Germany’s historic U-turn
Plus, a guest post on the American embargo of computer chip supply to Russia and possible opportunities for China
Guten Tag! I hope you have a great weekend ahead. This week we’re looking at Germany’s historic defence and military policy U-turn amid a European security landscape shift caused by the Russian invasion of Ukraine. We’ll also look at why the West is rejecting calls for a no-fly zone over Ukraine.
Besides key updates from the conflict, there’s lots more about the Quad virtual summit, the Iran nuclear deal, United States President Joe Biden’s ‘State of the Union’ address and French President Emmanuel Macron announcing that he’ll seek re-election next month.
We also have a guest post on the American embargo of computer chip supply to Russia and possible opportunities for China.
This day that year
2009: The International Criminal Court issued an arrest warrant for Sudan’s president Omar Hassan al-Bashir for alleged war crimes and crimes against humanity during the war in Darfur. al-Bashir was the first sitting head of state to be indicted by the ICC. While al-Bashir was ousted in a 2019 coup d’état, the warrant is yet to be executed.
1980: Robert Mugabe won the Southern Rhodesian general election to become Zimbabwe's prime minister. In 1987, Mugabe became the president and remained in power until his ouster in 2017.
Germany’s historic U-turn
Vladimir Lenin, one of the founders of the Soviet Union and the main proponent of Leninist political ideology, once said: “There are decades where nothing happens; and there are weeks where decades happen”. It seems true. Last week’s events changed the European security architecture. This week’s events commenced the process of redefining it.
Exactly a month ago, we discussed how Germany, dealing with its historical guilt associated with the Second World War, was hampering the North Atlantic Treaty Organization (NATO)’s coherence in tackling what was then the possibility of a Russian invasion of Ukraine. This has now changed.
The German government made a number of historic defence and military policy announcements on February 27, during a special session of parliament convened in response to Russia’s invasion of Ukraine.
Making a U-turn from its earlier policy, German Chancellor Olaf Scholz and his government announced that the country will now supply weapons to Ukraine. In the run-up to the ongoing conflict in eastern Europe, Germany had refused to provide weapons to the Ukrainian military citing a self-imposed ban on such exports to areas of conflict. That was because politicians in Berlin see the Nazi German invasion of the Soviet Union, Russia’s predecessor state, with a sense of historical guilt.
A day before his speech in the Bundestag, the German chancellor also announced that his military will send 1,000 anti-tank weapons and 500 “Stinger” class surface-to-air missiles to Ukraine. Germany also permitted Estonia and the Netherlands to send weapons, previously owned by the country, to Ukraine. Those transfers had been blocked until now.
“We need to support Ukraine in its hour of desperate need,” Scholz told lawmakers. “In attacking Ukraine, [Russian President Vladimir] Putin doesn’t just want to eradicate a country from the world map, he is destroying the European security structure.”
According to Scholz, anyone who has read what Putin is saying can have “no doubt” that Russia wants to “create a new order in Europe and he has no qualms about using military capabilities to achieve it”.
The Russian invasion of Ukraine “marks a turning point” and “threatens our entire post-war order,” Scholz told parliament.
Germany had already halted the certification process for the Nord Stream 2 gas pipeline project that was to help it import Russian natural gas. That project has been packed away for the foreseeable future. Germany is still dependent on Russia for energy imports, but it has started replacing them with supplies from other countries. Berlin has also supported cutting off Russian banks from SWIFT and has announced closure of its airspace to Russian civilian flights. They are likely to back most western sanctions against Russia, if not all.
But more importantly, Germany is now shedding the partial pacifism it had abided by since the end of the Second World War. One of the big announcements was the allocation of a one-time special fund of about $110 billion for modernising its military. Additionally, the country will now spend more than 2 percent of its Gross Domestic Product every year on defence. Scholz’s announcements were met with applause.
“It’s clear [that] we need to invest significantly more in the security of our country in order to protect our freedom and our democracy,” Scholz said.
