TOON

Western Aid Declines, Financial Bailouts Mount

Over three billion people - almost half the world, live on less than $2.50 a day.

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Thalif Deen
June 26, 2009 - Inter Press Service

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As the world's poorer nations warn about the gravity of the global financial crisis on their fragile economies, the United Nations has exposed the hypocrisy of Western donors who cry poverty even while they raise trillions of dollars to rescue their beleaguered financial institutions.

Secretary-General Ban Ki-moon has warned that the current financial meltdown should not be an excuse to slash development aid or marginalise developing nations, specifically the world's 49 least developed countries (LDCs) - ranging from Bhutan and Benin to Sierra Leone and Solomon Islands.

The United Nations Millennium Campaign, which is battling to help eradicate extreme poverty and hunger worldwide, points out that since the inception of overseas development assistance almost 50 years ago, donor countries have given some 2.0 trillion dollars in aid.

And yet over the past year, 18 trillion dollars has been found globally to bail out banks and other financial institutions.

"The stark contrast between the money dispersed to the world's desperately poor after 49 years of painstaking summits and negotiations and the staggering sums found virtually overnight to bail out the creators of the global economic crisis makes it impossible for governments to any longer claim that the world can't find the money to help the 50,000 people who are dying of extreme poverty every day", says Salil Shetty, director of the Millennium Campaign.

The amount of total aid over the past 49 years represents just 11.0 percent of the money found for financial institutions in one year, he added.

Addressing the three-day U.N. summit on the global financial crisis Wednesday, the secretary-general reinforced the same argument.

The annual aid to the crisis-stricken continent of Africa, he said, was at least 20 billion dollars below the promises made by the leaders of the industrial world in Gleneagles, Scotland back in 2005.

"Surely, if the world can mobilise more than 18 trillion dollars to keep the financial sector afloat, it can find more than 18 billion dollars to keep commitments to Africa," Ban said.

But would it?

The challenge to the industrial world will come up once again at a summit meeting of the G8 countries - the United States, Britain, France, Italy, Germany, Japan, Canada and Russia - in L'Aquila, Italy Jul. 8-10.

"We need clear priorities," Ban told the U.N. summit. "That is why I have just sent a letter to G8 leaders urging concrete commitments and specific action to renew our resolve."

A 16-page outcome document, to be adopted by political leaders Friday, says the evolving crisis, which began within the world's major financial centres, has spread throughout the global economy, causing severe social, political and economic impacts.

"This crisis is negatively affecting all countries, particularly developing countries, and threatening the livelihoods, well-being and development opportunities of millions of people," the draft says.

The bottom line: millions of people all over the world are losing their jobs, their income, their savings and their homes.

The document specifically says that developing countries, "which did not cause the global economic and financial crisis, are nonetheless severely affected by it."

The Food and Agriculture Organisation (FAO) says the economic meltdown has resulted in 100 million more people going hungry, with the total number of the world's starving population reaching over one billion this year.

The World Bank projects a finance gap of up to 700 billion dollars, desperately needed by developing nations, with the possibility of a "lost generation", resulting in added deaths of 1.5 to 2.8 million infants by 2015.

Asked why rich countries keep ignoring the pleas of the world's poorer nations while they bail out banks and other financial institutions, Shetty of the U.N. Millennium Campaign told IPS: "The leaders in rich countries don't face any short-term political consequences by not acting on the needs and aspirations of poor people living in poor countries."

He said the only long-term solution is to build public support through sustained public education on these issues in rich countries.

"The decision-makers in rich countries don't see the same self-interest and mutuality as they now see in climate change, swine flu/pandemics, the so-called war against terror and to a lesser extent in trade on which the need for multilateral action has become painfully clear," he added.

Shetty pointed out they did realise the possible consequences in the case of Eastern Europe, where they live physically next to poor countries.

"They forget that there is less than 10 miles of water separating Europe from Africa," he noted.

Asked if developing nations, who are now part of G20, have a role to play in convincing their rich partners to respond to the call, Shetty said: "Yes, like climate change the growing economic importance particularly of China has certainly rebalanced the highly asymmetric power relations between rich and poor countries."

The members of the G20 are the finance ministers and central bank governors of 19 countries: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom and the United States of America, plus the European Union.

Shetty said: "The challenge we now face is to make sure that the BRICs (Brazil, India and China) themselves don't forget the 49 least developed countries (LDCs), as they bargain for a better deal for themselves with the richest countries."

