The Long War has started￼￼POLITICO - RYAN HEATH - 11/03/22
Good morning from Austin, Texas, where the SXSW media and tech festival is kicking off in-person for the first time since 2019.
With the ongoing re-Stalinization of Russia, and the old Stalin tactics unfurled again in Ukraine: Is it time to start labeling Vladimir Putin a dictator? Tell me your thoughts: email@example.com. If you don’t hear back, I’m standing in a two-hour line for BBQ.
How much cake is on the menu in Versailles? Not so much. Emmanuel Macron is today pushing for a $250 billion EU fund to sponsor defense and energy independence from Russia, funded by a mix of new borrowing and transfers from the regular EU budget. Governments from Europe’s center and east — normally hesitant to endorse EU federalism — are enthusiastic.
But instead of Slovakia’s push for Ukraine to get “candidate plus” status and a Marshall Plan-style fund for rebuilding infrastructure, Ukraine got a vague commitment to getting on the path to becoming part of the “European family.” More on Ukraine’s EU membership midway through the newsletter.
Norway is hosting 30,000 NATO troops for land and sea exercises: The drills began Thursday and will last a month.
Russian media report that Meta, including Instagram, will be banned.
NEXT STEPS TO WATCH FOR
STAGE SET FOR PROTRACTED WAR — RUSSIA TO FORMALIZE CONSCRIPTION: Peace talks yielded no progress Thursday, and Russia’s new conscription plans don’t indicate any interest in compromise.
“We’re looking at a very long-term conflict in Ukraine,” Britain’s Foreign Secretary Liz Truss told an Atlantic Council audience Thursday in Washington. China’s Foreign Minister Wang Yi also recognized the “war” for the first time. Putin has authorized the arrival of 16,000 volunteers from Middle East to fight in Ukraine.
Nuclear regulators have lost all contact with Chernobyl staff, the International Atomic Energy Agency reported Thursday evening. WHO advised Ukraine scientists to destroy stored pathogens in health labs to prevent disease leaks, resulting from Russian attacks.
Poland’s grassroots refugee effort is running out of steam: With 1.4 million refugees already arrived, and another 100 arriving every minute, it’s getting tough at the Ukraine border, reports Zosia Wanat. Around 2.5 million people have now fled from the war.
Gerhard Schröder peace bid: The former German chancellor — lately shilling for the bankrupt Nord Stream 2 gas pipeline, Rosneft and Gazprom — flew to Moscow to meet Putin, in what appeared to be a self-inspired peace mediation bid. Schröder has refused to sever his close ties to Moscow even following Putin’s invasion of Ukraine, prompting several of his personal staff to quit last week.
STAGE SET FOR WIDESPREAD FOOD INSECURITY AND FAMINE: By now you know that Russia and Ukraine are two of the world’s biggest food producers, and they’ve been all but taken out of global markets. But it’s worse than the initial headlines suggest.
Grain price jumps trigger political instability as well as hunger: Wheat futures prices jumped by around 50 percent over the past two weeks on the back of production and Black Sea access fears. The last time wheat prices spiked to these levels protests spread through nearly 40 countries in 2008; another price jump helped trigger the Arab Spring in 2011.
Egypt is the most dependent on Ukraine and Russia wheat exports, according to International Trade Center data, with Turkey also dependent. Lebanon also gets a large proportion of its wheat from Russia and Ukraine.
China sits on world’s biggest reserves: POLITICO’s Meredith Lee reports that China is panic-buying to top off its immense grain reserves (around two-thirds of the global total) and is likely to hold off on rice exports. Some U.S. lawmakers are pushing to expand the number of acres farmers can plant this year to help fill the void, but after severe 2021 droughts, they won’t get anywhere close to meeting demand. You can expect a lot of countries with minimal reserves to start implementing export controls. Hungary and Serbia have also banned some grain exports. Indonesia will control palm oil shipments.
Top U.N. food official shuts down debate over Russia’s war impact: My POLITICO colleague Stuart Lau reports that Qu Dongyu, the top official at the Food and Agricultural Organization, a former Chinese minister, is obstructing efforts by other officials and diplomats to study the impact Russia’s war in Ukraine is having on grain markets.
The reporting follows an earlier Spiegel report, confirmed by POLITICO, that the FAO is withholding a report on the war’s impact on food supplies to Africa and Middle East.