This is significant because that level is the defence spending target NATO has been urging its members to meet. Berlin has never hit that target so far. Currently, Germany spends 1.5 percent of its GDP (just over $50 billion) on defence every year. The US had also been pushing Berlin to spend more on defence. Scholz added that Germany would deploy more personnel to NATO’s eastern flank.
To be fair, Germany’s military is not archaic or isn’t crumbling. They do have modern equipment. So, what’s key here is the German government’s acceptance that a new European security architecture is developing and the willingness to take actions accordingly.
Scholz told parliament that the “new reality” Putin had created requires a clear response.
These decisions are, of course, going to hugely benefit the defence manufacturing industries in Germany, rest of Europe and the US. Germany is already the world’s fourth-largest weapons exporter.
Germany’s U-turn is not only expected to boost German defence and capabilities of NATO, but also herald a new era for European security with Germany now willing to play a greater role in it.
Bears, dragons and tech
By Kriti Singh
US President Biden’s State of the Union address on March 1 bolstered the country’s computer chip industry. Talking about the 2021 Innovation and Competition Act, Biden highlighted development of Intel’s new $20 billion semiconductor computer chip factory in Ohio. This comes on the heels of the recent American embargo on sale of computer chips to Russia in a bid to target its military and industrial complex.
The embargo has also been applied to most products using US technology, but doesn’t include chips used in consumer products. This move is similar to when the US had blocked the sale of chips to Chinese telecom equipment manufacturer Huawei Technologies, partly contributing to a 30-percent fall in the company’s revenue in 2021.
Un-powering Russia
The American embargo on chip sales is expected to affect not only Russian automobile, computer and smartphone industries, but also digitised military equipment like drones and jets. While Russia might be trailing Europe and East Asia in the digital revolution, its priorities are clearly seen in the heavy investments Moscow has made in digitising its economy, especially in the national security domain.
The key driver behind this is the Russian government, as is evident from Putin’s latest policies focusing on the country's artificial intelligence endeavours and technology upgrades like 5G telecommunications, among others. As for the chips, according to the US-based Semiconductor Industry Association (SIA), Russia accounts for only 0.1 percent of global chip purchases and 70 percent of its supply comes from China. These chips, however, with questionable quality may not help power Russian missiles.
There may not be an effect on Russia in the short term, but experts believe it may impact the Kremlin in the long run as upgrading technology would become a challenge.
However, the other side is that both Russia and Ukraine are major suppliers of neon gas and palladium, which are vital components in chip manufacturing. As a response to the American ban, Russia can cut off this supply to a market already dealing with a shortage. Currently, major manufacturers have said that there has been no impact on the supply chain. This could be because these manufacturers had diversified following Russia’s actions in eastern Ukraine in 2014, and had managed to secure significant supply before the current conflict.
An opening for China?
The US and its allies ousting seven key Russian banks from the Society for Worldwide Interbank Financial Telecommunication (SWIFT), a messaging system that allows banks around the globe to securely make cross-border payments, has led to a fall in the value of the Ruble (Russian currency) and the stock market there.
Now, there are two approaches Russia could take: first, the country recently moved to legalise its cryptocurrency industry and like Iran, which is also heavily sanctioned by the US, can use cryptocurrency for imports. The Central Bank of Russia is also developing its own digital Ruble. Like the internet, cryptocurrency is a dual use technology. On one hand, it has helped Ukrainians with over $15 million in donations and is acting as a storage of wealth as its economy collapses. On the other hand, the anonymity crypto transactions offer, which a traditional bank does not, can be exploited by Russia to sidestep sanctions. But if it can fill the hole created by the sheer volume of sanctions, is questionable. Crypto’s volatility is another major factor and that creates more uncertainty at a time of conflict for both sides. Nevertheless, the integration of this parallel and decentralised financial institution in the mainstream is something to be seen.
Second, Russia can turn to its close ally: China. Russian banks’ ouster from SWIFT, as an attempt to target its financial institutions, may encourage China to strengthen its own nascent payments network, the Cross-Border International Payments System (CIPS).
