Moscow

Just before Christmas in 1997, as a tumultuous stock-market crisis ravaged emerging markets in every corner of the globe, readers of the Wall Street Journal were treated to some good news: Russia was going to emerge from the mess unscathed. While conceding that “few debt markets outside Southeast Asia were hit harder by recent financial turmoil than Russia’s,” the Journal‘s Moscow bureau chief, Steve Liesman, added quickly that “many analysts believe an equally strong rebound may be in the offing.” Moreover, Liesman wrote, investors were rapidly coming to the realization that “Russia’s problems are far different and, for the moment, less dire than those that undermined Asian economies.” The December 16 piece was headlined, “Russian Debt Markets Due for Rebound.”

A few weeks later, Liesman and the Journal used even stronger language to trumpet Russia’s economic merits. They chided investors who were too busy “fretting over Asia’s financial crisis” to notice what they called “one of the decade’s major economic events: the end of Russia’s seven-year recession.”

The Journal‘s prediction was more than a little precipitate. Instead of getting better, things in Russia got worse. A lot worse. Nine months after Liesman declared that Russia’s debt market was due for a rebound, and just over seven months after proclaiming the end of the Russian recession, the Journal–like most US newspapers–found itself having to explain the near-total collapse of Russia’s economy and capital markets.

What is most astonishing is not how badly Liesman and the Journal misreported one of the most tragic economic stories of the decade as it was happening. The amazing thing is that they won a Pulitzer Prize for their reporting of the Russian crisis after the country had gone down in flames. Liesman, who left the Moscow bureau in April of 1998 to return to New York, was called back to Moscow after the crisis to help write a series ofJournal pieces on how the Russian financial collapse happened. These articles completely contradicted the body of work he had left behind, leaving the impression that the collapse had been inevitable all along.

While it’s true that throughout the mid-nineties nearly the entire Western press corps had painted a similar picture of allegedly successful, if bumpy, market reform in Russia, the Wall Street Journal‘s version was even more deluded, and more inappropriately enthusiastic, than the competition’s. Furthermore, few if any of those other outlets, with the possible exception of the New York Times, have as much influence internationally as theJournal. And none of those other reporters won the Pulitzer Prize. To win that, the Journal ought to have been ahead of the pack throughout; as it was, the paper’s coverage only stood out as the most spectacular wreck in a huge pileup.

Liesman’s Russia coverage was a case study in the kind of narrow colonialism and provincialism that is increasingly pervasive in American foreign news reportage. Until the crisis struck, Western reporters based in Moscow focused almost exclusively on the Russia story in terms of its relevance to Western businessmen–and as long as the stock market was doing well, and companies like British Petroleum were still proudly announcing mergers with Russian partners, much of the corruption that eventually sank the Russian economy was ignored. As a result, an event like the recent Bank of New York debacle actually came as something of a surprise to Americans. But for ordinary working Russians, a great many of whom have been watching their bosses send company money offshore for years while their own salaries go unpaid, the only surprise in the New York money-laundering story was that it didn’t come out sooner. And one reason it didn’t is that the Western press, particularly pro-”reform” cheerleaders like the Journal, was plainly uninterested, until it was far too late, in making an effort to see the corruption that was a daily reality for the majority of Russians.

In fact, until the crisis forced them to change their tune, Western reporters like Liesman seemed to distrust reports of widespread public despair over the Yeltsin regime’s criminal policies, preferring instead to rely upon the stock market, the pronouncements of the IMF and the results of Russian state-produced macroeconomic reports to tell them how the Russian economy was doing. As journalists Matt Bivens and Jonas Bernstein wrote in an article in the academic journal Demokratizatsia, which criticized Western press performance (including that of the Wall Street Journal) in post-Communist Russia: “Sadly, there is another dynamic at work here, an element of disdain for the Russians as a people…. [Many] Westerners have sympathy for the idea that following centuries of oppression, the Russians ‘aren’t ready’ to be trusted with complete democracy. Perhaps, then, it is better to let former Vice Premier Anatoly Chubais and his Harvard-trained whiz kids manipulate matters–always, of course, ‘in the larger interest.’”

Liesman, 36, a bombastic, balding New Yorker whose amateur blues band played a few coolly received gigs in Moscow clubs in his early years here, is still well known in the Moscow press corps as a sort of caricature of a typical Moscow-based US correspondent–a loud presence at press conferences and a knee-jerk anti-Communist. Despite having lived in Russia since 1992, when he came to work for the English-language Moscow Times, Liesman was still using a translator in 1998, the year he left.

