Massenbach-Letter. NEWS 02.02.18

Massenbach-Letter. News

  • Carnegie Moscow Center: 2018 Russian Presidential Election
  • Germany and the U.S., Springing to Inaction
  • On the Origins of the Conflict in Yemen
  • Lowy Institute: Canberra looks for new bridges over troubled waters
  • Australian Strategic Policy Institute: China everywhere
  • Russia’s Changing Relations with the West: Prospects for a New Hybrid System
  • ( January 19, 2018 – Andrey Kortunov (Director General of the Russian International Affairs Council, RIAC member )
  • International Security and «Turbid Waters» of Cyberspace
  • (January 29, 2018 – Igor Ivanov (President of the Russian International Affairs Council (RIAC), Minister of Foreign Affairs of the Russian Federation (1998–2004) )
  • Russia and Europe: From Romanticism to Pragmatism
  • January 29, 2018 – Igor Ivanov (President of the Russian International Affairs Council (RIAC), Minister of Foreign Affairs of the Russian Federation (1998–2004)
  • The Caucasian Knot”: Week in the Caucasus: review of main events of January 22-28
  • Alexei Navalny’s supporters hold actions in Southern Russia

Massenbach* Carnegie Moscow Center: 2018 Russian Presidential Election


Rotating the Elite: The Kremlin’s New Personnel Policy

Tatyana Stanovaya, January 30, 2018

Whatever changes 2018 and 2024 bring to Russia’s leadership, the broader political system will become increasingly depersonalized, making it—rather than the president—the source of stability. Commentary

The Grudinin Effect: A Populist Shakes up Russian Politics

Andrey Pertsev, January 29, 2018,

The Communist Party’s new presidential candidate is far from a dull apparatchik. He’s a populist whose criticism of the authorities can appeal to different electoral groups. There has always been a demand for populism in Russia. If Pavel Grudinin can run an effective campaign—and his previous political experience suggests he can—it could lead to serious changes in the Russian political landscape. Commentary

Project Inertia: The Outlook for Putin’s Fourth Term

Andrei Kolesnikov, January 25, 2018

Do not expect modernization after Putin’s 2018 reelection. Instead, the system he built will function on autopilot as the Russian leader continues to lose direct control over events, ideas, and actions. But that doesn’t imply democratization. In essence, the head of state finds himself chained to the galley that he built himself. Commentary

Navalny’s Blinkered Economic Program

Andrey Movchan, January 23, 2018, Vedomosti

Most of Navalny’s economic proposals are seriously concerning and evocative of left-wing populist slogans. The policy platform contains outright errors, but its greatest problem is that it attacks all vocal parts of society in favor of a mythical “people.” Attracting voters with such a platform will prove to be difficult. Commentary

Putin 4.0: The President’s New Modus Operandi

Tatyana Stanovaya, January 18, 2018

Vladimir Putin is sending out signals about how he sees his fourth presidential term. Domestic initiatives are not a presidential priority and will be dealt with at the technocratic level. In the political sphere, the real threat to Putin’s power comes from the moderate opposition. Above all, there is to be no more democratic window dressing. Preparations are well under way for a new act. Commentary

Between Night and Day: Who Will Control Putin’s Fourth Term?

Konstantin Gaaze, December 21, 2017

As President Putin approaches his fourth term, his personal power is diminishing. In the recent corruption case against Minister Ulyukayev, the licensing of European University, and lawsuits against Sistema Financial Corporation, Putin has been either unwilling or unable to interfere. With the president off to the sidelines, there are signs that Russia’s “night rulers” are expanding their power. Commentary

Why the Kremlin Needs Sobchak

Konstantin Gaaze, November 13, 2017

Ksenia Sobchak’s run for the Russian presidency is not meant to siphon votes away from Alexei Navalny. The Kremlin’s aim is to create a pseudo-opposition, which will channel the discontents of the liberal urban electorate.


Alexei Navalny’s Permanent Revolution

Andrei Kolesnikov, October 09, 2017,Moscow Times

Time is on Navalny’s side. If he doesn’t commit a blunder that disenchants potential voters, and if the authorities don’t take the brute force approach of locking him away for a number of years, he could emerge as a key opposition figure between 2018 and 2024. Commentary

Sobchak for President: What the Rumors Reveal About Russian Politics

Andrey Pertsev,October 09, 2017

The possibility of TV anchor Ksenia Sobchak as a presidential candidate has morphed from the dream of one of Vedomosti’s Kremlin sources into a political fact and a model for all of Russian politics. It demonstrates the strategy and working style of the president’s administration and of Alexei Navalny, as well as the demand for any candidate other than Vladimir Putin. Commentary

Looking Beyond 2018: Putin and the Technocrats

Tatyana Stanovaya, October 06, 2017

The 2018 Russian presidential election will be the beginning of Vladimir Putin’s presumed final act as he seeks to ascend to the pantheon of Russia’s great historical figures. But as Putin loses interest in some of the more down-to-earth details of government, the Kremlin is testing new models of technocratic rule in order to sustain the regime.