Delegations to the FAO from European countries told POLITICO of a difficult meeting with Qu last week, in which Qu refused to discuss the war. At least six countries were prevented from speaking when Qu abruptly closed the discussion. FAO replied to a Global Insider request for comment with a link to this presentation. The office of Cindy McCain, who serves as U.S. ambassador to the FAO, did not reply to a request for comment.
World Food Program already faces ration crunch: The American chief of the U.N. agency tasked with mitigating famine, David Beasley, has said that WFP has already been forced to impose a 50 percent cut on its food aid to 8 million people in Yemen because of a lack of resources. “We get 50 percent of our grain out of the Ukraine-Russia area,” he said. “It’s going to have a dramatic impact on food costs, shipping costs, oil and fuel. Just when you think it couldn’t get worse, it’s going to get worse.” And that includes WFP having to pay sky-high prices to feed Ukrainian refugees.
“It’s going to be a major issue for the entire world,” Gregg Doud, who served as the U.S. Trade Representative’s chief agricultural negotiator during the Trump administration, told POLITICO. Expect the number of people suffering from acute hunger to double over the next 18 months, said Matthias Berninger, Bayer’s sustainability chief.
One winner: “Rising commodity prices help EM commodity exporters, especially in Latin America,” per Institute of International Finance.
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UKRAINE GLOBAL IMPACTS
WHERE UKRAINE STANDS ON ITS EU MEMBERSHIP APPLICATION: The EU leaders final text: “[W]ithout delay, we will further strengthen our bonds and deepen our partnership to support Ukraine in pursuing its European path. Ukraine belongs to our European family.”
Lithuanian President Gitanas Nauseda is positive: “EU leaders said yes to Ukrainian eurointegration.” Others aren’t so sure, noting that countries from France to Netherlands are in no rush to accept Ukraine. The Dutch worry about the cost and provoking Putin. «There is no such thing as a fast tracking of accession. It doesn’t exist,” said Dutch Prime Minister Mark Rutte.
Estonian PM Kaja Kallas called it Europe’s “duty” to create a clear timeline and path to membership. “Ukraine came under attack in 2014 because it wanted to join the European Union. It came under armed attack on February 24th because it seeks to take its rightful place among us.”
R.I.P., U.N. SECURITY COUNCIL? The U.N. is a casualty of Russia’s war which “marks the most severe test for multilateralism since the end of the Cold War,” according to International Crisis Group’s Richard Gowan — the man the U.N. press corps turns to as a barometer of the state of diplomatic bureaucracy.
The reality is that the U.N. will need to collapse for the Security Council system to change: “Russia is able to block both U.N. Charter reform and any effort to expel it, under rules laid down in the charter itself,” Gowan said. He told Global Insider: “There is not a snowball in hell’s chance of progress,” for reform. “Russia will block and China hates the idea of reform, too.“
The status quo wasn’t working, even before Russia’s war: Russia issued 17 vetoes over Syria alone during the past decade, while Asian and African nations increasingly prefer ASEAN and the African Union to handle regional crises. There has been some success on African peacekeeping and limiting Iran’s nuclear ambitions.
The next U.N. flash points: The biggest foreseeable flashpoints are likely in Libya, Mali and Bosnia and Herzegovina.
Russia could encourage its allies back to war in Libya; Moscow is already deploying private contractors to destabilize the Sahel region — the scene of multiple coups and rising extremism. Russia came close in 2021 to vetoing renewal of a peacekeeper mission in Bosnia, which implements the 1995 Dayton Accords, and will surely be tempted to wreck the process this October.
ICYMI — ZELENSKYY’S PARTY JOINS THE EUROPEAN LIBERAL PARTY GROUP: The Alliance of Liberals and Democrats in Europe is where Macron calls home. They’re more of a classical market liberal and centrist bloc than a left-wing American Democrat bloc.
CORPORATE SURVEILLANCE RAMPS UP:
A new index rates nearly 100 companies on the actions to divest or halt operations in Russia. The authors are The Good Lobby, a nonprofit civic participation organization, and Progressive Shopper, which tracks political contributions.