“I wasn’t the only guy who was [working with a translator],” he said. “A lot of guys were doing that.” When reminded that he was the only one of those “guys” who had won the Pulitzer Prize, he conceded, “Well, that’s a point.”

Like many of the more linguistically challenged members of the foreign press corps in Moscow, Liesman fell into the classic trap of making one small group of English-speaking Russian politicians his most trusted source of information. That clique–including privatization czar Chubais, early Prime Minister Yegor Gaidar and allies of theirs like onetime property chief Maxim Boycko–was often referred to by Russia observers as the “St. Petersburg Mafia” (most of the group came from the northern capital). This group sold itself to the Western press as the vanguard of the anti-Communist, pro-Western movement and nudged reporters like Liesman into portraying any criticism of their policies as aid to the Communist movement.

Liesman’s unwillingness to report any negative news associated with the St. Petersburg Mafia first became glaringly obvious in early 1996, when he called privatization “the most successful and important of Russia’s reforms.” Part of the privatization effort that Liesman praised, the notorious “loans-for-shares” auctions, had just created a national scandal due to their overt criminality; it had forced loans-for-shares architect Chubais out of government. In these auctions of huge stakes in key Russian enterprises, Kremlin insiders decided the winners in advance, often helping out by padding their bids with government funds. These auctions instantly created a super-rich clique of monopolist “robber barons”–many of whom were much-vilified names in the US press this past summer, when they began appearing in connection with investigations into the Bank of New York scandal.

The criminality of these auctions was well detailed in the Russian- and English-language press: Izvestia, for instance, reported that $50 million in Ministry of Finance funds had been transferred to Bank Menatep before the latter won a huge stake in the oil company Yukos, and more than one paper noted the curious anomaly of two banks (Stolichny Bank and Menatep) guaranteeing each other’s bids in a “competitive” auction for a stake in the oil company Sibneft. The winning bid in that auction was just $100.3 million, despite the fact that the company, which at the time produced more than 22 million tons of crude per year, was clearly worth a lot more. Most observers at the time believed that the sweeping victory by the Communists in the 1995 parliamentary elections was at least partly fueled by public disgust over these bogus auctions. And every sane observer recognized that the auctions represented a profound step away from the Western capitalist model. Even the cautiously neoliberal Moscow Times criticized the auctions in a December 30, 1995, editorial: “As more than one commentator has said, this isn’t capitalism as the country ought to know it…. While it goes on, and there is no reason to think that it will stop, economic growth will be held back, and cronyism and cartels will prevent meritocracy and open markets.”

Liesman didn’t see it that way. His Journal coverage ignored the auctions’ reported improprieties and dismissed their critics as Communists and political malcontents. In a February 7, 1996, article, for instance, he compared the criminal investigations into loans-for-shares to “show trials”: “The [investigations] are at least partly political…. Some in Moscow’s financial circles even anticipate show trials that would sacrifice a few privatization deals to mollify the opposition and save the rest of the program.” In an interview for this article, Liesman said he believed, and still believes, that loans-for-shares was, relatively speaking, a success–or at least preferable to the alternatives. “It’s in your opinion that [loans-for-shares] wasn’t successful,” he said. “To me, if you ask me, what was the alternative? Keeping it in state hands?” Liesman added, “Do I stand accused of being on the Chubais bandwagon? If so, I plead guilty. Just like the United States government, and just like every other expert we spoke to.”

Unfortunately, none of the “experts” Liesman spoke to were ever very interested in advertising Russia’s problems to the Western investors who read his paper. Ultimately, this was the key to the Journal‘s failure. While Western businessmen on the ground in Moscow saw the disaster of the Russian state in action–evident in their mass flight from Russia’s capital markets beginning in late 1997–Journal readers abroad were taken completely by surprise when catastrophe struck. As late as June 1998, when Russia’s capital markets teetered on the edge of collapse and worker protests over nonpayment of wages paralyzed rail travel across the country, the Journal was still dismissing Russia’s troubles as fallout from a few logistical glitches. In a June 5 article, Liesman argued that the crisis had its roots at least partially in a scheduling blunder by one of then-Prime Minister Sergei Kiriyenko’s underlings:

Moscow–In the story of how Russia’s markets collapsed in May, give at least a couple of paragraphs to a simple mistake by a provincial government aide.
It happened that Lawrence Summers…requested a meeting with Prime Minister Sergei Kiriyenko. But an aide to the youthful new prime minister…knew only that this Mr. Summers was a deputy secretary of the treasury–a title unworthy of an audience with a Russian prime minister.
Word leaked out that the two had failed to meet…. Over the next two weeks, a bad situation worsened, as ruble-holders rushed to convert to dollars, stock prices plunged, and a near panic brought Russia to the brink.

