War as an Accelerator - How Russia’s War Against Ukraine Showcased and Exacerbated Domestic Governance Challenges
How Russia’s War Against Ukraine Showcased and Exacerbated Domestic Governance Challenges
More than one year after Russia’s 2022 invasion of Ukraine it has become clear that Russia’s security elite and President Vladimir Putin seriously underestimated both the resilience and combat capabilities of Ukraine and the willingness of an international coalition led by the United States, European Union, and NATO member states to support Ukraine and to impose unprecedented costs on Russia. Perhaps a little more surprisingly, Putin seems to have received poor intelligence not only about the international situation and Ukrainian domestic politics, but also about the state of his own country.
While as of May 2023 the war in Ukraine is far from being settled and Russia arguably possesses enough material reserves and (mostly tacit) international support to continue its aggression for the foreseeable future, the past year has also put the internal inefficiencies, shortcomings, and contradictions of Russian domestic policymaking and governance on display. Together with international sanctions, Russia’s weaknesses have made waging war significantly costlier for its rulers in financial and political terms. These inefficiencies, shortcomings, and contradictions predated the 2022 invasion and were going to be defining features of Russian politics in the 2020s, but the situation created by Russia’s war has acted as an accelerator, putting further strain on a system that had already faced trouble coping with these challenges prior to 2022.
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The author illustrates the war's effect through the context of three interconnected policy challenges:
- The conflicts stemming from the Russian economy’s forced pivot to Asian markets.
- The strain on Russia’s public administration system and multi-level governance.
- The internal contradictions of the country’s emerging digital authoritarianism.
Read the report for a full breakdown of Russia's political and financial deterioration following its full-scale invasion of Ukraine.
About the Author
András Tóth-Czifra is a Fellow in the Eurasia Program at the Foreign Policy Research Institute (FPRI) and contributing author for FPRI's Bear Market Brief Newsletter. He is also a political analyst from Hungary, based in New York City.
The War as an Accelerator - Foreign Policy Research Institute (fpri.org)
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(photo credit: RYAN CARTER/UAE Presidential Court/Handout via REUTERS
Sultan of Oman to visit Egypt on Sunday
The heads of state "will discuss all aspects of cooperation between Egypt and Oman in order to boost their relations."
By SETH J. FRANTZMAN Published: MAY 18, 2023
The Sultan of Oman Haitham bin Tarik is scheduled to begin a two-day official visit to Egypt on Sunday.
The visit will come in the wake of the Arab League summit on Friday and the return of Syria to the Arab League. It also comes amidst conflict in Sudan. Oman is an important country that has served as a center of meetings to discuss regional issues and end conflicts and because Oman generally is neutral in the region, it has often been open to Iran and also hosted Israeli Prime Minister Benjamin Netanyahu in 2018.
What will the sultan do during his visit?
Egypt Today noted that “during his visit, Sultan Haitham will discuss all aspects of cooperation between Egypt and Oman in order to boost their relations to a level that fulfills the desired goals in all fields and serves the two countries’ joint interests.
The leadership of the two countries will also hold consultations and coordination that would contribute to enhancing joint Arab work.”
The visit will be watched closely in the region as yet another example of the new diplomatic era and frequent visits by heads of state and high-level ministers from various countries. It is part of the wider regional integration taking place.
Sultan of Oman to visit Egypt on Sunday - The Jerusalem Post (jpost.com)
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Syria's Assad to steal spotlight at Arab summit after years in the cold
While Arab countries appear to have brought Assad in from the cold, they are still demanding that he curbs Syria's drug trade.
By REUTERS Published: MAY 17, 2023
Syrian President Bashar al-Assad, a pariah for more than a decade, is expected to steal the spotlight at Friday's Arab League summit in Saudi Arabia, where he will rub shoulders with regional leaders who once backed his war foes.
Ostracized by most Arab states following his crackdown on protests against his rule in 2011 and the ensuing civil war, his government's return to the bloc is a signal that his war-battered country's isolation is ending.
Saudi Arabia, Qatar and others for years supported anti-Assad rebels. But Syria's army, backed by Iran, Russia and paramilitary groups, has regained control of most of the country.
While Arab countries appear to have brought Assad in from the cold, they are still demanding that he curbs Syria's flourishing drugs trade and that war refugees can return.
But it remains a striking recovery in the Syrian leader's fortunes.
"This is, indeed, a triumphant moment for Bashar al-Assad, being accepted back into the Arab League, the Arab world, after being shunned and isolated by it for over a decade," said David Lesch, a Middle East History professor at Trinity University in Texas.
Several states, including Qatar and Kuwait, had voiced their opposition to welcoming back Assad. But the summit will underscore how Qatar has scaled back its ambitions to be a major diplomatic player in the region and accept Saudi's preeminent role.
Assad is not the only divisive issue among Arabs. The League is also split over questions ranging from normalization with Israel and how to support the Palestinian cause, the regional roles of Turkey and Iran, and which side to pick in polarized global politics.
Also present in the Red Sea city of Jeddah are envoys for Sudan's warring military factions. That ongoing conflict is expected to dominate discussions. Saudi Arabia has been hosting talks on a ceasefire and humanitarian issues in Sudan for weeks.
