Global forecast 2015

2015
global
forecast
Crisis and Opportunity
editors
craig cohen | josiane gabel

2015
GLOBAL
FORECAST
Crisis and Opportunity
editors
craig cohen | josiane gabel

about csis
For over 50 years, the Center for Strategic and International Studies (CSIS) has developed solutions to the world’s
greatest policy challenges. As we celebrate this milestone, CSIS scholars are developing strategic insights and
bipartisan policy solutions to help decisionmakers chart a course toward a better world.
CSIS is a nonprofit organization headquartered in Washington, D.C. The Center’s 220 full-time staff and large
network of affiliated scholars conduct research and analysis and develop policy initiatives that look into the future
and anticipate change.
Founded at the height of the Cold War by David M. Abshire and Admiral Arleigh Burke, CSIS was dedicated to
finding ways to sustain American prominence and prosperity as a force for good in the world. Since 1962, CSIS
has become one of the world’s preeminent international institutions focused on defense and security; regional
stability; and transnational challenges ranging from energy and climate to global health and economic integration.
Former U.S. senator Sam Nunn has chaired the CSIS Board of Trustees since 1999. Former deputy secretary of
defense John J. Hamre became the Center’s president and chief executive officer in April 2000.
© 2014 by the Center for Strategic and International Studies. All rights reserved.
CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this
publication should be understood to be solely those of the author(s).
PHOTO CREDITS:
Page 4: Shutterstock.com.
Page 6: Cheryl Casey / Shutterstock.com
Page 8-9: Official White House Photo by Lawrence Jackson.
Page 12: U.S. Navy photo by Mass Communication Specialist 3rd Class
Amanda S. Kitchner/Released
Page 15: Tech. Sgt. H. H. Deffner, U.S. military/ Department of Defense.
Page 18-19: Shutterstock.com.
Page 26-27: photo.ua / Shutterstock.com.
Page 28-29: https://www.flickr.com/photos/eppofficial/5875973953/.
Page 32: http://government.ru/media/2012/2/4/47985/
photolenta_big_photo.jpeg
Page 36-37: Kiev.Victor / Shutterstock.com
Page 41: Merkushev Vasiliy / Shutterstock.com.
Page 45: Mykhaylo Palinchak / Shutterstock.com.
Page 48-49: AP Photo/Hassan Ammar.
Page 50-51: U.S. State Department photo.
Page 54: Anton_Ivanov / Shutterstock.com.
Page 56: https://www.flickr.com/photos/soldiersmediacenter/
The piece by Juan C. Zarate is an adaptation of two of the author’s previous op-eds: “Making Russia Pay for Its Actions in
Ukraine,” The Washington Post, March 6, 2014, and “After the Sanctions, Prepare for the Russian Counterattack,” The Financial
Times, September 24, 2014.
Center for Strategic and International Studies
1616 Rhode Island Avenue NW, Washington, DC 20036
202-887-0200 | www.csis.org
6795361645/.
Page 58: Oleg Zabielin / Shutterstock.com.
Page 60: U.S. Navy photo taken by Mass Communication Specialist 2nd
Class Brett Cote.
Page 62-63: U.S. Navy photo by Mass Communication Specialist 3rd Class
Dustin Knight/Released.
Page 65: Astrelok / Shutterstock.com.
Page 67: Official White House Photo by Pete Souza
Page 70: Nisarg Lakhmani / Shutterstock.com
Page 72: jorisvo / Shutterstock.com
Page 74: U.S. State Department photo by William Ng.
Page 76-77: Shutterstock.com
Page 80: Bretton Woods Monetary Conference of 1944, Mount Washington
Resort photo
Page 83: Dashu / Shutterstock.com.
Page 86: The Yomiuri Shimbun via AP Images.
Page 89: Jim Barber / Shutterstock.com.
Page 90-91: Anton_Ivanov / Shutterstock.com.
Page 93: EC/ECHO/Jean-Louis Mosser.
This publication is made possible by internal resources to CSIS. Donors to CSIS can be found at CSIS's website at csis.org/
support-csis/our-donors.

contents
Introduction | Is America in Retreat?
JOHN J. HAMRE
PART 1: What Role Will Deterrence Play in
America's National Security Strategy?
The Case for Deterrence
KATHLEEN H. HICKS
Rebuilding Credibility: Regional Perspectives
A CONVERSATION WITH JON B. ALTERMAN,
HEATHER A. CONLEY, AND MICHAEL J. GREEN
MODERATED BY STEPHANIE SANOK KOSTRO
Why Deterrence Failed to Prevent Syrian Use of WMD
SHARON SQUASSONI
A Nuclear Deterrent for the 21st Century
CLARK A. MURDOCK
Deterrence in the Cyber Age
JAMES A. LEWIS
The Role of Conventional Forces in Deterrence
MAREN LEED
The Challenge of Deterring ISIS
THOMAS M. SANDERSON
PART 2: What Are the Implications of Putin’s
New Russia?
Russia’s Influence on Europe
HEATHER A. CONLEY
Putin’s Dilemma
ANDREW C. KUCHINS
The Calculations of Russia's Neighbors
JEFFREY MANKOFF
Ukraine's Transition
SARAH MENDELSON
A Test of Wills on Sanctions
JUAN C. ZARATE
Energy Codependency
EDWARD C. CHOW
NATO’s Eastern Front
ANDREW A. MICHTA
PART 3: How Can the United States Best Exert
Influence in Today’s Middle East?
Acting and Reacting in the Middle East
JON B. ALTERMAN
The Need for Better Civil-Military Planning
ANTHONY H. CORDESMAN
The Challenge of Non-state Actors
HAIM MALKA
Counterterrorism Success and Failings
SAMUEL J. BRANNEN
PART 4: Is the Rebalance to Asia Sustainable?
Asian Perceptions of the Rebalance
MICHAEL J. GREEN AND ZACK COOPER
Keeping Focus on Korea
VICTOR CHA
Economic Imperative in Southeast Asia
ERNEST Z. BOWER
The Long View on India
RICHARD M. ROSSOW
Maintaining the U.S.-Japan Alliance
NICHOLAS SZECHENYI
Recalibrating on China
CHRISTOPHER K. JOHNSON
PART 5: Is a Competing Economic Order
Emerging?
The Evolving Institutional Landscape
MATTHEW P. GOODMAN
Strengthening the Existing Order
AMY STUDDART
The Evolution of the Global Trading System
SCOTT MILLER
Geopolitical Instability and Energy Markets
SARAH LADISLAW
Divergent Perspectives of the Democratic BRICS
A CONVERSATION WITH CARL MEACHAM,
JENNIFER G. COOKE, AND RICHARD M. ROSSOW
MODERATED BY AMY STUDDART
PART 6: Will Ebola Evolve from a Health Crisis
to an Economic and Governance Crisis?
The Trajectory of Ebola and our Response
J. STEPHEN MORRISON
The Economic Impact of the Ebola Outbreak
DANIEL F. RUNDE AND CONOR M. SAVOY
Contributors
5
10
12
14
16
18
21
23
28
31
34
36
40
43
45
50
53
57
59
64
65
67
69
71
73
78
81
83
85
87
92
95
97

Is America in
Retreat?
Introduction | John J. Hamre
As the 2016 presidential election race begins, both
parties look schizophrenic on foreign and defense
policy. Three factors create this wavering between
isolationist and internationalist visions: budgets, who
gets to wear the mantle of “strong on defense,” and the
horizontal nature of the problems we face. The result
is a policy debate that doesn’t conform to traditional
battle lines. This has left the rest of the world wondering
two things. Is America in retreat? And will the upcoming
election settle this question or prolong it?
Let me start with the politics of defense budgets. There
is an internal political dynamic in Washington for defense
budgets that is only indirectly related to the threats the
country faces. Over the past 30 years, one of the dominant
factors in budget politics has been a Republican Party that
maintains “strong defense” as an essential component of
its ideological base. Democrats were traumatized by the
Vietnam War, and so despite a few notable exceptions, they
were deeply ambivalent about defense over this period.
Over the past six years, however, Democrats were able
to emerge from the shadow of Vietnam. They were able
to portray the party as sensible on national security
after the overreach of the Bush administration on Iraq.
The courageous strike on Osama bin Laden, the hated
mastermind of the attack on 9/11, further shielded
Democrats to the charge that they were soft on defense.
But this also meant that there was no longer a great
electoral benefit to Republicans to being defense
champions.
This trend coincided with the emergence of the Tea Party
as the energetic base of the Republican Party. Tea Party
conservatives came to Washington believing that the
greatest national security risk we face is unbridled deficits.
Former Vice President Dick Cheney famously said that
GLOBAL FORECAST 2014 / 5

deficits don’t matter politically, but the Tea Party
argued successfully that even Defense should be
cut if that is how we need to get our national house
in order. This sentiment still has a firm lock on
Republicans, dividing them internally and blocking
a consensus on defense spending. Democrats want
to see greater domestic spending and are willing
to increase defense to get it, but don’t want to be
seen as flagrant deficit spenders.
This is the dynamic that produced the sequester—
the mindless, automatic process that cuts the
federal budget by a set percentage unless Congress
acts to replace it with another budget. Defense
budgets have remained caught in this cycle in which
discretionary spending—which will account for less
than a third of federal spending in FY 2015—must
shoulder the entire burden of reducing the deficit
because Congress can’t reach consensus on cutting
entitlements or raising taxes. Stepping out of this
cycle will require positive action from both parties to
compromise, a lost art in Washington these days.
The result of this domestic political dynamic is
that neither party has established a consensus
for a sustained commitment abroad. In fact, both
parties have strong wings questioning our existing
commitments. These isolationist arguments
resonate with Americans after 12 years of war. But
the challenges we face internationally do not lend
themselves to quick fixes or retreating behind Fortress
America. Let me use the example of the two external
crises commanding our attention at present—Ebola
and the Islamic State of Iraq and Syria (ISIS).
Now that the Ebola virus has spread to the United
States, we have become alert as a nation to a
problem that we thought was limited to Africa. At
the same time the news is deeply troubling in Iraq
that ISIS continues its march across the desert,
expanding its demonic remit.
These two crises seem quite unconnected, yet they
share fundamental qualities. Ebola has erupted
periodically in Africa for at least decades. It always
remained contained in its local setting, gradually
disappearing back into the natural environment
into what epidemiologists call the “reservoir”
where it remains until the next outbreak.
We have had terrorists for over a millennium in
the Middle East. But historically those terrorists
had only parochial aspirations. Now we have a
virulent ISIS that threatens Europe and America via
repugnant videos released on the Internet.
While these are different forms of pestilence,
they both become global concerns because of
two factors. The first is the ease of movement
in the 21st century—the movement of people,
information, ideas, disease, and commercial
goods. The second half of the 20th century saw a
revolution in commerce and technology. American
consumers depend on distant factories that
transport goods in container ships within short
weeks. Millions of people a day are flying across the
globe. Technology has sped the transit of people,
goods, and disease at unprecedented speed. In
one sense it is amazing it took four months before
Ebola showed up in America.
The second factor that underlies ISIS and
Ebola is that both exploded in areas with weak
governments and poor infrastructure. Corruption
undercuts the legitimacy and effectiveness of
governments. The void is a breeding ground for all
forms of pestilence.
Both ISIS and Ebola have caused deep anxieties
here in Washington. I hear politicians saying that we
should shut down all air transportation from West
Africa, for example. Until ISIS exploded in Syria and
6 / CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES

Iraq, the prevailing public sentiment was to walk away from Iraq and not get involved in Syria.
Our fatigue with 12 years of war understandably caused Americans to simply want out of the
whole mess.
But we all greatly benefit from this new global economy. Our prosperity and way of life
are now inextricably connected into this global system. We can’t simply quarantine our
country from the rest of the world to avoid ISIS or Ebola or anything else. It was clear to
health professionals six months ago that Ebola would come to America if we didn’t mount
a Marshall Plan-type effort to stop it in West Africa. It was
clear three years ago the chaos in Syria would erupt into
violent energy throughout the Middle East. We just didn’t do
anything.
President Obama was widely criticized at the time of the
Libya invasion when the administration said it would “lead
from behind.” I thought the administration’s position was
wrong at the time. But I would reformulate that statement
the question is whether
our domestic politics
can sustain the type of
lasting effort required
to lead from within.
to capture what I think has to be our strategy to deal with ISIS, Ebola, and most modern
threats: we have to lead from within.
We are not going to defeat ISIS with airplanes. We will have to be on the ground. But we
will be on the ground in the middle of a coalition, predominantly made up of moderate
Sunnis from Iraq and partner countries in the region. America has to be in the middle of it.
We finally sent 3,000 military personnel to West Africa to provide logistics support for the
health professionals there, who are struggling to contain Ebola at the source. Again, we
have to be leading from within.
The question is whether our domestic politics can sustain the t ype of lasting effort required
to lead from within. This is the overarching question that lies behind the articles in this
annual CSIS publication. Is America’s power of deterrence still credible? Can we sustain
our alliances and commitments abroad? Can we still shape events in places where our
credibility has suffered? Will the world still look to us for political, security, and economic
leadership, or are we seeing alternatives emerge?
In this modern era, there are very few unilateral actions America can take to solve the
problems we face. Acting in concert with others doesn’t mean America is leading from
behind or is in retreat. Quite the opposite. We must build partnerships with those who need
our help but lack the ability to solve problems on their own. I suspect that both parties’
nominees for the presidency in 2016 will understand this. Americans are a pragmatic
people. We adapt to the challenges we face.
The risk is that before this occurs, our domestic politics will evolve into a crisis of
confidence in government. We now need, all the more, a bipartisan consensus. No enduring
U.S. policy can be achieved without it.
I believe the world wants and needs U.S. leadership. We remain uniquely capable. The only
thing that could truly send America into retreat is ourselves. ▶

PART ONE
What Role Will Deterrence Play in
America's National Security Strategy?

The Case for Deterrence
Kathleen H. Hicks
After a difficult year in U.S. foreign policy, some are wondering if the concept of
deterrence still holds. Deterrence, though ancient in its basic precepts, came to prominence
during the nuclear age when the United States was focused on convincing the Soviet Union
that the costs and risks of direct military conflict would outweigh its potential benefits. With
the dynamics of bipolar nuclear competition having long given way to a broader set of national
security challenges, the U.S. government has made an effort to update its deterrence policy.
Following the attacks of September 11, 2011, the U.S. go vernment began to refer to “tailored
deterrence,” wherein the United States would tailor its approach to affecting the decision
calculus of different potential adversaries in different circumstances.
Some argue that tailored deterrence has gone too far—that deterrence has become so
context-specific and ubiquitous that it is no longer useful as an or ganizing principle of U.S.
policy. These critics can point to documents like the 2010 National Security Strategy, in which
the Obama administration made 17 references to deterrence, ranging from deterring armed
conflict and aggression to deterring cyber intrusions and unlawful entry to the United States
to deterring attacks on the international financial system. If deterrence has so many variations,
can the United States effectively build policy around it?
The broad applicability of deterrence should not be seen as one of its failings. Deterrence
was a key feature of foreign policy long before it carried the label and became synonymous
with averting crises in strategic nuclear competition. Variations in the context for deterrence
do, however, put a premium on effectively communicating to potential adversaries the risk-reward
calculus they face in a particular circumstance. Communicating deterrent threats today
is further complicated because norms are not yet firm in some domains of conflict, such as
cyberspace, nor universally shared among key actors, such as in maritime disputes. Moreover,
in an age of instant global communications and in which many deterrent contexts are present
simultaneously, “tailored deterrence” can be difficult to execute, as key actors conflate word
and deed in one case (usually U.S. inaction) with another.
The most damning critique of deterrence is far simpler: the concept is no longer useful because
it does not work. Skeptics holding this view can point to incidents such as R ussia’s 2008
incursion into Georgia and 2014 annexation of Crimea, the recent rise of ISIS in defiance of
international condemnation, repeated North Korean nuclear tests in the face of sanctions, and
the Syrian regime’s use of chemical weapons despite President Obama’s “red line” as evidence
that the United States does not have the credibility to deter threats. These incidents have taken
10/ CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES

place in the face of overwhelming U.S. military
capability, the wielding of “exquisite” economic
sanctions, and seemingly tireless diplomatic
efforts (how many hours has Secretary of State
Kerry been airborne these past 12 months?). If
the United States, with all its current advantages,
cannot deter others from undertaking actions it
opposes, who can?
It is the United States itself that offers the most
compelling case for the continuing relevance of
deterrence: we are routinely deterred because
we do not wish to risk the consequences—
usually in blood and treasure—that taking
certain actions might bring. And the United
States in turn can deter well, especially against
potentially catastrophic activity. U.S. nuclear
capability and overwhelming conventional
military power have forced many would-be
rivals and non-state actors to pursue action in
less deadly spheres, where it is difficult for the
United States to bring these same advantages
to bear.
The problem, then, is not with the concept of
deterrence but rather its successful application.
Our failures stem from three important
shortcomings: in clarifying our interests, to
ourselves and to others; in convincing others
of our credibility in threatening those who
challenge our interests; and in demonstrating
the will and capability to fulfill those threats if
deterrence fails. Moreover, U.S. credibility is
more elastic than our leaders might like—the
more deterrence fails or appears to fail in a
particular context, the less credible U.S. threats
are in that context, and often in other spheres.
The good news is that leaders can often
increase their credibility relatively quickly, as the
administration has done this year by stepping-up
its military capabilities along NATO’s eastern
border following Russia’s annexation of Crimea.
It is time to set aside tired theoretical
debates about deterrence to focus on
concrete applications that fit today’s dynamic
environment. In the coming year, deterrence
will be an aspect of vir tually all our security
dealings. From continuing nuclear challenges,
to the conventional military sphere, to
cyber and “cross-domain” challenges, to
counterterrorism, deterrence will succeed only
where American leaders can convince others
that their actions (or inactions) risk greater
costs than rewards. The results will usually be
far less than desired: competition of interests
will continue, and in some cases, the United
States will care less about the outc ome than
those with opposing goals. This was true in the
Cold War, from the creation of the Warsaw Pact
to the Prague Spring, to, eventually, Vietnam,
just as it was in 2014.
In 2015, the United States will need to build on
its strong record of deterring existential threats
to better deter those who threaten us short of
war. Better application of deterrence requires
clearly communicating what we care about and
our willingness and capability to act in defense
of those interests. Importantly, it also requires
us to carry out threats when deterrence fails.
Credibility can be gained just as it can be lost,
but absent the wherewithal to carry out the
deterrent threats we make—whether codified in
our longstanding treaty commitments or simply
stated by the president—more and potentially
greater challenges to our interests will follow. ▶
better application of
deterrence requires clearly
communicating what we care
about and our willingness
and capability to act in
defense of those interests.

Rebuilding Credibility:
Regional Perspectives
A Conversation with Jon B. Alterman, Heather A. Conley,
and Michael J. Green moderated by Stephanie Sanok Kostro
New realities within the international security environment—such as emerging threats from
non-state adversaries—are causing U.S. officials to reevaluate how to use deterrence as a critical
element of the nation’s defense strategy. Senior Fellow Stephanie Sanok Kostro sat down with
Senior Vice President, Zbigniew Brzezinski Chair in Global Security and Geostrategy, and Middle
East Director Jon B. Alterman, Senior Vice President for Europe, Eurasia, and the Arctic and Europe
Director Heather A. Conley, and Senior Vice President for Asia and Japan Chair Michael J. Green to
discuss regional perceptions and opportunities for improved U.S. deterrence.
Stephanie Sanok Kostro: How do governments in your region of study perceive the current U.S.
approach to deterrence?
Heather A. Conley: U.S. deterrence in Europe is expressed through NATO’s Article 5 commitment
that “an armed attack against one or more [ally] shall be considered an attack against them all.” In
addition, any ally can convene Article 4 consultations when it feels threatened. There have been
only four post–Cold War instances of such consultations: three invoked by Turkey over Iraq / Syria
and one by Poland over the Ukraine crisis. Invocation of these articles sends strong messages to the
world about NATO—to include American—security concerns.

Michael J. Green: Although U.S. deterrence
has long underwritten Asian security, there are
serious questions in Asian capitals about U.S.
deterrence. Many states worry about China’s
growing military capabilities and its assertive
actions in territorial disputes. Japan and South
Korea also focus on North Korea’s largely
unimpeded uranium and plutonium weapons
programs. Simultaneously, chaos in Syria, Iraq,
and Ukraine (as well as political dysfunction in
Washington) elicits concern that the United
States might “pivot” away from Asia or lack the
willpower or resources to manage new security
challenges.
Jon B. Alterman: There is a broad sense that
U.S. deterrence is now less compelling, in
part because of the Obama administration’s
perceived reluctance to
use tools of influence and
in part because of the Bush
administration’s inability
to accomplish ambitious
goals in the Middle
East. While the region is
fractured in many ways,
there is virtual unanimity
on one point: the Obama
administration does not recognize pure evil
when it sees it.
Also, the United States is trying to deter both
Middle East state and non-state actors. States
have assets to hold at risk, and rewards can be
conferred. Non-state actors require a different
set of tools and offer a different set of potential
outcomes. U.S. tools are much better developed
for the former.
Kostro: What are recent examples of successful
U.S. deterrence efforts?
Alterman: While one might argue the United
States is successfully deterring Iran from
producing a nuclear weapon, the United States
and its partners have failed to persuade Iran to
end its nuclear program. Whether the current
violence in the Middle East represents the failure
or success in U.S. deterrence efforts is unclear.
The answer is probably a little of both.
Conley: Article 5 in some allies’ minds equates
to U.S. “boots on the ground.” This is true
in Poland and the Baltic states, which have
lingering doubts whether some European
countries would come to their aid if Russia
invades. The most successful example was the
recent deployment of 600 U.S. soldiers to the
Baltic region and augmentation of U.S. forces in
Poland following Russia’s annexation of Crimea.
It is also helpful that allies provided additional
aircraft to NATO’s Baltic air policing and based
NATO’s Multinational Corps-Northeast in
Szczecin, Poland. Simply put, rhetoric is great,
boots are required.
Green: The most obvious
historical examples are
deterrence of North Korea
crossing the 38th Parallel and
China crossing the Taiwan
Strait. Today, some of the most
difficult challenges are “gray
zones,” rather than black and
white threats of invasion. China’s
pressure on its neighbors in the East and South
China Seas presents a serious challenge for
many in the region. Despite the U.S. rebalance
to Asia, U.S. policymakers do not appear to have
a clear strategy for deterring such “gray zone”
conflicts, and Asian states will find it difficult to
deter revision of the status quo on their own.
There have been successes in reassuring allies
about deterrence, including new dialogues with
Japan and Korea and visible deployments of
tactical aircraft and nuclear-capable bombers
after threatening moves by North Korea.
Kostro: How could the United States improve
deterrence activities?
Conley: The United States and NATO must meet
the challenge of modern deterrence, and they
must rapidly adapt, including developing the
u.s. policymakers do
not appear to have
a clear strategy
for deterring “gray
zone” conflicts.

tools to confront Russia’s unconventional means to influence the battle space, such
as energy restrictions or support for anti-Europe parties. NATO must also be able to
focus on its east and southeast flanks, given growing concern that concurrent tests of
American and European policies in Ukraine and Syria will fail.
Alterman: The United States needs to be clearer about its interests, more willing to
take action to further its interests, and more effective in creating consequences it seeks
to create. Allies and adversaries alike judge that the United States is so inwardly focused
and wary of Middle Eastern entanglements that they can safely predict the limits of U.S.
action.
Green: I agree. Clarity and consistency in U.S. declarations will be critical. Washington’s
discourse has left Asian experts confused about the core strategic assumptions that
animate U.S. policy. Do U.S. policymakers seek a balance of power centered on U.S.
allies? Or a concert of power centered on Beijing? Or a combination of both that
depends on which official is speaking and what is happening in th e world? U.S. allies,
partners, and adversaries are watching U.S. statements and actions. They will respond
accordingly. ▶
Why Deterrence Failed to Prevent
Syrian Use of WMD
Sharon Squassoni
When it comes to weapons of mass destruction (WMD) proliferation, it’s hard not
to like deterrence as a concept: it’s much better to forestall WMD development
than react to a fait accompli. Yet deterrence of WMD development and use is not
simple. The Assad regime’s use of chemical weapons against Syrian civilians in 2012
and 2013 is widely considered a failure of deterrence. The lessons of Syria are not easy,
clear, or likeable for those contemplating future efforts to deter WMD proliferation.
From the beginning of the Syrian crisis, the Assad regime attempted to use the threat of
WMD as a deterrent to external intervention. In July 2012, a foreign ministry spokesman
claimed that, “Any stock of WMD or unconventional weapons that the Syrian Army
possesses will never, never be used against the Syrian people or civilians during this
crisis. . . . These weapons are made to be used strictly and only in the e vent of external
aggression against the Syrian Arab Republic.” President Obama’s declaration of a red
line the following month was probably not the response Assad had hoped for:
We cannot have a situation where chemical or biological w eapons are falling
into the hands of the wr ong people. We have been very clear to the Assad
regime, but also to other play ers on the ground, that a red line for us is we
start seeing . . . chemical w eapons moving around or being utilized. That
would change my calculus.