At the time this article was written, Russia was experiencing major unrest. The last remaining investors were pulling out en masse, markets were collapsing and the debt bubble had grown so large that no new IMF loan could possibly save it. But Liesman, apparently eager to reassure his readers, attributed May’s financial tremors mainly to PR gaffes–as well as the Asian financial crisis:

Until the most recent troubles in Asia–riots in Indonesia, more evidence of Japan’s deep ennui, a nuclear race on the Indian subcontinent–Russia appeared to have escaped the ravages of the Asian monetary maelstrom. Its notoriously poor tax collection was improving. Economic data showed growth for the first time in seven years. Credit Suisse First Boston declared the country a buy. Boris Jordan, an American who has become one of the biggest players in Russia’s stock market, went on vacation to Disney World.

Two things bear mentioning here. One is that before the crash, pro-reform journalists like Liesman often justified placing a positive spin on the Russian economy by noting that their sources in places like Credit Suisse were constantly pumping up Russia as a hot market. The brokers, the thinking goes, were the experts–so how could a reporter be remiss by trusting them? Answer: very easily. Any good business reporter knows that few stock analysts or brokers in emerging markets will go on the record as saying anything negative about their host country’s economies–because if they do, no one will buy into its market. Asking a Credit Suisse trader in Moscow to be straight about the Russian market is like asking a Ford dealer to compare a Taurus with a Lexus honestly. Quoting analysts is fine to get the bright side of a story, but a responsible reporter looks for hard economic data for balance–and this is what was consistently missing from the Journal‘s coverage.

The second fact worth mentioning is that the Russian State Statistics Committee was notoriously unreliable. In fact, its chief, Yuri Yurkov, was fired for fudging statistics shortly after Liesman’s June article appeared, news that went largely unreported in the Western press. In contrast, when the much-vilified anti-IMF president of Belarus, Alexander Lukashenko, announced a 10 percent rise in GDP for 1997, the news was greeted with widespread skepticism in the West. A Moscow Times story, for instance, was headlined “Belarus Growth a Question of Statistics” and speculated that Lukashenko might be “cooking the books.” Russia got no such treatment in the reform era. The most revealing passage in the June article by Liesman was the line about Disney World. Thousands of people were sitting on train tracks to beg for their wages, and Liesman was writing about one rich American’s plans to travel to Disney World.

Then again, lack of empathy for the plight of ordinary Russians was a consistent feature not only of Liesman’s coverage but of US policy toward Russia in general. Like the IMF and the World Bank, both of which felt that Russia’s need to pay their high-priced consultants was greater than its need to pay many of its “economically unnecessary” workers, Liesman revealed a concern for wage-earning Russians that extended only as far as their perceived utility in the service of global capitalism. When asked why he hadn’t covered the nonpayment crisis, he replied: “Yeah, but nonpayment for what kind of labor?”

Mining coal?

“Coal that was needed, or not needed?” he snapped.

In that same June 5 article, Liesman also suggested that Russia might have been better off if it had been more corrupt, not less. “Another policy change also hurt,” he wrote. “For years, the government had used commercial banks to pay its bills. Last year, it moved to a US-style treasury system, with branches of its own. The change saved money, reduced corruption and made payments more timely. But an unforeseen result was a fall in the cash moving through banks–money that these banks once used to play the government bond market.

“So when the crunch hit, the Russian banks couldn’t help.”

Liesman wasn’t the only major-market bureau chief to blow the Russia story. The Washington Post and the Los Angeles Times both described Chubais as a “lightning rod” for unfair criticism when he was fired, downplaying or ignoring the many scandals he’d been linked to. Business Week wrote a glowing profile of banker Vladimir Potanin after he had been linked to an apparent bribe of officials in charge of a major auction Potanin had just won. In fact, most of the Western press, like the US government, got the Russia story wrong before the crash; as Liesman said, most of them really were on the Chubais/reform bandwagon right up until the August crash, when the position became untenable. In a 1995 article for the New York Times, John Lloyd, onetime Moscow bureau chief of London’s Financial Times, dismissed as “facile pessimism” claims that Russia was sinking into a quagmire. Like Liesman, he would eventually change his tune, writing a much-ballyhooed eulogy of the Russian reform effort in the New York Times Magazine this past summer that railed theatrically against the corruption in the Yeltsin regime. In that article Lloyd even denounced the loans-for-shares auctions as acts of “colossal criminality”–language far stronger than he had ever used when privatization was actually taking place.

