Here’s the weekly piece from Strat­for that’s repub­lish­able, obvi­ously focused on Russia.

Bot­tom line is this: the Rus­sians need to reaf­firm now their power, seize the “win­dow of oppor­tu­nity” of US mil­i­tary engage­ments, and demon­strate its will­ing­ness to crush its periph­ery. Basi­cally this or slip as a major world player.

Actu­ally, I find Strat­for a bit opti­mistic, as they seem to under­es­ti­mate the sit­u­a­tion on the ground (Rus­sians are clearly set­tling in) and the timeta­bles of the very start of the con­flict. They tip towards Russ­ian provo­ca­tions, Geor­gian start, Russ­ian reac­tion based on pre-deployment in North Osse­tia. What tran­spires now is that the Rus­sians had actu­ally pre-positioned a major build-up of forces in South Ossetia.

What this means: we will cer­tainly see a major esca­la­tion at least ver­bally, but also prob­a­bly on the ground through the the­aters on the globe. Add to this the Bei­jing olympics after­math, which will prob­a­bly be dif­fi­cult domes­ti­cally, the pre­dictable dis­rup­tion (route cuts, bank­rupt­cies and merg­ers) in the air­line indus­try, etc… The out­look for the global busi­ness envi­ron­ment isn’t par­tic­u­larly good and we should start to feel these effects from Q4 this year.

The con­se­quences of the whole she­bang added to the financ­ing tight­en­ing and exit oppor­tu­ni­ties scarcity for entre­prise 2.0 start-ups ? The answer is in the question.

THE REAL WORLD ORDER

By George Friedman

On Sept. 11, 1990, U.S. Pres­i­dent George H. W. Bush addressed Congress.

He spoke in the wake of the end of Com­mu­nism in East­ern Europe, the weak­en­ing of the Soviet Union, and the inva­sion of Kuwait by Sad­dam Hus­sein. He argued that a New World Order was emerg­ing: “A hun­dred gen­er­a­tions have searched for this elu­sive path to peace, while a thou­sand wars raged across the span of human endeavor, and today that new world is strug­gling to be born. A world quite dif­fer­ent from the one we’ve known. A world where the rule of law sup­plants the rule of the jun­gle. A world in which nations rec­og­nize the shared respon­si­bil­ity for free­dom and jus­tice. A world where the strong respect the rights of the weak.”

After every major, sys­temic war, there is the hope that this will be the war to end all wars. The idea dri­ving it is sim­ple. Wars are usu­ally won by grand coali­tions. The idea is that the coali­tion that won the war by work­ing together will con­tinue to work together to make the peace. Indeed, the idea is that the defeated will join the coali­tion and work with them to ensure the peace. This was the dream behind the Con­gress of Vienna, the League of Nations, the United Nations and, after the Cold War, NATO. The idea was that there would be no major issues that couldn’t be han­dled by the vic­tors, now joined with the defeated. That was the idea that drove George H. W. Bush as the Cold War was com­ing to its end.

Those with the dream are always dis­ap­pointed. The vic­to­ri­ous coali­tion breaks apart. The defeated refuse to play the role assigned to them. New pow­ers emerge that were not part of the coali­tion. Any­one may have ideals and visions. The real­ity of the world order is that there are pro­found diver­gences of inter­est in a world where dis­trust is a nat­ural and rea­son­able response to real­ity. In the end, ideals and visions van­ish in a new round of geopo­lit­i­cal conflict.

The post-Cold War world, the New World Order, ended with author­ity on Aug. 8, 2008, when Rus­sia and Geor­gia went to war. Cer­tainly, this war was not in itself of major sig­nif­i­cance, and a very good case can be made that the New World Order actu­ally started com­ing apart on Sept. 11, 2001. But it was on Aug. 8 that a nation-state, Rus­sia, attacked another nation-state, Geor­gia, out of fear of the inten­tions of a third nation-state, the United States. This causes us to begin think­ing about the Real World Order.

