also engage Russia through negotiations out of the public glare, focused on each side’s capabilities to do great damage to the other side’s critical infrastructure.

• It makes no sense for two countries with the power to destroy each other and, in 30 minutes, to end civilization as we know it to lack fully functioning diplomatic relations. In the wake of the Ukrainian crisis, key governmental contacts were severed, consulates shuttered and embassy staff drastically reduced. Too often we wrongly consider diplomatic contacts as a reward for good behavior, but they are about promoting our interests and delivering tough messages. We need them as a matter of essential security to minimize the misperceptions and miscalculations that can lead to unwanted war. Restoring normal diplomatic contacts should be a top priority for the White House and supported by the Congress.

• Our strategic posture should be that which served us well during the Cold War: a balanced commitment to deterrence and détente. Thus, while maintaining our defense, we should also engage Russia in a serious and sustained strategic dialogue that addresses the deeper sources of mistrust and hostility and at the same time focuses on the large and urgent security challenges facing both countries:

◦ The imperative to restore U.S.-Russian leadership in managing a nuclear world made more dangerous by destabilizing technologies, shifting attitudes toward the use of nuclear weapons, discarded nuclear agreements and new tension-filled nuclear relationships. That means extending the New START Treaty and swiftly moving to a next phase of arms control to strengthen nuclear stability, carefully adjusted to a world of multiple nuclear actors.

◦ The imperative to make safer and more stable the military standoff that cuts across Europe’s most unstable regions, from the Baltic to the Black Sea, working vigorously to preserve existing constraints, such as the Open Skies Treaty—now under challenge—and the Vienna Document 2011, and creating new confidence-building measures.

• The success of U.S.-China policy will in no small measure depend on whether the state of U.S.-Russia relations permits three-way cooperation on critical issues. Our current policies reinforce Russia’s readiness to align with the least constructive aspects of China’s U.S. policy. Moving the needle in the opposite direction will not be easy, but should be our objective.

• On salient issues where U.S. and Russian interests are in genuine conflict, such as Ukraine and Syria, the U.S. should remain firm on principles shared with our allies and critical to a fair outcome. More attention, however, should be paid to the cumulative effect that measured and phased steps forward can have on the overall relationship, and in turn the opportunity an improving relationship creates for further steps forward.

• While sanctions should be a part of our Russia policy, they should be judiciously targeted and used in conjunction with other elements of national power, especially diplomacy. The steady accumulation of congressionally mandated sanctions as punishment for Russian actions in Crimea and eastern Ukraine, the poisoning in Salisbury, violations of the INF treaty and election meddling reduces any incentive Moscow might have to change course since it considers those sanctions permanent. We need to restore flexibility to our sanctions regime, focusing on targeted sanctions that can be eased quickly in exchange for Russian steps that advance negotiations toward acceptable resolutions of outstanding conflicts, including a demonstrable Russian effort to cease interference in our electoral process. Doing so will require political will on the part of both the White House and the Congress.

Ultimately, the reality is that Russia, under Vladimir Putin, operates within a strategic framework deeply rooted in nationalist traditions that resonate with elites and the public alike. An eventual successor, even one more democratically inclined, will likely operate within this same framework. Premising U.S. policy on the assumption that we can and must change that framework is misguided. Likewise, we would be unwise to think that we have no choice but to stick with current policy. We must deal with Russia as it is, not as we wish it to be, fully utilizing our strengths but open to diplomacy. So focused, we can both cope with the challenge that Russia poses and strive to put the relationship on a more constructive path. Failure to do so carries too high a price.

Rose Gottemoeller
Under Secretary of State for Arms Control and International Security, 2014-2016


Thomas Graham
Senior Director for Russia, National Security Council staff, 2004-07


Fiona Hill
Senior Director for European and Russian Affairs, National Security Council staff, 2017-19


Jon Huntsman Jr.
Ambassador to Russia, 2017-19


Robert Legvold
Columbia University


Thomas R. Pickering
Ambassador to Russia, 1993-96


***


George P. Shultz
Secretary of State, 1982-89


William Perry
Secretary of Defense, 1994-97


Ernest J. Moniz
Secretary of Energy, 2013-17
Nuclear Threat Initiative


Sam Nunn
United States Senator, 1972-97
Nuclear Threat Initiative


Gary Hart
United States Senator, 1975-87


John Hamre
Deputy Secretary of Defense, 1997-2000


John McLaughlin
Deputy Director and Acting Director, CIA, 2000-04
The Johns Hopkins School of Advanced International Studies


James F. Collins
Ambassador to Russia, 1998-2001


John Beyrle
Ambassador to Russia, 2008-12


Meghan O’Sullivan
Deputy National Security Advisor for Iraq and Afghanistan, National Security Council staff, 2005-07
Harvard Kennedy School


Richard Burt
Assistant Secretary of State for Europe and Canada, 1983-85
Global Zero


Thomas Countryman
Assistant Secretary of State for International Security and Nonproliferation, 2011-17


J. Stapleton Roy
Assistant Secretary of State for Intelligence and Research, 1999-2000
Kissinger Institute on China and the United States, Wilson Center


