How history echoes Syria’s unholy war

As in 17th-century Europe, it is the involvement of outside powers that has kept the fires burning
Ingram Pinn illustration©Ingram Pinn
The Middle East reminds us that there is nothing so unholy as a holy war.
Europe learnt this in the 17th century. Confessional competition between Catholicism and Protestantism fused with temporal rivalry to provoke the Thirty Years’ War among the continent’s leading powers.
The fighting, bloodier than any previously seen, ended when raison d’état triumphed over theology. The Peace of Westphalia in 1648 marked the end of Europe’s great wars of religion.

This should tell us something about the present conflict in Syria.

The wholesale slaughter that followed could not have been imagined in 1618, when mainly Protestant Bohemia rose up against the Catholic Holy Roman Empire. The subsequent wars — there were several — drew in Habsburg Spain and Austria, France, the Netherlands, Sweden, Poland, Russia, Denmark and the big German principalities. England, Scotland, the Ottoman Empire and Russia all claimed walk-on parts.

The fighting was mostly on German soil, but the battles were between armies of foreign mercenaries. As befits wars conducted in the name of God, cruelty and brutality were endemic.

By many accounts, the population of Germany was cut by a third or more. Torture and mass burnings of alleged witches were commonplace.

For Catholic and Protestant, read Shia and Sunni. There are, I am sure, a hundred differences between the horrors that engulfed Europe and the flames consuming Syria. There are also uncomfortable coincidences. The brutality flowing from the intertwining of the spiritual and territorial is one; the misfortune of a patch of ground — Germany then, Syria now — in becoming a battlefield for outside powers is another.
The Thirty Years’ War began as an assertion of independence by the Protestant princes of Bohemia and Germany against the Catholic Holy Roman Empire. But it was also about France’s fear of encirclement by the Habsburgs of Spain and Austria, the Dutch struggle for independence from Spain, Sweden’s bid to assert itself, Poland’s eclipse and Denmark’s last throw as a big power. Half-a-dozen other states also claimed a vital national interest in the outcome.

Confessional loyalties were sometimes elbowed aside by secular ambitions. Thus Catholic France joined up with Protestant Sweden against its co-religionists in Spain and Austria — just, perhaps, as Shia Iran now finds advantage in allying itself with Sunni Hamas. Protestant Denmark fought at different moments on either side of the confessional divide. Competing Lutherans and Calvinists

By 1648, the wars had recast the geopolitical balance. France emerged a victor, the Holy Roman Empire a loser. Westphalia became a foundation for the modern European state. If there was a thread running through the various treaties that settled the territorial disputes it was that the confessional choices of states should no longer be a casus belli. Today’s Middle East, with the same combustible mix of theological and earthly rivalry, is a long way from reaching such an understanding.

One way of looking at the fighting in Syria is an uprising of the majority Sunni against the Alawite, or quasi-Shia, regime of Bashar-al Assad. This is the obverse, you could say, of what happened in Iraq: the fanatics of the self-styled Islamic State have prospered with the support of Iraqi Sunnis dispossessed by the toppling of Saddam Hussein.
The dividing lines on the ground are important. But, as in 17th-century Europe, what has kept the fires burning has been the involvement of outside powers. Syria has become the arena for the long-simmering regional contest between (Sunni) Saudi Arabia and its Gulf allies on one side, and (Shia) Iran on the other. Russia sees a vital national interest in sustaining the regime in Damascus; Turkey in overthrowing it.

Recep Tayyip Erdogan, Turkish president, talks about the enemies of Mr Assad as his “Sunni brothers”. But the shooting down of a Russian jet by Turkish warplanes patrolling the Syrian border has little to do with rival versions of Islam. Ankara’s fear is the emergence of a powerful Kurdish entity in northern Syria and Iraq — a concern that explains its dangerous ambivalence towards Isis. Russia, like the US and Europe, sees Isis as a serious threat, but does not want to risk losing its Mediterranean naval base.
For Tehran, the preservation of the Assad regime is part of a strategy that has seen Iran push its influence deep into the Arab world. Saudi Arabia and the Gulf monarchies want to counter what they fear is Iranian encirclement. These Sunni states also want to see Isis defeated, but not at the price of a victory for Tehran. And here are just a few of the dizzying complexities of the conflict.

For the US and its allies, the overarching interest is the re-establishment of regional stability and the defeat of the Isis jihadis. But this is a conflict that defies partial solutions. An eventual peace will demand the unravelling of the confessional and the temporal — that religion surrenders to realpolitik.
The Gordian knot is the struggle between Iran and Saudi Arabia, but a settlement would have also to acknowledge Russia’s interests and Turkey’s fears. Impossible, many will say. Maybe.

But until it happens, today’s Syria will live the horrors of 17th-century Germany; and Isis will continue to find a safe haven for its twisted credo.

