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Strategies & Market Trends : Investment in Russia and Eastern Europe

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To: Jon Koplik who wrote (1082)2/11/2000 1:43:00 AM
From: CIMA   of 1301
 
Diplomatic Blitzkrieg: The West Responds to Russia's Assertiveness

Summary

European Commission President Romano Prodi said Feb. 10 that the
European Union (EU) would extend absolute security guarantees to
all of its members. This statement in a single stroke redefines
Russia and the West's struggle for the countries of Central Europe.
No longer will Russia have the luxury of viewing EU expansion as a
harmless process. Prodi essentially announced de facto NATO
expansion under the guise of EU security guarantees.

Analysis

European Commission President Romano Prodi surprised his Latvian
audience Feb. 10 by declaring that "any attack or aggression
against an EU [European Union] member nation would be an attack or
aggression against the whole EU, this is the highest guarantee." If
implemented as stated, this marks a quantum shift in EU policies
from the purely economic into the security realm - a change that
Russia cannot afford to ignore. Now Russia will feel just as
threatened by EU expansion as it has by NATO expansion. Prodi's
announcement intensified the ever-escalating race to establish a
new frontier between Russia and the West.

At the Jan. 24-25 Commonwealth of Independent States (CIS) Summit,
[http://www.stratfor.com/SERVICES/giu2000/012100.ASP] Russia
compelled its fellow CIS members to participate in tighter security
measures [http://www.stratfor.com/CIS/commentary/c0001260125.htm]
to combat terrorism and Islamic fundamentalism - Moscow's code
names for Chechen militants.

Until now, the West has responded to Russia's new assertiveness
with piecemeal measures. First, there was a tug-of-war for
Georgia's loyalties [http://www.stratfor.com/CIS/commentary/c0002030025.htm] over joint
Russian-Georgian border patrols. Then, the United States directly
challenged Russian interests in the Persian Gulf
[http://www.stratfor.com/MEAF/commentary/m0002040010.htm] by
boarding a Russian tanker that was evading U.N. sanctions. Russia
responded to these challenges by strengthening its ties with old
Soviet client states [http://www.stratfor.com/SERVICES/giu2000/020800.ASP]
such as Iraq, North Korea and Vietnam. Now, the West has seized the
Russian gauntlet. High-level delegations are taking off to entice much of
Central Europe to fully join the Western fold.

Russia cannot help but take this diplomatic blitz seriously. Among
the delegations are the European Commission president, NATO's
secretary-general and NATO's supreme commander. Their target
audiences include an array of states traditionally within the
Russian sphere of influence: Estonia, Latvia and Lithuania border
Russia; and Christian Orthodox Romania and Moldova share religious
ties. To underscore the completeness of the Western response, NATO
even dispatched a delegation Feb. 9 to Russia's Caucasus neighbor,
Georgia.

But it is Prodi's statement that will truly shock Russia. The fact
that the proclamation came from the European Commission's president
- the highest non-rotating position within the EU superstructure -
indicates that the intent to implement security guarantees is no
mere trial balloon, but new EU policy.

However, Prodi's promise of an explicit security guarantee cannot
be supported by current EU capabilities. Even if the Eurocorps
functions as Prodi envisions, it will have a scant 60,000 troops at
its command. This is just barely enough to handle a Kosovo-style
operation; it would do little to deter a large-scale attack from a
hostile power. Even the defense establishments of Europe's larger
countries would be hard-pressed to project sufficient power to
Europe's eastern fringes in times of crisis.

Only the United States could possibly provide the level of force
that Prodi envisions. Prodi's wording itself sounds remarkably
similar to NATO's Article V security guarantee: "that an armed
attack against one or more of them shall be considered an attack
against them all." This indicates that Prodi - the steamroller of
EU reform [http://www.stratfor.com/services/giu2000/012800.asp] -
is either bluffing his way through Central Europe or has plans to
integrate NATO into the EU in order to produce a militarily
credible Europe. Prodi's assurance of security to all EU members
extends NATO guarantees to the countries that will be on the EU's
new eastern border. Suddenly, Russia's perception of the EU becomes
much less benign.

What makes the announcement more dramatic is Prodi's choice of
audiences - Latvia. Of all the former communist states, this small
Baltic country has had the most venomous relations with its former
master. Prodi's statement and the locale in which he made it
indicate Prodi's willingness - even enthusiasm - to stare down
Russia over issues of importance to Europe.

Russia may have the advantage in the race for Caspian oil routes [
stratfor.com] and in
the contest for Central Asia
[http://www.stratfor.com/CIS/specialreports/special13.htm], but
Prodi has firmly set his mind on the EU fully absorbing all of
Eastern Europe - Baltics included. Now he has shown a unique
willingness to use NATO to achieve that goal. It remains to be seen
how the rest of the Union will respond to this sudden policy shift.
Prodi will have his plate full convincing the EU's four neutral
states to militarize under any common banner. Persuading France to
allow the United States an even more prominent position in Europe
will prove thorny as well.

If the EU fully adopts Prodi's plans, it would conjure a nightmare
scenario for Russia. A soft-power EU and hard-power NATO would
become formal partners in Western expansion. Traditionally neutral
countries such as Austria, Finland, Ireland and Sweden would be co-
opted into a NATO-EU military structure. An economically powerful
EU, backed by a militarily powerful NATO, would dig in along vast
lengths of Russia's eastern border. Russia's acquiescence to EU
expansion will rapidly come to an end, and what little is left of
the Russia-West "friendship" may be completely gone.

(c) 2000, WNI, Inc.

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