· Article

The Burden of Predictability: Russia’s 2018 Presidential Election

· Andrei Kolesnikov,May 18, 2017

In the absence of a real political contest, Russia’s 2018 presidential election will be more or less a referendum on public confidence in Putin.


From our Russian News Desk. (The views expressed are the author‘s own.)

  • Russia’s Changing Relations with the West: Prospects for a New Hybrid System
  • ( January 19, 2018 – Andrey Kortunov (Director General of the Russian International Affairs Council, RIAC member )
  • It appears that in the foreseeable future, Russia cannot hope for much more than tactical interaction with the United States on a limited set of issues, such as Syria, North Korea, the Arctic and nuclear non-proliferation. If Moscow is particularly lucky, it might expand this list to add strategic stability, the fight against global terrorism and certain other problems.”
  • International Security and «Turbid Waters» of Cyberspace
  • (January 29, 2018 – Igor Ivanov (President of the Russian International Affairs Council (RIAC), Minister of Foreign Affairs of the Russian Federation (1998–2004) )
  • “Let us hope that today the awareness of the scale of the threat and the possible global consequences of a large-scale Russia–US confrontation in cyberspace will allow us to move to practical cooperation between Moscow and Washington in this extremely important for all mankind area.

Of course, bilateral Russia–US negotiations, important as they are, do not solve global issues of cyberspace governance. This is the task for the entire international community — big and small countries, private business and civil society institutions. And the special responsibility falls on the permanent members of the UN Security Council, especially on the threesome of the United States, Russia, and China, as the leading States in cyberspace. There is no doubt that joint leadership in such a pressing issue would help to build confidence between Washington, Moscow, and Beijing, and the growth of predictability in international affairs at large, that would be in the interest of all other members of the international community…”

  • Russia and Europe: From Romanticism to Pragmatism
  • January 29, 2018 – Igor Ivanov (President of the Russian International Affairs Council (RIAC), Minister of Foreign Affairs of the Russian Federation (1998–2004)

“… the fundamental issues of European security cannot be discussed without the United States and outside the NATO context. To be sure, any attempt to exclude the United States from the conversation would be both naive and counterproductive. However, neither Russia nor Europe can afford to wait for the United States to sort out its domestic political crisis and be ready for serious discussion. Neither the United States nor NATO has a monopoly on the dialogue surrounding European security – the issues are too diverse, and too important, to be passed on to the discretion of a third country or organization.

These and other proposals only demonstrate that this new stage of Russia–Europe relations requires new and fresh approaches if the sides are truly interested in imbuing them with real content. Emotions need to give way to logic. Romantic illusions need to be replaced by pragmatic considerations. And ideological constructions need to be ousted in favour of a clear understanding of the long-term interests of both sides…

  • The Caucasian Knot”: Week in the Caucasus: review of main events of January 22-28
  • Alexei Navalny’s supporters hold actions in Southern Russia


Policy= res publica

Freudenberg-Pilster* On the Origins of the Conflict in Yemen

Dec. 28, 2017 As is often the case, the current civil war has historical and geographical beginnings.

Yemen has always been different from the rest of the countries of the Arabian Peninsula. Even the Ancient Greeks thought of it as such, referring to the land that would eventually constitute Yemen as Eudaimon Arabia – “Fortunate Arabia” or “Happy Arabia” – because its rainfall and fertile land made for a stable population.

But the country it has become has rarely been fortunate or happy for long. Located at the intersection of major trade routes, it is an outpost for distant powers seeking access to Arabia. It is a prize peninsular powers have long tried – and always struggled – to control. It is a diverse country, a little more than 200,000 square miles in size, boasting a fertile coastline, mountains as tall as 12,000 feet (3,700 meters), and desert terrain. Its inhabitants are at least as diverse, disconnected as they by dozens of tribal and religious affiliations. Here, diversity all too often leads to volatility, for no one group can control the country for long.