Syrian chemical weapons subsequently killed
1,000 people in 2012 and 2013, but no direct
foreign military interventions ensued. Instead,
Assad used his chemical weapons stockpile as a
bargaining chip against military intervention. By
2013, the international community (particularly
Russia) succeeded in pressuring Syria to join the
Chemical Weapons Convention and destroy its
entire chemical arsenal. U.S. government officials
have suggested that Russia and Syria thought
the threat of U.S. military force was credible,
but there is no way of knowing for sure. It was
ultimately public outrage over the execution of
American journalists and
others by ISIS, not Syrian
chemical weapons use,
that prompted the U.S.
military intervention in
Syria in September 2014.
As the Syria case
demonstrates, there
are limits to deterring WMD proliferation.
Knowing that Assad already had chemical
weapons, President Obama’s red line was
aimed at their use or transfer to terrorists.
However, use against Syrian civilians did not
threaten U.S. vital interests, and it is hard to
verify WMD transfer to terrorists. On Syria’s
nuclear capability, it is unlikely that deterrence
was ever seriously considered by Israel, which
covertly bombed the Al Kibar reactor in 2007.
For Israel, Assad’s construction of a nuclear
reactor at Al Kibar threatened Israel’s vital
interests in a way that Syrian chemical weapons
did not. Israel preemptively struck the reactor,
the consequences of which have not entirely
unfolded. (The bombing of the Osirak reactor
prompted Iraq to embark on a massive nuclear
program, which Assad is likely not to pursue.)
On a fundamental level, the clear signals and
identifiable outcomes that define successful
deterrence are tough to establish for WMD
proliferation. Deterring
WMD use may be easier
than deterring WMD
development, if only
because WMD use is a
clearly defined action
(mostly), whereas
WMD development is a
process, and a deeply
clandestine one at that. The challenges are
further compounded when onward proliferation
to terrorist groups (whether intentional or
accidental) is added to the mix. In contrast, as
long as WMD are thought to deter military action
against a regime, they will be highly valued by
proliferators, making WMD programs a vital
interest. At the very least, giving up weapons or a
program can buy time for a regime.
the clear signals and
identifiable outcomes that
define successful deterrence
are tough to establish for
wmd proliferation.

As a policy tool, then, deterrence is unwieldy in the nonproliferation world. It shares an
uncomfortable bed with the treaties (such as the Non-Proliferation Treaty, Biological
Weapons Convention, and Chemical Weapons Convention) that seek procedural responses
to noncompliance and with the informal supplier arrangements that rely on cooperation to
keep the most sensitive materials and equipment out of the hands of w ould-be proliferators. A
decreasing number of countries stand outside these regimes, and for these, deterrence is most
likely to be directed against use of WMD, or their transfer to terrorist groups.
Despite its limitations, however, deterrence will continue to be attractive for nonproliferation, if
only because of the costs and risks of the alternatives: doing nothing (which allows a proliferator
to develop weapons at will, a la North Korea), destroying a proliferator’s capabilities (a la Israel’s
bombing of the Osirak and Al Kibar reactors or threatened U.S. and Israeli action against Iran,
should it proliferate), or invasion (Iraq). Given the significant risk that terrorist acquisition of WMD
continues to pose around the globe, the United States should focus particular attention on
strengthening the network of legal controls, intelligence sharing, and international cooperation
that prevent their spread and keep the risk well below the threshold of deterring use. ▶
A Nuclear Deterrent for the
21st Century
Clark A. Murdock
The Obama administration's policy from the outset has been to reduce U.S. reliance on
nuclear weapons as a near-term step in the long-term pursuit of a world without nuclear
weapons. This is easy for the United States to say, because it has the world's strongest military by
far. If no one has nuclear weapons, the United States is the nondeterrable “600-pound gorilla.” As
Paul Bracken, who coined the term “the second nuclear age,” observed in 2012: “China, Russia,
India, Pakistan, North Korea, and Iran hardly desire a world that is ‘safe’ for U.S. strong-arm tactics
with conventional forces.” For nations wanting the same freedom of action that our conventional
superiority gives us, giving up the nuclear option makes no sense.
Much like the United States in the 1950s when it faced massive Warsaw Pact conventional forces,
other states are increasing their reliance on nuclear weapons. Russia and China are embarked on
aggressive nuclear modernization programs; North Korea has joined the nuclear club; and Iran may
be pursuing nuclear weapons. During the Cold War, the United States deployed about 7,000 tactical
nuclear weapons in Europe, so that the Soviets would know that any major war in Europe would “go
nuclear.” Today, the Russian general staff is writing doctrine for how Russia could use nuclear weapons
in a conflict with a conventionally superior force (that would be the U.S.-led NATO) to “deescalate” a
crisis. Nuclear weapons offset conventional military superiority. When the U.S. military declares that it
is seeking “full spectrum dominance” (see Joint Vision 2010), it simply reinforces the dependence of
our would-be competitors on nuclear weapons.
How does the United States counter the nuclear weapons of other states that don't want to live
under Pax Americana? We need to get serious again about nuclear weapons. The days of massive

retaliation and mutual assured destruction
are over, but nuclear weapons still matter for
the United States because they are the most
credible way of deterring how other countries
might employ their nuclear weapons against us.
The scenarios are different, and the stakes less
existential. But we are in the second nuclear age,
and denial is no longer an option.
Embrace Realism. The fallacy of hoping that
our competitors would give up their means for
offsetting U.S. conventional power is laid bare
by the actions of Russia, China, and North Korea
today. In the same way that the United States and
the Soviet Union did during the Cold War, these
states “use” their nuclear
weapons every day. They
understand that nuclear
weapons are a primary
element of the global distribution of power that
provides the underlying structure for deterrence
relationships between all states, not just those
states seeking to oppose the United States. They
also know that their nuclear weapons will cast a
“nuclear shadow” over any major conflict with the
United States. During the first nuclear age, it was
the mutual fear of nuclear escalation that kept
the Cold War cold as the two global superpowers
engaged in Thomas Schelling’s “competition in
risk-taking.” And as they plan for how to cope
with a United States that increasingly acts as
if nuclear war is unthinkable, they are thinking
through how they might physically employ a
nuclear weapon to demonstrate their willingness
to escalate to the nuclear level. For these
conventionally weaker powers, it won’t be as a
last resort, because a lengthy conventional war
with the United States is a no-win proposition.
“Going nuclear” early in a conflict in a manner
that convinces the United States to back off
(but does not provoke us into “going ballistic”)
makes sense from their perspective. We need to
internalize that and plan accordingly.
Buy 21st-Century Nukes, not Cold War Ones.
Sustaining a U.S. nuclear force designed for the
Cold War cannot be the right response to the
challenges of “the second nuclear age.” Like our
potential adversaries, we should develop and
procure new nuclear
weapons. We also
need nuclear weapons
whose employment
we need to get serious again
about nuclear weapons.
demonstrates our willingness (if necessary)
to break the nuclear threshold in a manner
that does not set off uncontrollable nuclear
escalation. From a global perspective, we need
to maintain nuclear parity with the Russians and
sustain nuclear superiority over the Chinese—
dealing with a Russia that thought it had nuclear
superiority would be even more difficult than it
already is; a China that had achieved nuclear parity
would tear big holes in the U.S. nuclear umbrella.
Our conventional superiority obviates some of
our requirements for nuclear weapons, but it
creates others. This is paradoxical, to be sure, but
paradoxes seem endemic to any nuclear era. ▶

Deterrence in the
Cyber Age
James A. Lewis
Deterrence is the threat to use military force to
impose intolerable costs if an opponent takes an
unacceptable action. The threat must be credible, which
requires opponents to calculate whether it is serious and
if potential gains outweigh the possible harm. The context
for deterrence has changed markedly, from a single peer
opponent to several different rivals, each with different
capabilities and tolerance for risk.
Nuclear weapons form the core of strategic deterrence,
but their utility is increasingly constrained. “First strikes”
are stigmatized, as is nuclear weapons use for anything
other than to deter nuclear attack. The destructive effect
of nuclear weapons is disproportional to the attacks we
face, reducing the credibility of threats to use them.
Nuclear weapons deter nuclear attack and (with general
military forces) major conventional war, but there is little
between these two extremes.
The likelihood that a country will carry out its deterrent
threat depends on both material and political factors.
Powerful militaries can inflict immense harm even without
nuclear weapons, and no one doubts the capabilities of
U.S. forces. Opponents use several techniques to manage
and reduce the risk of retaliation, such as relying on proxy
forces and irregulars. Opponents can limit their actions
to those that do not qualify as the use of f orce (defined
by the UN Charter as threatening a nation’s territorial
integrity or political independence) or that threaten
American lives or major economic damage (the U.S.
threshold for preemptive response to cyber attack) and
diminish the likelihood of American retaliation.
This could be proof that deterrence works now much as
it did during the Cold War and is effective at a “strategic”
level. America’s military rivals avoid actions that could

trigger a damaging U.S. military response.
It also suggests the limits of deterrence.
Opponents likely calculate that actions
that do not affect America’s vital national
interests, as they perceive them, will not
trigger a damaging response.
The United States could change these
calculations if it convinced opponents that it
had an expansive definition of vital national
interests, such as defending the “global
commons,” but these broad definitions are
unpersuasive. Other countries define vital
national interests in a more limited fashion
and it is through this narrower prism that
they measure U.S. pronouncements. For
extended deterrence, we can likely deter
opponents from invasion or nuclear attacks
on allies or friends, but not from supporting
terror attacks by proxies or most kinds of
cyber attack.
When it comes to a deterrent threat, nuclear
weapons are too much; launching a few
random cruise missiles is too little; perhaps
threatening cyber attack can reshape
opponent calculations? This idea is better in
theory than in practice. If deterrence has to
threaten unacceptable cost, cyber attacks
cannot deliver. Their effect is tactical, and
while they offer real military utility, they
do not pose an existential threat or create
intolerable costs. A stand-alone cyber attack
like Stuxnet would create only temporary
annoyance, and annoyance is not an astute
strategy.

“Cross-domain” deterrence is another twist on traditional nuclear
deterrence. The idea is to threaten that an attack by an opponent
in one domain—for instance, on U.S. space or cyber assets—will
result in damaging counterattacks in another domain—such as
against sea or land targets. However, cross-domain deterrence
turns out to be unworkable. How many ATMs must Iran hack to
justify a cruise missile response? How much stolen intellectual
property justifies a strike against a Chinese space launch facility?
Cross-domain deterrence’s complicated strategic calculus does not
produce credible threats.
Some scholars argue that a lower threshold for the use of force in
cyberspace could deter cyber attack. China’s cyber espionage, they
say, is “death by 1,000 cuts,” and justifies retaliation as economic
espionage imperceptibly saps vital industrial capabilities. There is no
evidence that the Chinese follow this strategy, which sounds more
like the plot of a cheap thriller. Nor have the 1,000 cuts done much
harm—America continues to grow, and if growth has been slow in
the last 15 years, it reflects bad policy choices more than nefarious
foreign stratagems. In any case, after Snowden, it would be unwise
for the United States to insist that cyber espionage is an act of war.
Deterrence worked best when linked to clear foreign policy goals
and red lines, such as shielding Europe from invasion. Weak linkages
between deterrent threats and vital American interests make red
lines unpersuasive and encourage opponents to calculate how
much they can get away with. The circumstances where the United
States will inflict unacceptable harm on an opponent (and risk harm
to itself) remain very few.
A vast range of coercive activities directed against the United States
and its allies are not deterrable. Some of these actions have only
symbolic effect, such as blocking a bank’s website. Other actions
advance regional agendas that may appear to opponents an
peripheral to U.S. vital interests. Some actions, like cyber espionage,
fall outside of the scope of what international law regards as
justifying the use of retaliatory force. The United States can no more
deter espionage or proxy conflict now than it could in the Cold War.
Rather than ask what we can deter, it is better to ask how to clearly
define vital interests and plan how to counter opponents who adjust
their strategies to rely on techniques and technologies that avoid
triggering a U.S. military response. ▶
if deterrence
has to threaten
unacceptable cost,
cyber attacks
cannot deliver.

The Role of Conventional Forces in
Deterrence
Maren Leed
For decades, U.S. conventional forces’ primary role in deterrence has been to maintain
sufficient capability and capacity to engage in a large-scale, potentially long-duration
fight with other large conventional forces. While nuclear forces remained the “ultimate”
deterrent, conventional U.S. capability was one in the range of challenges an adversary might
face when contemplating actions contrary to U.S. national interests.
Since the collapse of the Soviet Union, and especially in the 21st century, the deterrence picture
has become more complex in at least two ways. First, the Bush doctrine of preemption has given
way to conventional wisdom that claims that Americans are no longer willing to support large-scale
employment of U.S. forces. (This view is borne out by the inability or unwillingness o f the
U.S. Congress to reverse defense budget cuts, despite numerous and growing demands for U.S.
military capabilities around the globe.) A second shift relates to the growing power of non-state
actors, from terrorists to criminal networks to pirates, whose deterrence calculi have proven
different than those with which many U.S. strategists had become familiar.

Both changes—domestic reluctance to employ large U.S. military forces, and their
more limited salience to the full range of complex challenges facing U.S. leaders—affect
the basic calculus of deterrence, which is a function of both will and capacity. Political
constraints affect the “will” component, and the ability of non-state and irregular actors
to pose asymmetric threats to conventional forces affect the relevance of their capacity.
Given this reality, questions about how much of a role conventional forces can play in
future deterrence strategies are well warranted.
It would be foolish, however, to underestimate their continued relevance. It is important
to note that the large, near-peer state competitors for which conventional U.S. forces
have been principally designed remain, and in at least one case is growing stronger. This
reality implies that capacity will continue to be needed. That said, however, different and
smaller capabilities may be more relevant to deterring other threats. The larger question
with respect to potential U.S. adversaries is about will: not only whether U.S. leaders
would commit forces if required, but, more importantly, whether others perceive that
they would.
Here, the U.S. government has been clearly
signaling its desire to keep its military
commitments limited, and when commitment
is absolutely necessary, small. While this is
an accurate reflection of public desires, the
question for U.S. leaders is whether more can be
done within the “limited and small” framework to
enhance the U.S. deterrent posture. For example,
Russia’s move into Crimea was essentially a fait
accompli by the time U.S. forces were deployed
setting “trip wires,”
like red lines, only
serves to deter if,
when tripped, the
consequences are
quick and severe.
on the ground. Could the small units of U.S. forces that deployed to Poland and the
Baltic states have been positioned earlier as indications of Russian troop movements
became clear? Elsewhere in the world, the tinderboxes in the South and East China
Seas could flare at any moment. Should U.S. leaders be routinely approving freedom-of-navigation
operations in the South and East China Seas as a demonstration of American
commitment to international maritime norms and a political solution to maritime
disputes in the region?
Such actions would of course involve risks. Employing forces proactively—however
small—runs the risk that if others take actions against them, the United States could
be drawn further into conflagrations it might prefer to handle differently. Setting “trip
wires,” like red lines, only serves to deter if, when tripped, the consequences are quick
and severe. On the other hand, taking more visible though tailored steps might change
the trajectory of certain conflicts, forestalling larger problems and potential calls for
more significant U.S. military intervention later on. Such actions could align more
clearly with current U.S. public will. The capacity question—whether U.S. conventional
capabilities are well suited to deter non-state actors—is more complex. In both
instances, however, a more robust cost-benefit analysis of the degree to which smaller
conventional force formations might better contribute to current deterrence challenges
is both necessary and overdue. ▶

The Challenge of Deterring ISIS
Thomas M. Sanderson
Through its coalition against ISIS, the
West and its local allies are struggling to
save a region now teetering on the edge
of a geopolitical precipice. The amalgam of
coalition forces—much of it still notional—
is an engineer’s nightmare: composed of
countless moving parts of marginal quality,
with American pressure and a fear of ISIS as
its only lubricants. The U.S.-led force also
confronts an unpalatable reality: the adversary
is undeterrable.
Foreign fighters pouring over Turkey’s border
to do battle in Syria can make one final
stop before gliding
through the Bab Al-
Salam gate. Before
a perfunctory wave
through by border
officials, aspiring
jihadists can sell
their passports to a
well-positioned café
owner who knows
these fighters will
never again need them. Drawn from a life of
marginalization to one of empowerment and
eventual salvation, dozens of young men will
transform themselves into human bombs at
the direction of ISIS or Jabhat al-Nusra.
with few deterrent options,
the united states and its
partners should support
efforts aimed at dissuading
would-be fighters before they
make the decision to join isis.
Seemingly inexhaustible in number, Sunni
boys and men from America to Indonesia and
more than 75 countries in between are drawn
by the dramatic imagery, fueled by social
media, of heroic fighters doing battle against
all manner of evil. These young men—many
of them illiterate and poor—move from a life
devoid of choice, dignity, and respect to an
environment impervious to reason and fear.
A long-sought caliphate is in place, they are
told, and it needs defending at all costs.
Willing to die in defense of their religion and
the self-declared caliph who interprets it for
them, many of these fighters are energized
by the promise of a favorable postmortem
evaluation of their Earthly deeds. Helping
to cleanse holy lands of corrupt, despotic,
Western-controlled Sunni governments
(and even more detestable Shi’a regimes)
is intoxicating indeed. The excesses and
failures of corrupt governments have thrust
them—fearless and energized—to the
front lines of a holy
war.
For some of those
who do not perish on
the battlefield, their
onward movement
presents an entirely
new threat. At times
withdrawing through
the same border
crossing in Turkey, there is the option of
buying a now-repurposed passport for travel
to Europe. Chances are, the documents
on offer were once held by some of the
estimated 3,000 European fighters who
journeyed to the region, many hailing from
one of 30 U.S. “visa-waiver” countries. Soon
they could be on an airplane to America—
intentions unknown, but quite likely lethal.
What can be done about ISIS and its team
of motivated, trained foreign fighters and
other non-state actors like them? Is the only
solution arrest or death, or can those two
sanctions prevent them from taking up arms
in the first place?

Unfortunately, a deterrence strategy, which by definition is based on
the threat of consequences, is unlikely to succeed in the fight against
ISIS or similarly minded groups. Death is a goal for many jihadists, and
one to be celebrated. With few deterrent options, the United States
and its partners should support efforts aimed at dissuading would-be
fighters before they make the decision to join ISIS. This may include
local efforts to engage family members, clergy, community leaders,
and law enforcement, who in turn can discourage plans by those
most at risk to fight and die in Syria or Iraq. These influences must
be brought to bear before an ISIS commander or facilitator makes
his mark on the individual over social media or in person. After that
point, stemming the flow of fighters will be much harder and more
expensive to achieve. ▶

PART TWO
What Are the Implications of
Putin’s New Russia?

