The President's Mission to Moscow

Obama doesn't need to engage Russia's leaders. He needs to deter themm

DAVID SATTER

Moscow

President Barack Obama arrives here today facing a dilemma of his own making. Having called for a "reset" in U.S.-Russian relations, the U.S. side is virtually obliged to make some new overtures. But Russia does not need to be engaged. It needs to be deterred.

The expectations that Mr. Obama has inspired are substantial. Both officials and ordinary citizens in Russia interpret the call for a reset as an admission of U.S. guilt for ignoring Russia's interests. Sergei Rybakov, the Russian deputy foreign minister, said that mutual trust was "lacking over the last several years." It was the task of the U.S. to show its good intentions with "concrete actions" because in Russia, the U.S. is "deeply distrusted."

David Gothard

Accepting the Russian view of reality on the issues that divide the U.S. and Russia, however, would be a grave mistake. Russia aspires to resurrect a version of the Soviet Union in which it projects power and dominates its neighbors. To encourage its ambitions in any way would be to undermine not only U.S. security but, in the long run, the security of Russia as well.

There are three important areas of conflict between the U.S. and Russia: NATO expansion, the U.S. missile shield in Eastern Europe and the Russian human rights situation. In each case, any reset should be on the Russian side.

The most urgent issue may be NATO expansion. There are serious indications that Russia is preparing for a second invasion of Georgia. The first Georgian war was accompanied by a burst of patriotism in Russia but didn't achieve its strategic objectives. Georgian president Mikheil Saakashvili remains in power and Georgia remains a supply corridor to the West for energy from Central Asia and the Caspian Sea. Many Russian leaders want to finish the job. At a televised forum in December, Prime Minister Vladimir Putin was asked about press reports that he had told French president Nicolas Sarkozy that Mr. Saakashvili should be "hung by his ba**s." He replied, "Why only by one part?"

Under these circumstances, the best protection for Georgia is NATO membership. According to Pavel Felgenhauer, a defense analyst with Novaya Gazeta, the decision to invade Georgia last August came in April after NATO failed to offer outright a Membership Action Plan to Georgia and Ukraine at its annual summit in Bucharest.

Russia will argue strenuously that Georgia, Ukraine and the other former Soviet republics are part of its sphere of "privileged interests." This is an issue on which Mr. Obama cannot give way. If the former Soviet republics are denied NATO membership at Russia's behest, they either will be turned into Russian satellites with manipulated elections and a controlled foreign policy or form a zone of instability along Russia's borders with unpredictable consequences for both Russia and the West.

Beside the issue of NATO expansion, Russia and the U.S. have a critical conflict over U.S. plans to install a missile shield in the Czech Republic and Poland. Not only have U.S. experts argued that the anti-missile system is not aimed at Russia but Russia's military experts agree. Nonetheless, the system is described by Russian leaders as a threat and denunciations of the missile shield are a staple of the anti-Western programming on Russian state television.

According to Mikhail Delyagin, who served as an adviser to former Russian Prime Minister Mikhail Kasyanov, the placement of rockets in Poland is unacceptable to Russia for emotional and symbolic reasons. "It shows that the U.S. is now the master in Eastern Europe," he said. Any decision to yield to Russian objections, however, would effectively divide NATO into countries that need Russian approval for deployments and those that do not. Even dubious Russian promises to help with Iran would not compensate for the damage done to the alliance by such a concession to Russian pretensions.

Finally, there is the conflict between Russia and the U.S. over human rights. The status of human rights is a universal concern but it also has strategic implications. A population that lacks democratic rights and is subject to constant anti-Western propaganda can easily be mobilized against the U.S.

By any measure, the state of human rights in Russia is unacceptable. Russia today lacks honest elections or a separation of powers. The regime allows a degree of freedom but the features of daily life include police torture, prisoner abuse, political control of the courts and, for democratic activists, the danger of being beaten or killed. The result is that fear has returned to Russia less than two decades after the fall of the Soviet Union.

The regime is also taking steps to curtail freedom of speech. Freedom of the press has long been restricted under Mr. Putin with censorship on state run television and pressure on newspapers through their owners, to exercise self censorship. Peaceful demonstrations have also been forcibly dispersed. In recent weeks, however, a bill has been introduced in the State Duma that would make it illegal to deny the role of the Soviet Union in the victory in World War II or the crimes of Hitler's cronies (but not the crimes of Stalin and his entourage). The punishment both for Russian citizens and for foreigners will be three to five years in prison.

In the run up to Mr. Obama's visit, Russian academics and self described realists in the U.S. have called for a "grand deal" in which the U.S. accedes to Russian demands in the former Soviet Union in return for Russian help on Iran, North Korea and Afghanistan. In the case of Iran, Russia, which has repeatedly thwarted tough United Nations resolutions on that country's nuclear energy program, is offering to assist in dealing with a problem that it helped to create.