The global sys­tem is suf­fer­ing from two imbal­ances. First, one nation-state, the United States, remains over­whelm­ingly pow­er­ful, and no com­bi­na­tion of pow­ers are in a posi­tion to con­trol its behav­ior. We are aware of all the eco­nomic prob­lems beset­ting the United States, but the real­ity is that the Amer­i­can econ­omy is larger than the next three economies com­bined (Japan, Ger­many and China). The U.S. mil­i­tary con­trols all the world’s oceans and effec­tively dom­i­nates space. Because of these fac­tors, the United States remains polit­i­cally pow­er­ful — not liked and per­haps not admired, but enor­mously powerful.

The sec­ond imbal­ance is within the United States itself. Its ground forces and the bulk of its logis­ti­cal capa­bil­ity are com­mit­ted to the Mid­dle East, par­tic­u­larly Iraq and Afghanistan. The United States also is threat­en­ing on occa­sion to go to war with Iran, which would tie down most of its air power, and it is fac­ing a desta­bi­liz­ing Pak­istan. There­fore, there is this para­dox: The United States is so pow­er­ful that, in the long run, it has cre­ated an imbal­ance in the global sys­tem. In the short run, how­ever, it is so off bal­ance that it has few, if any, mil­i­tary resources to deal with chal­lenges else­where. That means that the United States remains the dom­i­nant power in the long run but it can­not exer­cise that power in the short run. This cre­ates a win­dow of oppor­tu­nity for other coun­tries to act.

The out­come of the Iraq war can be seen emerg­ing. The United States has suc­ceeded in cre­at­ing the foun­da­tions for a polit­i­cal set­tle­ment among the main Iraqi fac­tions that will cre­ate a rel­a­tively sta­ble gov­ern­ment. In that sense, U.S. pol­icy has suc­ceeded. But the prob­lem the United States has is the length of time it took to achieve this suc­cess. Had it occurred in 2003, the United States would not suf­fer its cur­rent imbal­ance. But this is 2008, more than five years after the inva­sion. The United States never expected a war of this dura­tion, nor did it plan for it. In order to fight the war, it had to inject a major por­tion of its ground fight­ing capa­bil­ity into it. The length of the war was the prob­lem. U.S. ground forces are either in Iraq, recov­er­ing from a tour or prepar­ing for a deploy­ment. What strate­gic reserves are avail­able are tasked into Afghanistan. Lit­tle is left over.

As Iraq pulled in the bulk of avail­able forces, the United States did not shift its for­eign pol­icy else­where. For exam­ple, it remained com­mit­ted to the expan­sion of democ­racy in the for­mer Soviet Union and the expan­sion of NATO, to include Ukraine and Geor­gia. From the fall of the for­mer Soviet Union, the United States saw itself as hav­ing a dom­i­nant role in reshap­ing post-Soviet social and polit­i­cal orders, includ­ing influ­enc­ing the emer­gence of demo­c­ra­tic insti­tu­tions and free mar­kets. The United States saw this almost in the same light as it saw the democ­ra­ti­za­tion of Ger­many and Japan after World War II. Hav­ing defeated the Soviet Union, it now fell to the United States to reshape the soci­eties of the suc­ces­sor states.

Through the 1990s, the suc­ces­sor states, par­tic­u­larly Rus­sia, were inert. Under­go­ing painful inter­nal upheaval — which for­eign­ers saw as reform but which many Rus­sians viewed as a foreign-inspired national cat­a­stro­phe — Rus­sia could not resist Amer­i­can and Euro­pean involve­ment in regional and inter­nal affairs. From the Amer­i­can point of view, the reshap­ing of the region — from the Kosovo war to the expan­sion of NATO to the deploy­ment of U.S. Air Force bases to Cen­tral Asia — was sim­ply a log­i­cal expan­sion of the col­lapse of the Soviet Union. It was a benign attempt to sta­bi­lize the region, enhance its pros­per­ity and secu­rity and inte­grate it into the global system.