Joseph S. Nye
Assistant Secretary of Defense for International Security Affairs, 1994-95
Harvard University


Graham Allison
Assistant Secretary of Defense for Policy and Plans, 1993-94
Harvard Kennedy School


Gen. (ret.) Charles Boyd
Deputy Commander-in-Chief, U.S. European Command, 1992-95
Center for the National Interest


George Beebe
Former Director of Russia Analysis, CIA


Mark R. Beissinger
Princeton University


Richard K. Betts
Columbia University


Coit D. Blacker
Senior Director for Russian, Ukrainian and Eurasian Affairs, National Security Council, 1995-96
Stanford University


Barry Blechman
Stimson Center


Ian Bremmer
Eurasia Group


George Breslauer
University of California at Berkeley


Edmund G. Brown, Jr.
Governor of California, 1975-1983, 2011-2019
Bulletin of Atomic Scientists


Larry Caldwell
Occidental College


Samuel Charap
Senior Advisor to the Undersecretary of State for Arms Control and International Security, 2011-12


Peter Clement
Columbia University, School of International and Public Affairs


Timothy Colton
Harvard University


Keith Darden
American University


Jill Dougherty
Georgetown University


Daniel Drezner
The Fletcher School of Law and Diplomacy


Gloria Duffy
Deputy Assistant Secretary of Defense, 1993-95


Susan Elliott
National Committee on American Foreign Policy


Robert David English
University of Southern California


Brian Finlay
Stimson Center


Rosemarie C. Forsythe
Director for Russian, Ukrainian, and Eurasian Affairs, National Security Council staff, 1993-95


Nancy W. Gallagher
University of Maryland


James Goldgeier
American University


Thane Gustafson
Georgetown University


Sheila Gwaltney
U.S. Ambassador (ret.)


Siegfried S. Hecker
Stanford University


Martin E. Hellman
Stanford University


Richard E. Hoagland
Caspian Policy Center


David J. Holloway
Stanford University


Arnold Horelick
The RAND Corporation


Edward Ifft
Deputy Director of the On-Site Inspection Agency, 1991-98
Stanford University


Robert Jervis
Columbia University


Jan H. Kalicki
Woodrow Wilson Center


Michael Kimmage
Catholic University of America


Michael Krepon
Stimson Center


George Krol
U.S. Ambassador (ret.)


Charles Kupchan
Special Assistant to the President for National Security Affairs, 2014-17
Georgetown University


Cliff Kupchan
Eurasia Group


Melvyn P. Leffler
University of Virginia


William Luers
U.S. Ambassador (ret.)


Allen C. Lynch
University of Virginia


Eileen Malloy
U.S. Ambassador (ret.)


Steven Mann
U.S. Ambassador (ret.)


Jessica Mathews
Carnegie Endowment for International Peace


Richard H. Matzke
Former Board Member (Chevron, PetroChina, and Lukoil)


John J. Mearsheimer
University of Chicago


Mark Medish
Senior Director for Russian, Ukrainian and Eurasian Affairs, National Security Council staff, 2000-01


Rajan Menon
City College of New York/City University of New York


Richard Miles
U.S. Ambassador (ret.)


Chris Miller
The Fletcher School


Matthew H. Murray
Columbia University


Allan Mustard
U.S. Ambassador (ret.)


Larry C. Napper
Texas A&M University


Michael Oppenheimer
New York University


Bruce Parrott
The John Hopkins School of Advanced International Studies


Peter Pettibone
Pettibone International ADR LLC


Steven Pifer
Senior Director for Russia, Ukraine and Eurasia, National Security Council staff, 1996-97
Stanford University


Paul R. Pillar
Georgetown University


Barry R. Posen
MIT


William Potter
Middlebury Institute of International Studies at Monterey


Jon Purnell
U.S. Ambassador (ret.)


Brad Roberts
Deputy Assistant Secretary of Defense for Nuclear and Defense Policy, 2009-13


Cynthia Roberts
Hunter College, City University of New York


Matthew Rojansky
The Kennan Institute


Joan Rohlfing
Nuclear Threat Initiative


Lynn Rusten
Senior Director for Arms Control and Nonproliferation, National Security Council staff, 2012-14
Nuclear Threat Initiative


Scott Sagan
Stanford University


Jeffrey Shafer
National Committee on American Foreign Policy


Dimitri Simes
Center for the National Interest


Christopher Smart
Senior Director for International Economics, Trade & Investment, National Security Council staff, 2013-15


Jack Snyder
Columbia University


J. Andrew Spindler
Financial Services Volunteer Corps


Adam N. Stulberg
Georgia Institute of Technology


Ronald Suny
University of Michigan


Daniel Treisman
UCLA


Anna Vassilieva
Middlebury Institute of International Studies at Monterey


Stephen M. Walt
Harvard University


Jon Wolfsthal
Senior Director for Arms Control and Nonproliferation, National Security Council staff, 2014-17
Global Zero


Kenneth Yalowitz
U.S. Ambassador (ret.)


Stephen M. Young
U.S. Ambassador (ret.)