Unfortunately such a deal, the only "reset" in which the Russians have shown any interest, would eliminate moral criteria from the U.S.-Russian relationship and deprive the U.S. of any basis for limiting Russia's demands in the future. Under those circumstances, Russia's appetite is likely to grow.

Mr. Obama may wish to improve the U.S.-Russia relationship but the problems in that relationship come not from our actions but from assumptions on the Russian side about the prerogatives of power that we cannot possibly accept. Instead of resetting relations, we may just have to content ourselves with resisting Russian pretensions until such time as the mentality that gives rise to them can be changed.

Mr. Satter is a senior fellow at the Hudson Institute and a visiting scholar at the Johns Hopkins University School of Advanced International Studies (SAIS). He is writing a book on the Russian attitude to the Soviet past.

Honduras at the Tipping Point

Why is the U.S. not supporting the rule of law?

• By MARY ANASTASIA O'GRADY

Hundreds of emails from Hondurans flooded my in-box last week after I reported on the military's arrest of President Manuel Zelaya, as ordered by the Supreme Court, and his subsequent banishment from the country.

Mr. Zelaya's violations of the rule of law in recent months were numerous. But the tipping point came 10 days ago, when he led a violent mob that stormed a military base to seize and distribute Venezuelan-printed ballots for an illegal referendum.

All but a handful of my letters pleaded for international understanding of the threat to the constitutional democracy that Mr. Zelaya presented. One phrase occurred again and again: "Please pray for us."

Associated Press

Raul Castro, left, Manuel Zelaya, center, and Hugo Chavez in Managua, Nicaragua, June 29.

Hondurans have good cause for calling on divine intervention: Reason has gone AWOL in places like Turtle Bay and Foggy Bottom. Ruling the debate on Mr. Zelaya's behavior is Venezuelan strongman Hugo Chávez, who is now the reigning international authority on "democracy."

Mr. Chávez is demanding that Mr. Zelaya be reinstated and is even threatening to overthrow the new Honduran president, Roberto Micheletti. He's leading the charge from the Organization of American States (OAS). The United Nations and the Obama administration are falling in line.

Is this insane? You bet. We have fallen through the looking glass and it's time to review how hemispheric relations came to such a sad state.

The story begins in 2004, when Mr. Chávez was still an aspiring despot and the U.S. pursued a policy of appeasement toward him. Not surprisingly, that only heightened his appetite for power.

Mr. Chávez had already rewritten the Venezuelan Constitution, taken over the judiciary and the national electoral council (CNE), militarized the government, and staked out an aggressive, anti-American foreign policy promising to spread his revolution around the hemisphere.

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Many Venezuelans were alarmed, and the opposition had labored to collect signatures for a presidential recall referendum permitted under the constitution. As voting day drew near, Mr. Chávez behaved as if he knew his days were numbered. The European Union refused to send an observer team, citing lack of transparency. The OAS did send observers, and in the months and weeks ahead of the vote mission chief Fernando Jaramillo complained bitterly about the state's intimidation tactics against the population. Mr. Chávez gave OAS Secretary General César Gaviria an ultimatum: Either get Mr. Jaramillo out of the country or the referendum would be quashed. Mr. Chávez was appeased. Mr. Jaramillo was withdrawn.

The Carter Center was also invited to "observe," and former President Jimmy Carter was welcomed warmly by Mr. Chávez upon his arrival in Venezuela.

A key problem, beyond the corrupted voter rolls and government intimidation, was that Mr. Chávez did not allow an audit of his electronic voting machines. Exit polls showed him losing the vote decisively. But in the middle of the night, the minority members of the CNE were kicked out of the election command center. Shortly thereafter, Mr. Chávez claimed victory. There was never a credible audit of the paper ballots against the tallies in the voting machines.

Mr. Carter's approval notwithstanding, the proper U.S. and OAS response was obvious: The process had been shrouded in state secrets and therefore it was impossible to endorse or reject the results. Venezuelan patriots begged for help from the outside world. Instead, the U.S. assistant secretary of state for the Western Hemisphere, Roger Noriega, and the OAS blessed the charade.

There was never any explanation for the blind endorsement, but behind the scenes there were claims that Mr. Chávez threatened to call his militia to the streets and spill blood. The oil fields were to be burned. To this day, the opposition contends that the U.S. and Mr. Gaviria made a cold calculation that caving in to Mr. Chávez would avoid violence.

Predictably, Washington's endorsement of the flawed electoral process was a green light. Mr. Chávez grew more aggressive, emboldened by his "legitimate" status. He set about using his oil money to destabilize the Bolivian and Ecuadorean democracies and to help Nicaragua's Daniel Ortega and Argentina's Cristina Kirchner get elected. Soviet-backed Fidel Castro was able to intimidate his neighbors in the 1960s and '70s, and Mr. Chávez has done the same thing in the new millennium. This has given him vast power at the OAS.

