Putin Extends Influence in Latin America

Journal of Political Risk, Vol. 2, No. 10, October 2014.

By Darya Vakulenko

Proton-M rocket blasts off from the Baikonur launch pad in Kazakhstan, Thursday, Dec. 25, 2008. Russia's space agency says three GLONASS-M satellites have been put into orbit by the Proton-M rocket. The satellites launched Thursday will join Russia's Global Navigation Satellite System, or GLONASS. (AP Photo)

Proton-M rocket blasts off from the Baikonur launch pad in Kazakhstan, Thursday, Dec. 25, 2008. Russia’s space agency says three GLONASS-M satellites have been put into orbit by the Proton-M rocket. The satellites launched Thursday will join Russia’s Global Navigation Satellite System, or GLONASS. (AP Photo)

Vladimir Putin’s most recent trip to Latin America is a sign of an ongoing Russian push to expand its influence and diversify foreign allies. In mid-July, the Russian president visited Cuba, Nicaragua, Argentina and ended his trip in Brazil, where the BRICS countries gathered for their 6th annual summit.

Throughout his tour, Putin discussed similar topics: assistance in developing and exploring new energy sources; installation of Global Satellite Navigation System (GLONASS), the Russian response to the U.S. Global Positioning System (G.P.S.); and agreements on boosting the presence of official Russian media in Latin America.

On energy, Putin and his team showed real determination to strengthen Russia’s position in the region. In Argentina, Rosatom, a Russian state-owned nuclear agency, submitted a proposal to construct the third unit for the Atucha nuclear plant. [1],[2]  In Cuba, Russian state-oil companies were the most active of the delegation. Zarubezhneft  presented plans to develop oil fields west of Boca de Jaruca, and Rosneft will search for offshore deepwater oil.[3] Additionally, the Russian energy holding company, Inter RAO, will build four energy blocks for Maximo Gomez, an electrical plant in East Havana.[4]

The push to install the navigation GLONASS system in each visited country was clear, as Russia is determined to become independent from the United States’s GPS network. For that reason, Putin and his government have resolved to place more control centers in the Western Hemisphere and thus improve the quality of the GLONASS constellation. Currently, apart from former Soviet states, only Brazil holds a GLONASS earth control station, on the campus of the University of Brasilia. There are plans to increase cooperation with the Brazilian Space Agency and place two more control centers in Pernambuco and Rio Grande do Sul. [5] Continue reading

U.S. Foreign Policy in Peril: President Obama’s Worldview and the Democratic Ethos

A passer-by, right, departs a store that features cut-outs of President Barack Obama, left, and First Lady Michelle Obama, center, Saturday, Aug. 9, 2014, in Oak Bluffs, Mass., on the island of Martha's Vineyard. President Obama and his family are returning to the island off the Massachusetts mainland Saturday. The president is doing something unusual with his summer vacation on Martha's Vineyard: He'll come back to Washington midway through the getaway to attend White House meetings. (AP Photo/Steven Senne)

A passer-by, right, departs a store that features cut-outs of President Barack Obama, left, and First Lady Michelle Obama, center, Saturday, Aug. 9, 2014, in Oak Bluffs, Mass., on the island of Martha’s Vineyard. President Obama and his family are returning to the island off the Massachusetts mainland Saturday. The president is doing something unusual with his summer vacation on Martha’s Vineyard: He’ll come back to Washington midway through the getaway to attend White House meetings. (AP Photo/Steven Senne)

Journal of Political Risk, Vol. 2, No. 8, August 2014.

By Priscilla Tacujan, PhD

Critics from all sides of America’s political spectrum are either angry or exasperated over President Obama’s handling of foreign policy. Major U.S. newspapers, including those that endorsed his presidency, have recently published scathing editorials about how weak U.S. leadership has become. In the face of unfolding international crises, Western allies are forced to take a stance ahead of the President, sensing a lack of U.S. leadership and resolve that used to be the hallmark of American power in the world. U.S. leadership has come to mean mobilizing the coalition of nations, lending credence to the phrase “leading from behind.”