Donald Zagoria
National Committee on American Foreign Policy


Peter B. Zwack
Brigadier General (ret.), The Kennan Institute

[Ward Smith + 6,615]

@Tomaszhaven't you been paying attention? According to the Main Stream Media and the DNC (but I repeat myself), Trump is a puppet of the RUSSIANS. Therefore as a puppet it is impossible we could be having bad relations with them. You and I both know MSM - Pravda could never lie.

[Yoshiro Kamamura + 274]

8 hours ago, Ward Smith said:

@Tomaszhaven't you been paying attention? According to the Main Stream Media and the DNC (but I repeat myself), Trump is a puppet of the RUSSIANS. Therefore as a puppet it is impossible we could be having bad relations with them. You and I both know MSM - Pravda could never lie.

It seems that it's you who is not paying attention. The fact that Trump is an unknowing puppet to the Russian, Chinese and Korean regimes (being too stupid to realize he is being manipulated via his desire to appease these dictators) does not mean that all the elements of the US administration consider the relation with Russia satisfactory. US military, for example, is very upset, because their soldiers are targeted by Russian bounties, and Trump, despite being informed about the fact, does not even bother ask his comrade Putin why he tries to kill his soldiers and ask him to stop. 

[Ward Smith + 6,615]

8 hours ago, Yoshiro Kamamura said:

US military, for example, is very upset, because their soldiers are targeted by Russian bounties,

I see you're an enthusiastic supporter of the Goering diktat that a lie repeated often enough becomes the truth. My nephew was an army ranger in Afghanistan during the Obama administration. The Taliban didn't need a bounty from RUSSIANS to try and kill him, they were supposedly doing it for Allah. 

Your endless propaganda gets old. Try and up your game, I've seen the (very) occasional intelligent post from you, either it's possible you have a brain or there are multiple people sharing your wumao account. Meanwhile, about this Russian hoax, here's some American slang for you to learn, that dog won't hunt

[Bartosz + 7]

Russia I think is not really enthusiastic about islamic fanatics rule in Afghanistan near its southetrn borders  

One of biggest problems for Russia rarely mention in MSM is surge of heroin production in Afghanistan after 2001. Unfortunately as you have opoid problem in USA there are a lot of heroin takers in Russia.

If I were Putin I would really try to bomb heroin production in Aghanistan. I don't know maybe there is a chemical substance suitable for this purpose.

[Tomasz + 1,608]

Its fact that Russia has over a dozen million Muslims and generally fought against Islamic fanatics in Chechnya, therefore Islamic fanatics in Afghanistan is not very good idea for them. 

However I dont agree because  the Taliban, with all their fanaticism, fought the production of heroin and other drugs in Afghanistan in a very effective way by simply murdering the peasants producing it.

Not that I support such a policy , but the fact is that when the Taliban will take control of all Afghanistan, they will apply a similar policy.

[Ward Smith + 6,615]

On 8/7/2020 at 9:51 AM, Tomasz said:

Its fact that Russia has over a dozen million Muslims and generally fought against Islamic fanatics in Chechnya, therefore Islamic fanatics in Afghanistan is not very good idea for them. 

However I dont agree because  the Taliban, with all their fanaticism, fought the production of heroin and other drugs in Afghanistan in a very effective way by simply murdering the peasants producing it.

Not that I support such a policy , but the fact is that when the Taliban will take control of all Afghanistan, they will apply a similar policy.

The problem with that idea is the Taliban aren't killing those peasants for the good of humanity, they're killing competitors. The cartels did the same thing in South America with the coca growers. 

[Dan Warnick + 6,100]

On 8/7/2020 at 11:51 PM, Tomasz said:

Its fact that Russia has over a dozen million Muslims and generally fought against Islamic fanatics in Chechnya, therefore Islamic fanatics in Afghanistan is not very good idea for them. 

However I dont agree because  the Taliban, with all their fanaticism, fought the production of heroin and other drugs in Afghanistan in a very effective way by simply murdering the peasants producing it.

Not that I support such a policy , but the fact is that when the Taliban will take control of all Afghanistan, they will apply a similar policy.

Aha!  So that is what my government means by  "The War on Drugs"!!  Heh-heh.  Air America anyone?

[Tomasz + 1,608]

 

The Taliban simply controlled the country much more effectively with a hard hand. The power of the current government ends at the outskirts of Kabul's capital, and American troops are reluctant to leave the bases.

So due to the pauperization of the population, it produces what easily brings some income, i.e. heroin.

 

[Douglas Buckland + 6,308]

On 8/8/2020 at 12:51 AM, Tomasz said:

Its fact that Russia has over a dozen million Muslims and generally fought against Islamic fanatics in Chechnya, therefore Islamic fanatics in Afghanistan is not very good idea for them. 

However I dont agree because  the Taliban, with all their fanaticism, fought the production of heroin and other drugs in Afghanistan in a very effective way by simply murdering the peasants producing it.

Not that I support such a policy , but the fact is that when the Taliban will take control of all Afghanistan, they will apply a similar policy.

The Taliban will turn a blind eye to the poppy fields. They will ‘tax’ it as a revenue source.

[Marcin2 + 726]

Trump has no trumps to trump.

All the cards were played before he became US President.