As Rus­sia regained its bal­ance from the chaos of the 1990s, it began to see the Amer­i­can and Euro­pean pres­ence in a less benign light. It was not clear to the Rus­sians that the United States was try­ing to sta­bi­lize the region. Rather, it appeared to the Rus­sians that the United States was try­ing to take advan­tage of Russ­ian weak­ness to impose a new politico-military real­ity in which Rus­sia was to be sur­rounded with nations con­trolled by the United States and its mil­i­tary sys­tem, NATO. In spite of the promise made by Bill Clin­ton that NATO would not expand into the for­mer Soviet Union, the three Baltic states were admit­ted. The promise was not addressed. NATO was expanded because it could and Rus­sia could do noth­ing about it.

From the Russ­ian point of view, the strate­gic break point was Ukraine. When the Orange Rev­o­lu­tion came to Ukraine, the Amer­i­can and Euro­pean impres­sion was that this was a spon­ta­neous demo­c­ra­tic ris­ing. The Russ­ian per­cep­tion was that it was a well-financed CIA oper­a­tion to foment an anti-Russian and pro-American upris­ing in Ukraine. When the United States quickly began dis­cussing the inclu­sion of Ukraine in NATO, the Rus­sians came to the con­clu­sion that the United States intended to sur­round and crush the Russ­ian Fed­er­a­tion. In their view, if NATO expanded into Ukraine, the West­ern mil­i­tary alliance would place Rus­sia in a strate­gi­cally unten­able posi­tion. Rus­sia would be inde­fen­si­ble. The Amer­i­can response was that it had no inten­tion of threat­en­ing Rus­sia. The Russ­ian ques­tion was returned: Then why are you try­ing to take con­trol of Ukraine? What other pur­pose would you have? The United States dis­missed these Russ­ian con­cerns as absurd. The Rus­sians, not regard­ing them as

absurd at all, began plan­ning on the assump­tion of a hos­tile United States.

If the United States had intended to break the Russ­ian Fed­er­a­tion once and for all, the time for that was in the 1990s, before Yeltsin was replaced by Putin and before 9/11. There was, how­ever, no clear pol­icy on this, because the United States felt it had all the time in the world. Super­fi­cially this was true, but only super­fi­cially. First, the United States did not under­stand that the Yeltsin years were a tem­po­rary aber­ra­tion and that a new gov­ern­ment intend­ing to sta­bi­lize Rus­sia was inevitable. If not Putin, it would have been some­one else. Sec­ond, the United States did not appre­ci­ate that it did not con­trol the inter­na­tional agenda. Sept. 11, 2001, took away Amer­i­can options in the for­mer Soviet Union. No only did it need Russ­ian help in Afghanistan, but it was going to spend the next decade tied up in the Mid­dle East. The United States had lost its room for maneu­ver and there­fore had run out of time.

And now we come to the key point. In spite of dimin­ish­ing mil­i­tary options out­side of the Mid­dle East, the United States did not mod­ify its pol­icy in the for­mer Soviet Union. It con­tin­ued to aggres­sively attempt to influ­ence coun­tries in the region, and it became par­tic­u­larly com­mit­ted to inte­grat­ing Ukraine and Geor­gia into NATO, in spite of the fact that both were of over­whelm­ing strate­gic inter­est to the Rus­sians. Ukraine dom­i­nated Russia’s south­west­ern flank, with­out any nat­ural bound­aries pro­tect­ing them. Geor­gia was seen as a con­stant irri­tant in Chech­nya as well as a bar­rier to Russ­ian inter­ests in the Caucasus.

Mov­ing rapidly to con­sol­i­date U.S. con­trol over these and other coun­tries in the for­mer Soviet Union made strate­gic sense. Rus­sia was weak, divided and poorly gov­erned. It could make no response. Con­tin­u­ing this pol­icy in the 2000s, when the Rus­sians were get­ting stronger, more united and bet­ter gov­erned and while U.S. forces were no longer avail­able, made much less sense. The United States con­tin­ued to irri­tate the Rus­sians with­out hav­ing, in the short run, the forces needed to act decisively.

