[Stratfor's background to the current embassy crisis from a month ago]
29 March 1999
Kosovo and Asia
Summary
Kosovo points toward a rupture between Russia and the West. It also
points to an alliance between China and Russia. During the past
generation, economics were more important than politics. That is now
old-fashioned thinking. National Security in all of its guises is back
and critical. Kosovo is a turning point for Asia as well as Europe.
Analysis
On the surface, the Kosovo crisis has little to do with Asia. This is
not at all the case. Asia lives in the shadow of the United States.
Politically, militarily and certainly economically, anything that
affects the United States affects Asia and this, more than anything
the United States has done in Iraq, will affect Asia.
Let us begin by making a point that many readers have raised. It
appears that we spend more time on military affairs than on the
economic affairs that our readers are interested in. This is certainly
true. Remember, our task is to forecast events. Our reading of events
is that the next decade will resemble the pre-1990s period. That is to
say, it is our view that political and military events will define
economic relations. This is the reverse of the situation during most
of the 1990s. Particularly in Asia, political and military affairs
appeared trivial and even archaic compared to economic and business
news. That is simply no longer the case.
Consider the Kosovo crisis. In and of itself, this is a matter of
little importance to Asia. What is important is that it is redefining
U.S. relations with Russia. For the Russians, the Kosovo crisis is a
last chance to force the West to bail out its collapsed economy.
Russia is using its leverage over the Serbians as a tool for
extracting economic concessions from the West. To be more precise, the
U.S. pleaded with Russia to intervene on its behalf with the Serbs to
head off the current crisis. Not only didn't the Russians do this, but
they also actually made the situation worse, by making it clear to the
Serbs that they were no longer isolated. The Russians have been
shipping supplies and weapons to the Serbs for quite a while. This has
emboldened the Serbs. During the run-up to the crisis, the Russians
did everything they could to appear to be working to influence the
Serbs while actually encouraging Serbian resistance.
Russia wanted this crisis for two reasons. First, it is using the
crisis to show the U.S. and Europe what the world will look like if
reform in Russia collapses. The motive here is to get the U.S. and
Europe to convince the IMF to provide Russia with financial support.
Of course, Russia knows quite well that the quantity of support
available from the IMF is trivial compared to the Russian need. It
wants the money but is aware that the money is, at best, a stopgap
that will not stabilize the economy but will buy the Yeltsin-Primakov
regime some breathing room.
Russia's interest in the crisis goes deeper--it is aware that the
reform game is up. It is, therefore, looking to position itself for
the next era, the one that comes after the post Cold War era. The
crisis does two things for Russia. For the first time since the
collapse of reform, the Kosovo crisis has built a general Russian
political consensus around the pan-Slavic theme. This in itself is
useful. Second, using the pan-Slavic theme as a political foundation,
Russia is now in a position to try to create a geopolitical bloc,
particularly in European regions built around the Slavic claim of
Western betrayal. This bloc is already emerging.
But the most important evolution is Russia's desire to reverse the
U.S.-Chinese entente of 1972. If you will recall, the origin of
U.S.-Chinese relations rested in the American defeat in Vietnam. The
Nixon administration understood that because of the forced withdrawal
of U.S. forces from Vietnam and the collapse of political solidarity
in the United States, America, by itself, could no longer resist
Soviet pressure. The Chinese, for their part, understood that they
were heavily exposed to Soviet pressure. Indeed, ever since 1962 when
the Soviets floated the idea of a surgical nuclear strike on the
Chinese nuclear facility at Lop Nor, an idea that the Kennedy
administration vetoed, China was dependent on the United States as a
counterweight to the Soviets. Thus the formal anti-Soviet entente
created in 1972 was designed to contain the Soviet Union. It worked.
That relationship did more than merely redefine global geopolitics. It
also served as the general foundation of the U.S.-Chinese commercial
relationship that was a fundamental element in China's opening to the
world and reform in China. The geopolitical relationship approved by
Mao evolved into the economic structure from which Deng evolved modern
China.
Now, U.S.-China relations have collapsed in recent months. The issue
is not human rights or spying, although these have contributed. The
fundamental issue is that the basic element of the U.S.-China
relationship--American investment and loans underwriting China's
development--has simply dissolved into air. To be more precise,
China's economic development has run into a massive cyclical downturn
and is no longer a very attractive environment for Western investment.
Therefore, China has little motive to continue the geopolitical
cooperation begun in 1972. More exactly, since the economic benefits
are no longer there, the geopolitical price that China has been
prepared to pay is no longer rational.
China, like Russia, has played a subordinate geopolitical role in
relation to the United States throughout the 1990s. The payoff for
both was economic. The price was that both countries, and Russia in
particular, had to be extremely cautious not to challenge fundamental
American geopolitical interests. For example, neither country really
challenged U.S. operations against Iraq, viewing them as a trivial
price to pay for economic relations.
But with economic relations dissolving, neither country need suffer
U.S. geopolitical arrogance any longer. Russia has nearly ruptured its
relationship with the West and whether or not the IMF provides loans,
those relations will never recover. China is itself fed up with the
United States and is eager to assert its geopolitical presence in
Asia. Neither Russia nor China can resist the United States alone. But
just as the trilateral relationship between Russia, China and the U.S.
created an anti-Soviet alliance between China and the U.S. in 1972, so
the deck gets reshuffled in 1999.
Today, an anti-U.S. alliance between Russia and China is emerging,
designed to bring overwhelming U.S. power under control. And Kosovo is
the trigger. Both Russia and China are appalled by the U.S. use of
NATO as an instrument of U.S. policy in Yugoslavia. Each understands
that if the U.S. succeeds in Kosovo, it is as likely to use that power
in Ukraine or Indonesia. Therefore each has an interest in U.S.
failure in Kosovo, or at least preventing the spread of Kosovoism to
areas of fundamental interest to them.
Therefore, the question facing Asia today, as we prepare for a
U.S.-Asia summit, is likely to be as definitive in some ways as
Nixon's visit was in 1972: What will the world look like if the United
States finds itself in a Cold War with a Sino-Russian alliance? What
will happen on the Korean peninsula? What will happen in Hong Kong?
What will happen in Indonesia? How will Japan behave?
In a continent where real estate holdings in Singapore or money rates
in Thailand have appeared far more substantial and important than
fighter aircraft or naval vessels, such a redefinition will be
wrenching. Just as Cold War thinking dominated Asia well into the
1980s, so too, post-Cold War thinking will dominate into the first
decade of the next millenium. But the smart money understood early on
that real estate investment was more important the weaponry. Today's
smart money had better recognize that weapons are once again more
important than real estate in Asia.
This is a theme we will be emphasizing in the coming weeks and months.
It is time to think politically and take economic actions with one eye
on national security.
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