Russian Tank Probe in Ukraine Confirmed with US Official

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Journal of Political Risk, Vol. 2, No. 6, June 2014.
Anders Corr, Ph.D.
Publisher of the Journal of Political Risk
T-72 Tank reportedly destroyed by Ukrainian forces in Snizhne, Ukraine, June 12, 2014. Source: Twitter.

T-72 Tank reportedly destroyed by Ukrainian forces in Snizhne, Ukraine, June 12, 2014. Source: Twitter.

The Ukrainian Interior Minister, Arsen Avakov, accused Russia of allowing three tanks on June 12 to cross  from Russia to Ukraine at a rebel-controlled border crossing. The Journal of Political Risk confirmed a tank movement from Russia to Ukraine with a US official who wishes to remain anonymous.

The small tank column is likely a probe to assess the potential reaction of Ukraine and the West to a larger tank invasion that may be under consideration by the Russians. This comes after Russian troops pulsed the border on April 24 in an “exercise” that also served the military intelligence function of testing Ukrainian tactical reaction.
The Russian tank probe in Ukraine comes at a time when President Obama is showing less military restraint than a few months ago. In June he ordered resumption of drone attacks in Pakistan, and he has not removed the possibility of US air strikes in Iraq against Al Qaeda terrorists making territorial gains on the outskirts of Baghdad. With sagging approval ratings in part due to a public perception of weakness in international affairs, President Obama is likely to react to the Russian tank probe with greater rigor, including increased economic sanctions against Russia, and troop build-ups in Eastern Europe. This would put significant downward pressure on the Ruble and MICEX index of Russian stocks.
JPR Status: Report.

Nationalism, Pastoral Nomadism, and Political Risk to Natural Resource Investments in Mongolia: Case Studies of the Aluminum Corporation of China Limited (Chalco) and Rio Tinto

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Journal of Political Risk, Vol. 2, No. 6, June 2014.

From right to left, Shaft #1, #2, and #5 at Oyu Tolgoi, a copper mine in extreme southern Mongolia photographed from afar.

From right to left, Shaft #1, #2, and #5 at Oyu Tolgoi, a copper mine in extreme southern Mongolia, 2013. Oyu Tolgoi, also known as Turquoise Hill is a combined open pit and underground mega mine project in Khanbogd in the south Gobi Desert. The site was discovered in 2001 and is being developed as a joint venture between Ivanhoe Mines, Rio Tinto and the Government of Mongolia. The mine is scheduled to begin production in July 2012. The Oyu Tolgoi mining project is the largest financial undertaking in Mongolia’s history and is expected upon completion to account for more than 30% of the country’s gross domestic product. Copper production is expected to reach 450,000 tonnes annually and Gold production is estimated to reach 650,000 ounces per year. Source: Wikimedia Commons.

Jamian Ronca Spadavecchia [1]
Founder and President of Oxbow Advisory

Mongolia stands at a critical juncture between the rewards of natural resource development and the challenges of modernization. On the one hand, it offers abundant opportunities in the natural resources sector and is located near growing and resource-starved industrial nations of East Asia. At the same time, the presence of autocratic neighbors impose international instability on this democratic and market-oriented economy.

This article considers two underanalyzed political risks that are necessary for understanding the future of the Mongolian economy: nationalism and pastoral nomadism. In doing so, it proffers an improved analytical framework for resource investors to better assess and mitigate their Mongolia risk.

Finally, the analysis uses selected case studies to demonstrate how nationalism and pastoral nomadism might impact natural resource investment. For nationalism, a study of the proposed acquisition of SouthGobi Resources (SouthGobi) by the Aluminum Corporation of China Limited (Chalco) is offered. The Chalco study is emblematic of the link between nationalism and two dominant trends in Mongolia: resource nationalism and increasing geopolitical risk in the natural resources sector. The section also looks at how pastoral nomadism poses a risk to Oyu Tolgoi, Mongolia’s premier copper and gold mining project, by examining a dispute between Rio Tinto and indigenous communities of Gobi herders that threatened Oyu Tolgoi’s project financing. Continue reading →

The New Face of Russia’s Relations with Brazil

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Journal of Political Risk, Vol. 2, No.5, May 2014.

Defense Minister of Brazil, Celso Amorim, receives his counterpart from Russia, Sergei Shoigu, during bilateral meeting in Brasilia.