It’s important to note that while China has highlighted the need to uphold Ukraine’s sovereignty, it hasn’t condemned the Russian invasion of Ukraine. With increasing sanctions against Russia, more opportunities are opening up for Beijing and Moscow to deepen their bond – resulting in significant shifts on the geopolitical chessboard.
Kriti Singh is the Chief of Staff at New Delhi-based tech policy think-tank The Dialogue.
Updates: Russian invasion of Ukraine
No-fly zone debate
Many, including Ukrainian President Volodymyr Zelenskyy, have urged the West to declare a no-fly zone over Ukraine to stop Russian air force from bombing Ukrainian cities. The US and the UK have ruled this out. Why?
A ‘no-fly zone’ refers to a defined airspace where aircraft are not supposed to enter. These can be small areas such as the airspace above parliaments and military installations, or above large areas such as territories and countries. A no-fly zone was enforced over Libya amid the First Libyan Civil War in 2011.
If an aircraft enters a no-fly zone, it would be asked to leave immediately or even shot down if necessary. Thus, enforcement of the no-fly zone becomes very important.
In the case of Ukraine, the onus of enforcing the no-fly zone — whether it is over a limited area or spread across the country — would fall on NATO. That would mean that if Russian air force jets transgressed into the no-fly zone, NATO aircraft would have to drive them away or even shoot them down if required. That would put Russia and the West directly in combat against each other — escalating the conflict and increasing the nuclear threat. Some have also suggested that a no-fly zone in this case would have to include Belarus as well because Russian jets are using that airspace too for their aerial campaign against Ukraine. It must also be noted that the Russian air force has failed to gain aerial superiority over Ukraine so far.
Key developments this week
Resistance: Ukrainian citizens taking up arms has contributed to a stronger resistance against the invading Russian army, than what was expected earlier. Kyiv, the Ukrainian capital, not falling into Russian hands so far demonstrates just that. US President Biden said Putin believed he “could roll into Ukraine and the world would roll over. Instead, he met a wall of strength he never imagined.”
Russian offensive: Yet, the southern Ukrainian city of Kherson has fallen and the Russian offensive in Kharkiv has picked up. Putin told French President Macron in a telephonic conversation that Ukraine rejecting Russia’s conditions means the war will continue. The French president’s office was quoted by the media as saying that “[it expects that] the worst is yet to come.”
The Ukrainian government hasn’t capitulated: Zelenskyy and his core cabinet members are believed to still be in Kyiv, even as Russian forces have closed in. “The fight is here; I need ammunition, not a ride,” Zelenskyy told the US, according to the Ukrainian embassy in the United Kingdom – rejecting the American offer to evacuate from the capital.
Russian casualties: Russia has admitted losing 498 of its soldiers in Ukraine so far. However, Ukraine claims nearly 9,000 Russian soldiers have been killed. The US has estimated that number to be around 5,000.
Zelenskyy has emerged as a ‘hero’ with many people across the world praising the actor-turned-politician for his wartime leadership.
Humanitarian corridor: At the time of writing this, Russia and Ukraine seemed to have reached a tentative agreement to create a safe corridor (an area where there would be a ceasefire) for humanitarian supplies to be brought in and civilians to be evacuated.
Pin it on the map
Time for some head scratching: This satellite image shows the capital city of a former Soviet republic. Situated about 28 metres below the sea level, it’s the lowest lying national capital in the world. About 25 percent of the country’s population lives in this city. While it has been inhabited for centuries, it has become more famous in recent years for hosting a number of sports events, including Formula 1 races and the inaugural edition of the European Games in 2015. What city is this?
The answer is at the bottom.
What else?
Quad summit
In a virtual summit on March 3, leaders of the Quad – Australian Prime Minister Scott Morrison, Indian Prime Minister Narendra Modi, Japanese Prime Minister Fumio Kishida and American President Biden discussed the conflict and humanitarian crisis in Ukraine and assessed its broader implications.