The West's Dilemma

Why Assad Is Uninterested in Defeating Islamic State

By Christoph Reuter

Photo Gallery: Free-For-All in Syria

In the fight against Islamic State, the West is considering cooperating with the Syrian army.

There's a hitch though: Assad's troops aren't just too weak to defeat IS -- they also have no interest in doing so.

Sunday, Nov. 29, was market day in Ariha, a small city located in the northwestern Syrian province of Idlib. In May, various rebel groups had taken control of the town, which is legendary for its deep-red cherries. Ariha is located far from the front, and even further away from areas under the control of Islamic State (IS). But the Russian air force bombed it anyway.

The people shopping at the market didn't stand a chance. Just seconds after the roar of the approaching Russian Sukhoi fighter jet first became audible, the first bombs struck. They killed passersby, vegetable sellers and entire families. "I saw torn up bodies flying around and children calling for their parents," said a civil defense rescuer hours after the attack.

One day prior, just before 10 a.m., it was the turn of Safarana, a small city northeast of Homs.

A first barrel bomb, dropped out of a Syrian regime helicopter, killed a man and a young girl and injured more than a dozen others. The victims had hardly been delivered to the clinic when two more barrel bombs exploded in front of the hospital, operated by Doctors without Borders, killing patients and paramedics who were caring for those who had just arrived.

Such attacks are nothing new in Syria. Jets from both Syria and Russia continue unhindered to bomb markets, hospitals, bakeries and pretty much any other place where people gather in the provinces that are under rebel control. Two years ago, Russia voted in favor of United Nations Resolution 2139, which was supposed to bring an end to attacks on Syrian civilians. But that hasn't prevented Russia from flying hundreds of exactly those kinds of bombing raids itself since the end of September. And that, in turn, hasn't prevented France from talking to Russia about the possibility of conducting coordinated air strikes and joining together in the fight against Islamic State.

Just three weeks after the terror attacks in Paris, Europe has prepared itself for entry into this war against Islamic State. But it is a war that unites many radically divergent elements -- and one for which there is no strategy. French jets, joined recently by British warplanes, are now flying sorties against IS in Syria. And Germany will soon join them. German Tornado jets, equipped with high-resolution imaging technology, are to help identify targets while A-310 aircraft will refuel warplanes in the air. In addition, a German frigate is to provide protection to a French aircraft carrier in the Mediterranean.

Partnership with the Dictator

But beyond Germany's limited contribution to the air war, Berlin and Paris are discussing a vastly more sensitive and extremely uncertain engagement on the ground. Meanwhile, the French government -- which had long been a vocal opponent of Syrian President Bashar Assad -- recently introduced the idea of a possible partnership with the dictator and his troops in a joint alliance to fight IS.

German Defense Minister Ursula von der Leyen recently said somewhat awkwardly of Syria: "There are parts of the troops, that one could very well -- like in the Iraq example, where the training of local troops was very successful -- emulate here too." Her spokesperson quickly made it clear that such a concept doesn't apply to troops under Assad's command. But the idea of cooperating with Assad is one under discussion: Islamic State terror in Europe would seem to have partially rehabilitated the dictator.

Foreign Minister Frank-Walter Steinmeier even proposed that fighting between the Syrian opposition and regime troops could be "discontinued, for a start." Steinmeier's words reveal his frustration at the fact that the two sides are engaging each other in a war of attrition instead of joining forces against IS. But the reality on the ground refuses to conform to his aspirations.

Indeed, it is increasingly difficult to identify such a potential partner for Europe on the Syrian battlegrounds. Assad's official army is now just one of many fighting forces on the side of the regime -- and is also suffering from poor morale and a lack of soldiers. For many young Syrians from areas under government control, forced conscription has become the most significant motivator for embarking on the refugee trail to Europe.

This is also one reason why Russia's initial strategy for Syria is not finding success. Moscow had been hoping that massive air strikes would force rebel fighters in opposition-held areas to abandon the fight. That would then pave the way for Assad's ground forces to advance and take back those regions. But in October, when Assad's tank units rolled into those areas that Russian jets had previously bombed, they didn't get very far. Instead of fleeing, rebels there had dug in instead.

Syrian Fighting Force?

Using TOW anti-tank missiles supplied by the US, in addition to Russian anti-tank weapons that had been captured or acquired from corrupt officers, the rebels struck some 20 tanks before the others turned back. The army's ground offensive south of Aleppo likewise quickly ground to a halt. Meanwhile, rebels near Hama were able to finally take control of a long-contested city.

Assad's army isn't just vulnerable, it also isn't strictly a Syrian force anymore. For the last two years, the forces on his side have increasingly been made up of foreigners, including Revolutionary Guards from Iran, members of Iraqi militias and Hezbollah units from Lebanon. They are joined at the front by Shiite Afghans from the Hazara people, up to 2 million of whom live in Iran, mostly as illegal immigrants. They are forcibly conscripted in Iranian prisons and sent to Syria -- according to internal Iranian estimates, there are between 10,000 and 20,000 of them fighting in the country. The situation leads to absurd scenes: In the southern Syrian town of Daraa, rebels began desperately searching for Persian interpreters after an offensive of 2,500 Afghans suddenly began approaching.