I do not see any possibility for the important change of US Russia relations in many years, at least a decade.

US and Russia have No common business at present , no actual economic or political relations.

They only try not to nuke each other and watch that No new country can have nukes, that is the only area of  co-operation.

United States In all areas important for Russia has opposite strategic interests and What is more important is not going to work towards any consensus, this is obvious at least since 2011.

Lets get into details.

UN Security Council - end of  cooperation in 2011 After Libya.

Syria - also 2011

Southern areas , Asia - After Georgia War

Europe - After taking of Crimea.

There is  No area left where US can do any harm to Russia, all the cards were played.

Global situation is becoming better for Russia each and every year since the rise of China.

Russia gets economic protection and China gets natural resources.

There is No trust left in Russia regarding US. Whole generation of politicians would have to be retired to change this, as I said at least decade.

 Current situation is stable and  internally beneficial for Russia  dictatorship, they need strong government to fight another foreign invasion on Mother Russia.

Edited August 10, 2020 by Marcin2
Typo

[Ward Smith + 6,615]

14 minutes ago, Marcin2 said:

Russia gets economic protection and China gets natural resources.

How long until China just gets Russia? The demographics alone are pretty devastating. Russia about 100 million and declining rapidly. Siberia is already Asian. I'm guessing two generations, tops. China gets deep enough into Russia, they won't get nuked. Russia won't despoil her own land and not much upside in dropping missiles on Chinese cities. Easier to come to an accommodation, pretend it was always about cooperating. Mutual defense pact kind of thing. 

[Douglas Buckland + 6,308]

Who would want to invade Mother Russia in this day and age?

[SUZNV + 1,197]

Trump were used as a decoy for Germany relationship with Russia (I don't think their leaders suffer TDS). They want oil from Russia and want protection from the US. The narrative : US is bad, Trump is bad.

https://www.politico.eu/article/germany-plays-trump-card-in-pursuit-of-russian-nord-stream-2-pipeline-dream/

BERLIN — Donald Trump has done it again.

If there’s one thing the U.S. president has proved extremely adept at since taking office in 2017, it is getting under Germany’s skin, whether the issue is transatlantic trade, defense spending or the controversial German-Russian gas pipeline project known as Nord Stream 2.

The latest blowup was triggered by a letter sent last week by three Trump-supporting U.S. senators to a Baltic Sea port operator in Chancellor Angela Merkel’s home constituency, threatening the port’s managers with “crushing legal and economic sanctions” if they continue to support the project servicing the Russian ships laying the pipe.

German reaction to the warning was fast and furious. Manuela Schwesig, the premier of the state where the port is based, called the letter from Washington “blackmail,” while Jürgen Trittin, a prominent Green, said it amounts to a “declaration of economic war.” Carsten Schneider, a leading Social Democrat in the German parliament, accused Washington of “neo-imperialism.”

The episode proved yet again that if there’s one thing that unites Germans, it’s their hatred for the American president.

Berlin has become so obsessed with its distaste for Trump that it has lost sight of how it is perceived among key officials in the U.S.

Trouble is, they’ve become blinded by it.

Though Trump’s antics, strange relationship with his German heritage and generally outrageous behavior might make it tempting to dismiss anything he says or does, he’s hardly alone in opposing Germany’s pipeline deal with Russia, which would allow Moscow to circumvent Ukraine and other countries in Eastern Europe and deliver gas directly to Germany under the Baltic. Critics warn the deal, the second such pipeline linking Russia and Germany, would make Europe too reliant on Russian gas supplies and bolster Moscow’s leverage in its dealings with the region.

Countries from the Baltics to Poland to Slovakia have been urging Berlin to abandon the project for years. And Trump’s own moves to halt it are supported by both Republicans and Democrats, a rare glimpse of bipartisanship in the deeply riven American Congress.

That’s one reason why last week’s letter could not have come as a surprise to either the German government or the port in question. In fact, following a decision by Congress last month to broaden the scope of the sanctions, the senators’ rhetorical shot over the port’s bow was all but inevitable.

In the German press, much has been made of the fact that the port is located in the coastal town of Sassnitz, in Merkel’s constituency. But considering that Sassnitz is the port being used by the Russian ships carrying out the work (only about 150 kilometers of the 2,350-kilometer project remain unfinished), the connection to Merkel would appear to be more coincidence than by design.

Either way, the real question is why Germany’s political class is expressing shock and horror over sanction threats they had to have known were coming.

The reaction is typical of how Berlin has responded to criticism of the project from the beginning. Put simply, Germany’s tactic has been to focus on form instead of substance.

All business

For years, Merkel refused to even engage with critics of the project, repeating time and again that it was a “business project,” suggesting that political intervention would be inappropriate.

Despite U.S. objections, the chancellor’s tactic worked ­— at least until Trump arrived on the scene.

From the time he took office, Trump has been relentless in highlighting the inherent contradiction in Germany’s position. How can Germans expect the U.S. to use its military to defend their country while they also cut lucrative gas deals with Russia, the country from which it needs protection?