Russia’s Influence
on Europe
Heather A. Conley
The transatlantic community awoke on March 18, 2014, to
a strategic surprise: the Russian Federation, a “strategic
partner” of the European Union, had formally annexed Crimea.
This was an event not seen since Adolf Hitler annexed Austria in
1938. On that same day, Vladimir Putin articulated a new guiding
doctrine for Russian foreign policy, stating that Moscow will
preemptively act to “protect” ethnic Russians wherever they live.
This policy became reality as Russia quickly moved to destabilize
eastern Ukraine in support of pro-Russian separatists.
The post–Cold War era and order has come to an abrupt end. We
have yet to identify what this new period will bring. What does the
future hold and how should the transatlantic community respond
to Russian malfeasance in its neighborhood? What are Putin’s
long-term intentions? How do regional leaders perceive Russian
actions? What transatlantic policy responses will be most effective
with regard to sanctions, energy, civil society, and defense? Perhaps
most importantly, can Europe and the transatlantic alliance
hold together despite Russia’s pervasive economic and political
influence within the European Union?
As this collection goes to print, the Russian flag still flies over
Simferopol, the capital of Crimea; the conflict in Ukraine’s Donbas
region is now Europe’s latest and greatest frozen conflict; and the
United States and Europe have yet to fully address the growing
threat that Putin’s revanchist ambitions pose.
When Central and Eastern Europe threw off the Communist yoke
and the Soviet Union collapsed, Europe and the United States
transformed their Soviet policy of isolation and containment to one
of political and economic integration with the Russian Federation.
This approach had been largely successful over the past 25 years.
Russia joined the Group of Eight (G8) in 1998, the World Trade
Organization in 2012, and was considered for membership in the
Organization for Economic Cooperation and Development (OECD).
In the past 10 years alone, the value of Russia’s global trade has

nearly quadrupled from $210 billion in 2003 to
$802 billion in 2013. Last year, Russia’s trade
with the EU represented 48.5 percent of its
total. Although U.S.-Russian trade ties remained
subdued by comparison, the two former
superpowers developed a measurable degree of
economic interdependence, as evidenced by the
International Space Station and Russian-made
titanium engines for Boeing’s 787 fleet. This
transatlantic policy of integration came to an
abrupt halt on March 18, 2014.
Over time, Russia’s economic integration with
Europe—and specifically with the countries
of Central and Eastern Europe—has gradually
devolved from a positive source of growth into a
negative and corrosive force, serving only to widen
economic and political rifts within Europe. Europe’s
reliance on Russian energy and financial resources
and its accompanied political influence has
hindered its ability to formulate a swift, unified, and
robust response to Moscow’s violation of Ukraine’s
territorial integrity. Europe’s policy hesitancy is in
actuality a delicate political balancing act in which
Europe must weigh the normative benefits of
defending international legal principles against the
tangible, self-inflicted economic costs of imposing
sanctions against Russia. While Europe’s sustained
sanctions campaign has seemingly tipped the
scales in favor of democratic principles for the
time being, its asymmetrical economic impacts
are raising questions about the durability of this

commitment. Nowhere else is this equilibrium
teetering more than in Central and Eastern
Europe where Russia has begun to reclaim its
influence.
Presciently, in a July 2009 Open Letter to
President Obama, a group of pro-American
leaders from Central and Eastern Europe,
such as former Polish President Lech Walesa,
foreshadowed the dark side of Russia’s
integration with the West: “Russia is back as
a revisionist power pursuing a 19th-century
agenda with 21st-century tactics and methods.
. . . It [Russia] uses overt and covert means of
economic warfare,
ranging from
energy blockades
and politically
motivated
investments to
bribery and media
manipulation in
order to advance
its interests and to
challenge the transatlantic orientation of Central
and Eastern Europe.” Despite being full-fledged
members of the European Union for over a
decade, the countries of Central Europe are
experiencing an erosion of the rule of law and
good governance.
there appears to be a
linkage between russian
influence and the rise of
populist, nationalistic, and
xenophobic political parties
in parts of europe.
Freedom House’s 2013 Nations in Transit
report noted that only two (Latvia and the
Czech Republic) out of 10 Central European
countries have improved their democracy “score
card” after being members of NATO and the
European Union for over a decade. The other
eight countries’ ratings dropped in the areas
of media freedom, electoral processes, judicial
independence, and corruption. Increasingly,
there appears to be a strong correlation between
a marked decline in transparency, rule of law, and
democratic practices, and the extent of Russian
economic and political engagement in these
countries.
In the case of Bulgaria, recent media reports
estimated that as much as one-third of Bulgaria’s
economy is owned by Russian entities, with
particular concentration in the energy, financial,
and media sectors. Bulgaria’s political landscape
is highly volatile and opaque; the country has
already seen four governments in the past two
years. Consequently, Transparency International
ranked Bulgaria 77 out of 177 countries on
perceived levels of public-sector corruption—
the second lowest in the European Union.
There also appears to be a linkage between
Russian influence and the rise of populist,
nationalistic, and xenophobic political parties
as many of these entities receive
financial support from Russian-affiliated
nongovernmental
organizations (NGOs). Taking
advantage of Europe’s economic
malaise, these increasingly
successful fringe parties have
contributed to the weakening
of political support for the
European Union and governments
across Europe. Their impacts, however, are
most evident in the former Eastern Bloc,
where institutions and civil society remain
underdeveloped and susceptible to the
revitalization of former Soviet networks.
In the case of Hungary, many of these
trends have toxically blended to produce an
increasingly authoritarian regime. Over the
last decade, Hungary has maintained strong
economic and political ties with Russia. Russia
is Hungary's largest trading partner outside the
European Union, and the country remains 80
percent reliant on Russian energy. As Russia’s
grasp on Hungary’s economy has tightened,
nationalist and xenophobic groups—such as
the neo-fascist Jobbik party—have also risen to
prominence, further undermining the country’s
Western, liberal orientation. Moreover, Hungarian
Prime Minister Viktor Orban has articulated a
significant shift in national direction and policy
orientation, declaring in July that Hungary must
strive to build “an illiberal new state based on

national foundations” as evidenced by legislative motions to restrict free speech
(including an oppressive advertising tax), centralize authority (Hungary’s new
constitution has been amended five times), and erode the independence of the
judiciary. Noting that the geopolitical “wind is blowing from the East,” Orban has
credited Moscow for these latest Russian-styled Hungarian “reforms.”
These illiberal trends have been accompanied by distinctly pro-Russian foreign
policies in Budapest. Orban has consistently derided the EU’s sanctions against
Russia, and Hungary abruptly discontinued its sale of excess gas supplies to
Ukraine after a visit from the CEO of Gazprom this fall. Hungary received a 10
billion euro loan from Russia for a new nuclear power plant facility, increasing
Hungary’s energy dependence on Russian technology and financial support.
Negative developments in Hungary and its neighbors threaten to derail wider
European efforts to restrain Russian recidivism.
Although the 21st-century East-West confrontation does not bear the
ideological vestiges of the Cold War, there is a clear ideological component.
This contestation is between liberal versus illiberal, transparency and good
governance versus corruption and “managed democracy.” The unqualified
success of Central Europe’s transformation from Communism to liberal
democracies and market economies is not immutable, and we should not trick
ourselves into believing it is so. ▶
Putin’s Dilemma
Andrew C. Kuchins
Just days before Boris Yeltsin shocked the world by retiring early from the
Russian presidency on December 31, 1999—making then-Prime Minister
Vladimir Putin acting president—Putin released his Millennial Statement that
outlined Russia’s immense challenges and a vision for its future. This vision
emphasized greater predictability, prosperity, and stability for Russia after the
economically and socially traumatic 1990s. The document’s other core theme
was the urgent need to reconsolidate the Russian state in order to lead the
recovery of the Russian nation.
For the past 15 years that Putin has served as Russia’s de jure and/or de facto
national leader, the majority of Russian people have been satisfied that he has
delivered what he promised and what they want. During his first two terms
as president, the Russian economy grew at approximately 7 percent per year
(measured in nominal dollar terms and accounting for ruble appreciation, the
figure is an impressive 26 percent). Even after the global economic crisis in
2008–2009, the Russian economy regained its footing growing at a rate of more
than 4 percent in 2010 and 2011.

The foundation for Vladimir Putin’s consistently
high political ratings has been the Russian
people’s perception that their economic
prospects were constantly improving. Putin’s
so-called vertical of power—an increasingly
state-centric political economy—has been
facilitated by a growing economic pie that could
be carved up and distributed to Putin loyalists.
This system, patrimonial authoritarianism,
finds its historical roots traced to the princes of
Muscovy, Russian tsars, and later Soviet general
secretaries. In this sense, Vladimir Putin is a
very traditional Russian leader.
But signs that not all was well in modern
Muscovy manifested themselves in the winter
of 2011–2012 when the largest political
demonstrations took place in Russia in 20 years
as tens of thousands of protesters took to the
streets to condemn the falsified Duma elections
of December 2011. Putin’s United Russia party
fared poorly in those elections marking Putin’s
first electoral defeat since his emergence
on the national stage a decade earlier. The
demonstrations also marked the first large social
media-mobilized opposition Putin had ever
faced. It seemed clear from private discussions
with Putin and his inner circle prior to the 2011
election that Putin was taken by surprise. The
demonstrations were a shock to Putin personally
as well as to the political system he oversaw for
over a decade.
While the protesters were ideologically diverse,
the majority were the relatively well-off middle
and upper-middle classes who had benefited the
most during those prosperous years of Putin’s
tenure. But they viewed Moscow’s centralized,
corrupt, and authoritarian political system
nurtured by Putin as incapable of promoting
further economic growth or answering their
demands for improved governance.
When he returned to the presidency in May
2012, Putin faced a difficult choice as signs of
economic stagnation were already visible: he
could either co-opt the growing middle class
by addressing their concerns and embark on
structural economic reforms or risk undermining
the political foundation of his vertical of power.
Putin’s dilemma is reminiscent of the Soviet
Politburo in the early 1980s. Despite massive
windfall revenue of petrodollars, the economy
was so structurally inefficient that the Soviet
growth rate was close to zero. At the high point
of Soviet zastoi or stagnation, Brezhnev and
his successors decided structural economic
reform was too politically risky and attempted to
muddle through. Had oil prices remained high,

muddling may have been successful and the Soviet Union would have endured. Of course, oil
prices plummeted, the Soviet Union attempted reform, and collapse ensued.
Putin, like his Soviet predecessors, has avoided reform and the Russian economy has continued
to stagnate (1.3 percent growth in 2013) even before Crimea annexation and the war in Ukraine
despite historically high oil prices. It appeared that Putin had already decided to abandon
economic growth and prosperity as the foundation for his political popularity and authority. This
risky political strategy would require a new political narrative to justify his indefinite leadership if
economic growth and prosperity were no longer the essential thread.
This new political narrative began to form in 2012–2013 with a growing emphasis on traditional Russian
values captured in the 19th-century Russian policy of “official nationality” revolving around the triptych
of autocracy, orthodoxy, and Russian nationality. The crisis over Ukraine offered an ideal opportunity
to further consolidate this new political narrative. Previously, Putin had always been careful to avoid
enflaming Russian nationalism, but his seminal speech to the Russian Assembly formally annexing Crimea
on March 18, however, articulated a highly chauvinistic form of Russian nationalism that does not accept
the legitimacy of post–1991 borders let alone post–World War II and even post–World War I borders.
Putin has reintroduced the Tsarist-era term of Novorossiya, which geographically included much
of Eastern and Southern Ukraine under the administrative jurisdiction of Russia. This has become
his new political narrative and a rallying cry for the insurgents in Eastern Ukraine.
Putin will manage the devastating economic consequences of his strategic choice in many
different ways. The nearly 25 percent decline in oil prices has put further pressure on his
government. The house arrest in September of leading
economic magnate Vladimir Yevtushenkov sent a deep
chill through the Russian business community in a similar
manner as the 2003 arrest of Mikhail Khodorkovsky. The
Khodorkovsky affair and the destruction of the Yukos oil
company was the watershed event in the establishment
of Putin’s vertical of power, including the redistribution of
some of the core assets of the Russian economy.
As the economic pie is reduced, Putin must find ways to
assure the loyalty of his core allies and the intelligence
putin clearly has made a
faustian bargain with russian
nationalism and oligarchic
predators with unpredictable
consequences for russia’s
neighbors, regional security,
and the russian people.
services to guarantee his leadership. All signs suggest that another redistribution of assets to
his loyalists is underway. Western sanctions may actually help facilitate this process as Western
financial institutions and individual investors are removed as arbiters in the Russian market that
make it easier for erstwhile Putin allies to consume their own.
Putin clearly has made a Faustian bargain with Russian nationalism and oligarchic predators
with unpredictable consequences for Russia’s neighbors, regional security, and the Russian
people. Although government officials and experts perceive that Russia is weak, Putin has proven
himself time and time again as highly adept at playing what app ears to be a weak hand. Ukrainian
President Peter Poroshenko has described Putin as “unpredictable, emotional, and dangerous.”
How long Putin can manage this volatile situation that he has created is an open question, but we
should not assume it will be brief or that whoe ver comes after Putin will be easier. ▶

The Calculations of Russia’s
Neighbors
Jeffrey Mankoff
For Russia’s neighbors in the South Caucasus and Central
Asia, the Ukraine crisis is a watershed moment. Since
independence, these countries had pursued a “multi-vector”
foreign policy, which meant seeking new partnerships while
acknowledging their dependence on Russia and being careful to
respect Russian red lines.
After the annexation of Crimea and destabilization of eastern
Ukraine, the location of those red lines no longer seems clear.
The resulting uncertainty is forcing the leaders of the South
Caucasus and Central Asian states to be more deferential to
Moscow in the near term while accelerating these states’ efforts
to loosen and diversify their ties with Moscow. Time, especially
the emergence of a new generation of leaders with no memories
of the Soviet Union, will only accelerate this process.
Before the outbreak of protests on Kyiv’s Maidan Nezalezhnosti
[Independence Square] in September 2013, Ukraine’s strategy
for dealing with Russia was multi-vector as well. Economic and
cultural ties with Russia remained strong, but the government,
even under the allegedly pro-Russian President Viktor
Yanukovych (whose political career the Kremlin aided), sought
to develop diplomatic, trade, and investment ties with other
partners. For Ukraine, that meant primarily the European Union,
while the South Caucasus and Central Asian states have looked
variously to the United States, EU, Turkey, China, and elsewhere.
While these states pursued economic ties with a range of
neighbors, they understood that Moscow regarded security
cooperation, especially the presence of NATO or U.S. forces, as a
red line, and steered clear—or paid the price. Georgia’s courting
of NATO, which contributed to the 2008 war with Russia, and
Kyrgyzstan’s hosting of U.S. forces at the Manas Transit Center,
which helped fuel Moscow’s role in ousting former President
Kurmanbek Bakiyev, served as object lessons of the costs of
seeking outside security assurances. Still, the rule seemed to
be: trade with whomever you want at least as long as you do not

challenge Russia’s preferred position such as
in EU energy markets, but keep U.S. and NATO
forces out.
In line with this understanding, before the
Maidan protests, post-Soviet elites from
other states were generally weary of joining
the Russian-backed Eurasian Customs Union
with Belarus and Kazakhstan, or the planned
Eurasian Economic Union. Despite the fact
that Kazakh President Nursultan Nazarbayev
first proposed the Eurasian Union in the 1990s,
many Kazakh officials and businessmen
opposed Putin’s scheme, and even Nazarbayev
took pains to emphasize that the planned body
was solely an economic union.
Others, including Armenia, where more than
5,000 Russian troops are based, as well as
Kyrgyzstan and Tajikistan, whose economies
are heavily dependent on remittances from
Russia, demurred. Meanwhile, Ukraine, along
with Armenia, Georgia, and Moldova, negotiated
association agreements with the EU that,
when implemented, would radically transform
their economic and administrative structures,
weakening inherited links with Russia. Although
Moscow opposed these agreements and
encouraged its
neighbors to join its
customs union, these
countries largely
continued charting
their own course,
mostly evincing
little interest in the
customs union.
the “maidan scenario”—a
corrupt, ineffective
government thrown out by
its own people—represents
the greatest fear of many
post–soviet leaders.
Nevertheless, in
the run-up to the EU summit where Armenia,
Georgia, Moldova, and Ukraine were set to
formalize their association agreements,
Russia began exerting enormous political
and economic pressure. In September,
Armenia abruptly announced it was shelving
its association agreement and would join the
customs union. Soon thereafter, Ukrainian
President Yanukovych also buckled, following a
secretive two-day visit to Moscow. Yanukovych’s
about-face sparked the protests that led to his
downfall, Russia’s occupation of Crimea, and
the insurgency in eastern Ukraine. These events
seemed at odds with the previously accepted
rules of the game. Russia’s military intervention
in Ukraine was driven more by post-colonial
disregard than any prospect of NATO forces on
its border (indeed, it was the Russian intervention
that led new President Petro Poroshenko to
again seek Ukrainian NATO membership).
Moreover, to justify the intervention, Putin
proclaimed a wide-ranging mandate to protect
“compatriots,” “Russians and Russian-speakers”
throughout the former USSR. This formula
gave Moscow a pretext to intervene in any
of its former dependencies—including the
Baltic states. Incautious remarks from Putin
about Kazakhstan lacking historical legitimacy
only exacerbated the sense of concern in the
neighborhood that Russia had gone rogue.
The Ukraine crisis held another lesson for the
former Soviet states as well, a lesson about
the dangers of “people power.” The “Maidan
scenario”—a corrupt, ineffective government
thrown out by its own
people—represents the
greatest fear of many post–
Soviet leaders. The result,
in at least some states, has
been greater repression and
less openness, even if these
crackdowns make a Maidan
more likely in the longer
term.
In the near term, the twin fear of Moscow and
the Maidan is working to Russia’s advantage.
Unlike the West, Russia will not object to
crackdowns on domestic opposition, while
joining the Eurasian Economic Union provides
some insurance against Russian meddling (a
krysha, or roof, in Russian criminal slang). In the
past year, Armenia and Kyrgyzstan have applied

to join the Eurasian Economic Union, while Azerbaijan and Georgia have
increasingly hedged their pro-Western orientations. Further driving this tilt
toward Moscow is the perception, widespread especially in Central Asia,
that U.S. engagement in the region is declining with the withdrawal from
Afghanistan.
Yet the post–Soviet states view Russia’s decision to change the rules
of the game as a threat to their sovereignty. The crisis in Ukraine has
strained the bonds of affection tying these states to Russia. While they
may have little choice but to join Russian-led multilateral bodies, these
countries will work to ensure that these entities remain toothless, and will
redouble their efforts to reduce their dependence on and vulnerability
to Russia. Almost without exception, elites in the South Caucasus and
Central Asia see greater U.S. engagement as vital to the sovereignty and
independence of the region’s states.
The irony is that, as Putin made clear in 2008, Russia does not view
Ukraine, any more than the states of the South Caucasus and Central Asia,
as a “real state.” By forcing these countries to defend their independence,
Moscow is compelling them to define themselves and their national
interests, often in opposition to Russia. Russia’s actions are breeding a
new national identity and pride, which will be the surest guarantee of
these countries’ sovereignty over the longer term. ▶
Ukraine’s Transition
Sarah Mendelson
The guiding aspiration since World War II and the mantra since the
end of the Cold War for Euro-Atlantic security has been “Europe
whole and free.” For many, that conception of security has included an
independent, democratic, and prosperous Ukraine. At times, improbable
as it now seems, it has also included a democratic Russia.
What is to be done, as we pass the 25th anniversary of the fall of the Berlin
Wall, with the 40th anniversary of the Helsinki Accords looming, about
Vladimir Putin overseeing an invasion of Ukraine and a war that has cost
thousands of lives? Setting aside armed intervention, what is the right
response given his apparent judgment that the post–Cold War order is
not to his liking, and universal rights, transparency, and accountability are
either deemed not applicable to Russia or threaten its sovereignty? Are we
all doomed to live in a new, post–Helsinki world?

The answer better be no or we will see more
chaos and violence in Europe. The need for
coherent, coordinated support to Ukraine has
vaulted to the top of the Euro-Atlantic security
agenda for 2015. Political transitions are
complicated enough without a neighbor trying to
split the country and occupy territory. But a year
after the Euromaidan first formed, it is important
to remember that Ukrainian citizens chose and
drove this transition and still do. The stakes are
especially high; this is Ukraine’s third go at post–
independence transformation, and many believe
it is their last chance at creating a stable, law-governed
country.
In responding to this urgent agenda, we need to
identify and apply lessons learned from decades of
support to political transitions around the world.
Lessons Learned
In contrast to the cartoonish images that
some paint of how international democracy
promotion works, we cannot want democracy
and rule of law in Ukraine more than Ukrainians
do. We ought to have both a sense of humility
at outsiders’ ability to effect change and a
highly nuanced understanding of Ukrainian
public opinion. According to a September

2014 International Republican Institute (IRI)
poll, Ukraine is neither as deeply divided as
some argue, nor as uniform as others suggest.
More and different data are needed for a
fuller understanding of Ukrainian political
demands. Using data to address citizen needs
is critical to reducing conflict, countering
propaganda from Moscow, and addressing
historical grievances—so often overlooked or
underappreciated as drivers of development.
Euro-Atlantic cohesion is also vital to effective
support of Ukraine, and when divisions
emerge, U.S. and European diplomats must
make it a priority to mend them. Russia actively
tries to divide and conquer; there are illiberal
trend lines in Hungary and other European
Union countries.
With the departure of
both Swedish Foreign
Minister Carl Bilt and
Polish Foreign Minister
Radosław Sikorski,
strong voices in support
of Ukraine and Euro-
Atlantic cohesion, there
is heightened need for
both continued U.S.
diplomatic attention to
these issues and new
European voices to emerge.
the importance of getting
accurate information
both to russians and to
countering more globally
the disinformation
supported by kremlin-financed
platforms should
be a high priority.
As we speak with one voice, we must not
become overly focused on any one political
figure. Unconditional political devotion to
Boris Yeltsin as he failed to deliver to his citizens
cost the United States enormously in terms of
credibility in Russia. Instead, our support must
go to those in Ukraine who listen and respond to
citizens’ needs.
Euromaidan activists argue the task at hand
is moving from “the revolution of dignity” to
“the revolution of effectiveness.” This requires
transparency in budgets and accountability
of officials; it is good news that the new laws
on anticorruption were (finally) adopted.
They must now be implemented. The
activists also acknowledge that broader
behavioral change across Ukraine needs to
occur in terms of demand for transparency
and accountability. Currently tied with the
Central African Republic, Iran, and Nigeria
in terms of corruption, Ukraine needs to
apply the comprehensive approach to
tackling corruption that Georgia deployed
in recent years. Nothing less will work and
requires political will from both society and
government.
The Kremlin has successfully weaponized
information, even going so far as to take over
television stations in Ukraine at gun point.
The importance of getting
accurate information
both to Russians and to
countering more globally
the disinformation
supported by Kremlin-financed
platforms should
be a high priority. Are
companies that include
the RT news channel
in cable packages in
the United States and
Europe enabling Kremlin
propaganda, and if so, what can be done
about it? While the U.S. Broadcasting Board
of Governors’ recently launched 30-minute
Russian-language television news program
“Current Time” is laudable, much more is
needed to counter the steady stream of
falsehoods propagated by the Kremlin.
Specifically, the traditional approaches to
supporting independent media need to
be brought quickly into the 21st century,
including tapping millennials to creatively
advance information on new platforms
as well as on television. A gathering of
stakeholders on this issue ought to be
convened in Europe in early 2015.