WHY 78 FOREIGN POLICY SPECIALISTS OPPOSE A NO-FLY ZONE: An open letter in POLITICO. Summary: The goal is to end a war not expand it. And the logic that to end it you must expand is fatally flawed and replete with catastrophe.
ALSO HOLDING BACK: “To those arguing that we should take greater risks to help Ukraine in its war against Russia, like instituting a no-fly zone, let’s remember that the Cold War stayed cold because we both worked to avoid situations where we risked direct military confrontation.”
— Chicago Council’s Ivo Daalder, former U.S. Ambassador to NATO
CANADA’S SHORT-TERM AND LONG-TERM THINKING
“Direct conflict between NATO planes or fighters and Russia would not bring about a better outcome for Ukrainians, nor would it bring out a better outcome, especially for the rest of the world.”
“Canada very much believes in, of course, the International Court of Justice, and the ICC — the International Criminal Court as well. I think they’re both extremely useful. One state versus state in the International Court of Justice, but also for holding Putin himself accountable for the war crimes he’s committing presently in Ukraine, the ICC will be extremely important.”
— Justin Trudeau, Prime Minister of Canada
“Eighteen million people in Afghanistan need aid, 13 million in Yemen are severely hungry, 15 million in Central Sahel are in need, 4 million in Somalia are drought-affected. Human suffering is at unprecedented levels across the world, Ukraine is the latest in a long list.”
— Jan Egeland, Norwegian Refugee Council
WEF AND RUSSIA: Mark Turrell, a former World Economic Forum Young Global Leader, turned thorn in the organization’s side, was unimpressed with news reported by Global Insider that WEF has frozen its Russia relationships. “Aside from the nice banal words, what else did Klaus Schwab actually do? Donate the proceeds from Russian money to Ukrainian humanitarian causes? No. They deleted some web pages. How brave.”
What do you think? Should WEF donate its recent Russia income to Ukraine humanitarian aid. A $3 million donation would still leave WEF with around 99 percent of its cash reserves.
GO FUND THEM! STATE DEPARTMENT’S NEW RALLY CRY: The State Department has a new public-private partnership with GoFundMe.org “to direct funds to organizations that are helping to address the humanitarian needs of those impacted by the Kremlin’s aggression against Ukraine.”
By the numbers: So far, $1.8 million has been raised from 330 million Americans. The Dutch — with just 17 million people — raised $125 million in a single day Monday.
GLOBAL RISKS AND TRENDS
NEW PODCAST EPISODE — GAYLE SMITH
“It didn’t have to unfold this way” — Biden’s Global Covid Response coordinator opens up about what went wrong with Covid vaccine markets and what she’d do to make a Covax 2.0 work better.
SOUTH KOREA — WHAT’S NEXT FOR THE NOVICE CONSERVATIVE PRESIDENT? Is he like Trump? Is he a misogynist? Is he really going to bomb North Korea? You may need some time to polish your knowledge about Yoon Suk-yeol, once Seoul’s top prosecutor in the previous left-liberal administration, who swiftly transformed into an abrasive conservative darling.
In 10 seconds: Gained a national profile tackling corruption in the previous administration. His policies include a «reset» with China, a tougher stance toward North Korea, and abolishing the country’s gender equality ministry.
CHINA AND INDIA — BACKCHANNELS FOR RUSSIA TRADE: My colleague Phelim Kine reports on workarounds to restrictions on exports to Russian maritime, aerospace and defense industries of high technology items, including lasers and semiconductors. “You can imagine enterprising Chinese and Indian companies importing things that Russia needs and then reselling them to a Russian company at a markup,” said Victor Shih of UC San Diego. “Russia and China have made sanctions evasion into a team sport,” warned Rep. Michael McCaul of Texas, lead Republican on the House Foreign Affairs Committee
Reality check: While China is now Russia’s top export and import market, taken together EU27 trade is still much bigger.
VENEZUELA — FINDING WAYS TO MOVE FORWARD: Venezuelans are in the middle of a severe humanitarian crisis. Extreme poverty has risen to 77 percent, inflation is an eye-watering 1,700 percent: to the extent that it can even be counted. But some experts see oil as the way for Venezuela to climb out from under the crushing economy and return to normalcy.