Thus far, Berlin hasn’t even tried to seriously answer that question. Neither Russia’s hacking of the Bundestag (the German parliament) nor Moscow’s assassination of a Chechnyan rebel in broad daylight in central Berlin prompted Germany to reconsider the project.

Instead, German officialdom has maintained its defensive stance, parrying American objections by sowing doubt over U.S. motives and tactics.

A Gazprom employee at the Bovanenkovo gas field on the Yamal peninsula | Alexander Nemenov/AFP via Getty Images

“The Americans don’t care about Russia, they just want to sell us their fracking gas,” goes a common refrain in Berlin, a reference to the U.S. boom in natural gas drawn from shale, a form of exploration frowned upon in Germany on environmental grounds. Furthermore, Germans argue, the extraterritorial sanctions the U.S. is trying to enforce on all entities connected to Nord Stream 2 are not just dubious, but illegal under international law.

Such arguments, which draw on widely held German stereotypes of no-holds-barred American capitalism and perceptions of U.S. arrogance, have helped German supporters of Nord Stream 2 (a broad, non-partisan coalition of political and industry forces) to avoid answering tough questions about why the project is worth jeopardizing Germany’s relationship with the U.S. and other key allies.

In short, they’ve succeeded in turning Nord Stream 2 into a debate about Trump.

Even if one accepts the argument that Trump’s opposition to the project is born of a desire to sell American gas to Europe, that hardly blunts the more fundamental questions surrounding the deal.

The conventional wisdom in German political and media circles is that both the recent U.S. decision to withdraw about 12,000 troops based in Germany, as well as the Nord Stream 2 sanctions threat, are little more than a petty attempt by the U.S. president to get back at Merkel for declining his invitation to attend a now-canceled G7 meeting in Washington this fall.

That assumption is false on both counts. The Pentagon has been quietly preparing the U.S. troop move — and, contrary to German assertions, warning Berlin of the shift — since the beginning of the year, according to both German and American defense officials involved in the process. And the U.S. sanction plans for Nord Stream 2 were in train long before Merkel told Trump in May that she wasn’t going to Washington.

The Castoro 10 pipelay vessel (R) lays concrete-coated pipe for the Nord Stream 2 gas pipeline onto the seabed of the Baltic Sea | Sean Gallup/Getty Images

Berlin has become so obsessed with its distaste for Trump that it has lost sight of how it is perceived among key officials in the U.S. — the country that, for better or worse, remains by far its most important partner in both strategic terms and on trade. Most senior German officials seem to think that if they can wait out the storm until November, things will return to normal, provided that the polls are accurate and Trump loses his reelection bid.

That’s almost certainly naive.

Up until his death in 2018, U.S. Senator John McCain, no friend of Trump and no enemy of Germany, made little secret of his frustration about Berlin’s intransigence on Nord Stream 2, joining colleagues in urging the administration to "use all tools at its disposal" to derail the project.

McCain was no outlier. Another former U.S. senator and longtime McCain confidant shares those concerns: Joe Biden. He continued to criticize the plan after stepping down as vice president in 2016, calling it a "bad deal" for Europe. He has said nothing in the interim to suggest that he has changed his view.

For now, Germany’s Nord Stream 2 lobby has succeeded in convincing the country that the debate with Washington is rooted in Trump’s anti-Germany crusade.

Come November, Berlin will likely be looking for a new excuse.

[Marcin2 + 726]

Problem of EU and most of all EUrozone is that US strategic objective is to destroy or at least significantly weaken these organizations.

US needs weak, fragmented and obedient Europe in times of hegemony war with China.

On the other hand both China and Russia need strong EU and strong euro currency to defend themselves against US and weaponization of US dollar.

Alliances are Unfortunately changing.

As a Polish citizen I look at it with some anxiety, but my country has No impact on this situation.

Edited August 11, 2020 by Marcin2
Typo

[Tomasz + 1,608]

If we talk about bussiness and we are on oilprice.com forum I would add that in first half of 2020 US bought 9 milion tons of crude oil and oil products from Russia. Its still not a lot but in first half of 2019 US bought just 4 milion tons so thats a huge increase. 

https://www.rt.com/business/497603-russia-record-oil-exports-us/

As far as I know there are 3 big producers of sour crude- Iran Venezuela and Russia. So if you want to put sanctions on 2 of them you have to buy more oil from Russia.

I agree that after 2014 relations are frozen but foreign trade after 2014 in opposite although still small is growing.

I would also never forget that US is biggest real foreign investor in Russia

https://www.ridl.io/en/a-quiet-revolution-in-the-analysis-of-foreign-investments/

[Tomasz + 1,608]

If you found Rt not a reliable source its more expanded version from russian liberal site rbc.ru