Finally, foreign assistance absent home-grown strategy
is not going to solve Ukraine’s problems. Prime Minister
Arseniy Yatsenyuk’s “Recovery for Ukraine: Action Plan”
is a good start. While the United States allocated around
$291 million this year for democracy, economic, and
security efforts, President Petro Poroshenko and the new
Parliament need to draft a compelling and transparent
account of what funding is needed for what programs,
including a long-term plan for energy independence. The
sources of revenue should be varied and include the assets
stolen by senior members of the Yanukovich government,
apparently in the tens of billions of dollars. The location
and return of these funds are rightly a priority, however
laborious to track.
Behavior Has Consequences
Rather wobbly in the beginning, the United States and
Europe have demonstrated good solidarity on Ukraine
since the downing of Malaysia Airlines Flight 17 and the
incursion of thousands of Russian troops into Eastern
Ukraine in late August. Putin counts on this fading over
time. Instead, 2015 needs to be a year of unprecedented
Euro-Atlantic cohesion; it is our best shot at shaping
not only Putin’s choices, but those of the Russian
elite, some of whom might—just might—emerge as
a counterbalance. A few reports suggest that fissures
are emerging in Moscow, a by-product of the bite from
sanctions which need to stay in place.
In the longer run, and most important, is the
demonstration effect that a prosperous and open new
Ukraine might eventually have on Russia. Even after two
decades of disappointment on the democracy front in
Russia, there is still a minority that wants to be par t of the
West, wants to have a “normal” life with a government
responsive to its citizens, and institutions that deliver.
Ukraine’s path, if able to choose for itself, could help shape
Russia’s future; indeed that is what Putin fears and why it
matters for Euro-Atlantic security. ▶

A Test of Wills on Sanctions
Juan C. Zarate
For all the costs that Western sanctions and
lower oil prices are inflicting on the Russian
economy, the Russian flag still flies over
Crimea, Moscow remains undeterred, and the
September 5, 2014, ceasefire in Ukraine has
failed to end the fighting in Eastern Ukraine.
In response, Russia is using its own form of
economic and energy warfare as both a shield
and a sword. This all suggests that there are
limits to the West’s ability to deter Russian
aggression.
Since Russia’s annexation of Crimea in March,
Western strategy has focused on blocking
future deals with the Russian military sector,
restricting Russian banks’ access to long-term
capital, depriving elements of the Russian oil
sector of technology they need for offshore
and shale drilling, and
freezing the overseas
assets of individuals
tied to the Kremlin.
there is a limit to the
amount of financial pain
that the west can inflict
on a major economy with
substantial economic and
energy ties to europe.
But most existing
contracts between
Western interests and
their Russian clients
have been allowed to
continue. Rather than
dealing an instant blow, the aim has been to
starve the country of capital by sowing doubts
among Western investors about the wisdom of
investing in Russia. These efforts have produced
tangible results, impacting Russia’s ability to
access the global banking and trade systems,
and have already imposed direct transactional,
investment, and reputational costs.
The capital constriction strategy appears to
have been effective. Contracts and capital
have evaporated, and Moscow has attempted
to dampen rumors that it could assert capital
controls to halt the outflow of funds (net capital
outflows are estimated to exceed $100 billion
this year). The Russian Central Bank has been
forced to intervene decisively in defense of the
ruble as currency demand continues to plummet,
spending $1.5 billion on October 8 alone. Growth
has slowed to a near halt (projected to be just
0.4 percent for the year), and major Russian
companies such as Aeroflot have been unable to
acquire necessary investment.
Since Putin’s return to the presidency, he
has understood that Russia is economically
vulnerable, and in recent years he has moved to
reduce Russia’s reliance on
the dollar in international
trade and finance. He also
knew that there is a limit
to the amount of financial
pain that the West can
inflict on a major economy
with substantial economic
and energy ties to Europe
and the rest of the world.
Russia’s entanglements
may be vulnerabilities, but they also allow
Russia to exact a price of its own.
Companies subject to Western sanctions are
making moves to circumvent the restrictions.
Rosneft, the Russian oil company, is set to
buy 30 percent of Norway’s north Atlantic
drilling, enabling it to access offshore drilling
capabilities in the Arctic despite technology-

export bans and financial restrictions. Meanwhile, Russian investors
continue to deepen their economic interests in London, Frankfurt,
and New York. And the Russian sovereign wealth fund and Russian
pensions funds will be tapped for billions of dollars to shore up
necessary capital requirements for its banks hit by sanctions.
Moscow is also responding to Western sanctions by substantially
reducing flows of oil and gas to Ukraine, which restricts exports to
other European customers as winter approaches. As some European
countries have sent excess gas back to Ukraine in a reverse pipeline
flow, Moscow has specifically punished these countries. For example,
on October 2, Gazprom unexpectedly cut its supply of natural gas to
Slovakia by 50 percent as punishment for this reverse flow. A recent
visit by the CEO of Gazprom to Hungary completely ended Hungary’s
efforts to send gas to Ukraine.
The Kremlin has also banned agricultural imports from countries that
have participated in the sanctions, which economically damages
neighboring countries such as Poland and Finland. Symbolically,
Russia has closed four McDonald’s restaurants, citing health and
sanitation reasons—a common Russian tactic when it seeks to

punish a country or company. Moscow has
frequently suggested that it will develop a
national payment system that could replace Visa
and MasterCard and they have threatened to
prevent Western airlines from flying over Siberia
to Asian destinations at great expense. American
consulting and accounting firms could also be
prevented from operating in Russia.
Russia has more cards to play. It could cut off
supplies of engines to the U.S. space program.
It is a big exporter of titanium and other
resources needed by western companies and
could restrict exports in retaliation. Moscow
could emerge as a sanctions-busting financial
partner to a country such as Iran, at the height
of nuclear negotiations. Finally, in the past
Russia has launched cyber-attacks against
Estonia and Georgia as well as used tax and
money-laundering investigations to silence
critics. The Kremlin could enlist hackers and
organized criminals to disrupt financial systems
and companies in the West to complement
the tit-for-tat sanctions war that has erupted.
Some have questioned whether recent massive
cyber-attacks against JP Morgan and others were
Russian-originated due to events in Ukraine.
There are measures the West can take to
minimize Russian countermeasures. Europe
must finally take decisive measures to secure
alternative sources of oil and gas. This will be
a gradual shift, however, as Europe lacks the
critical infrastructure necessary, particularly
liquefied natural gas (LNG) facilities and
alternative pipelines, to receive greater imports
from abroad. Other countries should also seek
diversity of Russian energy supply as Moscow
becomes increasingly unpredictable.
New Russian investments in the United States
and Europe also should be carefully scrutinized,
and Western commercial contacts with suspect
individuals and companies further constrained.
There also needs to be a broader effort to
marginalize illicit financial behavior—not just
those individuals and entities tied to the invasion
of Ukraine. Thus far, sanctions have been limited
to targeted asset freezes, visa bans, and trade
and financial restrictions in critical sectors.
A more robust sanctions campaign, however,
would entail aggressive investigations of illicit
financial activity of Russian interests globally—
tied to concerns about money laundering,
corruption, tax evasion, and links to Russian
organized crime. This could include European
measures to apply enhanced due diligence and
reporting requirements on Russian entities
or individuals with bank accounts or new
investments in real estate. Europe applied similar
scrutiny in Cyprus during its recent banking crisis
but it must redouble its efforts.
But these steps would not be without
complications. Distinguishing between
legitimate and illicit financial activity would prove
difficult. And at a time of weak growth, Europe
has little appetite for additional economic pain.
Already, existing sanctions have had tangible
impacts on Europe’s economy, impacting both
large and small countries already struggling
against a triple-dip recession.
At the end of the day, enduring the economic
pain of sanctions for both Russia and the West is
a test of wills. If one side is unwilling to endur e
the economic pain, their sanctions campaign
will prove ineffective. At this moment, Moscow
seems willing to accept the pain as it exerts its
influence in its near abroad; the West also has
accepted the cost to defend the international
system but it seems to do so with increasing
reluctance. The West must realize that this crisis
may be a new frozen economic conflict, where
both sides use financial and economic tools to
impose pain on the other. Both sides should
prepare themselves for a long campaign. ▶

Energy Codependency
Edward C. Chow
During Vladimir Putin’s first two terms as president of Russia from 1999 to 2008, oil
prices rose from below $20 to over $140 per barrel. In many respects, this enabled the
domestic and foreign policies that he pursued, including in the oil and gas industry where
private ownership was restricted and the sector recentralized in the hands of the state and
state companies. Today, Russia is more of a petro-state than the Soviet Union ever was, with
oil and gas contributing more than a quarter of GDP, half of federal budget revenue, and two-thirds
of the country’s export earnings.
The same will not be true during Putin’s third term as president from 2012 to 2018 as oil
prices dropped below $90 per barrel from historic highs of above $100 for the last four
years. For the energy industry, high prices eventually result in conservation, substitution,
and new supply. The American shale gas and tight oil revolution is a classic example of the
development of new supply. Even if this is a cyclical decline, oil prices are unlikely to return
to the growth rate of the previous decade.
To maintain Russia’s currently high oil and gas production and export levels on which its
economy depends, large-scale and long-term investments are needed in exploration and
development in frontier areas beyond Russia’s traditional producing regions, such as in East
Siberia and the Arctic offshore, and in costly infrastructure to bring new production from
remote areas to markets in Russia or abroad. Majority state-owned
Rosneft and Gazprom, or favored companies such as Novatek,
needed Western energy partners to underwrite these investments
and provide technical and management expertise. Western
economic sanctions therefore come at a critical time for its oil and
gas industry in response to Russia’s aggression against Ukraine.
Financial sanctions restrict access to capital for Russian energy
russia needs europe more
than ever as the primary
destination of its oil and
gas exports.
companies. Sanctions against investments in frontier exploration in the Arctic offshore and
shale oil have stalled or halted projects with major international oil companies.
The often-heard narrative that Europe is heavily dependent on Russian energy sources is
true for some European countries yet Europe receives overall about 30 percent of its oil and
gas imports from Russia. The less understood dynamic is that Russia is even more reliant on
Europe as the market for 80 percent of its total oil and gas exports. While much has been
made of Russia’s recent energy mega-deals with China, diversification of Russia’s export
markets to Asia will take a decade or longer, if ever, to reach a level comparable to its exports
to Europe. As global energy prices soften and global demand stagnates, Russia needs Europe

more than ever as the primary destination of its
oil and gas exports.
The other narrative is Russia’s use of its oil and
gas supplies as a tool of statecraft. In reality,
Moscow has little room for maneuver. Europe
will continue to import oil and gas from Russia;
Russia cannot shift its oil and gas exports to Asia
in the near term. Therefore, this boils down to
the economic terms of energy trade, whether
Europe and Russia are politically willing to lessen
their degree of mutual dependence, and whether
both sides are willing to bear the higher cost of
supply diversification by shipping or receiving
oil and gas over greater distances utilizing
expensive new infrastructure.
Here natural gas matters a lot more than oil.
As a globally traded commodity with ease
of transportation, oil supply is much more
flexible than gas supply, which is tied to fixed
infrastructure and longer-term contracts in
regionalized markets. In other words, Russia’s oil
pays the rent (at a ratio of 4 to 1, more valuable
than gas), whereas gas is more about power
politics—both domestic and foreign—as well as
revenue generation and distribution.
For the third time in less than a decade, Europe
is again faced with the possible interruption of
Russian gas transiting Ukraine that, following
the development of the Nord Stream pipeline,
represents today around 15 percent of Europe’s
total gas supply. Each occasion was triggered
by significant political developments in Ukraine
that were perceived by Putin as affecting Russia’s
interests: the Orange Revolution (preceding the
gas cutoff in 2006), the internal power struggle
between President Yushchenko and Prime
Minister Tymoshenko (the longer 2009 gas cutoff),
and now the Euromaidan and the departure of
former Ukrainian President Yanukovych (leading
to the current standoff on gas supply). Each cutoff
occurred during the winter months.
Neither Russia nor Ukraine can afford another
gas crisis. Ukraine has yet to implement any
fundamental reform of its dysfunctional and
corrupt energy system. Reform requires political
will on the part of Ukrainian leaders even
under the most difficult conditions of war/
insurrection and economic collapse and great
patience by the Ukrainian people to accept
increases in energy prices in order to improve
energy efficiency and increase domestic
production. Ukraine will require extensive
financial assistance from international financial
institutions and Western countries for the next
five to ten years with strict reform conditionality.
As lower oil prices and Western sanctions exact
a toll on Russia, Moscow will likely continue to
see Ukraine as an undependable transit partner
for its energy and to focus on completing its
plan to bypass Ukraine entirely by constructing
the South Stream gas pipeline system under the
Black Sea and through the Balkans.
What role does Europe play as it enters
potentially its third energy crisis with Russia?
The European Union must decide to observe
its own stated rules as outlined in the Third
Energy Package and EU competition policies.
After years of investigation of Gazprom’s
business practices in Europe, the “statement of
objections” (or formal charge sheet) was poised
to be released in May 2014. The matter is still
pending. Europe must also decide whether and
how to use its leverage to determine the terms
of the gas trade with Russia. While creating a
future EU “Energy Union” may be an important
step, the EU must first implement its own
rules rather than continually seek exemptions
without reducing its energy vulnerabilities.
The best solution for all sides is for Russia
and Ukraine to reach a six-month interim
agreement, which is currently under discussion,
on the gas debt that Ukraine owes Russia and
on the gas price Russia will charge Ukraine.
Continued brinksmanship between Russia and
Ukraine on gas negotiations has only led to bad
outcomes for all parties, including Europe. ▶

NATO’s Eastern Front
Andrew A. Michta
Faced with Russia’s military aggression
and its use of hybrid warfare in Ukraine,
NATO remains caught in the double
bind of shrinking defense resources
and a continued lack of consensus on
how to respond to this aggression beyond
political condemnations, the imposition
of economic sanctions, and enhanced
exercise and readiness measures. NATO’s
new Eastern Front—consisting of the
most active NATO members, the Baltic
States, Poland, Romania, and Bulgaria—
wants physical assurances that NATO will
prevent potential Russian aggression, not
reassurances that NATO will respond to
aggression after it has occurred.
Herein lies the challenge: until NATO
adequately shores up its Eastern Front
with permanent military deployments,
NATO’s regional security and deterrent
posture will continue to erode. Yet, several
NATO countries insist that the permanent
stationing of NATO forces near Russia’s
border not only would provoke additional
Russian military action but also contravenes
the 1997 NATO-Russia Founding Act
(irrespective of Russia’s own violation of

this Act). NATO’s easternmost states are also
apprehensive about U.S. policy persistence and
its sustained focus on Europe as events in the
Middle East and the Asia-Pacific region draw
attention and resources elsewhere. Against
these political odds, establishing an effective
deterrence regime against Russia along NATO’s
eastern frontier remains a daunting task.
It seems clear that Russian President Vladimir
Putin’s “Novorossiya” (or “New Russia”) aims
at reclaiming either direct or indirect Russian
influence over the post–Soviet space—which
could include NATO members Estonia, Lithuania,
and Latvia. The immediate goal of Russia’s
irredentist policy in Ukraine is to maintain its
hold on the east of Ukraine and to consolidate
its gains there. The presence of Russian forces in
Moldova, Georgia, and Armenia can be viewed as
part of a larger Russian regional military strategy,
likely to be accompanied by a gradual tightening
of Russia’s grip on other post–Soviet states.
The September 2014 NATO Summit in Newport,
Wales, demonstrated strong rhetorical unity
among the 28 members, but debuted a
limited package of reassurance measures
for NATO’s eastern allies. Allies agreed to a
Readiness Action Plan, which will create a
rapidly deployable 4,000-troop task force to
spearhead NATO’s response force, in addition
to an enhanced regional exercise and training
program. This reassurance package also
augments the presence of 600 U.S. soldiers
in the Baltic States and Poland, enhanced
NATO air policing, and the readiness of NATO’s
Multinational Corps–Northeast Regional
Headquarters in Szczecin, Poland.
Unfortunately, NATO allies were only able
to agree to a “persistent” rotational force
presence in the east and not a permanent
deployment. The current formula of “persistent
rotations” conveys a message to Russia that
the crisis along NATO’s border is a temporary
phenomenon rather than a new and long-term
destabilizing force. The hoped-for deployment
of NATO’s 4,000-troop spearhead force stands
in stark contrast to the continuous mobilization
of tens of thousands of Russian forces along
Ukraine’s border over the past six months.
NATO allies have also not been able to outline
a new, overarching deterrence doctrine
against hybrid warfare tactics. For example, in
Eastern Ukraine Russia has deployed special
force units disguised as separatist militants;
utilized information, cyber, energy, and trade
warfare tactics; and agitated ethnic Russian
communities in order to achieve its aims.
NATO remains underprepared to confront
such unconventional challenges. Although
NATO has created–or will shortly–Centers of
Excellence in cyber warfare, energy security,
and strategic communications in an attempt
to address specific elements of hybrid warfare
by enhancing policies and awareness (not
surprisingly each of these centers resides in a
Baltic State), the alliance has yet to make any
decisive changes.
As NATO confronts and attempts to deter
the long-term security implications of
“Novorossiya,” the Alliance will continue to
rally around transatlantic unity and solidarity,
as well as the shared commitment to uphold
Article 5 treaty obligations. As Russia continues
to further test NATO’s resolve in and around
its territory, the Alliance must develop a new
and flexible deterrence strategy against hybrid
warfare that permanently stations NATO forces in
the East, in addition to the readily available rapid-reaction
forces. To implement this strategy, NATO
should consider deploying at least one heavy
brigade combat team (BCT)-sized deployment to
the region with a mix of U.S. and European NATO
troops. Likewise, the Szczecin HQ in western
Poland could be substantially augmented with
more senior leadership and staffed with more
NATO personnel.
Against the backdrop of Russia’s invasion of
Georgia in 2008, its seizure of Crimea, and its
encroachment into Ukraine, NATO must trans-

late its powerful rhetoric into a tangible military presence.
NATO must overcome its hesitancy, if not outright opposition,
to the permanent stationing of NATO troops in the region—
most notably those objections articulated by Berlin. As NATO
prepares to deter hybrid warfare, it must also retain deter-rence
capabilities against a potential direct threat by Russia
against NATO’s eastern flank. By developing a robust deter-rent
nato’s hesitancy will
further embolden russia
to exert pressure along
nato’s periphery.
posture built on a permanent troop and asset deployment along the
frontier combined with transatlantic unity, Moscow will be unable to erode
confidence in NATO’s Article 5 commitment to its eastern members. Failure
to do so will call into question NATO’s viability when Russia decides to probe
a NATO member in an attempt to expose the lack of Alliance resolve. The
political framework for implementing such a deterrent strategy has already
been established in the outlines of President Obama’s recent speeches and
statements in Warsaw and Tallinn, and reinforced by remarks from European
leaders and the new NATO Secretary General Jens Stoltenberg.
Without a sufficient NATO deterrent policy, NATO’s hesitancy will further
embolden Russia to exert pressure along NATO’s periphery. At present,
NATO’s response has been to focus on de-escalation rather than deter-rence.
Hence, efforts to seek political ac commodation and compromise
have hobbled a larger strategic deterrent redesign that is imperative if
NATO is to remain a credible alliance. ▶

PART THREE
How Can the United States Best Exert
Influence in Today’s Middle East?

Acting and Reacting in the
Middle East
Jon B. Alterman
When mass protests broke out in the Arab world in 2011, the Obama
administration saw opportunity. The president helped push long-time
U.S. ally Hosni Mubarak to step down from the Egyptian presidency,
noting, “I think history will end up recording that at every juncture in the
situation in Egypt that we were on the right side of history.”
Almost four years later, “people power” has not taken hold in the
Middle East. Some countries, such as Libya and Syria, hemorrhage
from civil wars that started as peaceful protests. In Egypt, elections
produced a government so exclusionary that after a y ear in power,
much of the public supported a return to military rule. Three and a
half years after the death of O sama bin Laden, jihadis are resurgent in
the region. Meanwhile, the United States finds itself fighting battles in
the Middle East with strained alliances and diminished influence. What
went wrong?
Where one stands depends on where one sits. For some, the problem
is that the United States swiftly abandoned principles for expediency.
Speaking at the State Department a week after bin Laden’s death, the
president raised idealists’ hopes, favorably comparing protests in the
Middle East to the American Revolution and the U.S. struggle for civil
rights in the 1950s and 1960s. “After decades of accepting the world
as it is in the region,” he said, “we have a chance to pursue the world
as it should be.” And yet, the rise of violence and disorder in the Middle
East pushed the United States to work more closely with the militaries,
intelligence services, and authoritarian leaders who only months before
seemed anachronistic.
The tension between ideals and interests has been starkly clear in
Bahrain, where the U.S. Fifth Fleet has its headquarters, and where
a Sunni-led government, with support from Saudi Arabia and other
neighbors, has been suppressing an uprising by the Shi’a majority. Naval
base operations have not been affected, and the United States resumed
sales of some military equipment only months after the unrest began.
For others, however, the United States has remained not only idealistic
but naïve in the face of real and persistent threats in the Middle East.

Gulf Arab allies continue to complain that the
Obama administration “threw Hosni Mubarak
under the bus,” yielding to chaos. Conservative
regional governments express puzzlement that
the United States has remained blind to the
menace of the Muslim Brotherhood, seeing
democrats where these governments saw power-hungry
theocrats. These governments not only
wonder about U.S. support should they face
internal challenges, but even if the United States
would provide aid and comfort to their enemies
out of a misplaced belief in the enemies’ good
intentions. Realists in the United States complain
that the disorder that accompanies rapid political
change is both predictable and profound, and
the eagerness with which the United States
embraced such change reflects a lack of historical
awareness or strategic thinking.
Perhaps most surprising in recent months, in the
arenas where the United States has been putting
forth the greatest effort—in Iraq, for example—
the U.S. government has put the emphasis
squarely on government-to-government
relationships. In so doing, the pr esident is
relying on often-ineffective or corrupt officials
to reach the large and dissatisfied populations
in whom the president had seen such promise a
few years before.

While some rush to ascribe incompetence or even malice to U.S. government actions, the
lack of effectiveness is instead a product of sustained U.S. uncertainty. Tumultuous politics in
the Middle East have pushed the United States toward a more circumspect attitude toward
the permanence of its allies. Put simply, it is not willing to bet on their suc cess. The speed
with which the United States moved to establish a working relationship with the Muslim
Brotherhood in Egypt was chilling to many regional leaders, as was the slow reluctance with
which the United States accepted the Egyptian army’s seizing power. For the United States,
the episode was a principled expression of concentrating on process rather than outcome.
For Arab allies, it was an opportunistic embrace of victors over friends.
Distrust of U.S. intentions colors Arab leaders’ assessment of U.S.-led negotiations over
the Iranian nuclear program. Arab governments fear that the United States will try too hard
to accommodate Iran in the negotiations and react too passively to subsequent Iranian
violations of its agreements, leaving them enveloped by Iranian hegemonic ambitions. The
fears of Gulf leaders in particular are abetted by the prospect of U.S. energy independence,
which they see as diminishing U.S. interest in their partnership, and in their security.
While there is widespread agreement that U.S. policy in the
Middle East should be responsive to conditions on the ground,
there is widespread concern that it has become wholly
reactive—crisis-driven, unprincipled, and uncoordinated. The
perception that it is reactive elicits complaints that it is not
reactive enough to an individual petitioner’s complaints. That
makes it appear feckless as well.
while some rush to ascribe
incompetence or even malice
to u.s. government actions,
the lack of effectiveness
is instead a product of
sustained u.s. uncertainty.
Whether one considers the “Transformational Diplomacy” of
Condoleezza Rice or the “21st-Century Statecraft” of Hillary
Clinton, the United States continues to lack a strategy it needs for an increasingly complex
world—and increasingly complex Middle East—in which non-state actors are stronger,
communications are more robust, and priorities harder to sustain. Equally importantly,
foreign policy complexity has helped create a world in which U.S. strategic priorities are
increasingly hard to discern. This is especially so given a strong bureaucratic impulse toward
the inclusion of priorities in strategic documents rather than choosing between them.
A clearer strategy would look like this: global energy security—broadly defined—is certainly
in the strategic interest of the United States, as is containing transnational terrorism. So too
is preserving the security of key allies against hostile states, and enhancing the resilience
of friendly governments. Working with friendly states in the region, in Europe, and in Asia,
those should be the strategic goals. In order to pursue them, the United States should not
only work with friendly governments, but also push to empower a range of like-minded non-state
actors, in the United States and abroad. Through it all, the United States must keep in
mind that some of its greatest successes have come not from what it has done directly, but
through creating institutions and incentives that encourage people and governments to
act in desirable ways. The United States still needs to react, but those reactions need to be a
smaller share of its actions in the Middle East and beyond. ▶