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The Decision in Favor of Operation Neptune Spear: Presidential Leadership and Political Risk

Hillary Clinton, Joe Biden, Barack Obama, Robert Gates

In this May 1, 2011, image released by the White House and digitally altered by the source to obscure the details of a document in front of Secretary of State Hillary Rodham Clinton, right with hand covering mouth, President Barack Obama, second from left, Vice President Joe Biden, left, Secretary of Defense Robert Gates, right, and members of the national security team watch an update of the mission against Osama bin Laden in the White House Situation Room in Washington. As the world now knows well Obama ultimately decided to launch the raid on the Abbottabad compound that killed bin Laden, though faced with a level of widespread skepticism from a veteran intelligence analyst, shared with other top-level officials, which nearly scuttled the raid. That process reflected a sea change within the U.S. spy community, one that embraces debate to avoid “slam-dunk” intelligence in tough national security decisions. (AP Photo/The White House, Pete Souza, File)

Journal of Political Risk, Vol. 2, No. 7, July 2014.

By Lauren Hickok

I. Introduction

On May 1, 2011, President Obama declared: “Tonight I can report to the American people and the world that the United States has conducted an operation that killed Osama bin Laden, the leader of al Qaeda, and a terrorist who’s responsible for the murder of thousands of innocent men, women, and children.”[1] The president had made a bold choice in authorizing Operation Neptune Spear.  His decision rested on an appraisal of several factors, which together determined the level of political risk associated with the mission: (1) the accuracy of the intelligence; (2) the ability of SEAL Team Six to succeed despite unexpected challenges; and (3) the costs to US national security, relative to the benefits. The president remained committed to countering al Qaeda in Afghanistan and Pakistan, involved himself in the planning for Neptune Spear, and took on considerable risk in order to succeed. In final review, the president’s decision was not easy, or even prudent—but it succeeded.

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Iran Interview: the Shia-Sunni Conflict, Israel, Nuclear Weapons, and Investment

Iranians wave Islamic flags while chanting against the al-Qaida inspired Islamic State in Iraq and the Levant, ISIL, during a rally in central Tehran, Iran, Tuesday, June 24, 2014. (AP Photo/Ebrahim Noroozi)

Iranians wave Islamic flags while chanting against the al-Qaida inspired Islamic State in Iraq and the Levant, ISIL, during a rally in central Tehran, Iran, Tuesday, June 24, 2014. (AP Photo/Ebrahim Noroozi)

Journal of Political Risk, Vol. 2, No. 7, July 2014.      

In this July 20 interview with the Journal of Political Risk, Dr. Yeganehshakib discusses how the present conflict in Iraq will affect Iran’s role in the Middle East and its relations with the United States.

Reza Yeganehshakib  holds a Ph.D. in history with a specialization in World and Middle Eastern history at the University of California, Irvine (UCI). He received a B.S. degree in Chemical Engineering from Iran Azad University, and an M.A. in history from UCI, where he serves as a Research Associate at the Samuel Jordan Center for Persian Studies. Dr. Yeganehshakib is a member of the Middle East Studies Association and the International Society for Iranian Studies. He is affiliated with the Persian Language Institute at California State University, Fullerton and was previously affiliated with the National Iranian Oil Company. Continue reading

Investment implications of President Rohani’s economic opening

Iranian car workers assemble a car at the state-run Iran-Khodro automobile manufacturing plant near Tehran, Iran, Sunday, June 29, 2014. Iran began exporting automobiles to Russia for the first time in five years on Sunday, after meeting upgraded emission standards, the country's largest auto manufacturer said. (AP Photo/Vahid Salemi)

Iranian car workers assemble a car at the state-run Iran-Khodro automobile manufacturing plant near Tehran, Iran, Sunday, June 29, 2014. Iran began exporting automobiles to Russia for the first time in five years on Sunday, after meeting upgraded emission standards, the country’s largest auto manufacturer said. (AP Photo/Vahid Salemi)

Journal of Political Risk, Vol. 2, No. 7, July 2014.