Quote

Russia has increased the supply of petroleum products to the United States to a record in 16 years Why do American refineries need Russian fuel
For six months Russia supplied to the US more than 9 million tons of oil products for $ 2.2 billion. This is a record since at least 2004, according to the data of the Federal Customs Service. According to experts, the States are replacing heavy oil from the sanctioned Venezuela with fuel oil
The export of petroleum products from Russia to the United States in the first half of 2020 reached 9.1 million tons in physical terms, follows from the data of the Federal Customs Service (FCS), which was studied by RBC. Compared to the same period of 2019 (4 million tons), supplies increased by 2.3 times and reached a maximum level at least since 2004 (since that time, the FCS has been keeping statistics in electronic form).
In January-June of this year, the United States accounted for more than 12% of all Russian exports of petroleum products (the total figure is 74.63 million tons). This is the second place - after the Netherlands, where Russia supplied 12.19 million tons of oil products (16.3% of the total). The third place belongs to Malta (4.4 million tons).
The Netherlands and Malta are transit hubs from where oil and oil products are supplied to end consumers in other countries. According to the US Energy Information Administration (EIA), imports of Russian petroleum products in only five months of 2020 (data for June are not yet available) reached 67.9 million barrels, or 9.3 million tons. This is more than the FCS recorded ... As part of the export, the customs service takes into account only shipments to the United States directly, while American statistics include imports of all Russian oil by origin, even if it was supplied through third countries.
Cheap fuel oil for the USA
In value terms, the export of petroleum products to the United States from Russia did not grow so significantly, it follows from the data of the Federal Customs Service, from $ 1.7 billion to $ 2.2 billion. The reason for the sharp decline in oil prices: Russian oil products were sold in the United States in the first half of the year 42% cheaper. than a year earlier, at $ 33.2 per barrel.
“In the US, they are guided only by the economic component. Apparently, during this period (the first half of 2020 - RBC ), Russian fuel is more profitable than other offers, so importers in the United States increased their purchases. Including fuel from Russia replaces Venezuelan supplies, ”said Andrei Polishchuk, an analyst at Raiffeisenbank, to RBC. As noted by Reuters , exports from Russia are replacing volumes from Venezuela, which no longer go to the United States due to US sanctions against that country. In addition, attractive prices and lower freight rates for tankers have an impact.
According to Reuters , the United States has particularly noticeably increased purchases of Russian fuel oil. In January-July, its imports into the country amounted to 6.4 million tons, including supplies in July increased by 16% versus June, to 1.08 million tons.

“Since the start of the OPEC + agreement [on the reduction from May 1 by oil exporting countries, including Russia, oil supplies amid a pandemic], there has been a shortage of heavy oil on the market, which refineries [refineries] focused on processing heavy oil - and this is exactly the case for the United States - they replace it with fuel oil, mixing it with light grades of oil, ”explains Vasily Tanurkov, director of the corporate ratings group at ACRA.
The export of Russian crude oil to the United States, on the contrary, decreased in the past six months by almost 2.4 times in annual terms, to $ 546 million, follows from the data of the Federal Customs Service. According to the EIA, the total import of Russian oil in April-May amounted to 0.5 million barrels (0.07 million tons), while in March alone it reached 4.9 million barrels.
 

 

[Tomasz + 1,608]

 

I know that I should not write a post under the post, especially because I have already pasted the link to the article. However, the article is so good that I think it is worth citing it in full for the second time.

The discussion about the importance of Russia for the West and for China with establishing the actual state of affairs I recommend an article on real foreign investors in Russia at the end of 2017. In my opinion, the author's final conclusions are ideally suited to making everyone aware of those who expected much more decisive steps by the West towards Russia over the last 6 years.

 Just by way of example - according to the Central Bank of Russia, officially assigned US investments in Russia amounted to only $ 3.5 billion. According to Americans, $ 14 billion. According to UNCTAD, this new calculation, where for the first time also includes investments through tax havens, already 40 billion. And if you add on-site investments to this, because the Russian market is a high-risk and high-dream market, together with the reinvestments of daughter companies, the total FDI of the American-Russian Chamber of Commerce at the end of 2017 is estimated at USD 85 billion. This time American investors on the stock exchange also owned government bonds at the level of approximately USD 15 billion. For the comparison of direct investments alone, Germany has 33 billion, the Chinese 36 billion, and the British 31 billion.

 

At this point, it is worth paying attention to China - according to the official message, Chinese investments are much smaller, which is one of the biggest manifestations of the weakness of Russian-Chinese cooperation. However, if you believe the UNCTAD data, the assessment must change, and at least it is geopolitically important.

The author of the article is Ivan Tkachev, one of the best Russian economic journalists from rbc.ru

Quote

 

The total stock of foreign direct investments (FDI) in the Russian economy amounted to just over $407 billion in 2018. What can we say after taking a closer look at them?

The Central Bank of Russia’s data show at least 68% of the FDI stock refer to investments from offshore jurisdictions. That are places like the Bahamas, Bermuda, Jersey, British Virgin Islands, or jurisdictions that in effect play virtually the same role – such as Cyprus (which accounted for more than 30% of the FDI, or $124.6 billion), the Netherlands, or Luxembourg.

It is obvious that those investments – made through transit financial jurisdictions – have been carried out by someone else. Perhaps they may have been made even by Russians themselves, who have long used such schemes of investment through foreign jurisdictions, under foreign law. For them it is often a way to optimize taxes, as well as to protect Russian investments from extortions and raids by security services.

Moreover, it seems surprising that, according to Bank of Russia, reported FDI from countries, such as the United States or China, are very low – $2.6 billion from China and $3.1 billion from the U.S., amounting to a mere 1.4% of the total.