The Need for Better
Civil-Military Planning
Anthony H. Cordesman
The United States is now more than a
decade into wars attempting to bring
security and stability to the Middle
East. The results have not been good.
The initial U.S. military victory in Iraq that
overthrew Saddam Hussein was followed
by eight years of irregular warfare, a pause,
and now a new war against ISIS. The U.S.
military effort to lead from behind in Libya
after 2011 has left instability bordering on
chaos in that country. The U.S. military effort
in Yemen has not prevented its capital and
government from falling to Houthi rebels.
The U.S. invasion of Iraq in 2003 had
the unintended consequence of totally
destabilizing the military balance in the
Gulf by destroying Iraq’s military forces, and
contributing to a massive regional arms
race between Iran and the United States
and Iran’s Arab neighbors. The broader
upheavals in the Arab world have offset
any other gains in the war in terrorism.
The Study of Terrorism and Response
to Terrorism (START) global database on
terrorism shows an increase from fewer than
300 major incidents a year in the Middle East
and North Africa (MENA) region during 1998
to 2004, to 1,600 in 2008, then from 1,500
in 2010 to 1,700 in 2011, 2,500 in 2012, and
4,650 in 2013—a fifteenfold increase since
2002, and threefold increase since 2010.
A recent RAND study found that the number
of Salafi jihadists more than doubled from
2010 to 2013, according to both low and
high estimates. The war in Syria was the
single most important attraction for Salafi-jihadist
fighters. There was a significant
increase in attacks by al Qaeda-affiliated
groups between 2007 and 2013, with most
of the violence in 2013 perpetrated by ISIS
(43 percent), which eventually left al Qaeda;
al Shabaab (25 percent); Jabhat al-Nusrah
(21 percent); and al Qaeda in the Arabian
Peninsula (10 percent).
The United States cannot ignore the need to
meet real threats with military force, or the
need to create effective counterterrorism
programs. It also, however, urgently needs
to look at the almost complete failure to
create effective civil-military plans and
programs during both the Afghan and Iraq
wars, the critical failures to manage them
effectively and establish transparency,
adequate fiscal controls, and measures of
effectiveness. By Congressional Research
Service (CRS) estimates, the United States
has already spent some $1.8 trillion on the
two wars, and both SIGIR (Special Inspector
General for Iraq Reconstruction) and SIGAR
(Special Inspector General for Afghanistan
Reconstruction) have shown the military and
civil aid aspects of this spending involved
incredible amounts of waste, fraud, and
corruption.
The weakest links lay in the civilian side
of aid spending, and in the poor planning,
weak management, and lack of proper
audits and measures of effectiveness by
the State Department and U.S. Agency for
International Development (USAID). There

is clear need for a comprehensive review of
the reason for these failures and to find ways
to create a structure that can cope with these
challenges in the future. As the new war against
ISIS makes clear, no war against jihadism,
terrorism, or an extremist sanctuary can ever
be won by force alone.
Here, Americans and Europeans need to
understand that the primary threat is not
to outside states, and that, as RAND states,
“Approximately 99 percent of the attacks by
al Qaeda and its affiliates in 2013 were against
‘near enemy’ targets in North Africa, the Middle
East, and other regions outside of the West, the
highest percentage of attacks against the near
enemy in our database.”
As the UN Arab Human Development Reports
have made clear since 2002, however, both
outsiders and MENA states need to pay far more
attention to the causes of these civil problems.
They are complex, they vary by country, and
analysts disagree about the importance of given
issues, but even a short list of key pressures
shows why extremism, violence, and instability
will continue indefinitely unless their civil causes
are properly addressed.
The MENA region is largely a desert with declining
aquifers, river flow, and rain, and dependence
on finite amounts of fossil water. It is also under
incredible demographic pressure. According to
the U.S. Census Bureau, the total population for
the MENA region was about 83 million in 1950. In
2014 the population was 404 million—roughly
five times higher. Its rate of growth is decreasing,
but conservative estimates put its population at
590 million in 2050—seven times higher than in
1950—and 46 percent higher than in 2014.
Part of the reason is aging. Life expectancy
increased by roughly 12 years, from
approximately 61 years to 73 years, on an average
after 1900. At the same time, the dependency
ratio—the number of people who depend on
others for income—increased because so much
of the population was so young. The CIA Factbook
estimates that the percentage of citizens 14
years of age or younger is 28–38 percent in most
MENA countries. For comparison, they are 19.4
percent in the United States, 13.8 percent in Italy,
and 13.2 percent in Japan.
This creates immense pressure on young
people in countries that have not invested
properly in education, where governments
have failed to create meaningful jobs and

careers commensurate with the increase in
population. Compounding the problem, in many
societies women are not allowed to compete
or be productive. In many cases, disguised
unemployment leaves only dead-end jobs that do
not cover basic family costs, including marriage,
children, or housing. These problems are more
destabilizing than direct unemployment,
particularly in countries that have failed to
modernize and reform their economies and lack
major oil wealth.
Many MENA citizens have also been forced to
leave the areas that provided them their sect,
ethnicity, and tribe with a traditional social safety
net. There has been a drop, not an increase, in
arable land, and the emerging market structures
for agriculture create strong pressure to invest
capital in agriculture and reduce the number of
people on the land.
This push away from the land, and sheer
demographic pressure, are leading in all but
the richest oil exporters to the unstable hyper-urbanization
of formerly rural societies. To make
matters worse, governments are not keeping
up with matching development, housing,
infrastructure, or investment in education,
and sometimes fail to provide the most basic
essentials, such as water and electricity. The
modernization of the wealthier part of most
MENA cities disguises large slums, low income,
and long commutes. As a rough estimate, nations
with 16–18 percent urbanization in 1950 are now
well over 40 percent today.
The CIA estimates the rate of urbanization in
Qatar is 98 percent, 73 percent in Algeria, 82.3
percent in Saudi Arabia, and 82.7 percent in Jordan.
In many cases, this creates new pressures that also
increase sectarian, ethnic, and tribal tensions. It is
also made much worse by the increasing flow of
refugees and internal displaced persons coming
from local and international conflicts—Algeria’s
past civil war, the Iran-Iraq War and conflicts in Iraq,
Arab-Palestinian conflicts, and ongoing civil wars in
Libya, Syria, and Yemen.
If one looks at national budgets and UN
data, many non-oil countries—and several
key oil countries like Algeria, Libya, Iran,
and Iraq—do not invest in their civil
sector proportionately to the rise in their
population and fall badly behind in spending
on education and social services. A major
shortfall now exists between required levels of
education in years and actual schooling. UN
estimates indicate that the average required
schooling totals 10.6 years in the MENA area,
but that the mean average of actual years is
6. This is not bad by South Asian and African
standards, but it compares with 10.4 years in
Europe, and far too often it creates alienated
young men who learn about Islam by rote
memorization, are open to extremists, and
have no reason to be loyal to their regimes.
Secularism and existing political structures
are often weak. The ideologies of the
past have all failed, and the indices of the
World Bank and Transparency International
show high levels of corruption, high levels
of violence, chronic failures of effective
economic reform, and poor rule of law. A
combination of authoritarianism, corruption,
lack of transparency, and faulty rule of law
help ensure that there are no real political
parties and no opposition leaders really
capable of governance. In turn, the opposition
often becomes covert and ideological,
extreme, and violent. State Department
Human Rights Reports also warn that
justice systems are often repressive and
dysfunctional in civil and criminal areas,
and religious extremism acquires political
legitimacy by default—particularly since
religious extremists seem to do the best job of
exploiting the internet, religious societies, and
social networks.
Some MENA states still do well and modernize
and reform, but there is an immense disparity
of income between and within MENA nations.
The CIA estimates that GDP per capita is
$2,500 in Yemen, $6,000 in Jordan, $6,600

in Egypt, $7,000 in Algeria, $7,100 in Ir aq,
$12,800 in Iran, $31,300 in Saudi Arabia,
and $102,100 in Qatar—this compares with
$52,800 in the United States. If one looks at
gross national income (GNI) per capita, the
average was $8,317 in 2013 f or the Arab world
versus $33,391 for very high development
countries. Moreover, corruption and favoritism
skew the numbers in favor of the elite, and keep
power in the hands
of those with strong
ethnic, sectarian, and
tribal biases.
unless the united states can do
a far better job of addressing
the civilian side of such
conflicts, every “victory”
will be no more real than the
moment sisyphus got the rock
As some of these
figures show, one
also needs to be
very cautious in
talking about MENA
“oil wealth.” Some
Gulf monarchies do
well, but the Department of Energy/Energy
Information Administration (DOE/EIA) estimates
that per capita oil wealth in Organization of the
Petroleum Exporting Countries (OPEC) states
ranges from only $1,667 in Algeria to $2,706
near the peak.
in Iraq, $8,939 in Saudi Arabia, and $40,943 in
Qatar. Distribution can range from reasonable
to terrible, and the “Dutch disease” is a hiccup
compared to the problems oil revenues create in
the MENA area.
This expansive set of factors helps explain
why U.S. commanders, policy planners, and
intelligence experts talk about a decade—
or decades—of unrest,
and warn again and again
that every military victory
or counterterrorism
strike has marginal
effect. Counterterrorism,
counterinsurgency, and
winning open conflict are not
going to do the job. Unless
the United States can do a far
better job of addressing the
civilian side of such conflicts,
and broaden the nature of its efforts to create
effective civil and military partnerships, every
“victory” will be no more real than the moment
Sisyphus got the rock near the peak. ▶

The Challenge of Non-state Actors
Haim Malka
After half a century during which the
Middle East was divided along Cold War
lines between U.S. allies and adversaries,
the United States now has friendly
relations with nearly every Arab state,
save the Assad regime in Syria. Yet, non-state
armed groups have emerged as key
protagonists in conflicts around the region,
and they are often
hostile to the
United States. Today
they undermine
U.S. policy goals,
destabilize fragile
states, and kill
civilians.
they can be contained, their
capabilities can be degraded,
but by their nature they
continue to evolve.
More than ever before, the United States must
address a mutating set of foes that operates in
increasingly complex political environments.
Doing so will require U.S. government officials
to demonstrate vigilance, dynamism, and
creativity at a time when security concerns
push many to huddle inside embassy walls.
The United States has many fewer tools to
influence non-state armed groups than it
has with governments—and close bilateral
ties with governments have encouraged
the United States to designate many such
groups as foreign terrorist organizations,
complicating any U.S. government contact
with them at all. When it comes to non-state
armed groups, the tools and the objective
have often been limited to “isolate” or
“eliminate.”
And yet, these groups have flourished.
Throughout the Middle East, non-state
armed groups have adapted to shifting political
constraints and opportunities, and they
have increasingly adopted characteristics of
states. Such groups control territory, engage
in diplomacy, build constituencies, and play
politics. Rather than merely looking for a stake
in existing state systems, non-state groups are
reinventing those systems.
Part of the challenge
for the United States is
how to address the root
causes of support that
these armed groups
enjoy. In many cases,
non-state armed groups
are inherently political actors with highly refined
objectives that resonate with significant parts of
local populations. Hezbollah fought for the rights
of the Shi’a majority population that had long
been marginalized in modern Lebanon. Hamas
presented an Islamist alternative to the Palestine
Liberation Organization’s (PLO) arrogance and
corruption, which critics believed had done
little to establish an independent Palestinian
state. Even in the fight against al Qaeda and
ISIS, there seems to be a steady supply of young
men willing to die for the ideology and goals
these movements espouse. While U.S. rhetoric
describes ISIS in polemical terms, the reality is
that ISIS has two powerful drivers of support:
it is a utopian social and political entity that
appeals to disaffected young people, and it is
a powerful protector of sectarian interests for
millions of Sunni Arabs in Syria and Iraq who feel
systematically disenfranchised.
The group will continue attracting foreigners
as long as it convinces them that its project to

build the caliphate remains sincere and a viable
alternative to other forms of government in the
region; it will likely continue finding support in Iraq
as long as many under their rule believe that Shi’a
politicians remain a larger threat to their interests.
Beyond their political acumen, many non-state
armed groups have become security providers.
Islamist military brigades went on the Libyan
government payroll after the revolution and
provided security at hospitals and government
installations. Hamas, though it remains
committed to fighting Israel, has at times
prevented rocket fire by smaller militant groups
and, through its security monopoly, limited
the activities of al Qaeda-affiliated cells in Gaza
that could pose a more lethal threat. In Syria,
Hezbollah is fighting ISIS and the al Qaeda
affiliated Jabhat al-Nusra, a goal that overlaps
with that of the United States.
It is these groups’ political dimension, then, that
poses the most complex challenges for U.S.
policymakers. The experiences of the last several
decades suggest that non-state armed groups
cannot be eliminated. They can be contained,
their capabilities can be degraded, but by their
nature they continue to evolve: they adjust
to new constraints, exploit opportunities, and
reinvent themselves to meet new environments.
For the United States, victory is unlikely to be
found through defeating and eliminating these
groups. Instead, the United States must work
to change the political and social conditions
that allow them to thrive. How to develop state
structures that meet the needs of populations
and offer a vision for them will be the great
challenge for the next generation in the Middle
East. If governments don’t take the lead in
putting forward new visions that resonate with
their populations, non-state armed groups will
do it for them. ▶

Counterterrorism Success
and Failings
Samuel J. Brannen
As President Obama oversees military
operations against ISIS, he and his
advisers should also be sure to focus on
the effectiveness of military operations
against terrorist groups over the past 13
years. While succeeding in the short term—
largely keeping the United States and its
citizens safe from attack—U.S.-led strikes
have neither stopped the spread of Islamist
extremism, nor addressed growing, related
state-level instability from Pakistan to Nigeria.
The increasing capability of terrorists to
destroy people and property and to command
attention is presenting itself as the strategic
challenge of a generation. In response to
the most pressing threats, the United States
has carried out a series of military strikes,
sometimes directly and sometimes through
allied militaries, sometimes on the ground
and sometimes from the air. Military action
against ISIS is the latest U.S. campaign
against an armed terrorist group operating
from a weak state.
Addressing the long-term challenge of ISIS
must begin with broad understanding of the
utility of military force against this enemy—
the most visible, costly, and active element
of U.S. strategy to date. It is true that through
innovation, investment, grit, and sacrifice
across the U.S. national security enterprise,
the United States has developed a remarkable
capability to detect and disrupt terrorist plots
emanating from overseas. Unmanned aerial
systems can operate over remote geographies
without putting a single American in harm’s
way, while Special Forces capture or kill high-value
leaders deep inside sovereign countries,
with or without diplomatic permission. The
enemy is nowhere safe, and largely the
U.S. intelligence community can provide
strategic (if not always tactical) warning of an
adversary’s activities.
Yet, there are firm limits on what strategic
results this approach to counterterrorism
brings. Secretary of Defense Chuck Hagel
told the House Armed Services Committee
in September 2014 that “American military
power alone cannot eradicate the threats
posed by ISIS to the United States, our allies
and our friends and partners in the region.”
Despite remarkable operational successes in
a global direct action campaign by the U.S.
intelligence community and the military, a
growing web of terrorist groups continues
to attract and train recruits, regrow leaders,
maintain funding, and gain new operational
footholds. Osama bin Laden and hundreds of
his top lieutenants and adherents are captured
or dead, but during the past decade terrorist
groups have expanded across the Middle East
and North Africa. As these groups metastasize,
U.S. military assets have been spread thin.
The U.S. military maintains unflinching focus

on counterterrorism at the expense of other difficult security challenges and
strategic imperatives that will matter in years and decades to come.
Former Secretary of Defense Bob Gates has observed that the incredible capability
of the U.S. military can be a liability: “Our foreign and national security policy
has become too militarized, the use of force too easy for presidents.” With so
much military capability on call for the president, and the broad counterterrorism
authorities endowed in presidential findings and the 2001 Authorization for
Use of Military Force, there is a distortion in the cost-benefit analysis for action
versus inaction (or less direct approaches). When option A is to attack the terrorist
network and option B is essentially to do nothing, the choic e is not difficult, even if
it is admittedly short term.
But often, the choice to use military force empowers this enemy. Former Secretary
of Defense Donald Rumsfeld asked his staff in an October 2003 memo, “Are we
capturing, killing or deterring and dissuading more terrorists every day than the
madrassas and the radical clerics are recruiting, training and deploying against
us?” The answer to that question is as unnerving today as when he asked it. Al-
Qaeda and ISIS not only do not seem to mind that they ar e hunted; they seem
to thrive because of it. Their propaganda depends on images of battle against
a superior adversary, stoking a sense of victimization and injustice. Israel has
experienced a similar phenomenon in its successive campaigns against Hezbollah
and Hamas: battlefield victories translate at best into stalemate and at worst into
political losses in a regional context. Terrorist groups feed on the instability and
economic decimation that warfare brings.

A more effective U.S. counterterrorism approach is
straightforward, well understood, and yet has proven elusive
to two administrations. It would be far better to balance the
use of military force in the short term against adversaries
directly threatening the interests of the United States and its
allies and partners with the need to pursue other approaches
that cut off recruits and support for these groups in the
medium and long terms.
Over the past 13 years, in addition to its military successes
the United States has improved border and transportation
security, and developed powerful counter-threat finance
tools. But it has fallen markedly short in other key areas. The
good news is that the shortfalls and needed capabilities are
well understood. They are mainly in the areas of information
operations, partner security forces and law enforcement
capacity building, economic and political development in
weak states, and human rights. Our failure to make successful
investments in these areas in Iraq helps explain the current
challenges the United States and its allies—including the
Iraqi government—face there now.
Progress on these issues will require sustained attention
from the president and his top advisers. The National
Security Council must give the same attention to building
up and exercising these tools as it does direct-action
counterterrorism. Congress must similarly lend its attention
to the necessary missing ingredients of a better approach to
counterterrorism. Military force is a sometimes necessary, but
strategically insufficient, answer to a growing threat. ▶
their propaganda depends
on images of battle
against a superior
adversary, stoking a
sense of victimization
and injustice.

PART FOUR
Is the Rebalance to Asia Sustainable?

Asian Perceptions of the Rebalance
Michael J. Green and Zack Cooper
Three years have passed since President Barack
Obama announced the U.S. “rebalance” to Asia.
A recent CSIS survey found that 79 percent of
strategic elites in Asia support the rebalance, with
opposition mainly coming from China where only
23 percent were in support. Yet, as enthusiastic
as most Asian observers are about a renewed U.S.
focus on their region, the rebalance or “pivot” to
Asia has been overshadowed by doubts regarding
the administration’s ability to follow through. In the
CSIS survey, 51 percent of elites questioned whether
the rebalance has been effectively resourced or
implemented. Concerns
center on three questions.
is the objective of the
rebalance a “new model of
great power relations” with
china or is it to strengthen
First, can the administration
and the Congress reach
agreement on the Trans-
Pacific Partnership (TPP)?
At present, the core of
the negotiations between
Japan and the United
States have broken down
over about five remaining issues, with Washington
blaming Japanese intransigence and Tokyo blaming
the Obama administration’s unwillingness to seek
Congressional Trade Promotion Authority (TPA). TPP
is seen in the region as an indispensable cornerstone
for building an open and inclusive trans-Pacific
economic architecture going forward.
security and economic
partnerships with states under
pressure from china?
Second, does the United States have the willpower
to counter increasing evidence of coercion in
the region? Chinese mercantile and paramilitary
coercion against claimant states in the East and
South China Seas and North Korea’s ongoing
nuclear weapons and missile programs have caused
regional allies and partners to carefully watch the
U.S. defense budget and the U.S. responses to the
crises in Syria, Iraq, and Ukraine. On the one hand,
they worry that renewed U.S. involvement in the
Middle East or Europe will undercut the rebalance
to Asia; but on the other hand, they worry about
Washington’s lack of demonstrated resolve in these
cases and the signal this sends for Asia.
Third, what is the administration’s bottom line
in Asia? Is the objective of the rebalance a “new
model of great power relations” with China—as the
administration has announced at various points, to
the chagrin of allies and partners like Japan or India
that are relegated to non-great power status by
Beijing? Or is the objective to strengthen security
and economic partnerships
with states under pressure
from China, which Beijing
views as a new form of
containment? The success
of the rebalance depends
in large measure on how
credibly and consistently the
United States articulates its
own role in shaping a future
regional order.
While these questions percolate around the U.S.
rebalance, there is good news for the administration
as it refocuses on Asia and the Pacific over the
coming years. First, elites in Asia appear to have
confidence in American leadership overall, with 57
percent of respondents to the 2014 CSIS survey
predicting that among various scenarios for the
future of Asian order a decade from now, continued
U.S. leadership was most likely. The major powers,
including China, were most certain of this future. As
President Obama prepares to travel in November
to the East Asia Summit (EAS) and Asia-Pacific
Economic Cooperation (APEC) summit, the
administration would do well to use the opportunity
to better define its vision for the rebalance in the
years ahead. ▶

Keeping Focus on Korea
Victor Cha
It is hard to tell what the bigger concern on the Korean peninsula will be over
the next year: more nuclear weapons and ballistic missile tests by the North,
or potential political discontinuities inside the Pyongyang regime. Neither is a
good outcome.
The first scenario would highlight the fact that over 20 years after the first nuclear
agreement with North Korea in October 1994 (the Agreed Framework), and 10
years after the second nuclear agreement in September 2005 (the Six-Party Joint
Statement), the problem has become exponentially worse in 2015. North Korea,
under Kim Jong-un’s byongjin strategy appears to be aiming to develop the full
spectrum of nuclear capabilities, from plutonium and uranium-based weapons to
potential battlefield use. The Obama administration might try to make one last push
for a denuclearization deal like the September 2005 agreement, but success would
be highly unlikely.
The second scenario is no better. The machinations of North Korean leadership
dynamics raise concerns about regime stability. It is not clear if the young leader is

calling the shots or if there are power struggles
among elites in the party and military over a
shrinking pie. Even if internal power struggles
are not the problem, Kim’s health may be.
Westerners who have met the young leader in
person at diplomatic functions in Pyongyang
have observed that he is grossly obese, much
more so than official pictures depict; that he is
a chain smoker; that he drinks heavily; and that
his face looks unusually unhealthy for a 29- or
30-year-old. There is a history of heart disease in
the family (Kim’s father and grandfather both died
of massive heart attacks), as well as purported
kidney and liver problems. The chances that he
can rule for decades like his predecessors are slim.
The challenge for the United States will be how
to maintain focus on this problem when the
White House will be
preoccupied with Ebola
in West Africa, Russia
and Ukraine, and the war
against ISIS. A crisis with
the North (in the form
of a fourth nuclear test
or provocations against
South Korea) will certainly
grab attention, but the
reaction will be to seek a
temporary solution that provides compensation
to Pyongyang in return for de-escalation—a
familiar outcome that has contributed directly to
the growth of the North’s nuclear program over
the past 25 years. On the other hand, if the North
does not invoke a crisis it will mean little attention
from Washington, allowing the North’s nuclear
program to develop unimpeded.
as reluctant as the south
koreans may be to work with
their neighbor, enhanced u.s.-
japan-korea trilateral alliance
cooperation is the best answer
to north korea’s threats and
possible regime instability.
The best antidote to this catch-22 is to continue
robust defense cooperation with South Korea.
This means enhancing missile defense, including
the introduction of Terminal High Altitude Area
Defense (THAAD) to the peninsula; delay of the
transfer of wartime operational control (OPCON)
from the United States to South Korea; and a
rigorous regimen of military exercises to reinforce
deterrence. Washington and Seoul might consider
improved defense cooperation in areas like drone
technology, which could be useful against North
Korea. Regional security also requires better
defense cooperation and information sharing
between South Korea and Japan. As reluctant
as the South Koreans may be to work with their
neighbor, enhanced U.S.-Japan-Korea trilateral
alliance cooperation is the best answer to North
Korea’s threats and possible regime instability.
North Korea is not the only issue on the U.S.-
Republic of Korea (ROK) security agenda in 2015.
Look for the two allies to complete a new civilian
nuclear energy agreement that will form the
basis of a new era of safe and proliferation-free
nuclear cooperation. Washington and Seoul are
likely to put flesh on the bones of a development
assistance agreement
made between the two
Peace Corps last year
(South Korea has the
world’s second-largest
Peace Corps next to
the United States)
and on health security
initiatives. These types
of projects reinforce
the alliance’s growing
scope not only to operate on the peninsula but
also to provide public goods for the broader world
community. Should the Trans-Pacific Partnership
be completed in 2015, also look for South Korea
to be one of the first major economies to seek
membership in the institution.
Despite the strong ties between ROK president
Park Guen-hye and Chinese leader Xi Jinping, 2015
may be a year in which we see this deepening
relationship put to the test. North Korean
provocations will raise expectations in Seoul that
Beijing should act expeditiously in punishing
the North. Meanwhile, China is likely to call in
some chips with the ROK by lobbying against the
introduction of THAAD to the peninsula. Neither
“ask” is likely to be heeded by the other side,
which will create mutual disappointment. ▶

Economic Imperative in
Southeast Asia
Ernest Z. Bower
While there is a wide range of differing perceptions about the U.S. rebalance in
Southeast Asia, there is a regional consensus that a strong, sustainable U.S.
presence is necessary to retain regional peace and stability, which are in turn
prerequisites for economic growth.
To build an effective strategy to promote its interests in the region, the United States
needs to digest the fact that in Asia, economics are the foundation for security.
In other words, any U.S. security and military strategy for Asia will be incomplete
and ineffective without a comprehensive economic thrust. Current U.S. economic
offerings are insufficient because they don’t include all of the key countries. Nor do
they articulate a comprehensive goal that makes sense to Americans seeking new
jobs as well as Asian partners seeking expanded investment, trade, and the benefits
U.S. companies bring, including training, education, and investment in communities
and infrastructure.