By Reza Yeganehshakib

After the election of Hasan Rohani as the president of the Islamic Republic of Iran, there has been hope among Iranians and the international community for change in Iran’s economy and foreign policy.[1] Hasan Rohani, who is known for being relatively moderate particularly in comparison with his conservative predecessor, made several promises during his campaign regarding his government’s efforts to lift foreign sanctions, restore Iran’s relationship with the West, and decrease inflation, for example. The supreme leader’s approval of Rohani’s election can also be interpreted as an indicator of a potentially major shift in Iran’s policies. Considering Iran’s economic and strategic massive capacities, the incorporation of Iran into the global market and the possibility of further security cooperation between the U.S. and Iran will contribute to a more secure Middle East that can be used as a safe pool for investments. As Iran already proved in the Afghanistan and Iraq wars, its cooperation with the U.S. could contribute to the security of the volatile Middle East and an increase in foreign investment in the region. Likewise, the Syrian conflict and recent turmoil in Iraq have shown that Iran and the U.S., as well as Israel and other U.S. allies, have one enemy in common, the jihadists and Islamist radicals.[2] It seems that if Rohani can overcome the obstacles to Iran’s entering the global economic system such as sanctions, lack of a sustainable relationship with the West, and unresolved nuclear issue, Iran could become an investment hub in the Middle East, especially in the oil and gas industry.

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Russian Tank Probe in Ukraine Confirmed with US Official

Journal of Political Risk, Vol. 2, No. 6, June 2014.

By Anders Corr, Ph.D.

T-72 Tank reportedly destroyed by Ukrainian forces in Snizhne, Ukraine, June 12, 2014. Source: Twitter.

T-72 Tank reportedly destroyed by Ukrainian forces in Snizhne, Ukraine, June 12, 2014. Source: Twitter.

The Ukrainian Interior Minister, Arsen Avakov, accused Russia of allowing three tanks on June 12 to cross  from Russia to Ukraine at a rebel-controlled border crossing. The Journal of Political Risk confirmed a tank movement from Russia to Ukraine with a US official who wishes to remain anonymous.

The small tank column is likely a probe to assess the potential reaction of Ukraine and the West to a larger tank invasion that may be under consideration by the Russians. This comes after Russian troops pulsed the border on April 24 in an “exercise” that also served the military intelligence function of testing Ukrainian tactical reaction.

The Russian tank probe in Ukraine comes at a time when President Obama is showing less military restraint than a few months ago. In June he ordered resumption of drone attacks in Pakistan, and he has not removed the possibility of US air strikes in Iraq against Al Qaeda terrorists making territorial gains on the outskirts of Baghdad. With sagging approval ratings in part due to a public perception of weakness in international affairs, President Obama is likely to react to the Russian tank probe with greater rigor, including increased economic sanctions against Russia, and troop build-ups in Eastern Europe. This would put significant downward pressure on the Ruble and MICEX index of Russian stocks.

JPR Status: Report.

Nationalism, Pastoral Nomadism, and Political Risk to Natural Resource Investments in Mongolia: Case Studies of the Aluminum Corporation of China Limited (Chalco) and Rio Tinto

Mongolia - Oyu Tolgoi - The processing conveyor under construction is seen at the Oyu Tolgoi mine

02 Nov 2011, Mongolia — The processing conveyor under construction is seen at the Oyu Tolgoi mine in Mongolia. Oyu Tolgoi, also known as Turquoise Hill is a combined open pit and underground mega mine project in Khanbogd in the south Gobi Desert. The site was discovered in 2001 and is being developed as a joint venture between Ivanhoe Mines, Rio Tinto and the Government of Mongolia. The mine is scheduled to begin production in July 2012. The Oyu Tolgoi mining project is the largest financial undertaking in Mongolia’s history and is expected upon completion to account for more than 30% of the country’s gross domestic product. Copper production is expected to reach 450,000 tonnes annually and Gold production is estimated to reach 650,000 ounces per year. —(Copyright Kieran Doherty/In Pictures/Corbis / APImages)

Journal of Political Risk, Vol. 2, No. 6, June 2014.