Work together
The kingdom wants to send a message to the global community that Arabs will work together, said Abdullah Baaboud, the State of Qatar Chair for Islamic Area Studies at Waseda University in Tokyo.
"That also helps it (Riyadh) not only in term of its status within the Middle East but also beyond that when it comes to dealing with international powers, whether it is the United States, Europe or China," Baaboud said.
Washington has been skeptical about Assad's return to the Arab fold. A bipartisan group of U.S. lawmakers introduced a bill last week intended to bar U.S. recognition of Assad as Syria's president and enhance Washington's ability to impose sanctions.
His return to the Arab League is likely to revive questions over his human rights record.
Government forces have used chemical weapons more than two dozen times during Syria’s civil war, U.N. war crimes investigators said. Syria has repeatedly denied using chemical weapons.
But Assad has proven resilient despite pressure from Western powers and Arab countries who backed his enemies in the war.
The Syrian crisis and other regional conflicts including Yemen and Libya, pose further challenges for the Arab League, which is often undermined by internal divisions. Arab leaders argue that security is more important than democracy.
"There has been indeed in the past few years a willingness by Saudi Arabia and other regional actors to consolidate a form of authoritarian stability in the region," said Joseph Daher, a professor at the European University Institute in Florence, Italy.
"Despite continuous rivalries among various states...they hold a common position in wanting to return to a situation similar to that in place before the uprisings in 2011."
This year's summit also comes as Egypt, Tunisia and Lebanon struggle with runaway inflation, unemployment and popular anger.
Saudi Arabia and the United Arab Emirates, however, have set a new tone for times of crisis, saying the era of no-strings-attached to help that the Gulf states offer others is over.
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Saudi Arabia could successfully reduce fiscal reliance on hydrocarbons over time: Moody’s
RIYADH: Saudi Arabia’s recent financial performance and the wide range of economic diversification programs could help the country reduce its fiscal reliance on hydrocarbons over time, credit rating agency Moody’s Investors Services said in its latest note.
Affirming a positive economic outlook, Moody’s noted that the Kingdom’s credit strengths include its robust government balance sheet, underpinned by moderate debt levels and large fiscal reserve buffers.
On March 17, Moody’s changed the outlook on the Saudi government to positive from stable and affirmed its long-term issuer and senior unsecured ratings at A1. The rating agency kept Saudi Arabia’s local currency and foreign currency country ceilings unchanged at Aa2.
“Saudi Arabia’s positive outlook reflects the increasing likelihood that broad-based structural reforms and investments in a wide range of diversification projects will help reduce significantly the sovereign’s economic and fiscal reliance on hydrocarbons over time,” said Christian Fang, vice president-senior analyst at Moody’s.
Diversifying its economy is one of the main agendas of Vision 2030, and the Kingdom is now placing itself as a global tourism hub, along with catalyzing its efforts to strengthen other sectors like logistics, technology, and mining.
Moody’s further noted that policy effectiveness and the Kingdom’s large stock of proved hydrocarbon reserves with low extraction costs are also supporting the country’s high economic resiliency.
Moody’s expects the Saudi government’s balance sheet to continue to improve in the next few years, based on an oil price assumption of around $85 per barrel in 2023 and $83 per barrel in 2024, before declining to the $50-$70 per barrel range in the medium term.
Saudi Arabia posted a fiscal surplus of 2.5 percent of the gross domestic product in 2022, against a deficit of 2.3 percent of GDP in 2022. In 2022, government revenues also rose by 31 percent year-on-year to SR1.26 trillion ($335.6 billion).
According to Moody’s, some of the credit challenges faced by Saudi Arabia include high economic fiscal exposure to declines in global oil demand prices.
Saudi Arabia could also face credit challenges in the long term due to risks stemming from the global transition to a lower-carbon economy.
“Geopolitical risks, mainly stemming from long-standing tensions with Iran, also weigh on its credit profile,” said Moody’s in the report.
The agency added that Saudi Arabia’s government debt burden is expected to decline to less than 25 percent of GDP in 2023 and around 23 percent of GDP on average in 2024-25.
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Saudi trade balance surplus surges to $12bn in February
....The report added that the most imported merchandise in February was machinery, mechanical appliances, and electrical equipment parts, which accounted for 20.8 percent of the total merchandise imports.
China sustained its position as the top global export destination for Saudi Arabia that month accounting for 17.4 percent of total Saudi exports valued at SR17.6 billion.
It was followed by Japan with exports valued at SR10.2 billion — 10.1 percent of the total — and India at SR9.9 billion, which was responsible for 9.7 percent, showed the data.
As for the Kingdom’s imports, China also took the lead, accounting for 23.4 percent of the total, worth SR13.2 billion.
The US followed with SR5.1 billion, or 8.9 percent of the total. India came in third with SR3.8 billion, or 6.7 percent of the total imports, showed the report.
Jeddah Islamic Port let through 30 percent of the total imports worth SR17 billion, making it the Kingdom’s primary port for incoming goods in February.
Saudi trade balance surplus surges to $12bn in February (arabnews.com)
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