Liesman was replaced by Andrew Higgins in July 1998, but he returned to Moscow in August to participate in the writing of a series of articles explaining how the crisis had unfolded. Apparently realizing he was on to a Pulitzer-caliber story, Liesman backed off every position he had taken in the previous two years and enthusiastically volunteered the new conventional wisdom: that the fundamentals for an Asia-plus meltdown had been there all along. In a prizewinning September 23 article co-written with Higgins, Liesman recounted grotesque anecdotes illustrating how Russia’s crony capitalism was one of the fundamental reasons behind the country’s collapse, concluding: “All the while, the government was going broke. It couldn’t collect the taxes it needed to pay its bills. So it built a rickety structure of domestic and foreign debt, creating the pyramid that collapsed in August and pushed Russia into default.”

What about loans-for-shares, which Liesman had lumped in with “the most successful and important of Russia’s reforms”? At the time, he had dismissed critics of the auctions as Communists. But in preparation for the Pulitzer ball, Liesman and Higgins sneered that only a fool could have missed the overt criminality of the auctions:

Desperate for cash, the government mortgaged some of its most lucrative assets for a fraction of their real value in return for loans from a handful of bankers. Meeting in secret, they carved up the spoils. Government bureaucrats colluded in the so-called loans-for-shares deals, allowing ownership of the stock-in-trust to be awarded at rigged auctions.
There wasn’t even a semblance of propriety. At a news conference in 1996, a Menatep executive could hardly contain his laughter when he claimed, implausibly, that he didn’t know who owned the subsidiary that had just bought Yukos, Russia’s second-biggest oil company. Russian journalists, served cognac by the bank’s staff, guffawed in disbelief. Menatep had run the auction and the bank, it would later disclose, controlled the firm that entered the winning bid.

None of the above, or even a hint of it, was in Liesman’s coverage of loans-for-shares when the story first happened. And none of it was new news.

Pulitzer candidates, like defendants in murder trials, are ostensibly judged by what they did, not by who they are–character and past behavior theoretically being irrelevant to the jury’s decision. In this case, Liesman, Higgins and the four other Journal staffers who won were judged by what they did in ten post-crisis articles, written between June and December of 1998.

But there are times when who a journalist is and what he does coincide. The record shows that Liesman’s bureau was little more than a PR conduit for a corrupt regime, consistently averting its eyes from the ugly truth. It cleaned up its act just in time to win the most coveted award in American journalism. The Pulitzer committee, as a body composed of journalism experts, either knew of the Journal‘s past record and chose to ignore it, or was negligently unaware of the Journal‘s body of work on Russia. If the former is true, it’s time to stop taking the Pulitzer Prize seriously as a standard-setter for the journalism profession. If the latter, the board should reconsider its award.

The Medvedev Doctrine and American Strategy

September 2, 2008

 By George Friedman

The United States has been fighting a war in the Islamic world since 2001. Its main theaters of operation are in Afghanistan and Iraq, but its politico-military focus spreads throughout the Islamic world, from Mindanao to Morocco. The situation on Aug. 7, 2008, was as follows:

1. The war in Iraq was moving toward an acceptable but not optimal solution. The government in Baghdad was not pro-American, but neither was it an Iranian puppet, and that was the best that could be hoped for. The United States anticipated pulling out troops, but not in a disorderly fashion.
2. The war in Afghanistan was deteriorating for the United States and NATO forces. The Taliban was increasingly effective, and large areas of the country were falling to its control. Force in Afghanistan was insufficient, and any troops withdrawn from Iraq would have to be deployed to Afghanistan to stabilize the situation. Political conditions in neighboring Pakistan were deteriorating, and that deterioration inevitably affected Afghanistan.
3. The United States had been locked in a confrontation with Iran over its nuclear program, demanding that Tehran halt enrichment of uranium or face U.S. action. The United States had assembled a group of six countries (the permanent members of the U.N. Security Council plus Germany) that agreed with the U.S. goal, was engaged in negotiations with Iran, and had agreed at some point to impose sanctions on Iran if Tehran failed to comply. The United States was also leaking stories about impending air attacks on Iran by Israel or the United States if Tehran didn’t abandon its enrichment program. The United States had the implicit agreement of the group of six not to sell arms to Tehran, creating a real sense of isolation in Iran.