Defense Minister of Brazil, Celso Amorim (L), receives his counterpart from Russia, Sergei Shoigu, to bilateral meeting at the Defense Ministry in Brasilia, capital of Brazil, on October 16, 2013. Shoigu’s visit included an attempt to win a $4 billion deal to supply 18 fighter jets.

Matthew Michaelides
Editor of the Journal of Political Risk

Abstract

Bilateral trade, high level personal communication, and military-technical relations between Russia and Brazil have all grown significantly over the past decade. Recent weapons sales to Brazil include a $150 million contract for MI-35 helicopters in 2009 and a 2012 deal for seven Ka-62 helicopters. Moreover, the Russian defense ministry has indicated its intention to increase Russian military capacity in Brazil and Latin America more broadly. This paper examines the causes for the increasing depth of Russian-Brazilian military-technical relations and concludes that informal patronage politics play an essential role in understanding Russian actions. A detailed analysis of contemporary Russian-Brazilian relations and existing theoretical perspectives is provided, as well as a thorough examination of recent Russian arms and equipment sales from the informal patronage politics perspective.

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China Response to Hacking Indictment Indicates Rash Leadership and Need to Expand NATO to Asia

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Journal of Political Risk, Vol. 2, No. 5, May 2014.

Chinese and Russian joint naval exercise is photographed. One large ship is visible in the background with a smaller one in the foreground.

Chinese and Russian joint naval exercise. In 2013, Russia and China conducted similar exercises near Vladivostok. A Chinese fleet consisting of seven naval vessels participated in the “Joint Sea-2013” Sino-Russian joint naval drills scheduled for July 5 to 12. The eight-day maneuvers focus on joint maritime air defense, joint escorts and marine search and rescue operations. Source: Wikimedia Commons.

Anders Corr, Ph.D.
Publisher of the Journal of Political Risk

China is using a very blunt and escalatory instrument — threatening general deterioration in military relations — to respond to a limited issue of Chinese individuals stealing trade secrets. On May 20, the United States Justice Department indicted five People’s Liberation Army members for hacking United States commercial data.  The remarkable speed with which China responded the following day, and at the highest level, suggests that commercial hacking is an officially-approved state policy on the part of China. The Chinese threat of reduced military cooperation and thereby deteriorating military relations is clumsy in that the Chinese would look better had they simply launched an investigation of the individuals — an investigation that they could later claim shows the indictment as baseless. The broad Chinese threat of deteriorating military relations invites an increase in US military attention to Asia — exactly what the Chinese should be trying to avoid. The clumsiness of the Chinese response to the indictments indicates a rash Chinese leadership prone to irrational military strategies, with consequent market volatility and political instability. The US and its Asian allies should respond with a measured forward deployment of military forces, and redoubled diplomatic energy towards greater alliance cooperation, including between Asian allies and NATO.

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Serbia’s EU bid and the Kosovo dialogue

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Journal of Political Risk, Vol. 2, No. 4, April 2014.

26th MEU Marines are photographed providing security at mass gravesite in Northern Kosovo as members of the Royal Canadian Mounted Police Forensics Team investigate remains.

26th MEU Marines provide security at mass gravesite in Northern Kosovo as members of the Royal Canadian Mounted Police Forensics Team investigate remains. The Marines and sailors of the 26th Marine Expeditionary Unit (MEU) are helping to enforce the implementation of the military technical agreement and to provide peace and stability to Kosovo during Operation JOINT GUARDIAN. Source: NARA & DVIDS Public Domain Archive.

Raquel Montes Torralba
Foreign Affairs Analyst

With Serbia seeking to join the European Union (EU), as did Croatia in July 2013, European officials have advanced a pre-condition to be resolution of major disputes with Kosovo. In April 2014, Serbia and Kosovo celebrate the first anniversary of an agreement meant to normalize relations. Positive developments include the March 2014 election of a pro-EU majority in Serbia’s parliament, local elections in North Kosovo held in a generally peaceful manner, as well as progress on technical issues such as border control and police transfer. Nevertheless, the political context for 2014 could be derailed by upcoming general elections in Kosovo, the creation of a Kosovo Army, and establishment of a war crimes court for Kosovo’s ethnic Albanian rebels. More particularly, all these factors could impact the creation of a Community of Serb Municipalities, the keystone of the Serbia-Kosovo Agreement. Continue reading →