A new report by the Atlantic Council suggests the U.S. Treasury Department “consider issuing special authorization” when it comes to hydrocarbon exports from PDVSA (Venezuela’s state-owned oil and gas company) to the U.S., which is currently prohibited under executive orders, and fiercely opposed by congressional hawks. This would, in part, allow U.S. and Western corporations to buy and pay for permitted Venezualan exports.
RECAST POWER LIST: This slate of 40 remarkable people shaking up power in Washington and the world. POLITICO’s The Recast has named the 40 power players at the intersection of race, politics and policy. It’s a remarkable slate covering Washington and the world. Explore the full list here.
R.I.P. — AUSTRALIAN SENATOR KIMBERLEY KITCHING: Kitching was Australian co-chair of the Inter-Parliamentary Alliance on China and the force behind the Australian Magnitsky sanction laws which came into effect in December. She died of a heart attack, aged 52.
F1 DRIVER SANCTIONED: The sacked Formula One driver Nikita Mazepin, son of oligarch Dmitry Mazepin, is now sanctioned by the EU. Dmitry was described as “a member of the closest circle of Vladimir Putin.” Mazepin junior was dismissed by the Haas team on Saturday with the U.S.-based team calling for peace in Ukraine.
PALESTINIANS MARRIED TO ISRAELI CITIZENS BANNED FROM REUNITING — AGAIN: Lawmakers in the Knesset voted 45-15 to renew a recently expired law that would exclude Palestinians married to Israelis from receiving residency or citizenship in Israel, hours before a parliamentary recess.The legislation was first introduced as a temporary amendment back in 2003 but has been renewed for a 12-month term every year since then, aside from it expiring last July.
JORDAN — PRINCELY POLITICS: Former Crown Prince Hamza, who was accused last year of trying to replace the monarch, has allegedly pledged he would never again act against the country’s rulers, the royal palace said in a statement on Tuesday. The jury’s out on whether to believe any of it.
ABRAMOVICH AMONG SEVEN MORE OLIGARCHS ADDED TO U.K. SANCTIONS: Ministers (who’ve known about his very visible presence in London for more than a decade) say he has blood on his hands. The U.K. sanctions list.
WHAT’S GOING ON WITH THE SUPERYACHTS? According to data obtained by POLITICO’s Joseph Gedeon from VesselsValue, there are an estimated 65 Russian-owned superyachts around the world. And for the most part, they are pretty much where we expect them to be. But that may soon change.
“Montenegro is fast becoming a popular destination for some,” said Sam Tucker, head of superyachts at VesselsValue. “Because whilst still in Europe, it is outside of the EU and currently appears to be providing a safe haven.” Tucker also noted that at least one superyacht, Galactica Super Nova owned by Russian billionaire Vagit Alekperov, has turned off its tracking system.
How to disappear a superyacht: Speaking of Montenegro, this vessel disappeared after pulling out of port. How mysterious!
All eyes should be on Dubai International Boat Show: Global Insider is reliably informed that at least four Russian superyachts are in the vicinity.
HOW DUBAI UNDERMINES RUSSIAN SANCTIONS: “At least 38 businessmen or officials linked to Mr. Putin own dozens of properties in Dubaicollectively valued at more than $314 million” and the leader of UAE won’t take Biden’s call.
THE HUNT FOR OLIGARCH ASSETS IN AMERICA: The total hidden among shell companies and relatives could total $1 trillion. So far, a team of volunteers has unearthed more than $450 million in a week. Transparency International thinks current and former Russian officials own at least 28,000 properties in 85 countries. More from New York magazine.
You got a problem with the lack of data on oligarch assets? Try calling the National Association of Realtors. Real estate agents are exempt from complying with federal anti-money laundering program requirements, and realtors are fighting Treasury efforts to require them to do due diligence on the origin of their client’s money.
CHEAT SHEET — THE BOOK THAT BEST EXPLAINS PUTIN’S INSANITY: Explained by Natalia Antonova, it’s about the creation of a third Russian empire (after the tsars and Soviets). The most unhinged element, which you must process: “Following a new cold war, the Third Empire defeats and occupies the United States.”
Inside the real Russian elite — Putin’s inner circle: by Anatol Lieven.
Thanks to editor John Yearwood, producer Lauraine Genota, Joseph Gedeon, Stuart Lau, and all the POLITICO reporters working across eight countries who are reporting on the Russian war in Ukraine.