Yet it is an overlooked country, usually afterthought among the machinations of more powerful actors, even as a civil war rages within its borders. It still makes headlines from time to time, of course. It initially re-entered global conversations during the Arab Spring, when its citizens rose up against President Ali Abdullah Saleh, sparking the current civil war. It gets some publicity when a bomb dropped by a member of the Saudi-led coalition fighting there lands on a wedding procession. Heads turn when Houthi rebels launch a missile at a passing ship or at a Saudi embassy. It was even the target of the Trump administration’s first counterterrorism operation, which left at least six women and 10 children dead.

Instability – if not always bloodshed – has been part and parcel of Yemen’s history for thousands of years. In this analysis, we will study the geography that divides this country, the turbulent transitions in power it has experienced over the centuries, and the roots of the civil war that continues today. (for more see att.)


Politics: From Vision to Action

Barandat*Lowy Institute: Canberra looks for new bridges over troubled waters

19 January 2018 … Australia’s foreign policy and security environment is coming under combined challenge from an emboldened, more powerful China, as well as new uncertainties about the commitment and leadership of the United States in Asia … And 2018 promises to be a testing year for Australia’s foreign policy, as it tries to navigate a course between the US and China. The likelihood of a more adversarial Sino-US relationship on the horizon brings heightened risk, as well as an imperative for Australia to be more active on the region’s diplomatic stage … China’s economic in-roads into the South Pacific have unnerved Canberra, as growing Chinese aid threatens to undercut Australia’s "traditional" predominance in its immediate region … Despite his lionisation of President Xi Jinping, the broader US-China relationship is becoming increasingly adversarial. This was apparent in the US‘ new national security strategy and is likely to cast a longer shadow over US-China policy than Mr Trump … Without the US present in the region, there is little prospect for Australia and like-minded countries to counter-balance China … Australia is stepping up its engagement. In South-east Asia, a new bilateral strategic partnership with Vietnam is expected to be concluded shortly, and defence engagement is likely to develop further this year with the Philippines and via the Five Power Defence Arrangements. Singapore remains Australia’s most advanced defence partner in South-east Asia … Canberra’s military capacity, though modernising, is still relatively small. As Australia winds down its combat involvement in Iraq and Syria, defence resources will need to be carefully husbanded for security closer to home … Bilateral defence cooperation with India and Japan is also likely to progress, though at a cautious pace, probably including a visiting forces agreement with the latter. One thing is certain, going it alone is not an option. Australia needs friends and partners in the region more than ever.


Middle East

Australian Strategic Policy Institute: China everywhere

12 Jan 2018 China is expanding its reach not just in the Asia-Pacific, but globally. What underpins China’s global push is President Xi Jinping’s commitment to transform China into a fully-developed, industrial country and to advance Chinese power in the world … For Xi, it is time for China to have a place under the sun. Xi’s tool of choice is strategic investments. This is a wise tactic, as it allows for a soft approach to influencing international politics that is less likely to cause anger. This can be contrasted with the tactics of Putin, who has annexed Crimea and embedded Russia in Syria, Iran, Libya and other conflict zones. While encouraging Chinese investment abroad, Xi is also making sure that such investment is strategic and of benefit to China. This is why on 18 August 2017, the Chinese Government introduced new rules to control Chinese overseas mergers and acquisitions. The rules outline three types of investment: banned, restricted, and encouraged. Military, gambling and sex industries all fall under banned investments. Restricted investments include such industries as real estate and hotels, film and entertainment, sports, and those that do not comply with environmental standards. Meanwhile the government encourages investment in industries that advance China’s technology, research and development, oil, mining, agriculture and fishing sectors. At the centre of Xi’s vision is the Belt and Road Initiative (BRI), a $US 1 trillion-plus program of infrastructure investment in more than 60 countries in Europe, Asia and Africa, including those that historically were not much interested in China … For decades, Sino-Israeli relations were trapped by Beijing’s reliance on Arab oil and its leadership position in the non-aligned world … Chinese investment in Israel had increased substantially: in 1992, when full diplomatic relations were established … Chinese investors have bought into the Israeli high-tech sector, formed joint ventures, hosted a trade conference and managed construction projects in Israel, including port and tunnel building. This trade relationship is likely to improve further … Israeli politicians are very much in favour of improving relations with the East Asian power … As part of the Israel-China corridor, there are discussions about the potential of a ‘Red-Med’ railway. The plan would connect Eilat, a port on the north of the Red Sea, to the port of Ashdod in the Mediterranean, while also developing Eilat to accommodate more cargo ships. In 2014, a subsidiary of China Harbour Engineering Company … won a US $950 million tender to build a port in southern Ashdod. The Chinese will build docks, warehouses and jetties. A year later, the Shanghai International Port Group (SIPG) won a US $2 billion tender to operate the new Haifa Port for 25 years. The Chinese will begin to run the port in 2021. Since August 2016, the China Ocean Shipping Company (COSCO) has owned Greece’s largest seaport, Piraeus. The ‘Red-Med’ rail line would make it easier for China to ship cargo to Piraeus and then into the European Union, bypassing the Suez Canal, which is dealing with increased traffic … In March 2016, Israeli Prime Minister Benjamin Netanyahu and China’s Vice Premier Liu Yandong announced the start of negotiations for a China-Israel Free Trade Agreement. The Agreement is linked to Xi Jinping’s BRI project, as once signed, it would cover such issues as standardisation, the removal of trade barriers, and areas of bilateral cooperation in the technological and economic sectors … Beijing can build influence across the international system because the US is retreating from key strategic areas. This notably includes the Middle East, where the Russians have also made substantial inroads … the Trump Administration is clearly out of its element … Although the Chinese are unlikely to undermine Israeli-American relations … they are penetrating an area that they had no access to, establishing a presence not only in Israel but also in the Eastern Mediterranean. China is challenging American hegemony everywhere, and not just in the Asia-Pacific.