"Otherwise, we could be back to the historic game of divide and rule," he stressed.

Shetty also said it is crucial that the emerging nations continue to place the achievement of the Millennium Development Goals (MDGs) at the forefront of their negotiations at the G8 in Italy in two weeks time and the G20 in September in the United States.

U.S. Lawmakers Act to Tame 'Vulture Funds'

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A coalition of African solidarity and debt relief organizations applauded U.S. legislation introduced last week to protect countries from vulture funds -- companies that profit off of the debt of poor nations.           

June 25, 2009 - OneWorld.net

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What's the Story?

The Stop VULTURE Funds Act is a "key step in protecting developing countries from vulture funds," said Nicole Lee, executive director of the TransAfrica Forum, an African American human rights and social justice advocacy organization.

Reintroduced last week into the lower house of Congress, the bill would block U.S. investment funds from purchasing the debt of impoverished countries at reduced rates and then suing the countries to collect astronomical profits. The bill would also limit the amount of interest for which the firms could sue to six percent and require greater transparency during these transactions.

According to Neil Watkins, executive director of the Jubilee USA Network, an alliance of 75 religious denominations, development agencies, and human rights groups, "vulture funds make their profits by deepening the suffering of millions of people in some of the poorest countries in the world. They are stealing the resources that should be invested in education, health, and infrastructure improvement."

Preying on the Poor

Every year, African nations pay approximately $14 billion in debt remunerations to wealthy nations and international financial institutions while receiving less than $13 billion in international aid. Agreements to cancel or reduce debts have enabled states to spend more on much-needed social programs and translated into a higher quality of life for millions of people in developing countries.

Money used to pay back vulture funds is typically rerouted from programs intended to benefit these countries' least privileged citizens.

One report estimates the average potential cost of lawsuits brought against Heavily Indebted Poor Countries' (HIPCs) by vulture funds amounts to 18 percent of spending on health care and education, 59 percent of debt repayments, and 5 percent of budget revenue. A 2007 study by the organization Debt Relief International found that lawsuit costs totaled 52 percent of health and education expenditure in Niger and 98 percent of revenue in Cameroon.

Vulture funds prey on countries that qualify for debt cancellation precisely because their governments have access to money for such programs, writes the TransAfrica Forum.

"Since the vulture fund buys the loan from the creditor, not the debtor, the vulture fund can technically claim payment of the full amount, even if it paid only a fraction of the value," explains Africa Action. Investment funds that pursue vulture activities often do so in great secrecy, by basing their operations in tax havens like the British Virgin Islands and litigating in European and U.S. courts, which they see consider more creditor-friendly and efficient. Moreover, some investment funds -- known as hedge funds -- are exempt from certain regulatory processes and can more easily target indebted countries.

Zambia and Donegal International

In 1979, Zambia purchased agricultural equipment and services from Romania on credit. Shoddy equipment and European farm subsidies, however, prevented the southern African nation from bringing in the revenue necessary to repay the loan.

In 1999, the two countries agreed to liquidate the debt for $3.28 million. But Donegal International, a British Virgin Islands-based fund, moved quickly to purchase the debt from Romania for the liquidation price and then sued the Zambian government in a U.K. court for $55 million seven years later.

The British High Court ordered Zambia to pay $15.4 million to Donegal International, or what amounted to 65 percent of Zambia's savings in debt relief in 2006.

Clipping the Wings of Vulture Funds

"More than two-thirds of the lawsuits brought by vulture funds are adjudicated in U.S. or U.K. courts," explains the TransAfrica Forum. "In the majority of cases, vulture funds sue in courts located in New York, Paris, and London because these courts are viewed as more creditor-friendly and more efficient."

In addition to efforts in the United States, lawmakers in the United Kingdom introduced legislation in May that would allow funds to sue only for the amount they paid for the debt, force funds to disclose a list of their investors, and introduce measures to combat the corruption often involved in these deals.

The U.K.-based Jubilee Debt Campaign is calling on supporters to urge their local representatives to engage in various efforts aimed at ending "the vulture culture."

Similarly, Jubilee USA is encouraging people in the United States to take action against vulture funds by encouraging greater political support for the Stop VULTURE Funds Act currently under consideration in Congress.

Will the 'Dollar Wars' Kill What's Left of the American Dream?

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Countries yoked to America's currency, and therefore its cratering empire, want to kick the dollar to the curb. And that's bad news for the U.S.