Hondurans had the courage to push back. Now Chávez-supported agitators are trying to stir up violence. Yesterday afternoon airline service was suspended in Tegucigalpa when Mr. Zelaya tried to return to the country and his plane was not permitted to land. There were reports of violence between his backers and troops.

This is a moment when the U.S. ought to be on the side of the rule of law, which the Honduran court and Congress upheld. If Washington does not reverse course, it will be one more act of appeasement toward an ambitious and increasingly dangerous dictator.

Zelaya Abandons Bid to Land in Honduras, Heads for El Salvador

July 5 (Bloomberg) -- The plane carrying deposed Honduran President Manuel Zelaya was unable to land in Tegucigalpa, the Central American country’s capital, because of vehicles blocking the runway.

Zelaya, speaking from the plane in an interview on the Telesur network, said the plane will head toward El Salvador where he will meet with allies. He vowed to try to enter Honduras tomorrow or at a later date.

Russia and India Question Reliance on Dollar Before G-8 Summit

By Mark Deen and Simon Kennedy

July 6 (Bloomberg) -- Russia and India said the world economy is too reliant on the U.S. dollar and called for changes in how $6.5 trillion in currency reserves are managed, as Group of Eight leaders prepare to meet this week.

“The dollar system or the system based on the dollar and euro have shown that they are flawed,” Russian President Dmitry Medvedev said in an interview with Corriere della Sera, repeating his proposal for a new international reserve currency.

Suresh Tendulkar, an economic adviser to Indian Prime Minister Manmohan Singh, said in a July 3 interview that he is urging his nation to diversify its foreign holdings away from the dollar.

The challenge to the dollar, a linchpin of world finance and trade since 1945, underlines the shift in relative economic power toward emerging markets and away from the developed nations that spawned the global crisis.

French Finance Minister Christine Lagarde, speaking yesterday at a conference in Aix en Provence, France, said that “we must explore better coordination of exchange-rate policy.”

Questions need to be asked about “the balance of currencies and the role of currencies in a world that has changed because of the crisis and the growing role of emerging countries,” she told reporters.

Bank of France Governor Christian Noyer said at the same conference, “We really need to make sure there is a greater stability between the big currencies in the period to come.”

Dollar Share Grows

For all the concerns about the dollar’s role, emerging markets such as China and India remain dependent on the currency. The International Monetary Fund said June 30 the share of dollars in allocated global foreign-exchange reserves increased to 65 percent, or $2.6 trillion, in the first three months of this year, the highest since 2007.

China doesn’t support the idea of creating a supranational reserve currency and expects the U.S. dollar to maintain its role for “many years to come,” Deputy Foreign Minister He Yafei told reporters in Rome yesterday.

While Medvedev said he sees “no alternative” to the dollar or euro now, he repeated his proposal that “regional reserve currencies” be developed and again questioned the wisdom of relying on the dollar.

‘Cannot Be Hostages’

“In the long term, we must also think about a single unit of payment such as the International Monetary Fund’s Special Drawing Rights,” a unit of an account linked to a basket of currencies, he told the Italian newspaper. “We cannot be hostages to the economic situation of a single country, as is happening today with the United States.”

Russia has support. India’s Tendulkar said he is advising Singh to diversify India’s $264.6 billion in foreign-exchange reserves and hold fewer dollars.

“The major part of Indian reserves are in dollars -- that is something that’s a problem for us,” he said in Aix en Provence. He said big dollar holders face a “prisoner’s dilemma,” a reference to a problem in game theory in which a rational choice for an individual has negative consequences for a group.

The People’s Bank of China, that country’s central bank, said June 26 that the IMF should manage more of its members’ reserves. China said July 2 that it will allow companies to use the yuan to settle cross-border trade and let them keep their entitlement to export tax rebates, seeking to reduce the reliance of importers and exporters on the U.S. dollar.

Safe Haven

The dollar’s role as a safe haven was highlighted last week when the currency advanced 0.5 percent against the euro, to $1.3894, on speculation the global economic recovery is faltering.

“Some emerging countries have decided to deal more in their respective currencies and trust each other,” Lagarde said in an interview yesterday. “That doesn’t stop other countries from seeing the dollar, and to a lesser extent the euro, as currencies of trading if not reserve currencies.”

Lagarde said that any discussion of currencies needs to encompass the dollar, the euro, the yuan and the yen and that the meetings of the Group of 20 are the right forum.

“The appropriate platform is the one in which all the major currencies are represented,” she said.

Asked in Aix en Provence about currencies, European Central Bank President Jean-Claude Trichet said it is “extremely important” that U.S. officials remain committed to their policy of supporting a strong dollar.