In short, the United States remained heavily committed to a region stretching from Iraq to Pakistan, with main force committed to Iraq and Afghanistan, and the possibility of commitments to Pakistan (and above all to Iran) on the table. U.S. ground forces were stretched to the limit, and U.S. airpower, naval and land-based forces had to stand by for the possibility of an air campaign in Iran — regardless of whether the U.S. planned an attack, since the credibility of a bluff depended on the availability of force.

The situation in this region actually was improving, but the United States had to remain committed there. It was therefore no accident that the Russians invaded Georgia on Aug. 8 following a Georgian attack on South Ossetia. Forgetting the details of who did what to whom, the United States had created a massive window of opportunity for the Russians: For the foreseeable future, the United States had no significant forces to spare to deploy elsewhere in the world, nor the ability to sustain them in extended combat. Moreover, the United States was relying on Russian cooperation both against Iran and potentially in Afghanistan, where Moscow’s influence with some factions remains substantial. The United States needed the Russians and couldn’t block the Russians. Therefore, the Russians inevitably chose this moment to strike.

On Sunday, Russian Prime Minister Dmitri Medvedev in effect ran up the Jolly Roger. Whatever the United States thought it was dealing with in Russia, Medvedev made the Russian position very clear. He stated Russian foreign policy in five succinct points, which we can think of as the Medvedev Doctrine (and which we see fit to quote here):

• First, Russia recognizes the primacy of the fundamental principles of international law, which define the relations between civilized peoples. We will build our relations with other countries within the framework of these principles and this concept of international law.
• Second, the world should be multipolar. A single-pole world is unacceptable. Domination is something we cannot allow. We cannot accept a world order in which one country makes all the decisions, even as serious and influential a country as the United States of America. Such a world is unstable and threatened by conflict.
• Third, Russia does not want confrontation with any other country. Russia has no intention of isolating itself. We will develop friendly relations with Europe, the United States, and other countries, as much as is possible.
• Fourth, protecting the lives and dignity of our citizens, wherever they may be, is an unquestionable priority for our country. Our foreign policy decisions will be based on this need. We will also protect the interests of our business community abroad. It should be clear to all that we will respond to any aggressive acts committed against us.
• Finally, fifth, as is the case of other countries, there are regions in which Russia has privileged interests. These regions are home to countries with which we share special historical relations and are bound together as friends and good neighbors. We will pay particular attention to our work in these regions and build friendly ties with these countries, our close neighbors.

Medvedev concluded, “These are the principles I will follow in carrying out our foreign policy. As for the future, it depends not only on us but also on our friends and partners in the international community. They have a choice.”

The second point in this doctrine states that Russia does not accept the primacy of the United States in the international system. According to the third point, while Russia wants good relations with the United States and Europe, this depends on their behavior toward Russia and not just on Russia’s behavior. The fourth point states that Russia will protect the interests of Russians wherever they are — even if they live in the Baltic states or in Georgia, for example. This provides a doctrinal basis for intervention in such countries if Russia finds it necessary.

The fifth point is the critical one: “As is the case of other countries, there are regions in which Russia has privileged interests.” In other words, the Russians have special interests in the former Soviet Union and in friendly relations with these states. Intrusions by others into these regions that undermine pro-Russian regimes will be regarded as a threat to Russia’s “special interests.”

Thus, the Georgian conflict was not an isolated event — rather, Medvedev is saying that Russia is engaged in a general redefinition of the regional and global system. Locally, it would not be correct to say that Russia is trying to resurrect the Soviet Union or the Russian empire. It would be correct to say that Russia is creating a new structure of relations in the geography of its predecessors, with a new institutional structure with Moscow at its center. Globally, the Russians want to use this new regional power — and substantial Russian nuclear assets — to be part of a global system in which the United States loses its primacy.

These are ambitious goals, to say the least. But the Russians believe that the United States is off balance in the Islamic world and that there is an opportunity here, if they move quickly, to create a new reality before the United States is ready to respond. Europe has neither the military weight nor the will to actively resist Russia. Moreover, the Europeans are heavily dependent on Russian natural gas supplies over the coming years, and Russia can survive without selling it to them far better than the Europeans can survive without buying it. The Europeans are not a substantial factor in the equation, nor are they likely to become substantial.