Scott Thill
June 26, 2009 - AlterNet

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Here's a terrible joke: An elderly man walks into a bar and says, "I got good news and I got bad news."

"What's the good news?" the bartender asks.

"I stayed out of the stock market, so my retirement dollars are safe."

"What's the bad news?"

"They're dollars."

OK, I said it was a terrible joke. But that may be what the dollar is becoming, now that the critical mass of wartime spending, rampant consumption, hyper-real finance  and environmental collapse has hit the fan.

The hangover from the last three presidential terms, but especially the last two, has taken the American economy down the rabbit hole, with the international monetary system begging for mercy while hitched to its off-the-ralls crazy train. But the ride has stopped, and some countries yoked to America's currency, and therefore its cratering empire, don't want to get back on.

Namely, Brazil, Russia, India and China, loosely termed BRIC by Goldman Sachs economist Jim O'Neill, who is not alone in predicting the four countries' ascendant power, as the United States and the Eurozone fade into the 20th century.

With Brazil and Russia lording over a large share of what's left of the planet's natural gas and oil, and China and India providing a titanic labor force that rivals the intelligence, productivity and regimentation of workers anywhere outside their borders, BRIC is in the house, big time. And it wants a say in what's going on, as Marvin Gaye sang.

What's going on is that the dollar, to which the majority of the planet's economies and currencies are now reliant, has us all by the proverbial balls, and BRIC is screaming about it in the press. Something has to give, it's saying, and that thing is the dollar.

"There is a lot of political and economic posturing involved," Rachel Zimeba, lead analyst at economist Nouriel Roubini's RGE Monitor, explained to AlterNet. "But I think there is substance to it. China has been trying, relatively unsuccessfully, to diversify for a couple of years, which has conflicted with its desire to have undervalued exports. Same thing has happened to countries in the Middle East, which are pegged to the dollar. And we're going to see even more pressure to diversify from these countries to reduce the share of their [dollar] assets.

"They see that the U.S. has a rising debt burden and record financing needs. Over time, they are worried that inflation and a weaker dollar will reduce the value of those assets."

They should be worried. Since the Bush administration took office, the dollar has lost 33 percent of its value. And since the Bushies left office, the dollar has been on autopilot, hovering beneath the pound and euro and jockeying for position with the Canadian dollar for the bronze medal in underperforming currencies, losing or gaining altitude every time a politician from Russia or China slams or praises it in the press. Like the American economy itself, the Humpty Dumpty dollar is wobbling on the fence, hoping reality doesn't hop along and give it a shove.

The good news? It could land softly.

"This is not an overnight thing," Ziemba added. "Same thing goes for these countries' attempts to turn their own currencies into transactional and reserve currencies."

That's reassuring, especially to what's left of those who still have a lot of dollars, as the American unemployment rate rises to levels nearly unseen since World War II. But once you wormhole a bit further into the future, the dollar's fate is much more murky.

"The debate between the inflationists and deflationists is red-hot these days, as the U.S. financial system continues to wobble and the 'real' economy of goods and services staggers," explained Jim Kunstler, author of The Long Emergency, World Made By Hand and the riotously acerbic column "Clusterfuck Nation."  "The fate of the dollar in the short-term depends on which way this really goes. But in the long term, both sides say the dollar is toast."

Helping push America off the debt-soaked cliff it built for itself by hitching its future to hyper-real derivatives and unsustainable deregulation and development is beginning to look less like sacrilege and more like prudent international monetary policy. Whereas in the past, China and Russia's public protestations about the hegemonic corruption of the American empire would have been shooed away like jealous flies, now more countries are joining in the anti-American chorus, even as they shake President Barack Obama's hand and hope openly for a kindler, gentler global village.

What's going on behind the scenes is anybody's guess. But it's probably a good guess that more than a few long knives have been unsheathed. 

"Geopolitically, I suspect there is whispered consensus between our various partners and rivals that the American situation is pretty hopeless,"  Kunstler cracked, "and that they would now all more or less benefit from the diminishment of U.S. power across the board. The Chinese, for instance, must know that we will never again ramp up the orgy of credit spending. Why keep throwing away their wealth to keep us consuming?"   

It's a good question. One of the BRIC members' solutions to the conundrum is to spend more time on their own currencies, as well as those of the beleaguered International Monetary Fund, which has its own currency, called special drawing rights. The SDRs are pegged to a currency basket, containing the U.S dollar, the euro, the yen and the U.K. pound sterling. In other words, the currencies of the 20th century's superpowers. 