A number of factors are driving Southeast Asia to
send the United States a strong demand signal
for engagement:
■■ Anxiety over China’s rapid economic growth
and its demonstrated willingness to use
economic leverage to force neighbors to
conform with its demands in disputes;
■■ China’s rapid increase in military capability;
■■ Admiration for elements of what the United
States stands for, including democracy,
freedom, and human rights;
■■ A well-developed instinct for geopolitical
balancing.
President Obama’s administration deserves credit
for saying and doing many of the right things in this
context, including sustaining a strong bipartisan
continuity of focus on Asia. His team has articulated
an Association of Southeast Asian Nations (ASEAN)-
focused strategic outlook that sees the new
geopolitical center of gravity as the point where the
Indian and Pacific oceans meet, namely in Indonesia,
ASEAN’s anchor. Former Secretary of State Hillary
Clinton described ASEAN as the “fulcrum” of evolving
security and economic architecture in Asia.
Function has followed form, for the most part.
President Obama successfully engaged ASEAN
by acceding to the group’s Treaty of Amity and
Cooperation, joining the East Asia Summit, and
establishing diplomatic relations with a reforming
Myanmar. Obama’s secretaries of state have not
missed an ASEAN Regional Forum; his secretaries
of defense have forged ahead with the ASEAN
Defense Ministers’ Meeting-Plus and held a U.S.-
ASEAN Defense Forum that the United States
hopes to repeat annually. The president himself
elevated his annual meeting with the 10 ASEAN
leaders to a summit, thereby institutionalizing
the high-level engagement.
Additionally, steps have been taken to deepen
bilateral ties with allies and important partners.
The Enhanced Defense Cooperation Agreement
was negotiated in the Philippines, four littoral
combat ships now have a home in Singapore,
military-to-military ties with Indonesia have
been normalized, and the embargo on lethal
weapons sales to Vietnam has been partially
lifted. These steps, in addition to concentrated
efforts to establish comprehensive or strategic
partnerships with other ASEAN countries, are
foundational benchmarks.
These steps are necessary, but not sufficient.
Southeast Asia worries about Beijing’s perception
that Washington won’t sustain this level of focus
and investment in Asia generally and Southeast
Asia in particular. Most ASEAN members believe
that Beijing has committed to achieving regional
leadership by the Chinese Communist Party’s 100th
birthday in 2021 and regional hegemony by the
People’s Republic of China’s centennial in 2049.
ASEAN’s members see China incrementally testing
U.S. resolve, pushing Beijing’s goals to dominate
the first and second island chain in the near- to
midterm. China is testing the limits of its new power,
and trying to understand where lines will be drawn.
This creates a dilemma for most Southeast Asian
countries. ASEAN needs China to be secure,
economically successful, and active in economic
integration, but it does not want to be dominated
by China. Nor do any Southeast Asia countries
want to emulate Chinese values or governance
systems, including Vietnam. This conundrum is
well demonstrated by the recent debate around
China’s campaign to develop a new set of Sino-centric
institutions to supplant, or at least regionally
augment, existing entities. A good example is the
proposed Asian Infrastructure Investment Bank.
ASEAN countries badly need more infrastructure
investment and feel current mechanisms such
as the World Bank, the Asian Development Bank,
and the global private sector are not acting quickly
enough. But they worry a great deal about giving
Beijing more economic leverage.
To complete the rebalance in Southeast Asia,
the United States needs presidential leadership
to build a political foundation for future
engagement in Asia. President Obama needs to
talk to Americans himself, in the United States,

about why Asia is fundamentally important to U.S. prosperity and
peace. This above all other actions will convince Asia that the United
States is committed for the long term. This leadership effort cannot be
deputized or delegated, though the ground work has certainly been
laid in speeches by successive Obama national security advisers and
other key cabinet members.
Asia wonders why talking about foreign policy, trade, and Asia is seen as a
negative in the context of U.S. domestic politics. Asian partners are being
told repeatedly that the White House will spend political capital on the
asia wonders why
talking about foreign
policy, trade, and asia
is seen as a negative
in the context of u.s.
domestic politics.
Trans-Pacific Partnership after the November midterm elections. This is not a good message in Asia.
It undercuts a belief in a sustainable and serious U.S. commitment to the region. Engagement in Asia
cannot and should not be something the administration squeezes in during the lame-duck session or
after elections so it doesn’t divide its political base. The United States must develop an Asia consensus
that serves as a foundation for policymaking for the remainder of the 21st century and beyond. ▶
The Long View on India
Richard M. Rossow
Ironically, the U.S. rebalance to Asia is viewed by some in India as a pivot away from their
country. Repeated U.S. attempts to initiate top-down cooperation in strategic sectors, such
as civilian nuclear power and defense trade, have experienced uneven success. Today, some
senior U.S. policymakers privately question efforts to court a nation that often appears unwilling to
reciprocate U.S. outreach. Few would argue that, in 20 years, a rising India will not play an important
role in regional stability. For the United States to be a partner in this future, it must commit to finding
small ways to work toward this vision—even if there will be few instances of short-term gratification.
U.S. policymakers have a powerful predilection toward tangible deliverables. Senior officials
want to walk away from public service with a sense that they, as individuals, made some
particular contribution to America’s strategic success. There is less interest in engaging in
relationships where there are low expectations for immediate repayment. Unfortunately,
India has fallen into this category.
President George W. Bush placed a “big bet” on India as a distinctly important partner in Asia’s
future. But with the rebalance, India sees the United States as placing multiple smaller bets across
Asia, with little strategic focus on India. The truth, of course, is much more nuanced; defense
relations are expanding and space cooperation is back on the agenda, while nuclear cooperation
is stuck in neutral largely due to India’s inability to open the door for commercial trade.
The Bharatiya Janata Party’s (BJP) resounding victory in the spring 2014 parliamentary
election offers a chance to review how the United States and India might engage on
strategic affairs. This BJP government is not the Congress Party, and therefore historical
positions concerning nonalignment bear less significance. While there will still be adherents to

nonalignment in the bureaucracy, policymakers
will be willing to approach issues differently. While
India has no desire to be seen as a junior partner
to Washington, Narendra Modi’s government is
more open to expanding cooperation with the
United States on a whole range of global issues.
There are already strong signals that New
Delhi is thinking differently about its global
interests, as evidenced by
the Joint Statement issued
following Prime Minister
Modi’s September 2014 visit
to Washington, D.C. While
the statement rehashes and
updates some of the areas
previously highlighted for
bilateral cooperation, it expands the number of
areas where the United States and India promise
to collaborate, including North Korea, Iraq, Syria,
and the South China Sea. Historically, India
has avoided being this specific when it comes
to identifying regions where it has strategic
concerns and interests.
there are already
strong signals that
new delhi is thinking
differently about its
global interests.
If India is interested in being a partner to the
United States in developing a new Asian security
architecture, there are important domestic issues
within India that must be addressed. First and
foremost, finding a solution to the nuclear liability
issue—which has thus far precluded American
commercial involvement in India’s nuclear power
industry—must be tackled. Second, India must
be more receptive to U.S. attempts to initiate co-development
and co-production of next-generation
defense equipment. Third, India must show more
willingness to engage on trade. While trade and
strategic issues are sometimes viewed through
different lenses, many consider the Trans-Pacific
Partnership free-trade agreement to be one of
the more tangible initiatives of the rebalance.
India’s avoidance of engaging in
high-standards trade agreements,
combined with the Modi government’s
decision to walk away from the World
Trade Organization’s Trade Facilitation
Agreement in July 2014, does not
give confidence that the government
is ready to make tough decisions on
trade issues that could bind the United States and
India closer together.
Building a comprehensive, strategic relationship
with India will continue to be an elaborate
courtship. The United States needs to sacrifice
its fondness for regular, clear deliverables,
and be prepared to play a long game that
may take decades. But India must also show
greater willingness to take decisions that form
the building blocks of a deeper relationship. A
thoughtful assessment of Asia in 20 years shows a
convergence of interests, but there is much work
to be done to make sure that the United States
and India have a dependable and comfortable
partnership. ▶

Maintaining the
U.S.-Japan Alliance
Nicholas Szechenyi
The U.S. rebalance to the Asia-Pacific region presents an opportunity to strengthen the
U.S.-Japan alliance and further its role in maintaining regional security and prosperity.
U.S. fiscal constraints and multiple crises in other parts of the world have prompted concern
in Japan about the sustainability of the rebalance, but close ties with the United States are the
cornerstone of Japanese foreign policy and the Abe government unveiled a national security
strategy last year that mirrors U.S. diplomatic, economic, and security objectives in the region.
There is much the two governments can do in the coming year to enhance alliance cooperation
aimed at shaping the regional order.
Revised guidelines for bilateral defense cooperation expected by the end of 2014 will update
the strategic framework for the alliance and signal a commitment to strengthen deterrence in
an increasingly complex regional security environment. The two governments are conducting
a policy dialogue to identify priorities. Examples listed in an interim report include maritime
security; air and missile defense; intelligence, surveillance, and reconnaissance; capacity
building; and space and cyber security. Core objectives are to increase Japan’s defense
capabilities and interoperability between the two militaries, and the Abe government’s July
2014 decision to reinterpret the constitution and exercise the right of collective self-defense
(or aid allies under attack) is potentially a means toward both ends. Requisite legislation for this
policy reform will be submitted for parliamentary debate in 2015 and it will take some time to
determine the impact in operational terms. Nonetheless, the guidelines likely will address the
general implications for the alliance, which include improved information sharing as well as
cooperation with other regional partners, a central tenet of the U.S. rebalance to Asia.
Japan will continue to seek U.S. support for its sovereignty claims over the Senkaku Islands and
respond to the challenges posed by Chinese coercion in the East China Sea. Senior Obama
administration officials have stated repeatedly that while the United States does not take a
position on the islands’ sovereignty, it does recognize Japan’s administrative control over the
islands and consequently Article V of the U.S.-Japan security treaty (which obligates the United
States to defend Japan and all areas under its administrative control) applies. U.S. officials have
also consistently voiced opposition to any unilateral attempts to coercively change the status
quo, but declaratory policy alone will prove insufficient in deterring Chinese assertiveness.
China has orchestrated multiple incursions into Japanese territorial waters and air space around
the Senkaku Islands, probing activities that fall short of armed conflict but increase tension and
instability. Japan would like to advance operational planning with the United States on these

so-called gray zone contingencies and reduce
the probability of accidental conflict. The
guidelines revision process should facilitate
such planning and the U.S. Pacific Command
should shed any reticence about exploring
cooperation in future gray zone scenarios.
A core pillar of Japan’s national security
strategy and the U.S. rebalance is economic
power. In joining the Trans-Pacific Partnership
trade negotiations, both countries have
recognized that economic competitiveness
and trade liberalization are inextricably
linked. The United States and Japan, as the
first- and third-largest economies in the
world, respectively, are poised to fuel the
economic engine that is the Asia Pacific
and enhance their strategic influence by
setting high standards for regional economic
integration. Trade politics in both countries
render the prospects for concluding TPP
uncertain, but progress on the agreement in
the year ahead will be critical to the credibility
of Prime Minister Abe’s structural reform
agenda and the economic component of
the U.S. rebalance. Article II of the U.S.-Japan
security treaty
focuses on economic
cooperation, and
joint leadership on
TPP is a vital tool
for enhancing both
economic prosperity
and security. Right
a core pillar of
japan’s national
security strategy and
the u.s. rebalance is
economic power.

now the United States and Japan are disagreeing on issues that probably
account for less than 1 percent of our total bilateral trade. Both sides need
to look to the larger strategic and economic picture. Japan should build on
deregulation under way in the agricultural sector to sell TPP at home, and
the White House needs to make the case politically not only for opening
Japanese markets, but also to demonstrate to U.S. trading partners
that President Obama is willing to fight for necessary Trade Promotion
Authority (TPA) against opposition in his own party.
As a treaty ally of the United States, Japan naturally welcomes a sustained
U.S. presence in the Asia-Pacific region and wants to be a partner in
realizing the objectives of the rebalance. This is evidenced by an interest
in expanding the parameters for bilateral security cooperation and setting
standards for regional trade. Translating these shared strategic interests
into action will prove important in terms of demonstrating Japan’s
leadership capacity and a sustained U.S. commitment to the region
despite a plethora of foreign policy challenges elsewhere. ▶
Recalibrating on China
Christopher K. Johnson
Sustaining the rebalance into 2015 will require crafting fresh
approaches to managing the bilateral U.S.-China relationship
while reassuring the region and encouraging Chinese leaders to
understand Washington’s abiding commitment to Asia without
further exacerbating Chinese suspicions over U.S. intentions.
On overall strategy, the administration needs to acknowledge more
honestly that President Xi Jinping is not responding to the heavy dose of
traditional U.S. messaging and cueing on maritime tensions and other
security sore spots—or at least not in the way Washington would want.
This does not require U.S. acquiescence to China’s new policy tack,
but it should give U.S. policymakers pause and a desire to reflect on
whether—and how—U.S. actions may need to be recalibrated to deal
with this dilemma.
At a more tactical level, the United States must not miss the opportunity
afforded by the round of summits taking place in Asia in late 2014.
China’s tone has become noticeably less shrill, especially when it comes
to relations with its regional neighbors. Whether it be Xi’s successful trip
to India or the steady—if still sub rosa—shift toward less antagonistic
relations with Japan, it is obvious that Beijing is on at least a mini charm

offensive. As a still relatively untested ruler on the
world stage, President Xi is keen to show off his
foreign policy acumen in playing host to all of the
region’s most important leaders at the APEC summit.
Skillful U.S. diplomacy will seek to mold that instinct
into an impetus for shaping the regional environment
to sustain the warming trend in the coming year.
Above all, operationalizing such a strategy with
China requires putting most of the administr ation’s
energy into advancing the economic and other
nonsecurity elements of the rebalance. Given the
seeming intractability of many of the security
challenges in the relationship, emphasizing these
other areas offers the best chance for developing
the mutual strategic trust needed to move toward
common ground on thornier issues. The f ollowing
three pillars would seem the most sensible policy
tools in undergirding such an approach:
■■ Use the APEC and reciprocal Sunnylands
summits to get the relationship back on track.
Many Chinese strategic thinkers believe the
summit marks a critical juncture for shaping
the trajectory of bilateral ties in the remaining
years of the Obama administration. This year’s
Strategic and Economic Dialogue failed to
act as a policy springboard for paving the way
for a successful summit. Instead, it released a
relatively bland series of pronouncements that,
after the summer in both capitals and an intense
focus early in the fall on critical domestic events
in each country, leaves precious little time to
think about policy solutions for elevating the
relationship. Along with progress on climate
change and counterterrorism, the administration
should seek to disarm Xi with an unexpected
gesture of support, such as endorsing China’s
proposed Asian Infrastructure Investment
Bank, or at least dropping our clumsy efforts to
undermine it.
■■ Put more energy into the Bilateral Investment
Treaty (BIT) negotiations. President Xi and
Premier Li Keqiang took a substantial domestic
political risk in endorsing the BIT at last fall’s

watershed Third Plenum. The United States should more clearly articulate its
appreciation of that gesture with greater activism while simultaneously pushing
the Chinese negotiators to shift from aspirational enthusiasm for the treaty toward
detailing real concessions the Chinese side is willing to make. The BIT also represents
the best mechanism for the United States to affect the trajectory of China’s
economic reforms, which has critical implications for the more challenging business
environment U.S. and other foreign firms currently are grappling with in China.
■■ Get TPP done. The rebalance can have no credibility in the region without the
TPP’s successful conclusion, because the pact reflects the crystallization of the
policy vis-à-vis China. It reassures U.S. allies and partners that they need not focus
exclusively on the pull of China’s economy while also providing a vehicle for those
in China who acknowledge that, like China’s World Trade Organization accession
more than a decade ago, TPP may provide a more politically palatable pathway for
making the difficult changes at home that Chinese leaders agree they must enact
for their own prosperity.
Despite concerns about Washington’s implementation of the
rebalance, the United States is well positioned to lead in Asia.
Decades of U.S. engagement have enabled Asia’s economic
growth, security, and the spread of shared values. Today many
regional states look to China to drive economic growth, but
they rely more than ever on the United States to guarantee
regional security. For this reason, it is critical that regional allies,
partners, and competitors recognize and acknowledge that the
United States is a Pacific power with the ability to carry out its
rebalance strategy.
today many regional states
look to china to drive
economic growth, but
they rely more than
ever on the united states
to guarantee regional
security.
Implementing the rebalance will require that the United States maintain its
longstanding political relationships, robust economic ties, unparalleled military
capabilities, and shared values with most regional states. Although the perception in
Asia is that the United States and its rebalance to the region have lost some steam,
2015 provides an opportunity for Washington to demonstrate that U.S. engagement
will not only continue, but will grow. ▶

PART FIVE
Is a Competing Economic Order Emerging?

The Evolving Institutional
Landscape
Matthew P. Goodman
Seventy years ago, as World War II was nearing its end, 44 allied nations assembled
at the Bretton Woods resort in New Hampshire to begin rebuilding a global
economic order that had been reduced to rubble over the previous 30 years. The
institutions spawned by that meeting, including the International Monetary Fund (IMF),
World Bank, and eventually World Trade Organization (WTO), underpinned a rules-based
economic order that produced seven decades of growing prosperity around the world.
Over the past decade, the credibility of these multilateral institutions has been brought
into question by two failings: frequent inability to deliver on their mandate, be it stronger
growth or freer trade; and outdated governance structures that do not reflect the rise
of China or the other emerging economies. Various efforts have been made to fix these
problems, from IMF quota reform to WTO ministerial conferences, but most of these
efforts have so far failed to deliver.
As a number of developments over the past year brought into sharp focus, some
countries—including industrialized economies—are tired of waiting for existing
institutions to perform better and have started to pursue workarounds. Some of these
initiatives have been consciously designed to bolster and reenergize the multilateral
order, while others appear to have been motivated by narrower considerations. But in
either case, there is a risk that these new arrangements could damage the existing order if
not structured and governed appropriately.
Trade is one area where workarounds are becoming the norm. Frustrated by a decade
of unproductive multilateral negotiations under the Doha Development Agenda, Group
of 20 (G20) leaders meeting in Cannes in November 2011 called for “fresh, credible
approaches” to trade liberalization. This helped spur agreement at Bali in December 2013
on a new multilateral deal on trade facilitation, designed to lower border frictions to trade.
Yet within months this agreement had unraveled, as India blocked final consensus.
Meanwhile, various groups of WTO members have been pursuing regional trade
arrangements outside the Doha framework. In the Asia-Pacific region, talks are underway
along two tracks, the Trans-Pacific Partnership (TPP) and the Regional Comprehensive

Economic Partnership (RCEP). The United
States and European Union are negotiating
a Transatlantic Trade and Investment
Partnership (TTIP). Although all of these
negotiations have been slow going, there
is a reasonable prospect that one or all of
these mega-regional deals will be struck
within the next two to three years.
Along with attempts
to negotiate sectoral
agreements such
as an updated
Information
Technology
Agreement (ITA-II) and a Trade in Services
Agreement (TISA), these new plurilateral
arrangements could be seen as a threat to
the multilateral system. However, provided
they remain open to new members and build
on existing rules rather than undermining
them, these workarounds could lay out an
alternative path to a new “21st-century” set
of trade rules, after years of failed attempts to
reach the multilateral summit directly via the
Doha round.
Meanwhile, attempts to reform the original
Bretton Woods institutions to align their
governance structures with the new global
balance of economic power have made
little progress. In 2010, the United States
championed an agreement in the G20 to
reallocate “shares and chairs” in the IMF
from the advanced countries of Europe
toward large emerging markets. But these
reforms have stalled due to failure of
the U.S. Congress to ratify an IMF capital
increase that underpins the deal.
Emerging markets have clearly lost patience
with the slow progress on institutional
reform and have started to pursue their own
workarounds. Meeting with Southeast Asian
leaders in late 2013, Chinese President Xi
Jinping proposed an Asian Infrastructure
Investment Bank (AIIB) to help meet the
region’s enormous infrastructure needs,
estimated at some $1 trillion per annum
over the next decade. Then in July 2014,
Brazil, Russia, India, China, and South Africa
launched a New Development Bank—
commonly known as the “BRICS Bank”—
that would pool the group’s resources to
finance development projects in the five
countries and possibly beyond.
While many details of the AIIB and BRICS
Bank remain to be worked out, these
initiatives clearly signal an impulse among
their founders—and especially China—for
more voice in global economic governance.
The real question is whether these new
institutions will enhance the rules-based
order or detract from it. In an encouraging
sign, Beijing has gone out of its way to
clarify that the governance structure and
operational practices of the AIIB, including
environmental and other lending standards,
will be transparent and consistent with the
practices of the Asian Development Bank
and other existing multilateral institutions.
Finally, what of the G20? Established as
a leader-level forum in 2008, the G20
was effectively a reversal of an earlier
workaround, the G7, which the advanced
industrialized democracies had created in
the 1970s initially to meet their needs as
energy consumers. Expanding the table to
include major emerging countries, the G20
generated unprecedented international
economic cooperation to combat the global
emerging markets have
clearly lost patience
with the slow progress
on institutional reform.

financial crisis at its first few summits. However, the forum has suffered in recent
years from a waning sense of shared purpose and an inability to deliver visible results
on its core mission of strong growth, financial stability, and international financial
architecture reform. As host in 2014, Australia sought to restore the G20’s credibility
by seeking concrete outcomes under the themes “growth and resilience,” but 2015
host Turkey is likely to have its work cut out in sustaining the G20’s role as steering
group for the global economy.
For all the questions about the effectiveness and legitimacy of existing multilateral
institutions, and for all the recent efforts at workarounds, it is worth remembering
that the postwar rules-based economic order has produced unprecedented
prosperity over the past seven decades. It is difficult to believe that a fundamentally
different set of institutions and rules could have produced better outcomes.
The big question going forward is whether key countries have the necessary
combination of willingness and capability to reform and strengthen the existing
order. The United States, Europe, and Japan still have the will, but their capacity has
been diminished by slow growth, fiscal constraints, and political dysfunction. China,
India, and other emerging economies have growing capabilities but have not yet
consistently demonstrated a willingness to lead in this area. Thus fluidity is likely to
remain the hallmark of global economic governance for the foreseeable future. ▶