By Jamian Ronca Spadavecchia [1]

Mongolia stands at a critical juncture between the rewards of natural resource development and the challenges of modernization. On the one hand, it offers abundant opportunities in the natural resources sector and is located near growing and resource-starved industrial nations of East Asia. At the same time, the presence of autocratic neighbors impose international instability on this democratic and market-oriented economy.

This article considers two underanalyzed political risks that are necessary for understanding the future of the Mongolian economy: nationalism and pastoral nomadism. In doing so, it proffers an improved analytical framework for resource investors to better assess and mitigate their Mongolia risk.

Finally, the analysis uses selected case studies to demonstrate how nationalism and pastoral nomadism might impact natural resource investment. For nationalism, a study of the proposed acquisition of SouthGobi Resources (SouthGobi) by the Aluminum Corporation of China Limited (Chalco) is offered. The Chalco study is emblematic of the link between nationalism and two dominant trends in Mongolia: resource nationalism and increasing geopolitical risk in the natural resources sector. The section also looks at how pastoral nomadism poses a risk to Oyu Tolgoi, Mongolia’s premier copper and gold mining project, by examining a dispute between Rio Tinto and indigenous communities of Gobi herders that threatened Oyu Tolgoi’s project financing. Continue reading

The New Face of Russia’s Relations with Brazil

Defense Minister of Brazil, Celso Amorim, receives his counterpart from Russia, Sergei Shoigu, during bilateral meeting in Brasilia.

Defense Minister of Brazil, Celso Amorim (L), receives his counterpart from Russia, Sergei Shoigu, to bilateral meeting at the Defense Ministry in Brasilia, capital of Brazil, on October 16, 2013. Shoigu’s visit included an attempt to win a $4 billion deal to supply 18 fighter jets.

Journal of Political Risk, Vol. 2, No. 5, May 2014.

By Matthew Michaelides

Abstract

Bilateral trade, high level personal communication, and military-technical relations between Russia and Brazil have all grown significantly over the past decade. Recent weapons sales to Brazil include a $150 million contract for MI-35 helicopters in 2009 and a 2012 deal for seven Ka-62 helicopters. Moreover, the Russian defense ministry has indicated its intention to increase Russian military capacity in Brazil and Latin America more broadly. This paper examines the causes for the increasing depth of Russian-Brazilian military-technical relations and concludes that informal patronage politics play an essential role in understanding Russian actions. A detailed analysis of contemporary Russian-Brazilian relations and existing theoretical perspectives is provided, as well as a thorough examination of recent Russian arms and equipment sales from the informal patronage politics perspective.

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China Response to Hacking Indictment Indicates Rash Leadership and Need to Expand NATO to Asia

 

Russia and China are currently conducting naval  exercises near Shanghai. In 2013, Russia and China conducted similar exercises near Vladivostok. From right, China's Yantai Type-054A missile destroyer, Yancheng Type-054A missile destroyer, Wuhan Type-052B guided missile destroyer and Lanzhou Type-052C air defence missile destroyer take part in the fleet review during the "Joint Sea-2013" Sino-Russian joint naval drills at the Peter the Great Gulf near Vladivostok in Russia on Wednesday, July 10, 2013. A Chinese fleet consisting of seven naval vessels participated in the "Joint Sea-2013" Sino-Russian joint naval drills scheduled for July 5 to 12. The eight-day maneuvers focus on joint maritime air defense, joint escorts and marine search and rescue operations. (Photo By Sheng Jiapeng/Color China Photo/AP Images)