Investment data distorted

As for most countries in the world, the FDI statistics provided by the Central Bank of Russia is based on the balance of payments. Reported data reflect cross-border investments from the immediate investing country.

Such data do not capture frequent cases when an investment is made, let’s say, by a Dutch SPV entity established by an American corporation. In this example the statistics will show the Netherlands as the investing country, not the United States.

However, given that the lion’s share of such investments (30–50% according to UNCTAD estimates) is actually made through intermediate (transit, or conduit) jurisdictions, investments from such countries as the U.S. or Germany are consistently underreported while investment flows from jurisdictions such as Cyprus or Bermuda are overstated. This offers a distorted picture which is largely useless for analysis, as in Russia’s case.

There is another important yet overlooked aspect. Foreign companies that have long established themselves in Russia tend to reinvest their domestically earned profits without moving them abroad. Such investments are not registered as foreign investments at all. Yet, quite obviously, it’s reasonable to factor them in too. This is what Russian statistical agency Rosstat did until 2014, when the authority to report FDI was handed over to Central Bank who switched to the internationally accepted method.

Silent ‘revolution’ in FDI analysis

Recently, the United Nations Conference on Trade and Development (UNCTAD)  published first-ever estimates of foreign direct investments into the economies based on Ultimate Investing Country. By definition, those estimates eliminated intermediary jurisdictions from the FDI matrix.

The data reported by UNCTAD as of the end of 2017 went largely unnoticed by the general public. However, they are able to create a small revolution within the realm of foreign investment analysis. Russia’s case can show clearly how the nominal geography of its inward foreign direct investments centered around offshore/quasi-offshore territories, as reported by Central Bank, is in fact a distorted picture.

‘In fact’ is, of course, a bit arbitrary here since the UNCTAD’s distribution of FDI by the ultimate investing country is an analytical estimation calculated under a probabilistic model based on Markov chains. In other words, UNCTAD didn’t make any direct restatement of investments through the elimination of intermediate investing jurisdictions. Instead, it applied a pure mathematical model (an overview of it obviously goes beyond the scope of this article but readers with particular interest can explore it here).

But the resulting distribution is consistent with the basic intuition suggesting that the vast majority of FDI in Russia reported to come from Cyprus, Bermuda, the British Virgin Islands, etc. has originated in ‘real’ investor countries with ‘classic’ exports of capital or has been ultimately made by Russian investors themselves.

A new perspective

What kind of ‘true’ picture of Russian FDI does UNCTAD model imply?

First, it is the U.S. which turns out to be the largest investor in the Russian economy. As of end-2017 the country accounted for 8.9% of the total accumulated investment, or $39.1 billion. This is 12.6 times more than reported by Russia’s Central Bank. The second largest investor is Germany ($33.2 billion), followed by the United Kingdom ($31.3 billion). According to UNCTAD estimates, these three countries accounted for more than $100 billion of total FDI stock in Russia. This compares to just $40 billion reported by Central Bank.

By contrast, the share of the Netherlands in FDI stock shrinks from about $41 billion to $29 billion. This is plausible given that, for instance, the investments into AvtoVAZ, the biggest Russian car manufacturer, were made by the Dutch-incorporated Russian-French joint venture of Rostec and Renault. A joint venture between Russia’s Yandex.Taxi and US’ Uber has been registered in the Netherlands too.

Curiously, according to UNCTAD data, 6.5% of investments (or $28.9 billion) turned out to be of Russian origin, not foreign. Russian investors traditionally shift money abroad, to countries with favourable tax regimes and unconditional respect for property rights, and repatriate investments from there back home. This is clearly reflected in the Central Bank’s statistics: the stock of foreign direct investments from Russia to Cyprus totals $172 billion, but a significant share of this money has been brought back (FDI stock from Cyprus to Russia is $125 billion as of 1 January 2019).

Currently, only 16 countries report their FDI statistics on the Ultimate Investing Country basis. Among them are the U.S., France, Germany, Japan. Comparing the Bank of Russia’s data on investments made from these countries with the respective data from those countries, one can see that Russian investments as reported by the U.S., Germany and others turn out to be higher. It’s natural since the latter data series include not only investments flowing directly from the U.S., Germany etc., but also investments by these countries’ corporations via third countries.

For instance, according to the U.S. Department of Commerce, cumulative investments of American businesses into Russia amounted to $13.9 billion at the end of 2017 (based on the historical cost of the investments made). This is significantly more than the Central Bank of Russia’s estimate ($3.1 billion). According to the Deutsche Bundesbank, the stock of investments from Germany into Russia totalled EUR 21.3 billion at the end of 2017 ($25.6 billion at the then exchange rate) while the Central Bank of Russia’s estimate is $18.1 billion.

Russia’s economic ties with the West underestimated

Obvious examples of foreign investments with the ultimate investor ‘hidden’ in the statistics include the construction of the plant in the Lipetsk region by US’ Honeywell (the plant was launched in early 2019, and the investment carried out by a Russian entity owned by Honeywell’s Singapore subsidiaries) or the acquisition of the Russian cigarette maker ‘Donskoy Tabak’ by Japan Tobacco made through its Swiss subsidiary, Japan Tobacco International.