Strengthening the
Existing Order
Amy Studdart
The pages of the economic press are not the place to look if
you are feeling gloomy about the future of the liberal order:
“Japan’s corporate confidence fades,” “Germany slashes its economic
forecasts,” “Yen tensions rise,” “The euro zone: that sinking feeling
(again).” Along with the United States, Japan and Europe represent
the pillars of the Bretton Woods system, but unlike the United States,
confidence in their economic prospects is low. It is understandable
why emerging economies have been looking for alternatives: no
matter how useful the tools and rules of Bretton Woods have proven
to be, the economies that underpin it don’t look hugely appealing.
Between them, Japan and Europe have five seats at the table of
the G7. The BRICS have none. Within the International Monetary
Fund (IMF) Europe has 35.6 percent of the voting power, Japan
has 6.7 percent, and the BRICS share 11.5 percent. As seen from
China, Brazil, India and other emerging economics, these numbers
represent an outdated sense of economic power and reflect neither
the emergence of new major economies nor the impact of the
2008 financial crisis. But Japan and the European Union continue to
represent more than a third of global GDP and have historically been
responsible stakeholders. Without them, Bretton Woods is a one-legged
stool.
The predominant response of emerging countries to the shift in
economic power over the last year has been to experiment with the
establishment of new, alternative institutions, not so loosely based
on the architecture of the old: the Asian Infrastructure Investment
Bank (AIIB) and the BRICS bank mirror the functions of the Asian
Development Bank (ADB), IMF, and World Bank; and BRICS summits
are not dissimilar to the G7 format. While these institutions need not
necessarily compete with their predecessors, the tendency toward
creating alternatives, combined with protectionist instincts on trade,
marks a worrying shift away from a mutually supportive, integrated
global framework.
The similarities of these institutions to those that already exist reflect
that there is much about the current order worth preserving. It is a
without japan and
europe, bretton
woods is a one-legged
stool.

rules-based system that has tended to reward
multilateralism and international cooperation
over the pursuit of a narrow conception of
self-interest. Without it, it is unlikely that the
emerging economies would have developed
as quickly or as robustly as they have. But
that order—unadjusted to new political and
economic realities—is fraying as countries
start to feel that working around the system
will yield more benefits than working within
it. The creation of more inclusive institutions
like the G20 has not been enough to stop the
process.
If the global economic order is to persist,
Europe and Japan will need to help create an
environment in which emerging economies
are incentivized to become stakeholders
within the existing system rather than
to create a new one. This will require the
promise of economic dynamism and strong
political leadership that can negotiate
adjustments to the system that better
reflect today’s balance of power without
compromising on the need for responsibility.
While reporting on frameworks like the BRICS
has tended to focus on the geopolitical, the
world’s emerging economies are primarily
looking for new sources of growth. Over the
last few years, they have largely seen that
momentum and opportunity in one another,
and especially in China.
But while the developing world has been
seen as the driving force behind the global
economy over the last decade and a half,
growth rates are slowing. In July, the IMF’s
World Economic Outlook revised their
prediction for this year’s global growth down
by 0.3 percent, citing “a less optimistic
outlook for several emerging markets.”
China’s promised economic reforms have
progressed in fits and starts, and even the
success of that plan would see a diminished
demand for the resource exports that have
driven the growth of countries like Brazil.
The IMF predicts that the growth rate of
advanced economies will see an uptick
between 2014 (1.8 percent) and 2015 (2.4
percent). In contrast, China’s growth is
predicted to fall from 7.7 percent in 2014 to
6.8 percent in 2015.
The net result is that Japan, Europe, and, in
turn, the Bretton Woods system of global
economic governance could again start to
look more appealing. In Japan, this will rest
on proving that the initial bout of confidence
in Abenomics—Prime Minister Abe’s plan
to revitalize the Japanese economy—is not
misplaced. For the European Union, it will
require a unified economic plan and strong
enough political leadership to see that plan
through. Given the recent figures on real wage
depreciation in Japan and downward revisions
for Germany’s economic growth, this is a tall
order.
When the U.S.-Europe-Japan Trialogue
was established in 1973, the statement of
purpose said that the three sides “bear a
special responsibility for developing effective
cooperation, both in their own interests and
in those of the rest of the world. They share
a number of problems which, if not solved,
could cause difficulty for all.” There have been
few instances where that has been truer than
now. The problem with the global economic
order is not that the institutions are irrelevant,
but instead that two of the pillars that support
it look like they are crumbling. Will a new
global economic order emerge? Maybe. But if
Europe and Japan get their economies on the
right track, it is far more likely that the existing
order will simply adapt. ▶

The Evolution of the Global
Trading System
Scott Miller
Five years ago, Moises Naim observed in Foreign Policy that the need for
effective multicountry collaboration had been rising steadily since the
1990s but attempts to craft multilateral agreements had consistently failed.
“Minilateralism,” the notion of conducting international governance by assembling
the fewest parties necessary for the largest effect, was Naim’s alternative in light of
the repeated failure of “big” multiparty deals. The trading system faces just such a
challenge today.
The General Agreement on Trade and Tariffs (GATT) 1994 was one of the last “big”
multiparty deals. Twenty years on, the World Trade Organization (WTO) members

have not once reached agreement to amend
the structure on a multilateral basis. Even a
small, universally beneficial agreement on
trade facilitation—announced with great
fanfare in December 2013—unraveled this
summer when it came time to implement the
deal. And never mind the Doha Development
Agenda (DDA), launched in 2001 and
scheduled to conclude in three years, which
hangs around like a snoring party guest,
obstructing discussion on other issues as the
memory of its onetime relevance fades.
Thanks to the “win-win” character of voluntary
exchange, trade goes on and traders muddle
through. Total merchandise trade achieved a
record-high $17.3 trillion in 2012, growing at
an average annual rate of 9 percent since the
launch of the DDA in 2001. The trading system
works reasonably well, due in part to the
strong core disciplines of the
GATT, especially the principle
of nondiscrimination and the
obligation of members to act
in the “least trade restrictive”
manner. Additionally, GATT
1994’s Dispute Settlement
Understanding continues to command respect
among the parties and helps to avoid policy
drift. Traders appreciate the rules and live with
the problems and inconsistencies. In truth,
trade would flourish even in the absence of
trade rules. Consider hydrocarbons, which
amount to 18 percent of world merchandise
trade despite there being practically no agreed
disciplines. Likewise, millions of people around
the world have seen their diet improved over
the past 20 years thanks to growing trade
in agricultural products, despite persistent
protectionist measures.
the wto may be
stuck, but trade
policy has by no
means stood still.
Technology Leads the Way
The WTO may be stuck, but trade policy has
by no means stood still. Regional economic
cooperation—in the form of regional trading
arrangements (RTAs) or bilateral/regional
free trade agreements (FTAs)—has been
the political “path of least resistance.” Over
200 RTAs have been concluded and operate
in concert with treaty-based protection for
foreign investors, creating a network for
efficient commerce. The rise in RTAs occurred
in parallel to dramatic changes in information,
communication, and transportation
technology often referred to as “globalization.”
Technological progress caused barriers to
the movement of goods, services, people,
ideas, and culture to fall; lowered barriers led
to further innovation in the way products are
designed, produced, and marketed. RTAs were
a logical policy response to technological
progress.
Even as technological change widens the gap
between commercial realities and trade policy,
sophisticated RTA negotiators are discovering
solutions to new issues. Electronic
commerce is an example. There was
no commercial use of the Internet
in 1994 when the most recent
GATT agreement entered into force.
Subsequent FTAs negotiated by
the United States have steadily
improved rules and practices, and today’s
negotiators continue to refine and extend
the disciplines. In the absence of a broad
multilateral framework, RTAs have provided
a vital outlet to develop international trade
architecture (and innovations therein).
Nothing Succeeds Like Success
Why is international trade architecture
evolving “bottom-up,” through RTAs instead
of a multilateral agreement? Principally
because of a split among the big traders. Trade
policy views are divided between advanced
industrial economies that support trade
liberalization and large emerging economies
that favor a larger role for state intervention.
This split has been evident in the Doha talks
since negotiations collapsed in July 2008.
Disagreement about the liberal trade regime

will not be easily overcome, since state capitalism offers stability over
growth, while allowing governments to capture rents. This basic divide exists
not just among WTO members, but also in the G20 and other arrangements.
Over time, trade agreements that offer practical benefits tend to grow, in
both members and the range of disciplines. GATT rules solved important
problems in constructive ways, and the agreement’s membership grew
from 102 economies in 1986 to 160 today. The Trans-Pacific Partnership
(TPP) was conceived as a way to modernize and raise standards for trade
and investment among a dozen diverse Pacific Rim economies with existing
RTAs. If negotiators succeed in crafting broadly acceptable, neutral rules
for issues like digital commerce, state-owned enterprises, or localization
requirements, others outside of the talks may adopt the provisions, whether
by joining TPP or incorporating similar disciplines in another agreement. Net,
TPP could become the “next big thing” on grounds of utility. In any case, a
new trade architecture is more likely to emerge in an organic, bottom-up
fashion than as a colossal production of a big multilateral conference. ▶
Geopolitical Instability and
Energy Markets
Sarah Ladislaw
The foreign policy world is churning about the current state of global
affairs, leading some to argue that we are witnessing an era of major
realignment in global power structures. If this is true, regional powers will see
an opening to strike a new balance, seek incremental gains, settle old scores,
and improve their standing. This leaves energy sectors particularly vulnerable.
The geopolitical landscape and energy often impact one another. Geopolitical
turmoil can affect energy markets and energy trends can upset geopolitical
dynamics. In the first instance, political risk and instability affect the vitality of
local, regional, and sometimes even global energy markets by causing supply
disruptions or stymying investment. Recent examples of this include supply
outages and under investment in Libya, Nigeria, and Venezuela among others.
In the second instance, large resource discoveries can alter internal domestic
or regional tensions or perceptions of relationships. The most prominent
current example of this is the surge of shale gas and light tight oil in the United
States and the perception of geopolitical realignment and leverage this energy
market development brings. This symbiotic relationship between energy and
geopolitics has been true in many parts of the world since the beginning of the
modern energy economy.

What then might an age of geopolitical
realignment mean for energy? The
conventional wisdom thus far is that we are
living in an era of heightened above-ground risk
for energy investors. Oddly enough, however,
at least in the realm of global oil markets,
heightened geopolitical risk in some of the
world’s largest energy producers has not led
to a dramatic increase in oil prices. Part of
the rationale is that market fundamentals are
weak, there is adequate supply despite record
outages, and demand
looks soft. Moreover, even
in areas where there is
definite political strife,
major oil and gas supplies
are not necessarily at
direct risk.
energy is used as a
point of leverage, a
negotiation tool, and,
indeed, a weapon.
Lack of a near-term price response does not
necessarily mean a lack of risk or impact,
however. Energy is often used as a tool in many
geopolitical struggles. It is targeted for tactical
and strategic aims in conflict areas—recent
examples include the fights over oil fields,
pipelines, refineries, and export terminals in
places like Libya, Northern Iraq, and Nigeria.
It is used as a tool for messaging intent and
asserting authority, like the recent deployment
of a drilling rig into contested South China Sea
waters as a “mobile manifestation of Chinese
sovereignty.” Energy is used as a point of
leverage, a negotiation tool, and, indeed, a
weapon. This has only become more pervasive
in the age of economic statecraft. No longer is
“energy leverage” only about Russia seeking to
constrain European foreign and domestic policy
through the use of its leverage as
natural gas supplier, but it is also
about a coalition of governments
using a variety of sanctions to
restrict investment in future oil
production in Russia as part of a
broader strategy to bring about a
course correction to Russia’s current posture
toward Ukraine.
While none of these discrete activities are
particularly new, the culmination of them
makes so-called “above-ground issues” matter
more to the energy sector than ever before. An
age of realignment and heightened geopolitical

tension when the energy sector is already experiencing disruptive change on a variety of levels—
from unconventional oil and gas development, the declining cost of solar, decentralization and
digitization of energy systems, slow and uneven growth, and rising investment costs—could dampen
or accelerate investments by location. During periods like this, some countries will seek to shore up
energy trade flows through the erection of new trade deals or by making infrastructure investments
that tie countries together. Other countries and companies will start to question the costs and benefits
of being tied to the international financial system and start to explore the feasibility and limitations of
alternative systems and arrangements to underpin their energy investments. And nearly everyone, from
private companies to state-owned enterprises and sovereign governments will reevaluate the political
risk exposure in their portfolio and their approach to managing resource development. 2015 promises
to be both an uncertain and opportunistic time. ▶
Divergent Perspectives of the
Democratic BRICS
A Conversation with Carl Meacham, Jennifer G. Cooke,
and Richard M. Rossow moderated by Amy Studdart
The BRICS grouping has emerged over the last year as one of the most significant gatherings of
economic power in the world. No longer just a talk shop, the most recent summit in Brazil saw the
creation of the BRICS Bank, the first concrete institution formalizing future cooperation. The success
of the grouping has been surprising. The BRICS members have fundamentally different economies,
politics, and, presumably, reasons for wanting to be associated with the BRICS framework. Arguably,
the three democracies in the group--Brazil, India, and South Africa--share more with the West in terms
of political systems and values than they do with China and Russia. In the interview that follows, CSIS
experts tease out the reasons why the BRICS framework has been so successful in those three countries.
Carl Meacham, director of the Americas program talks about Brazil’s approach; Jennifer Cooke,
director of the Africa program, addresses South Africa’s role; and Rick Rossow, director of the India
program, explains what the BRICS has meant to India in the past, and how that might change under a
new government.
Amy Studdart: What is the significance of being a part of the BRICS to Brazil, India, and South Africa?
Carl Meacham: In many ways what the BRICS countries share is their individual incomparability. Within
its own regional or subregional context, each BRICS member clearly stands out. But unlike its fellow
BRICS, Brazil is not an undisputed leader in its region—a region it shares with the United States. But it is
the largest, most promising, and fastest-growing developing country in the Western Hemisphere, and
that isn’t to be taken lightly. In a region accustomed to U.S. leadership and dominance, Brazil is a rising
star—and one that increasingly demands to be taken seriously on its own terms.
Richard M. Rossow: For India, creating the BRICS as an alternative to the Bretton Woods institutions
made sense when the Congress Party was leading the country. Congress’ commitment to
“nonalignment,” while perhaps a bit weaker than when Jawaharlal Nehru was prime minister, remains

an overriding principle of the Party’s foreign policy.
They prefer to spread their chips across the table,
instead of placing heavy bets on any individual
partnerships. Supporting alternative development
institutions made sense.
So far the Modi government’s foreign policy is a mix of
shoring up relations with immediate neighbors, and
courting larger countries to make critical investments
into India. The support for the creation of the BRICS
institutions in July 2014 does not appear aligned with
the primary objectives of the Modi government’s
overall foreign policy. It
remains to be seen if the
July summit was merely
following through prior
commitments while the
government carved out its
own foreign policy goals, or
if support for BRICS remains
strong. Prime Minister Modi’s
own statements on the need
for BRICS refer to weakness in major economies, the
need for people-to-people exchanges, and a concern
about the impact of developed nation’s monetary
policy on the Indian market.
bric membership is seen less
as a vehicle to advance a
global strategic vision than
as a means to advancing
national commercial and
economic interests.
Jennifer G. Cooke: South Africa is an odd choice
for inclusion in the BRICS grouping. The country’s
infrastructure and financial service base are relatively
sophisticated compared to much of Africa, but with
a GDP of just $351 billion in 2013 and a population
of 50 million, it is not exactly poised to become a
driver of global economic growth. Nigeria, with a
bigger and faster-growing economy and triple South
Africa’s population would arguably have been a
better African candidate. But being the grouping’s
sole African member may give South Africa a
boost in global prestige, burnish its credential as a
representative of “African” interests in global forums
(a notion that other African countries might dispute),
and perhaps most important, afford it greater and
more frequent access to investment and borrowing
opportunities with Chinese and Indian counterparts.
It also fits with a popular ideological rhetoric within
segments of the ruling African National Congress
of a South Africa that stands up to the overweening
influence of Western powers.
Studdart: How do India, Brazil, and South Africa
view their relationship with China within the BRICS
framework?
Rossow: It has been surprising to see the Narendra
Modi-led BJP government maintain the nation’s
support for the BRICS institutions. The BJP [Bharatiya
Janata Party) leans more toward a “realpolitik”
foreign policy, and views China as the country’s
long-term strategic and economic competitor. While
aligning with China on BRICS activities provides
some important positive connectivity, it is difficult
to envision India playing
anything but a junior role in
this “partnership,” which will
create pressure in New Delhi
to withdraw.
Meacham: China is, at
this point, pivotal to the
Brazilian economy—and it
is this economic closeness
that forms the lion’s share of the Brazil-China
relationship. China is, without a doubt, a strategic
partner for Brazil in economic terms, though
the two countries differ on many fundamental
issues. But those issues aside, China is Brazil’s
largest trading partner. Trade flows have grown
over tenfold since 2003, making the two the
biggest partners within the BRICS. Brazil is among
China’s largest destinations for foreign direct
investment, with Chinese cash fueling construction
and development projects across Brazil. So, in
short, Brazil’s relationship with China—both
within the BRICS and outside that framework—is
fundamentally an economic one focused on the
two countries’ overlapping interests and growth
trajectories.
Cooke: Views within South Africa about its
burgeoning relationship with China are mixed.
The South African leadership has been very open
to partnership with the Chinese, and President
Zuma has assiduously cultivated the diplomatic
and commercial relationship, which plays well
within nationalist, far-left factions of the ANC
[African National Congress]. But the whole-hearted
embrace of China has not been without controversy,

with some critics arguing that in its rush to find
alternatives to traditional Western partners, South
Africa risks becoming overly beholden to a new great
power. The Dalai Lama has been refused an entry
visa into South Africa three times in the last three
years (once after receiving a personal invitation
to celebrate the birthday of anti-apartheid hero
Bishop Desmond Tutu), leading some critics to paint
Zuma as a new lackey of the Chinese. The import of
inexpensive Chinese goods, particularly textiles and
clothing, has hit local manufacturers and the textile
industry hard. And President Zuma himself voiced
concern over the lopsided nature of the relationship,
calling the supply of raw materials to China without
benefit of local value addition unsustainable.
Studdart: Each of the BRICS countries is also a
member of the G20. What do South Africa, India, and
Brazil hope to achieve through the BRICS framework
that they cannot through the G20?
Cooke: Aside from an occasional rhetorical flourish,
South Africa under President Jacob Zuma has not
shown much real interest in trying to reshape the
global rules through the G20 or any other global
forum. For the most part, BRIC membership is seen
less as a vehicle to advance a global strategic vision
than as a means to advancing South Africa’s national
commercial and economic interests. Membership in
the smaller group gives South Africa greater global
cachet, and a more exclusive relationship with China.
In time, however, and with more focused intention,
South African leadership may calculate that it will
have greater influence in a smaller, South-South
grouping than the more diffuse G20, and that the
grouping could potentially serve as a vanguard for a
broader constituency for global governance reform.
Rossow: India shows habitual concern about the
development of global economic pacts and standards
where it does not exhibit sufficient influence alone. The
World Trade Organization is the most obvious example,
but India has voiced concerns about developments
in other areas such as Internet governance, global
taxation regulation, patents, and more.
Meacham: In many ways, the flexible BRICS format is
the best-case scenario for Brazilian engagement in the
world, given the country’s preference for nonbinding
interactions on the global stage. The summit-style
arrangement and its inherent malleability are what
make the forum so appealing to Brazil. Through the
summits, Brazil is empowered to identify those areas
in which cooperation would best suit its own needs.
In many ways, Brazil’s engagement with the BRICS
reflects Brazil’s increasing tendency to look to the
global economy to address its own development
goals. The BRICS framework complements Brazil’s
more established partnerships in innovation and
research, providing a low-risk but potentially high-reward
alternative to the existing order.
The BRICS summit in Brazil this summer demonstrated
an as-yet unseen coordination among the member
states for the future of the alliance—a future that
probably could extend beyond complementing the
present world order. But it would likely be difficult to
align the objectives of the five members on a broad
range of economic, geopolitical, and security issues,
given their asymmetrical interests. ▶

PART SIX
Will Ebola Evolve from a Health Crisis to an
Economic and Governance Crisis?

The Trajectory of Ebola and
our Response
J. Stephen Morrison
Ebola in West Africa is a modern plague,
unlike anything we have seen. In less than
a year since the epidemic reportedly began,
President Obama, the UN Security Council, World
Health Organization (WHO) Director General
Margaret Chan, and others have declared the
epidemic a grave threat to security in Africa and
beyond—including the United States. By late
October, there were 10,000 confirmed cases,
and over 5,000 deaths in Guinea, Liberia, and
Sierra Leone. (The largest previous outbreak, in
Gulu, northern Uganda, in 2000, was 424 cases.)
These numbers, thought to represent as little
as a quarter of the true scale, are expanding
exponentially, doubling every 20 days. By early
December, the epidemic is expected to reach
10,000 new cases per week.
The precise trajectory in 2015 is difficult to
predict, as West Africa heads into the unknown.
Under a worst-case scenario laid out by the U.S.
Centers for Disease Control and Prevention
(CDC), the total number of cases in Liberia
and Sierra Leone could reach 1.4 million in
January 2015. Under less extreme projections
that assume quicker international progress in
bringing the epidemic under control, the number
might be half, a quarter, or less, but none of
these options is comforting. Whichever scenario
materializes, it is safe to expect that the epidemic
will march forward at a fierce pace into 2015.
That will happen in parallel with an international
mobilization, led by the United States, the
United Kingdom, and the UN Mission for Ebola
Emergency Response (UNMEER), that races
against time—incrementally—to put in place
structures and programs that, it is hoped, will
cut the chain of transmission across countless
communities. The backdrop will feature steady
economic regression, worsening food insecurity,
and health systems in collapse that leave people
without access to safe delivery, malaria treatment
and control programs, and care for diabetes,
along with other critical services.
For U.S. policymakers, Ebola is a tricky two-front
war, fought both at home and abroad. It is now
the task before Ron Klain, the newly appointed
White House Ebola coordinator (czar) to figure
out the way forward.
In an unprecedented military-led international
health intervention, President Obama pledged in
September the deployment of U.S. forces (now
upwards of 4,000) and $1 billion over the first
six months. ($750 million in military assistance
has been committed, with the option of another
$250 million. U.S. civilian emergency assistance
exceeds $350 million.)
At home, all visitors arriving from Sierra Leone,
Liberia, and Guinea are now routed through five
hub airports where they are subject to advanced
screenings. The U.S. military has assembled a
30-person emergency medical team and CDC
has begun to deploy “swat teams,” each to

assist hospitals across the country that find themselves handling Ebola cases, before those cases are
transferred to one of four biocontainment facilities. CDC protocols for the handling of Ebola cases have
been revised and strengthened, and training of medical personnel has intensified across the nation.
Ebola’s two fronts are interdependent and at times in considerable tension with one another.
It is not possible to reduce the threat of importation of Ebola into the United States if the source—
burgeoning Ebola in West Africa—is not quickly brought under control, if not extinguished
altogether. Yet how, when, and if control of Ebola in West Africa is to be achieved remain highly
uncertain propositions. And the longer these uncertainties persist, the more difficult it will become
to sustain essential political and financial commitments by the White House and Congress to stay
the course in West Africa, and the more difficult it will become to fend off an increasingly frightened
population in the United States that demands greater unilateral protections at our points of entry.
These crosscutting pressures will only intensify. As the initial first six months draws to a close in the
first quarter of 2015, the Obama administration, Congress, the media, and the American people will
debate difficult, messy choices.
At home on American soil, the overriding goal is to protect Americans, minimize the importation of
cases, and when cases do appear, ensure U.S. health institutions are equipped to contain outbreaks.
It is fundamentally a battle to manage fear, preserve confidence, strengthen capacities to control
infection and trace contacts, and thereby minimize the threat that the disease poses to individuals, to
front-line institutions like Texas Health Presbyterian Hospital, and to the credibility of the presidency
itself (including the reform of U.S. health system under the Affordable Care Act) and key public
health agencies like the CDC. As we discovered following the Liberian Thomas Eric Duncan’s arrival in
Dallas in September, and the subsequent secondary infections of the two nurses, a very few bungled
cases can swiftly ignite public panic, recriminations, and a political emergency that reaches into the
White House. At the same time these incidents raise pressures for a travel ban and the tightening of
visas, steps that reach beyond enhanced thermal screening and interviews at major U.S. airport hubs. If
harsh exclusionary measures are imposed, however, these could weaken commercial air links and the

flow of essential health workers, emergency
personnel, and commodities. That in turn
will worsen pressures upon the U.S. military
to fill the resulting gaps and aggravate the
perception within West Africa that medieval
quarantine measures are being imposed.
In Liberia, the overriding U.S. goal is to cut
the chain of transmission by effectively
isolating those who have been exposed
and infected from all others. That is a tall
order that requires the rapid entry of a
flood of personnel and goods. The vital
U.S. military contributions in Liberia are to
create a command-and-control capacity;
erect an air bridge from Dakar, Senegal;
construct a health worker training center,
a 25-bed facility for care of health workers,
and 17 treatment facilities with 1,700
beds; and deliver mobile laboratories,
protective gear for health workers, and
thousands of home care kits. The operational
delivery of emergency health services is
the responsibility of some combination
of nongovernmental groups and civilian
contractors, though how exactly that
interface is to be managed has yet to be
sorted out.
There are not yet
answers to several
other fundamental
questions. Across
the three countries,
upwards of 20,000
trained national
and international
staff are required, at
least half in Liberia,
yet recruitment
continues to be seriously impeded by
the highly lethal threat of Ebola itself, a
worsening climate of instability and chaos,
and uncertainty about whether international
staff will be guaranteed adequate health care,
including medevac arrangements to Europe
or North America. For the United States and
others to be confident that both the threat
of Ebola across the region will be addressed
effectively, and that a future handoff to a
multilateral effort will be possible, it is critical
that other major donors come soon to the
table with major commitments and begin
to deliver quickly, especially in neighboring
Sierra Leone and Guinea. Filling out the
donor ranks and spurring quick action,
however, remain problematic. There has
been recent progress. The United Kingdom
has committed 750 troops and 300 million
pounds; the World Bank and IMF over $400
million in emergency facilities; and the
EU 130 million euros. The Chinese have
pledged $200 million, including 200 medical
personnel, and the Cubans over 400 doctors
and other skilled medical staff. Interestingly,
Mark Zuckerberg, Bill Gates, and Paul Allen
have stepped forward with, respectively, $25,
$50, and $126 million in quick-disbursing
assistance to fill critical gaps. But despite
these gains, the shortfall in pledges for
UNMEER’s $988 million appeal is over $630
million. Given the uncertainty, fear, and risk,
many donors are hanging back.
The stability of Liberia, Sierra Leone, and
Guinea remains an open question: the danger
is real that current governing structures, being
weak, corrupt, and widely
held in popular contempt,
could dissolve into violent
chaos. There has been
discussion of the possibility
of the Ebola virus mutating
to become airborne, and of
terrorists using Ebola as a
bioweapon: both possibilities
are remote but do incite
fear in the blogosphere
far more plausible is the
risk that ebola will become
endemic to the large
coastal cities where it is
now rampant, and that
it will spread to other
neighboring states.
and elsewhere. Far more plausible is the risk
that Ebola will become endemic to the large
coastal cities where it is now rampant, and
that it will spread to other neighboring states.
Most vulnerable are Ivory Coast, Ghana, and
Mali. While Senegal and Nigeria have scored
early successes in managing Ebola cases,
each remains vulnerable.