The Amer­i­can cal­cu­la­tion was that the Russ­ian gov­ern­ment would not con­front Amer­i­can inter­ests in the region. The Russ­ian cal­cu­la­tion was that it could not wait to con­front these inter­ests because the United States was con­clud­ing the Iraq war and would return to its pre-eminent posi­tion in a few short years. There­fore, it made no sense for Rus­sia to wait and it made every sense for Rus­sia to act as quickly as possible.

The Rus­sians were partly influ­enced in their tim­ing by the suc­cess of the Amer­i­can surge in Iraq. If the United States con­tin­ued its pol­icy and had force to back it up, the Rus­sians would lose their win­dow of oppor­tu­nity. More­over, the Rus­sians had an addi­tional lever for use on the Amer­i­cans: Iran.

The United States had been play­ing a com­plex game with Iran for years, threat­en­ing to attack while try­ing to nego­ti­ate. The Amer­i­cans needed the Rus­sians. Sanc­tions against Iran would have no mean­ing if the Rus­sians did not par­tic­i­pate, and the United States did not want Rus­sia sell­ing advance air defense sys­tems to Iran. (Such sys­tems, which Amer­i­can ana­lysts had warned were quite capa­ble, were not present in Syria on Sept. 6, 2007, when the Israelis struck a nuclear facil­ity there.) As the United States re-evaluates the Russ­ian mil­i­tary, it does not want to be sur­prised by Russ­ian tech­nol­ogy. There­fore, the more aggres­sive the United States becomes toward Rus­sia, the greater the dif­fi­cul­ties it will have in Iran. This fur­ther encour­aged the Rus­sians to act sooner rather than later.

The Rus­sians have now proven two things. First, con­trary to the real­ity of the 1990s, they can exe­cute a com­pe­tent mil­i­tary oper­a­tion. Sec­ond, con­trary to regional per­cep­tion, the United States can­not inter­vene. The Russ­ian mes­sage was directed against Ukraine most of all, but the Baltics, Cen­tral Asia and Belarus are all lis­ten­ing. The Rus­sians will not act pre­cip­i­tously. They expect all of these coun­tries to adjust their for­eign poli­cies away from the United States and toward Rus­sia. They are look­ing to see if the les­son is absorbed. At first, there will be mighty speeches and resis­tance. But the real­ity on the ground is the real­ity on the ground.

We would expect the Rus­sians to get trac­tion. But if they don’t, the Rus­sians are aware that they are, in the long run, much weaker than the Amer­i­cans, and that they will retain their regional posi­tion of strength only while the United States is off bal­ance in Iraq. If the les­son isn’t absorbed, the Rus­sians are capa­ble of more direct action, and they will not let this chance slip away. This is their chance to rede­fine their sphere of influ­ence. They will not get another.

The other coun­try that is watch­ing and think­ing is Iran. Iran had accepted the idea that it had lost the chance to dom­i­nate Iraq. It had also accepted the idea that it would have to bar­gain away its nuclear capa­bil­ity or lose it. The Ira­ni­ans are now won­der­ing if this is still true and are undoubt­edly ping­ing the Rus­sians about the sit­u­a­tion. Mean­while, the Rus­sians are wait­ing for the Amer­i­cans to calm down and get seri­ous. If the Amer­i­cans plan to take mean­ing­ful action against them, they will respond in Iran. But the Amer­i­cans have no mean­ing­ful actions they can take; they need to get out of Iraq and they need help against Iran. The quid pro quo here is obvi­ous. The United States acqui­esces to Russ­ian actions (which it can’t do any­thing about), while the Rus­sians coop­er­ate with the United States against Iran get­ting nuclear weapons (some­thing Rus­sia does not want to see).

One of the inter­est­ing con­cepts of the New World Order was that all seri­ous coun­tries would want to par­tic­i­pate in it and that the only threat would come from rogue states and non­state actors such as North Korea and al Qaeda. Seri­ous ana­lysts argued that con­flict between nation-states would not be impor­tant in the 21st cen­tury. There will cer­tainly be rogue states and non­state actors, but the 21st cen­tury will be no dif­fer­ent than any other cen­tury. On Aug. 8, the Rus­sians invited us all to the Real World Order.

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