This leaves the United States in an extremely difficult strategic position. The United States opposed the Soviet Union after 1945 not only for ideological reasons but also for geopolitical ones. If the Soviet Union had broken out of its encirclement and dominated all of Europe, the total economic power at its disposal, coupled with its population, would have allowed the Soviets to construct a navy that could challenge U.S. maritime hegemony and put the continental United States in jeopardy. It was U.S. policy during World Wars I and II and the Cold War to act militarily to prevent any power from dominating the Eurasian landmass. For the United States, this was the most important task throughout the 20th century.

The U.S.-jihadist war was waged in a strategic framework that assumed that the question of hegemony over Eurasia was closed. Germany’s defeat in World War II and the Soviet Union’s defeat in the Cold War meant that there was no claimant to Eurasia, and the United States was free to focus on what appeared to be the current priority — the defeat of radical Islamism. It appeared that the main threat to this strategy was the patience of the American public, not an attempt to resurrect a major Eurasian power.

The United States now faces a massive strategic dilemma, and it has limited military options against the Russians. It could choose a naval option, in which it would block the four Russian maritime outlets, the Sea of Japan and the Black, Baltic and Barents seas. The United States has ample military force with which to do this and could potentially do so without allied cooperation, which it would lack. It is extremely unlikely that the NATO council would unanimously support a blockade of Russia, which would be an act of war.

But while a blockade like this would certainly hurt the Russians, Russia is ultimately a land power. It is also capable of shipping and importing through third parties, meaning it could potentially acquire and ship key goods through European or Turkish ports (or Iranian ports, for that matter). The blockade option is thus more attractive on first glance than on deeper analysis.

More important, any overt U.S. action against Russia would result in counteractions. During the Cold War, the Soviets attacked American global interest not by sending Soviet troops, but by supporting regimes and factions with weapons and economic aid. Vietnam was the classic example: The Russians tied down 500,000 U.S. troops without placing major Russian forces at risk. Throughout the world, the Soviets implemented programs of subversion and aid to friendly regimes, forcing the United States either to accept pro-Soviet regimes, as with Cuba, or fight them at disproportionate cost.

In the present situation, the Russian response would strike at the heart of American strategy in the Islamic world. In the long run, the Russians have little interest in strengthening the Islamic world — but for the moment, they have substantial interest in maintaining American imbalance and sapping U.S. forces. The Russians have a long history of supporting Middle Eastern regimes with weapons shipments, and it is no accident that the first world leader they met with after invading Georgia was Syrian President Bashar al Assad. This was a clear signal that if the U.S. responded aggressively to Russia’s actions in Georgia, Moscow would ship a range of weapons to Syria — and far worse, to Iran. Indeed, Russia could conceivably send weapons to factions in Iraq that do not support the current regime, as well as to groups like Hezbollah. Moscow also could encourage the Iranians to withdraw their support for the Iraqi government and plunge Iraq back into conflict. Finally, Russia could ship weapons to the Taliban and work to further destabilize Pakistan.

At the moment, the United States faces the strategic problem that the Russians have options while the United States does not. Not only does the U.S. commitment of ground forces in the Islamic world leave the United States without strategic reserve, but the political arrangements under which these troops operate make them highly vulnerable to Russian manipulation — with few satisfactory U.S. counters.

The U.S. government is trying to think through how it can maintain its commitment in the Islamic world and resist the Russian reassertion of hegemony in the former Soviet Union. If the United States could very rapidly win its wars in the region, this would be possible. But the Russians are in a position to prolong these wars, and even without such agitation, the American ability to close off the conflicts is severely limited. The United States could massively increase the size of its army and make deployments into the Baltics, Ukraine and Central Asia to thwart Russian plans, but it would take years to build up these forces and the active cooperation of Europe to deploy them. Logistically, European support would be essential — but the Europeans in general, and the Germans in particular, have no appetite for this war. Expanding the U.S. Army is necessary, but it does not affect the current strategic reality.

This logistical issue might be manageable, but the real heart of this problem is not merely the deployment of U.S. forces in the Islamic world — it is the Russians’ ability to use weapons sales and covert means to deteriorate conditions dramatically. With active Russian hostility added to the current reality, the strategic situation in the Islamic world could rapidly spin out of control.