There is awareness of the acute need to accelerate the development of new
technology tools—vaccines, therapies, rapid tests—and much action is under way in
each area. Realistically, progress will be slow. There is reason to be hopeful, but new
solutions are not expected to become widely available for some time, and are not
expected to shape outcomes in this current urgent phase.
Debate over post–Ebola reconstruction has not yet begun, but will become increasingly
important. The same is true for what the international community should do to repair a
broken WHO that failed at critical moments in 2014 to intervene and sound the alarm,
despite prodding from Doctors Without Borders (MSF), the true heroes of this tragic
saga, and other witnesses.
In closing, U.S. leadership in response to the Ebola crisis has been bold, ambitious, risky,
and quickly evolving. It rests on unprecedented military commitments to answer a
dangerous modern plague. It tests our nation’s resolve on two complex fronts that will
remain in tension with one another. It requires navigating profound uncertainties. ▶
The Economic Impact of the
Ebola Outbreak
Daniel F. Runde and Conor M. Savoy
Ebola is quickly moving from a regional public health crisis to a regional
economic and political crisis that threatens to overwhelm the fragile
development gains made by Sierra Leone and Liberia over the past decade.
Beyond the immediate impact the disease is having on the public he alth systems of
the three countries affected, Ebola is now having a significant economic impact. At
the moment this is confined primarily to the tri-country region of Liberia, Sierra Leone,
and Guinea, but as borders remain closed, there is a growing possibility that it could
threaten the broader West African region’s economic well-being.
The World Bank estimates that in the short term, meaning for the remainder of the
year, Guinea will see a reduction in GDP of 2.1 percent, Liberia will see a reduction of
3.4 percent, and Sierra Leone’s GDP will be reduced by 3.3 percent. Moreover, the fiscal
impact for each country is significant, with Liberia seeing a loss of $93 million, Sie rra
Leone $79 million, and Guinea $120 million.
Each of these numbers is significant on its own. What makes the numbers truly startling
is that these states are some of the poorest on the poorest continent in the world.
Liberia and Sierra Leone are both slowly recovering from disastrous civil wars that were
only resolved in the early 2000s. Since then, both have seen significant economic gains.

This has included high GDP growth rates that have helped to generate additional
revenues to help fund critical investments. In addition, both have attracted
impressive amounts of foreign direct investment (FDI), with Liberia alone seeing $16
billion in FDI since the end of the civil war. These trends are now in danger of being
reversed.
On a country level, Ebola is causing commerce to grind to halt. Some of the hardest-hit
areas in the tri-country area are the “bread basket” regions and this, combined
with the closing of national borders, is causing food prices to spike. This has already
caused citizens to horde food, but the worst may be to come if prices continue to
rise and may trigger civilian unrest. Liberia’s economy, for example, is dominated by
mining, agriculture, and services, all of which are coming under severe strain. China
Union, one of two iron ore producers in Liberia, suspended operations at its facilities
in Liberia in August. ArcelorMittal, the other iron ore producer, is suspending its
expansion plans. On the agricultural side, palm oil and rubber producers are reducing
production, which has significant implications for export earners.
International financial institutions such as the International
Monetary Fund, World Bank, and African Development Bank
have responded with significant support packages for the three
countries. In addition, several bilateral donors, including the
United States, have pledged financial and material support to
help the countries control and stabilize the outbreak. These all
represent good short-term support that should help Liberia,
Guinea, and Sierra Leone bare the initial costs of this crisis.
To be sure, the international community needs to focus on
stopping the spread of Ebola, but planning should also begin for
helping these countries to recover rapidly once the disease is
under control and the crisis passes.
What seems clear from the cases of Liberia and Sierra Leone is how quickly
the institutions of state are being overwhelmed by Ebola. The most obvious
manifestation of this is the local public health ser vices, which were weak prior
to the Ebola outbreak. The danger now is that as the outbreak continues, other
government institutions will begin to be affected by the disease. If this happens,
then recovery from this crisis will be far more difficult.
The Ebola crisis in West Africa is, unfortunately, a stark reminder that for all of the
“Africa rising” stories there are significant challenges remaining at the country
level. Liberia and Sierra Leone have been two countries that many have sought to
highlight as leading performers on the continent, in spite of their ongoing fragility.
And, yet, it appears that these gains were relatively narrow and, as is so often the
case, a major crisis is exposing a lack of resilience in existing institutions. The
challenge for the governments of these three countries and international donors is
to concentrate on building resilient institutional capacity that will help to guarantee
that future economic gains are not lost to disease or other crises. ▶
the ebola crisis in west
africa is, unfortunately,
a stark reminder that
for all of the “africa
rising” stories there are
significant challenges
remaining at the
country level.

contributors
JON B. ALTERMAN is a senior vice president, holds the
Zbigniew Brzezinski Chair in Global Security and Geostrategy,
and is director of the Middle East Program at CSIS. Prior
to joining CSIS in 2002, he served as a member of the
Policy Planning Staff at the U.S. Department of State and
as a special assistant to the assistant secretary of state for
Near Eastern affairs. Before entering government, he was a
scholar at the U.S. Institute of Peace and at the Washington
Institute for Near East Policy.
ALISON BOURS is creative director at CSIS. She designs and
manages the production of CSIS publications, manages
the CSIS brand, and develops graphics for all external
communications. She previously served as deputy director
of external relations, program manager and marketing
associate, program assistant, and intern in the Office of
External Relations. She is a certified graphic and type
designer and also holds a B.A. in political science from the
University of Wisconsin at Madison.
SAMUEL BRANNEN is a senior fellow in the International
Security Program at CSIS, where his research focuses on U.S.
defense and national security strategy and policy, unmanned
systems policy, and Turkey. Prior to rejoining CSIS in May
2013, Brannen served at the Pentagon as special assistant
to the principal deputy under secretary of defense for policy.
Earlier, he served as country director for Turkey, Cyprus, and
Malta in the Office of Secretary of Defense, and as special
assistant to the deputy under secretary of defense for
strategy, plans, and forces.
ERNEST Z. BOWER is a senior adviser, Sumitro Chair for
Southeast Asia Studies, and codirector of the Pacific Partners
Initiative at CSIS. He is recognized as a leading expert on
Southeast Asia. He is president and CEO of BowerGroupAsia,
a business advisory firm he created and built. Before forming
his company, he served for a decade as president of the
US-ASEAN Business Council, the top private business group
composed of America’s leading companies in Southeast Asia.
VICTOR CHA is a senior adviser and Korea Chair at CSIS and
is a professor of government and director for Asian Studies
at Georgetown University. From 2004 to 2007, he was
director for Asian affairs at the White House, where he
was responsible for coordinating U.S. policy for Japan, the
two Koreas, Australia, New Zealand, and the Pacific Island
nations. He also served as U.S. deputy head of delegation to
the Six-Party Talks and has acted as a senior consultant on
East Asian security issues for different branches of the U.S.
government.
EDWARD C. CHOW, senior fellow in the Energy and National
Security Program at CSIS, is an international energy expert
with more than 30 years of oil industry experience. He has
worked in Asia, the Middle East, Africa, South America,
Europe, and the former Soviet Union, and he has advised
U.S. and foreign governments, international oil companies,
multinational corporations, multilateral agencies, and
international financial institutions.
CRAIG COHEN is executive vice president at CSIS. In
this role, he serves as deputy to the president and CEO,
responsible for overseeing and helping to achieve
all aspects of the Center’s strategic, programmatic,
operational, outreach, fundraising, and financial goals,
including recruitment of new program directors to CSIS.
Previously, Mr. Cohen served as vice president for research
and programs, deputy chief of staff, and fellow in the
International Security Program. He has directed research
on foreign assessments of U.S. power for the National
Intelligence Council, codirected CSIS’s Commission on
Smart Power, and has authored reports on Pakistan, foreign
assistance, and post-conflict reconstruction.
HEATHER A. CONLEY is senior vice president for Europe,
Eurasia, and the Arctic and director of the Europe Program
at CSIS. Previously she served as deputy assistant secretary
of state in the Bureau for European and Eurasian Affairs in
the Department of State, where she was responsible for
U.S. bilateral relations with Northern and Central Europe.
Additionally, she served as the executive director to the
chairman of the American National Red Cross and was
a senior associate with the international consulting firm
Armitage Associates.

JENNIFER G. COOKE is director of the Africa Program at
CSIS. She works on a range of U.S.-Africa policy issues,
including security, health, conflict, and democratization.
She has written numerous reports, articles, and
commentaries for U.S. and international publications.
Previously, she worked for the House Foreign Affairs
Subcommittee on Africa, as well as for the National
Academy of Sciences in its Office of News and Public
Information and its Committee on Human Rights.
ZACK COOPER is a fellow with the Japan Chair at CSIS, where
he focuses on Asian security issues. Prior to joining CSIS,
Mr. Cooper worked as a research fellow at the Center for
Strategic and Budgetary Assessments. He previously served
on the White House staff as assistant to the deputy national
security adviser for combating terrorism. He also worked
as a civil servant in the Pentagon, first as a foreign affairs
specialist and then as a special assistant to the principal
deputy undersecretary of defense for policy.
ANTHONY H. CORDESMAN holds the Arleigh A. Burke Chair
in Strategy at CSIS. He is a recipient of the Department of
Defense Distinguished Service Medal and has held positions
in the Departments of Defense, Energy, and State, and
at NATO.
JOSIANE GABEL is vice president for programs and
institutional partnerships at CSIS. In this role she supports
a wide range of CSIS programs and special initiatives,
develops and oversees CSIS executive education, and
supports partnerships with other institutions. She serves
as the executive director of the Brzezinski Institute on
Geostrategy. She is also responsible for running CSIS’s
professional development, leadership, and ethics training
as director of the Abshire-Inamori Leadership Academy.
MATTHEW GOODMAN holds the William E. Simon Chair in
Political Economy at CSIS. Previously, he served as director
for international economics on the National Security Council
staff, working on the G-20, APEC, and other forums. Before
joining the White House, Goodman was senior adviser to the
undersecretary for economic affairs at the U.S. Department
of State. He has also worked at Albright Stonebridge Group,
Goldman Sachs, and the U.S. Treasury Department.
MICHAEL J. GREEN is senior vice president for Asia and
Japan Chair at CSIS and an associate professor at the
Edmund A. Walsh School of Foreign Service at Georgetown
University. His research and writing focuses on Asian
regional architecture, Japanese politics, U.S. foreign policy
history, the Korean peninsula, Tibet, Burma, and U.S.-India
relations. He joined the National Security Council in 2001
and from January 2004 to December 2005 was special
assistant to the president for national security affairs and
senior director for Asian affairs.
JOHN J. HAMRE is president and CEO, Pritzker Chair, and
director of the Brzezinski Institute at CSIS. Before joining
CSIS, he served as the 26th U.S. deputy secretary of
defense. Before joining CSIS, he served as deputy secretary
of defense and undersecretary of defense (comptroller). In
2007, Secretary of Defense Robert Gates appointed him to
serve as chairman of the Defense Policy Board.
KATHLEEN H. HICKS is a senior vice president, the Henry A.
Kissinger chair, and director of the International Security
Program at CSIS. Prior to joining CSIS, she ser ved as
principal deputy under secretary of defense for policy and
deputy under secretary of defense for strategy, plans, and
forces. She focuses on U.S. national security and foreign
policy, geopolitical trends, and defense matters.
CHRISTOHPER K. JOHNSON is a senior adviser and holds the
Freeman Chair in China Studies at CSIS. An accomplished
Asian affairs specialist, he spent nearly two decades serving
in the U.S. government’s intelligence and foreign affairs
communities and has extensive experience analyzing and
working in Asia on a diverse set of country-specific and
transnational issues.
STEPHANIE SANOK KOSTRO is acting director of the CSIS
Homeland Security and Counterterrorism Program and a
senior fellow with the CSIS International Security Program,
where she focuses on a range of issues affecting defense,
foreign affairs, and development. Prior to joining CSIS,
she served at the U.S. embassy in Baghdad, where she
developed policy options for the U.S. government’s efforts
to support a sovereign, stable, and self-reliant Iraq.

ANDREW C. KUCHINS is a senior fellow and director of the
Russia and Eurasia Program at CSIS. He is an internationally
known expert on Russian foreign and domestic policies. He
publishes widely and is frequently called on by business,
government, media, and academic leaders for comment and
consulting on Russian and Eurasian affairs.
SARAH O. LADISLAW is a senior fellow and director of the
CSIS Energy and National Security Program, where she
concentrates on the geopolitics of energy, energy security,
energy technology, and climate change. She has authored
papers on U.S. energy policy, global and regional climate
policy, clean energy technology, as well as European and
Chinese energy issues. Ms. Ladislaw teaches a graduate-level
course on energy security at the George Washington
University.
MAREN LEED is senior adviser with the Harold Brown Chair
in Defense Policy Studies at CSIS. From 2011 to 2012, she
served as senior adviser to the chief of staff of the U.S. Army.
From 2009 to 2011, she was a senior fellow and director of
the New Defense Approaches Project at CSIS, where she led
projects on topics as diverse as military personnel costs, the
future of ground forces, amphibious capabilities, and service
cultures. She previously served as an analyst at the RAND
Corporation.
JAMES A. LEWIS is a senior fellow and director of the Strategic
Technologies Program at CSIS. His research involves innovation
and economic change, Internet policy and cyber security, space
programs, and intelligence reform. Previously, he was a member
of the U.S. Foreign Service and Senior Executive Service. The
policies he helped develop include counterinsurgency in Asia
and Central America, military basing in Asia, conventional arms
transfers, commercial remote sensing, high-tech exports to
China, and Internet security.
HAIM MALKA is deputy director and senior fellow in the
Middle East Program at CSIS. His principal areas of research
include violent non-state actors, North Africa, political Islam,
and the Arab-Israeli conflict. Before joining CSIS in 2005, he
was a research analyst at the Saban Center for Middle East
Policy at the Brookings Institution, where he concentrated
on Israeli-Palestinian issues and U.S. Middle East foreign
policy. Malka spent six years living in Jerusalem, where he
worked as a television news producer.
JEFFREY MANKOFF is deputy director and fellow with the
CSIS Russia and Eurasia Program. Before joining CSIS, he
served as an adviser on U.S.-Russia relations at the U.S.
Department of State as a Council on Foreign Relations
International Affairs Fellow. From 2008 to 2010, he was
associate director of International Security Studies at Yale
University and an adjunct fellow at the Council on Foreign
Relations.
CARL MEACHAM is director of the CSIS Americas Program.
He joined CSIS from the Senate Foreign Relations
Committee, where he served on the professional staff for
Senator Richard Lugar (R-IN) for over a decade. He served
as the senior adviser for Latin America and the Caribbean
on the committee, the most senior Republican Senate
staff position for this region. In that capacity, he travelled
extensively to the region to work with foreign governments,
private-sector organizations, and civil society groups.
SARAH E. MENDELSON is a senior adviser and director of
the Human Rights Initiative at CSIS. From May 2010 to
May 2014, she served as deputy assistant administrator,
responsible for democracy, human rights, and governance,
in the Bureau for Democracy, Conflict and Humanitarian
Assistance at the U.S. Agency for International Development.
ANDREW A. MICHTA is an adjunct fellow with the CSIS Europe
Program and the M.W. Buckman Distinguished Professor
of International Studies at Rhodes College. His areas of
expertise are international security, NATO, and European
politics and security, with a special focus on Central Europe
and the Baltic states.
SCOTT MILLER is a senior adviser and holds the William M.
Scholl Chair in International Business at CSIS. From 1997
to 2012, Mr. Miller was director for global trade policy at
Procter & Gamble, a leading consumer products company.
In that position, he was responsible for the full range of
international trade, investment, and business facilitation
issues for the company.
J. STEPHEN MORRISON is senior vice president and
director of the Global Health Policy Center at CSIS. He
publishes widely, has led several high-level task forces and
commissions, and is a frequent commentator on U.S. foreign
policy, global health, Africa, and foreign assistance. He

served as committee staff in the House of Representatives
and has been an adjunct professor at the Johns Hopkins
School of Advanced International Studies.
CLARK A. MURDOCK is a senior adviser for the U.S. Defense
and National Security Group at CSIS and director of the
Project on Nuclear Issues. His research focuses on defense
and national security issues, including strategic planning,
defense policy and governance, and U.S. nuclear weapons
strategy and policy. He directed the four-phase study on
Defense Department reform, “Beyond Goldwater-Nichols,”
which released multiple reports from 2004 through 2008.
RICHARD M. ROSSOW is a senior fellow and holds the
Wadhwani Chair in U.S.-India Policy Studies at CSIS. In this
role he helps frame and shape policies to promote greater
business and economic engagement between the two
countries. He joined CSIS in 2014, having spent the last 16
years working in a variety of capacities to strengthen the
partnership between the United States and India.
DANIEL F. RUNDE is director of the Project on Prosperity
and Development, holds the William A. Schreyer Chair
in Global Analysis, and codirects the Project on U.S.
Leadership in Development at CSIS. He focuses on
private enterprise development, the role of private
actors in development, and the role of “emerging
donors.” Previously, he headed the Foundations Unit for
the Department of Partnerships and Advisory Service
Operations at the International Finance Corporation and
was director of the Office of Global Development Alliances
at the U.S. Agency for International Development.
THOMAS SANDERSON is codirector and senior fellow in
the CSIS Transnational Threats Project, where he works
on terrorism, transnational crime, global trends, Central
Asia, and intelligence issues. With fieldwork across nearly
60 countries, he engages all manner of sources including
extremists, insurgents, foreign intelligence officials,
nongovernmental organizations, clergy, and academics.
He has authored or coauthored 13 CSIS reports, as well as
opinion pieces and articles in major newspapers.
CONOR M. SAVOY is deputy director and fellow with the
Project on U.S. Leadership in Development at CSIS, where
he focuses on implementing and guiding the project’s
research agenda. He has contributed to several CSIS reports
and commentaries. Prior to this, he worked in energy
consulting and as a research associate at the Council on
Foreign Relations in Washington, D.C.
NICHOLAS SZECHENYI is a senior fellow and deputy
director of the Japan Chair at CSIS. His research focuses
on U.S.-Japan and U.S.–East Asia relations. In 2009, he was
selected as an inaugural fellow of the U.S.-Japan Network
for the Future program, established by the Maureen and
Mike Mansfield Foundation. Prior to joining CSIS in 2005, he
was a news producer for Fuji Television in Washington, D.C.,
where he covered U.S. policy in Asia and domestic politics.
SHARON SQUASSONI is director and senior fellow with the
Proliferation Prevention Program at CSIS. She joined the
Center from the Carnegie Endowment for International
Peace, where she was a senior associate in the Nuclear
Nonproliferation Program. From 2002 to 2007, Ms.
Squassoni advised Congress as a senior specialist in
weapons of mass destruction at the Congressional
Research Service, Library of Congress.
AMY STUDDART is deputy director and fellow of the William
E. Simon Chair in Political Economy at CSIS, where she
explores current issues in international economic policy,
with a focus on the Asia-Pacific region. Prior to joining CSIS
in 2014, Ms. Studdart worked in Brussels at the German
Marshall Fund of the United States and, before that, at the
Carnegie Endowment for International Peace.
JUAN C. ZARATE is a senior adviser to the Transnational
Threats Project and the Homeland Security and
Counterterrorism Program at CSIS. He is the Chairman and
Co-Founder of the Financial Integrity Network, and is also
senior national security consultant and analyst for CBS
News, as well as a visiting lecturer of law at Harvard Law
School. He is a former deputy assistant to the president
and deputy national security adviser and former assistant
secretary of the Treasury. He sits on the Board of Advisors
of the National Counterterrorism Center and on the Board
of Directors of the Vatican's Financial Information Authority.
He is the author of the new book, Treasury's War: The
Unleashing of a New Era of Financial Warfare.

1616 rhode island avenue nw
washington, dc 20036
tel. (202) 887.0200
fax (202) 775.3199

Global forecast 2015

More Related Content

What's hot (18)

Similar to Global forecast 2015 (20)

More from Ruslan Sivoplyas (20)

Recently uploaded (20)

Global forecast 2015