*Massenbach’s Recommendation*

Germany and the U.S., Springing to Inaction

January 30, 2018 – For better or worse, their problems are the world’s problems.

Germany – the beating heart of Europe, one of the four largest economies in the world, a country helmed by an entrenched, established and respected politician – can’t seem to muster a government. It’s been 129 days since it had one. Now, to be fair, this isn’t uncommon among Europe’s parliamentary systems. The Netherlands went 225 days without a government last year, and Belgium holds the record at a whopping 589 days from 2010 to 2011. But Germany is not the Netherlands or Belgium. What happens there can shake the world.

The same could be said of the world’s only superpower, the United States, which has political problems of its own. The government in Washington recently reopened after a three-day shutdown, though it is funded only until Feb. 8. Unless Republicans and Democrats can come to some kind of agreement on immigration reform – something that has eluded both parties for decades – the government may well shut down again. Even if it doesn’t, political gridlock will so preoccupy Washington that it will actually impair U.S. foreign policy.

Inequality Is the Real Issue

Domestic problems are affecting German and U.S. behavior in eerily similar ways. In both countries, a widening gap in wealth inequality is creating the conditions for potentially radical political change. Of the 28 countries that report wealth distribution data to the Organization for Economic Co-operation and Development, Germany and the United States stand out. In Germany, the bottom 60 percent of the population possess just 6.5 percent of wealth in the country, the lowest figure in Europe. In the U.S., the bottom 60 percent possess just 2.4 percent – the lowest figure of any reporting country. The top 10 percent of both countries, on the other hand, account for a disproportionate amount of wealth – nearly 60 percent in Germany and nearly 80 percent in the U.S., the two highest figures of reporting OECD countries.

(click to enlarge)

In the case of Germany, this seems particularly mystifying. The country is, after all, enjoying record-low unemployment rates, and by all accounts, its economic growth has exceeded even the more optimistic projections (full disclosure: ours was not so optimistic). But these figures tell only part of the story. The real issue is inequality, in terms of household wealth and real income. Germany may be a rich country – the average net wealth per household is about 214,000 euros, or $265,000 – but the median net wealth per household in Germany is about 61,000 euros. For reference, that’s about 4,000 euros less than it is in Greece, which Germany almost kicked out of the EU for its profligacy. On a per household basis, the bottom half of households in Germany possess less wealth than the bottom half of households in Greece.

And things are getting worse. Sure, unemployment has steadily decreased since 2009, but jobs are not translating into increased wealth for the lower and middle classes. From 2009 to 2016, unemployment declined in Germany by roughly 2 percent. At the same time, the relative poverty rate – defined by Germany’s Federal Statistical Office as the “percentage living in households with an income below 60 percent of national average” – rose about 2 percent. That is not so much a measure of increased poverty as it is increasing wealth for Germany’s top wage earners, as more and more Germans find that the same salary they made a few years ago now puts them below the poverty level.

Income inequality has been increasing too. Kreditanstalt fur Wiederaufbau, a government-owned development bank, published a report in March 2016 that showed that household income grew by 6 percent and 21 percent for the bottom two quintiles, as opposed to roughly 39 percent for the top quintile. Consumer prices over the same time horizon rose by about 24 percent, which means in real terms, 40 percent of German households have seen their purchasing power decline. In 2000, Germany had one of the lowest rates of income inequality in the EU. Now it is simply average – and trending in the wrong direction.