BRIC, the purported superpowers of the 21st century, have been buying SDRs like mad lately. When BRIC met in mid-June in the Siberian city of Yekaterinberg, it committed to giving $80 billion to the IMF, with China carrying the lion's share at $50 billion. Add that to the $250 billion that the G20 coughed up in April, and the IMF is quickly becoming the planet's reserve bank of choice. 

"There is a need to make the IMF a true representative of the world's leading economies," Russian Finance Minister Alexei Kudrin asserted in June. "It's not there right now," he said, adding that it would be a decade before what People's Bank of China Governor Zhou Xiaochuan recently called a super-sovereign reserve currency mounted enough of a challenge to displace the dollar.

In the meantime, Russia, China and the other BRIC members are putting their money where they want their mouths to be, which is in the International Monetary Fund's ear. But whether that super-sovereign reserve currency is the SDR is too soon to say.

"The SDR can't handle the load in its current form," Zimeba argued. "You'd need a payment system that accepted the SDR, for one. But where it can grow is in reserve assets, and this upcoming issuance of IMF bonds denominated in SDR will be a significant increase. But SDRs will only be open to governments, not the secondary market where they can be traded, which fails the requirements of convertibility and liquidity.

"Right now, the SDR doesn't have that mechanism. But that can change over time. In the near term, this is a way towards diversification, because the dollar doesn't have a majority share in the SDR."

Kunstler adds: "They're obviously hedging their bets as much as possible. Put yourself in their shoes. They see the U.S. financial system's stupendous swindles, and they know the score. So their interests are strictly tactical and strategic in the interests of their survival. They also surely want to try to insure the continuation of world trade, with or without the U.S. consumer."

Which is why BRIC, and by extension the countries beneath its heel or shaking its hand, are diversifying their dollars and dumping cash into the IMF, where they can attempt to influence the international monetary system in their favor. The United States has so far committed $108 billion, including $5 billion siphoned from the controversial war-funding bill that passed in mid-June.

In addition, it has arranged for the IMF to receive over $500 billion altogether, mostly to prop up zombie European banks that drank too much of the derivatives Kool-Aid. So BRIC has an uphill battle ahead of it. But it's gaining strength, and wants to convert that to IMF say-so.

"They want more significant voting rights in the IMF," Ziemba said. "The money is in exchange for leverage. China has talked in detail about how the over-reliance on the dollar was adding to global instability, creating a situation where the optimal monetary policy for the U.S. is not optimal for countries tacked to the dollar. But it's fairly obvious that, in five to 10 years, the role of these countries in the global economy will only increase. But they also have to figure out how much responsibility they want to take on."

Or can take on. BRIC is ascendant for sure, but it's about to inherit a global economy and environment that is nothing like the respectively stable climates American and European empires have enjoyed over the last few hundred years. From the econopocalypse to climate crisis and beyond, BRIC is quickly going to find its hands full of problems that will doubtlessly dampen its upward surge. Sure, the dollar is toast, but so is Earth's biodiversity and store of natural resources. It's hard to build a superpower on that heap. 

"I think all nations are losing the ability to control events at the global level," Kunstler concluded. "It's a symptom of the crack-up of globalization, per se: A set of transient economic relations that only existed because of special conditions, namely, the final blowout of the cheap energy era. With that over, it's now a mad scramble for each player to survive.

"Observers seem to think that China will become the new global hegemon, but I doubt it. They have problems with water, food, overpopulation and environmental degradation that are much worse than ours. The world is comprehensively headed for a reduced standard of living."

Naval overhaul slides off Russia’s agenda

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Roger N McDermott
Jun 26, 2009 - Asia Times

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The Russian military top brass continues to make officially ambitious and upbeat assessments concerning the navy, mainly alleging that it carries out all "tasks assigned to it".

For example, on June 1, the official Ministry of Defense (MoD) publication Krasnaya Zvezda hailed record tactical exercises of two divisions, naval minesweepers and small anti-submarine warfare (ASW) ships, organized by the Black Sea fleet.

These claims often emanate from the Black Sea fleet information and public relations service, clearly tasked with presenting a positive view of naval activities. For instance, they emphasize that

 

seamen recruited in the draft last autumn participated in recent exercises.

