Russia, Israel, Iran, and the Dark Reality of Diplomacy

All zero-sum international negotiations are shaped by the size of the guns on the table. This is the dark reality of diplomacy: when one is trying to convince someone to give up a critical behavior (stop a nuclear weapons program, stop invading Ukraine), or start a new one (less common on the modern world order), the key unspoken factor underlying the negotiations is the potential use of force.

The United States and other Western powers are in negotiations that they are struggling with:

• Russia continues to hold Crimea, and isn't planning on giving it back
• Iran is developing advanced nuclear capability and years of negotiations have brought a maybe-acceptable proposal (I still haven't done enough work here to analyze it)
• Israel keeps building settlements in the West Bank

At this point, it's unlikely that the US is going to get what it wants in any of these negotiations, due to one simple fact: it lacks the will to exert its power, and therefore has no bargaining power.

In essence, when the US is trying to compel behavioral change, the other partner asks, "what are the consequences if I refuse?" Currently, the answer is "nothing," so there is no reason to agree unless the carrots are really, really big. And the US currently has no stick available, as it is unwilling to go to interstate war. And in this, it brings no guns to the table: they're all left at home.

In Iran, Professor Muravchik suggests that the Iranians are so ideological and bent on empire that sanctions have little impact, and lifting them (to bring material prosperity) just isn't important enough for the Iranians to not also require a "stick" to change the equation. But despite the blundering letter by 47 Republican congresspeople, the US is not willing to strike Iran's nuclear facilities with aircraft. In fact, the President might have said that he'd even shoot down Israeli planes doing the same. Because the US has no appetite for war, Iran can hold out indefinitely--it gets what it wants by doing nothing, and will only be moved if the US offers something somehow better than nuclear weapons--I just struggle to imagine what that would be.

In Russia, the game is similar. I won't speak at too much length here as we mention it in a recent post, but in summary: Putin enjoys over 80% approval (compared to Obama's 47% and US Congress' 8%) domestically despite the West's sanctions and the drop of the ruble. This won't change, even with more sanctions. Until and unless the US or NATO are able to credibly threaten a military response, Russia will continue to take advantage of the relative gap in resistance to establish its status quo rule over Georgia, Ukraine and probably the Baltics.

Despite the US' ongoing frustration with Israel's settlement construction in the West Bank and suspended peace talks with Fatah, threatening to withdraw the over-$3Billion/yr military aid to Israel is simply not on the table, probably due to concerns for Israel's immediate security. It's a different example than Russia and Iran, but another place where the US is unwilling to use a threat of risk to a nation's security in negotiation.

Until this changes, the US will have no bargaining power here or with China, North Korea, the Taliban, Syria's Assad, or any other frustrating group. Whether or not some of these issues are worth military intervention is a question that should be taken on a case-by-case basis. The point of this article is to simply drive home the fact that negotiations with powers like Iran will always end in failure if the military option is totally off the table; it is unwise to expect anything else.

No, the Ruble Falling Doesn't Mean Russia is Hosed

A friend recently shared an article with me about the ruble dropping (partly in response to sanctions) and asked me what I thought about it.

Go read it first, it's quick. I'm not going to summarize.

Read it yet? No, really, go do it.

Alright, good. Below is a modification of my original response, which I just wanted to share with everyone.

First, I think "2 guys got arrested" --> "Russia's economy is eating itself" is a grossly over-inflated and completely un-supported assertion here. Putin is on top because he does a great job specifically pitting his oligarchs against each other and reminding them that he can snap his fingers and crush them at any time... while keeping them rich. So the government still doing that is not surprising.

The oligarchs aren't in charge of the justice system (Putin wouldn't trust that) so I don't see how the arrests relate at all to oligarchical bickering. 

The ruble dropping isn't great, but it does mean that you can buy more bread (domestically made) for each barrel of oil you sell, so Russia's gas/oil imports will be buffeted here against the drop in the general price of oil/gas. 

Dropping one's currency is also a way to pivot an economy towards internal manufacturing, which may also be a deliberate move by Putin's administration to become less foreign-dependent, and it may be a sign of an economic strategy rather than just a political one. 

So yes, Russia is "digging in," and no doubt, it's getting ready to survive long-haul sanctions. But that doesn't mean the Russian economy is going to collapse. Putin is a smart guy. If he's planning to lose trade with the West, the first thing one wants to do is create as much domestic manufacturing as possible, and the ruble dropping is step one to doing that (because imports get expensive, exports get profitable, so local manufacturing is stimulated). The pain of the ruble dropping will pass as entrepreneurs seize on the opportunity to build new industries that take advantage of new domestic cost advantages. Russia's got the metal to make a lot of what it imports, excepting the luxuries that wealthy Russians love so much (but we don't need to worry about them). 

They'll be fine. The only way to really choke off the Russians is to cut oil/gas imports dramatically, and the Europeans aren't ready to feel the sting of that, themselves.