Quad leaders “agreed to … provide a channel for communication as they each address and respond to the crisis in Ukraine,” the White House said in a statement.
The four leaders are expected to meet for an in-person summit in Tokyo, Japan in the “coming months”.
India is the only Quad member to have abstained from United Nations Security Council and General Assembly resolutions seeking to condemn the Russian invasion of Ukraine.
Biden’s State of the Union address
US President Biden delivered the annual State of the Union Address on March 1. On the international front, Biden’s speech focused on the Russian invasion of Ukraine and the growing economic competition with China.
Talking about the conflict in Ukraine, Biden said Putin had “thought the West and NATO wouldn’t respond”. “Putin has unleashed violence and chaos. But while he may make gains on the battlefield — he will pay a continuing high price over the long run.”
Biden talked about economic sanctions the US was imposing on Russian oligarchs and entities linked to the Russian government, and discussed how the US and its allies were supporting Ukraine and its people.
He also listed his administration’s efforts to “transform America” in ways that would put the country “on a path to win the economic competition”, particularly with China.
Read the full transcript of Biden's State of the Union address here.
Macron seeks re-election
French President Macron has confirmed that he’ll run for a second term in office in next month’s election, hoping to become the first to get re-elected in 20 years. He’s currently leading his 2017 election rival Marine Le Pen in the opinion polls.
Macron, 44, is hoping to fill the European leadership void created by former German chancellor Angela Merkel stepping away from active politics last year.
Iran nuclear deal close
The US State Department’s principal deputy spokesperson told reporters on March 3 that negotiations to revive the 2015 nuclear deal between the West and Iran appeared to have reached a final stage. “We are close to a possible deal,” spokesperson Jalina Porter said.
The crucial talks are aimed at saving the 2015 nuclear deal under which Iran had agreed to limit its nuclear programme in exchange for economic sanctions being lifted. The country had stopped complying with the nuclear deal after former US president Donald Trump pulled out of the arrangement in 2018 and piled new sanctions. Since early last year, the Biden administration has been working to resurrect the nuclear deal.
Interesting stuff
While the ultimate responsibility for the Russian invasion of Ukraine rests with Putin, there’s an “inner circle” of people working with him. These are Putin’s most trusted people and loyal supporters who have worked with him for a long time. This story by the BBC gives an overview of such individuals.
For years, international relations scholar John Mearsheimer has argued that the West is responsible for the crisis in Ukraine (which has now turned into a full-fledged war). He has also faced criticism for seeing NATO’s expansion into eastern Europe and the US trying to turn Ukraine into a pro-American liberal democracy as the reasons for Russian aggression there. Now, in an interview with The New Yorker’s Isaac Chotiner, Mearsheimer has suggested that Putin is only interested in capturing Kyiv to install a puppet regime that will support Moscow’s interests and that Russia is “too smart to get involved in an occupation” of Ukraine. Read the lengthy interview here.
Douglas London, a former CIA senior operations officer, explains in Foreign Affairs that if Russia occupies much of Ukraine and installs a puppet regime, it will lead to a lot more trouble for Moscow. “Putin will face a long, bloody insurgency that could spread across multiple borders, perhaps even reaching into Belarus to challenge Belarusian President Alexander Lukashenko, Putin’s stalwart ally. Widening unrest could destabilise other countries in Russia’s orbit, such as Kazakhstan, and even spill into Russia itself.” The Coming Ukrainian Insurgency: Read the full article here.
“I fear we may find ourselves missing the old Cold War”. In an opinion piece for The New York Times, Mary Elise Sarotte, a history professor at the Johns Hopkins School of Advanced International Studies, is wondering if Putin’s “recklessness may cause the years between the Cold War and the COVID-19 pandemic to seem a halcyon period to future historians, compared with what came after”. Sarotte suggests that this “new cold war will be far worse than the first”. Read the full opinion piece here.
‘Pin it on the map’ answer: Baku, Azerbaijan. It’s also the largest city by the Caspian Sea.
Disclaimer: Views expressed in the guest post are those of the contributor.
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