Drafted mainly from Russia's central regions, these latest recruits passed the relevant tests and expressed their desire to serve on surface vessels. "The vessel crews worked skillfully and in a coordinated fashion," said the information service. This was in stark contrast, however, to the reported accidental shelling of a village near St Petersburg on May 28 by a vessel in the Northern fleet.

Other elements of the Russian navy are also praised in official military sources, no doubt in an effort to boost the morale of its personnel. In 2008, the Pacific fleet made high profile visits to foreign ports, and a detachment from the fleet entered the Indian Ocean in May 2009 under command of Captain First Rank Ildar Akhmerov, preparing calls to the seaports of Salalah (Oman) and Manama (Bahrain).

The detachment was formed before its embarkation, in a "manner which would enable it to tackle the tasks which might emerge both in coordination and independently by individual ships". It included the Admiral Panteleyev, a large ASW vessel, Izhora and Irkut tankers and the MB-37 tugboat, and was similar in composition to a group that carried out international anti-piracy tasks earlier in the year. It was essentially tasked with convoying vessels along the so-called security corridor, following which the detachment separated.

The challenges of containing international piracy have also provided opportunities for an enhanced "footprint" by the Russian navy. According to the International Maritime Bureau Piracy Reporting Center, by early May 2009 the number of attacks on shipping in the Bay of Aden and the eastern coast of Somalia exceeded the figure for the entire year of 2008. Since the start of the year pirates carried out 114 attacks, 29 of which ended in seizure of vessels: compared with 2008, these figures were 111 and 42 respectively.

On June 1, the first deputy Minister of Defense Colonel-General Aleksandr Kolmakov, summarized the results of the winter training period. "During the past winter training period, Russian navy surface ships and submarines took to sea on 438 occasions. During the summer the navy will also participate in international exercises," Kolmakov explained.

He nonetheless admitted the improved figures were only marginal, and that mostly naval elements had underperformed in the winter training period. "In recent years more than 540 modern technical training systems have been delivered to train army and navy personnel. The Defense Ministry is currently completing the development of a blueprint for the development of technical training systems for the period through 2020," he said. Its results, however, appear a long way off.

Objectives: Local or global?
On June 15, Vice Admiral Viktor Kravchuk, the commander of the Caspian flotilla, confirmed that it will remain under the direct subordination to the main staff of the Russian navy, despite the current military reform, in which all formations will be transferred to permanent readiness.

Earlier, Russian media mooted the idea that the Caspian flotilla was scheduled to become an operational naval command subordinated to the commander of the Black Sea fleet by December 1, as part of the reform. "By December 1, 2009, the reorganization of the flotilla will be carried out by abolishing parallel structures and uniting the formations that deal with secondary goals. Twenty five percent of positions will be reduced. However, the Caspian flotilla as a separate combat naval force will remain. The flotilla will remain a force under direct command of the main staff of the Russian navy in Moscow," Kravchuk said.

In his view, this will give the flotilla a "new image", with the critical change being its transfer to permanent readiness. Moreover, he explained that the reorganization of its combat composition will entail reducing older types of weaponry and equipment, and the number of units tasked with duties "not characteristic of a naval force". After the completion of the structural reforms, the Caspian flotilla will consist of two brigades of surface ships, naval infantry, logistical support units and auxiliary ships.

He said that the unstable military-political situation in the Caspian region justified the strengthening of the flotilla's combat capabilities. "The main sources of instability are the problems of the unsettled international legal status of the Caspian Sea, disputed oil and gas fields in the southern Caspian Sea and illegal fishing of valuable species of fish," Kravchuk said.

Sources within the Russian MoD have also alleged that the navy plans to transfer eight to 10 submarines to the Black Sea fleet, which is fiercely opposed by the Ukrainian government. Vasily Kirilich, the press spokesman for the Ukrainian Foreign Ministry, said that "the modernization or the introduction of new vessels of the Russian Black Sea fleet may be undertaken only with the consent of Ukraine, and this is specified clearly by the agreement between Ukraine and the Russian Federation on the parameters of the division of the Black Sea fleet of 1997."

Vice Admiral Oleg Burtsev, deputy chief of the Russian navy main staff, disagrees, arguing that Russia is entitled to replace the fleet's submarine forces without any reference to Kyiv. The Ukrainian Security Service also recently called on the withdrawal of all officers of the Federal Security Service of the Russian Federation attached to the fleet.