Russia and China are currently conducting naval exercises near Shanghai. In 2013, Russia and China conducted similar exercises near Vladivostok. From right, China’s Yantai Type-054A missile destroyer, Yancheng Type-054A missile destroyer, Wuhan Type-052B guided missile destroyer and Lanzhou Type-052C air defence missile destroyer take part in the fleet review during the “Joint Sea-2013″ Sino-Russian joint naval drills at the Peter the Great Gulf near Vladivostok in Russia on Wednesday, July 10, 2013. A Chinese fleet consisting of seven naval vessels participated in the “Joint Sea-2013″ Sino-Russian joint naval drills scheduled for July 5 to 12. The eight-day maneuvers focus on joint maritime air defense, joint escorts and marine search and rescue operations. (Photo By Sheng Jiapeng/Color China Photo/AP Images)

Journal of Political Risk, Vol. 2, No. 5, May 2014.

By Anders Corr, Ph.D.

China is using a very blunt and escalatory instrument — threatening general deterioration in military relations — to respond to a limited issue of Chinese individuals stealing trade secrets. On May 20, the United States Justice Department indicted five People’s Liberation Army members for hacking United States commercial data.  The remarkable speed with which China responded the following day, and at the highest level, suggests that commercial hacking is an officially-approved state policy on the part of China. The Chinese threat of reduced military cooperation and thereby deteriorating military relations is clumsy in that the Chinese would look better had they simply launched an investigation of the individuals — an investigation that they could later claim shows the indictment as baseless. The broad Chinese threat of deteriorating military relations invites an increase in US military attention to Asia — exactly what the Chinese should be trying to avoid. The clumsiness of the Chinese response to the indictments indicates a rash Chinese leadership prone to irrational military strategies, with consequent market volatility and political instability. The US and its Asian allies should respond with a measured forward deployment of military forces, and redoubled diplomatic energy towards greater alliance cooperation, including between Asian allies and NATO.

For legal and political reasons, the US will not be able to simply withdraw the indictment. It would increase the perception of an increasingly weak US foreign policy. This will lead Chinese diplomats to retaliate in some manner, further decreasing stability between the US and China. Expect mutual diplomatic retaliation to exert downward pressure on the Yuan (compensated by People’s Bank of China buying of Yuan), as well as downward pressure on Chinese stock indexes, including SHCOMP, CSI-300, Bloomberg China-US 55, and HSCEI. Expect Chinese index losses to increase with every additional diplomatic spat that ensues, and to slowly recover during periods of diplomatic quiet. Continue reading

Serbia’s EU bid and the Kosovo dialogue

A Serbian police officer guards a mass grave site in the village of Rudnica, 280 kilometers (170 miles) south of Belgrade, Serbia, Thursday, April 17, 2014. The mass grave is believed to contain at least 250 bodies of Albanian victims killed during the Kosovo war. (AP Photo/Darko Vojinovic)

A Serbian police officer guards a mass grave site in the village of Rudnica, 280 kilometers (170 miles) south of Belgrade, Serbia, Thursday, April 17, 2014. The mass grave is believed to contain at least 250 bodies of Albanian victims killed during the Kosovo war. (AP Photographer: Darko Vojinovic)

Journal of Political Risk, Vol. 2, No. 4, April 2014.

By Raquel Montes Torralba

With Serbia seeking to join the European Union (EU), as did Croatia in July 2013, European officials have advanced a pre-condition to be resolution of major disputes with Kosovo. In April 2014, Serbia and Kosovo celebrate the first anniversary of an agreement meant to normalize relations. Positive developments include the March 2014 election of a pro-EU majority in Serbia’s parliament, local elections in North Kosovo held in a generally peaceful manner, as well as progress on technical issues such as border control and police transfer. Nevertheless, the political context for 2014 could be derailed by upcoming general elections in Kosovo, the creation of a Kosovo Army, and establishment of a war crimes court for Kosovo’s ethnic Albanian rebels. More particularly, all these factors could impact the creation of a Community of Serb Municipalities, the keystone of the Serbia-Kosovo Agreement. Continue reading