The United States is therefore trapped by its commitment to the Islamic world. It does not have sufficient forces to block Russian hegemony in the former Soviet Union, and if it tries to block the Russians with naval or air forces, it faces a dangerous riposte from the Russians in the Islamic world. If it does nothing, it creates a strategic threat that potentially towers over the threat in the Islamic world.

The United States now has to make a fundamental strategic decision. If it remains committed to its current strategy, it cannot respond to the Russians. If it does not respond to the Russians for five or 10 years, the world will look very much like it did from 1945 to 1992. There will be another Cold War at the very least, with a peer power much poorer than the United States but prepared to devote huge amounts of money to national defense.

There are four broad U.S. options:

1. Attempt to make a settlement with Iran that would guarantee the neutral stability of Iraq and permit the rapid withdrawal of U.S. forces there. Iran is the key here. The Iranians might also mistrust a re-emergent Russia, and while Tehran might be tempted to work with the Russians against the Americans, Iran might consider an arrangement with the United States — particularly if the United States refocuses its attentions elsewhere. On the upside, this would free the U.S. from Iraq. On the downside, the Iranians might not want —or honor — such a deal.
2. Enter into negotiations with the Russians, granting them the sphere of influence they want in the former Soviet Union in return for guarantees not to project Russian power into Europe proper. The Russians will be busy consolidating their position for years, giving the U.S. time to re-energize NATO. On the upside, this would free the United States to continue its war in the Islamic world. On the downside, it would create a framework for the re-emergence of a powerful Russian empire that would be as difficult to contain as the Soviet Union.
3. Refuse to engage the Russians and leave the problem to the Europeans. On the upside, this would allow the United States to continue war in the Islamic world and force the Europeans to act. On the downside, the Europeans are too divided, dependent on Russia and dispirited to resist the Russians. This strategy could speed up Russia’s re-emergence.
4. Rapidly disengage from Iraq, leaving a residual force there and in Afghanistan. The upside is that this creates a reserve force to reinforce the Baltics and Ukraine that might restrain Russia in the former Soviet Union. The downside is that it would create chaos in the Islamic world, threatening regimes that have sided with the United States and potentially reviving effective intercontinental terrorism. The trade-off is between a hegemonic threat from Eurasia and instability and a terror threat from the Islamic world.

We are pointing to very stark strategic choices. Continuing the war in the Islamic world has a much higher cost now than it did when it began, and Russia potentially poses a far greater threat to the United States than the Islamic world does. What might have been a rational policy in 2001 or 2003 has now turned into a very dangerous enterprise, because a hostile major power now has the option of making the U.S. position in the Middle East enormously more difficult.

If a U.S. settlement with Iran is impossible, and a diplomatic solution with the Russians that would keep them from taking a hegemonic position in the former Soviet Union cannot be reached, then the United States must consider rapidly abandoning its wars in Iraq and Afghanistan and redeploying its forces to block Russian expansion. The threat posed by the Soviet Union during the Cold War was far graver than the threat posed now by the fragmented Islamic world. In the end, the nations there will cancel each other out, and militant organizations will be something the United States simply has to deal with. This is not an ideal solution by any means, but the clock appears to have run out on the American war in the Islamic world.

We do not expect the United States to take this option. It is difficult to abandon a conflict that has gone on this long when it is not yet crystal clear that the Russians will actually be a threat later. (It is far easier for an analyst to make such suggestions than it is for a president to act on them.) Instead, the United States will attempt to bridge the Russian situation with gestures and half measures.

Nevertheless, American national strategy is in crisis. The United States has insufficient power to cope with two threats and must choose between the two. Continuing the current strategy means choosing to deal with the Islamic threat rather than the Russian one, and that is reasonable only if the Islamic threat represents a greater danger to American interests than the Russian threat does. It is difficult to see how the chaos of the Islamic world will cohere to form a global threat. But it is not difficult to imagine a Russia guided by the Medvedev Doctrine rapidly becoming a global threat and a direct danger to American interests.

We expect no immediate change in American strategic deployments — and we expect this to be regretted later. However, given U.S. Vice President Dick Cheney’s trip to the Caucasus region, now would be the time to see some movement in U.S. foreign policy. If Cheney isn’t going to be talking to the Russians, he needs to be talking to the Iranians. Otherwise, he will be writing checks in the region that the U.S. is in no position to cash.