The status of the Black Sea fleet aside, it has become more strategically significant following the five-day war between Russia and Georgia in August 2008. Though naval combat played no meaningful role in the conflict, some naval officers have suggested that the fleet needs additional submarines. It currently has one permanent diesel-powered sub, the Alrosa, which is undergoing repairs; a painful situation for officers that recall around 40 submarines stationed in the Black Sea fleet in the Soviet period.

Economic issues challenge naval ambition
A series of setbacks has shaken the navy and the plans to carry out the reform program successfully. The much publicized though wholly unnecessary relocation of the navy headquarters to St Petersburg was "postponed" due to the costs involved and the opposition from admirals and senior officers who questioned its logic.

On June 18, a much more serious blow was disclosed by the deputy Defense Minister for Armaments Colonel-General Vladimir Popovkin, confirming that the planned development of six to seven carrier task groups in 2012 had also been "postponed".

The commander-in-chief of the Russian navy, Admiral Vladimir Vysotsky, first announced this ambitious program in July 2008. "Before going to the trouble, let us first decide what we need carrier task groups for. What strategic interests far from home do we have? There is more to a carrier task group than the aircraft-carrier alone. Aircraft-carriers need escorts. And the Russian navy only includes four fleets nowadays," Popovkin said.

Admiral Vysotsky said that such carrier task groups centered around nuclear-powered aircraft-carriers and capable of supporting strategic nuclear submarines were planned for the Northern and Pacific fleets. He emphatically promised that work on the project would begin in 2012.

If this postponement proves to be a diplomatic way of abandoning the plans, it will indicate that in practical terms the Russian military and security elites recognize the futility of pursuing global military ambitions. Moreover, these targets were announced prior to the global financial crisis while oil prices were relatively high on the world market.

There were also issues concerning which shipyards were capable of carrying out such construction work, while the long-running repairs to the Admiral Gorshkov aircraft carrier earmarked for export to India has been underway for more than a decade, complicating bilateral negotiations on pricing. Popovkin also said that tests of the Yuri Dolgoruky, a Borey class nuclear submarine which will carry Bulava missiles, submarine launched ballistic missiles, were scheduled to begin shortly; while the Bulava tests in 2008 resulted in 50% failure. More tests will commence in July, with four or five scheduled for this year. Equally, the MoD has decided to halve the number of ships scheduled for either repair or modernization.

On June 1, Russian Prime Minister Vladimir Putin criticized the MoD leadership during a Russian government session. He reported that the defense industrial complex enterprise directors have complained about the lack of progress in conclusion of contracts within the framework of the state defense order. "The directors are saying that the money is not arriving at the enterprises. We have the money but real problems are emerging at the enterprises."

The state defense order is based on the program for rearming the army and the navy that has been approved by the government, which was calculated for 2007-2015. The sluggishness involved reflects poor management, weaknesses within the defense industry and state corruption often resulting in vast sums vanishing - originally intended for repair or modernization.

Colonel Yuriy Rubtsov, an expert on the strategic culture fund in Moscow's Academy of Military Sciences, explained: "Unfortunately, the main mass of the 300 ships, which are in the Russian navy's fighting strength today, have been operating for more than 20 years now. The eloquent statements about the state-of-the-art navy are empty promises."

Conclusion
Although Russian military reform plans are currently concentrating on implanting organizational changes, from the mass mobilization principle and abandoning the division based structure, moving toward permanent readiness, a mobile brigade-based system by the end of the end the year, it appears that the navy is being hardest hit by the economic downturn, as the Russian economy contracts.

This might entail a more realistic assessment within the Russian MoD and General Staff concerning global military capabilities, focusing instead on raising the potential to intervene in local conflicts, perhaps in support of a more limited resurgence of Russian power within its near abroad.

Equally, the critique in Western assessments, that the military reform is being conducted in a "crazy" order, without first rewriting the military doctrine, actually makes sense from a Russian military perspective; the need to overcome internal objections to reform meant rushing to first restructure the organizational table.

Having already passed the halfway mark, they have secured the reforms and ensured they cannot be easily unpicked. While this might have implications locally, it appears that the more ambitious elements of the modernization agenda, including the navy and its dream of multiple aircraft carriers, are being corrected: Russia's power aspirations are therefore, more local than global - a point which could take more than a generation for the navy to accept.

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Roger N McDermott is an honorary senior fellow, Department of Politics and International Relations, University of Kent at Canterbury (UK) specializing in defense and security issues in Russia, Central Asia and the South Caucasus.