This trend is creating serious political problems. The most notable is the difficulty with which Chancellor Angela Merkel is cobbling together a coalition after German voters turned outside the mainstream to voice their frustration with the status quo. There are other troubling indicators, though. The Social Democrats, or SPD, fared no better than Merkel’s Christian Democratic Union in elections and may face insurrection from their members even if CDU and SPD negotiators come to an agreement. IG Metall – the largest industrial labor union in Germany and in Europe – walked out of talks with industry representatives on Jan. 27 and is now threatening 24-hour “warning strikes” if its demands on salaries and a 28-hour work week are not met.

Germany’s domestic political issues, punctuated by the absence of a German government, are beginning to reverberate throughout Europe. Political uncertainty in Germany has cast a shadow over EU negotiations with the United Kingdom on the conditions of Brexit, since Brussels cannot move forward with a deal without the German government’s approval. France’s president, Emmanuel Macron, continues to wait for a German government to be installed so Berlin can respond to French proposals for EU reform. Internal debates over the status of refugees cannot be resolved if Germany cannot even decide for itself what its immigration policy should be – one of the major current sticking points in the coalition negotiations. In effect, Europe is in a holding pattern, waiting for a German government that will be in a very weak domestic position even if the CDU and SPD conclude an agreement in the next week.

The Advantage in Washington’s Absence

Germany’s inequality problems began roughly when the country reunified in 1990. West Germany absorbed East Germany more easily than many predicted, and that created some of the socio-economic conditions today. But inequality is a much older issue in the United States. Modern income and wealth inequality in the U.S. has been creeping upward since the 1970s.

Donald Trump’s surprising electoral victory in 2016 was at least partly a political expression of that underlying dynamic. It is no coincidence that in the years before Trump’s election, the share in total income of the top 10 percent of all U.S. earners rose to just under 49 percent – a share surpassing that of any time during the Great Depression. This type of wealth inequality is a refrain in U.S. economic history that produces massive political change, of which Trump is likely just a precursor.

(click to enlarge)

The 2008 financial crisis aggravated the problem. The median income in the United States is at a record high – but when you look at median wealth figures divided by lower, middle and upper income, you see that only the upper income levels have recouped the wealth lost during the financial crisis. Lower- and middle-income U.S. households are still doing worse today than they were in 2007. Like Germany, the United States is also enjoying low unemployment rates – 4.1 percent in December 2017, according to the U.S. Bureau of Labor Statistics. Again, though, employment doesn’t tell the whole story. The Federal Reserve Bank of St. Louis noted in a report this past month that the net increase in jobs created since 2000 – roughly 17 million jobs – has been among workers 55 and older. Jobs don’t help if they don’t pay enough and don’t create opportunities for young workers.

These problems demand Washington’s full attention, and the government is too preoccupied by its own political affairs to do much abroad. Unlike Europe, where countries are waiting on Germany, the world is not waiting on the U.S. – it’s taking advantage of its absence. It’ll be tough for Trump to sell a major war on the Korean Peninsula to a divided electorate. North Korea and China understand as much and are now attempting to split South Korea off from the U.S.-led alliance structure in the Pacific. Turkey’s foray into Afrin is in part a test to see how much it can shape Syria unilaterally – and the test results show an indifference. Russia, meanwhile, is doing its best to parlay a weak hand in the Middle East and Eastern Europe into Russian influence and concomitant U.S. concessions, whether by masterminding a fanciful diplomatic solution to the Syrian civil war or continuing to seek a settlement with the U.S. over Ukraine. Russia has not found much success so far, but the current U.S. posture does nothing to deter Russia from continuing to try.

Domestic politics are less predictable than international politics. Generally, they are less important too. But when two of the world’s four largest economies and the world’s pre-eminent military power are so hamstrung by problems that their behavior on the world stage is affected, the issues cease to be domestic. The U.S. and Germany have officially crossed that line. Germany has no government, and whatever government it eventually forms will be weak and hypersensitive to domestic concerns about inequality and immigration. The U.S. government is squabbling with itself rather than efficiently solving problems, whether at home or abroad. In that sense, it is working the way the Constitution designed it in 1789: without the rest of the world in mind. In 2018, that has global ramifications.



see our letter on:

*Herausgegeben von Udo von Massenbach, Bärbel Freudenberg-Pilster, Joerg Barandat*



01-30-18 Kortunov_Ivanov- Russia and the West.pdf

12-28-17 On the Origins of the Conflict in Yemen – Geopolitical Futures.pdf