Also consider the investments made domestically by Russian subsidiaries of foreign companies, and you will get an even greater share of ‘classic’ investing countries. “Official statistics understates the genuine extent of the economic ties between Russia and the United States,” the joint study by the American Chamber of Commerce in Russia and EY said in May. They estimated the total amount of direct investments made by U.S. companies in Russia over the entire period at $85 billion. This is multiple times greater than the figures provided by Russia’s Central Bank.

The same is true with Chinese investments in Russia. Estimates by the Skolkovo’s Institute for Emerging Markets Research show that the total volume of Chinese investments in Russia reached $36 billion at the end of 2017. China’s investors are no different from others and they too have been extensively using Cypriot or BVI jurisdictions when structuring their investment projects, Oleg Remyga who heads the China section at Skolkovo notes.

New data and a different way to look at sanctions

UNCTAD points out that their method and, generally, the shift to FDI accounting based on the ultimate investing country principle imply “potentially far-reaching policy implications”. It is true, and let us explain why.

When discussing the existing economic sanctions of the West against Russia as well as potential sanctions initiatives, one should consider the ‘true’ scale of economic assets held by Western businesses in Russia. If the U.S. owns Russian investments worth mere $3.1 billion, as implied by Central Bank of Russia’s data, it’s not entirely clear what constrains the US administration from tightening the sanctions. However, if those investments turn out to be at least $33–39 billion (Germany/the U.S.), the balance of potential foreign policy benefits and potential economic costs is tilted towards protecting businesses.

In January 2018, the U.S. Department of Treasury told Congress in a report that potential sanctions against Russia’s sovereign debt carried too much risk for American investors, effectively recommending that these sanctions are not imposed. Russian credit rating agency ACRA estimated at the time U.S. investors held around 10% of Russia’s sovereign debt, or $15 billion. It was certainly not easy for the Treasury to sacrifice even such manageable amount of investments.

US real investments in the Russian economy are apparently much higher, and these are not portfolio investments. They can’t be easily and quickly withdrawn. If the sanctions are tightened dramatically, Russian authorities are capable, in theory, to respond by freezing or even expropriating the property of U.S. companies in Russia – this option was reportedly discussed by the Kremlin in early 2018, on the back of new sanctions at the time. Thus, Western companies have much more at stake in Russia than it might seem at first sight.

 

 

Edited August 12, 2020 by Tomasz

[SUZNV + 1,197]

The problem the US faces is because their Fed issues USD, so whatever its behaviors will face critics. For example: defunding international duties will face criticism that didn't fulfill its leadership role but create a new international organization or a sanction will be viewed as hegemony. Hegemony itself is just a negative word for leadership. If using its influence in negotiation is hegemony, does Germany have hegemony in the EU? Does UK have hegemony in Common wealth? Are the Brexit negotiation and how to divide covid19 relief package in EU counted as hegemony? The oil price war that damage the US has been who hegemony who?

Last time if US excluded HuaWei out of 5G network, and any allied country didn't do that, would it be natural to limit the intelligence sharing to protect the US intelligence community, the consequence is that country may limit the intelligence sharing to the US as well.

Any step US takes to reduce the protection of EU will be seen as undermining the relationship but how should US view about that relationship when their allies undermine its sanction or trade war policies?

For the China-US relationship, it has been China who didn't respect the agreements when it joined WTO and undermining US with IP theft, any US company has to partner with a Chinese Company and not vice versa, that relationship was never stable. US current policies towards China is a response of many year of being undermined with the empty talks and promises.

For the US sanction on Russia, it was the consequence of Russia took Chimera back from Ukraine.  US didn't start that but would EU be happy if US sat back and do nothing about that? Back then US didn't lift its oil export ban so that was not because of selling crude oil to EU.

I never thought modern Russia is a threat  to the US after the cold war and have no object to lift off the sanction and be friend. But I have a feeling that US was afraid Russia will become another China to abuse its relationship with the US and therefor US not ready for another relationship.

I just don't see the point of US is a personal body guard for EU against Russia so that EU can trade safely with Russia. In romance relationship, it is similarly  I guard my girlfriend dating with another guy to prevent him beating her and my benefit is she will still be my girlfriend.  If I put pressure on her stop dating that guy or I quit, then I am the "hegemony" boyfriend. But I know I quit or date that guy (to do the hegemony thing on him) is not an option.

Edited August 12, 2020 by SUZNV

[Tomasz + 1,608]

Today, one of Russia's most famous experts, Stephen F. Cohen, died.

It is a pity because for the last 50 years he has been one of the leaders of the discussion, although in recent years he has been marginalized in the mass media.

RIP.

Maybe it's unrelated to the topic, but it was one of the last reasonable and sane voices in the discussion, so I devoted this evening to listening to his speeches on youtube and I also read about 3-4 of his books, including the most famous about Bukharin and the last War with Russia.

https://www.nytimes.com/2020/09/18/books/stephen-cohen-dead.html

https://www.rt.com/usa/501133-stephen-cohen-russia-scholar-dies/