It is the first international Shiite jihad in history, one which has been compensating for the demographic inferiority of Assad's troops since 2012. The alliance has prevented Assad's defeat, but it hasn't been enough for victory either. Furthermore, the orders are no longer coming exclusively from the Syrian officer corps. Iranian officers control their own troops in addition to the Afghan units, and they plan offensives that also involve Syrian soldiers.

Hezbollah commanders coordinate small elite units under their control. Iraqis give orders to Iraqi and Pakistani militia groups. And the Russians don't let anyone tell them what to do.

The odd alliances aren't just limited to the Shiite fighters. Anti-Assad rebels were recently surprised to see American Humvees -- a vehicle that quickly became a symbol of IS attacks after the Islamists captured hundreds of them in Iraq in summer 2014 -- rolling towards them from government-controlled territory. "We thought only IS had captured Humvees, but the Shiite militias fighting alongside Assad use them too," said Osama Abu Zaid, a local legal advisor to various groups belonging to the Free Syrian Army (FSA).

Elsewhere, attacks by Assad supporters and by Islamic State have likewise taken place with astonishing temporal and geographic proximity to each other. Near the northern Syrian city of Tal Rifaat in early November, for example, an IS suicide attacker detonated his car bomb at an FSA base, though without causing much damage. Just half an hour later, two witnesses say, Russian jets attacked the same base for the first time.

Unsurprising Cooperation

Was it a coincidence? Likely not. There have been dozens of cases since 2014 in which Assad's troops and IS have apparently been coordinating attacks on rebel groups, with the air force bombing them from above and IS firing at them from the ground. In early June, the US State Department announced that the regime wasn't just avoiding IS positions, but was actively reinforcing them.

Such cooperation isn't surprising. The rebels -- in all their variety, from nationalists to radical Islamists -- represent the greatest danger to both Assad and IS. And if the two sides want to survive in the long term, the Syrian dictator and the jihadists are useful to each other. From Assad's perspective, if the rebels were to be vanquished, the world would no longer see an alternative to the Syrian dictator. But the rebels are also primarily Sunni, as are two-thirds of the Syrian populace -- meaning that, from the IS perspective, once the rebels were defeated, the populace would be faced either with submission and exile, or they would join IS.

In short, a Syria free of rebels would put both Assad and Islamic State in powerful positions, though not powerful enough to defeat the other. Still, such a situation would be vastly preferable to the alternatives: Being toppled from power (Assad), or being destroyed (IS).

Relative to those two camps, the Syrian opposition in the West is hardly being paid attention to anymore. That is in part a function of their confusing structure: There are dozens of larger rebel groups and hundreds of smaller units, mostly at a local level. They cooperate, but alliances often crumble due to the ideological differences of their foreign supporters.

British Prime Minister David Cameron presented numbers last week indicating the existence of some 70,000 moderate rebels. In addition, he said, there were two large Islamist groups: Ahrar al-Sham in the north, with 15,000 fighters; and Jaish al-Islam north of Damascus, with 12,500 militiamen -- and the al-Qaida-allied group Nusra Front, with its 6,000 to 10,000 men. Cameron had hardly finished reciting the numbers before questions were raised as to whether the 70,000 he cited were prepared to partner with the West in the battle against Islamic State. They have, though, been fighting against Islamic State since January 2014 -- but have primarily focused their fight on Assad.

Significant Moral Question

Sending ground troops into such a situation, or even lending legitimacy to the Russian-Syrian offensive, would unwittingly transform Europe into Assad's vassals. Beyond that, the dictator would have to be given troop reinforcements so that he could halfway successfully advance against the enemy.

Even if one were to ignore all of the military problems, there is also a significant moral question: Would the West really want to go into battle with a regime that has used, aside from nuclear weapons, pretty much every weapon imaginable against its own populace in an effort to cling to power? And once Islamic State is defeated and driven away, what should happen with the cities -- such as Raqqa, Deir el-Zour, al-Bab, Manbij and Abu Kamal -- that they now hold?

All those cities had been take over by local rebels long before Islamic State moved in. Who should such areas be given to?

Certainly not to Assad. That would merely turn the clock back on this war by three years.

Rebel groups would once again try to throw out Assad's troops -- and ultimately Islamic State would strike again.

Making matters even more complicated is the fact that IS, the declared enemy-number-one of international efforts, is receding from the focus of two major foreign actors in Syria. Ever since Turkey shot down the Russian jet, President Recep Tayyip Erdogan and President Vladimir Putin have been engaged in a proxy war in the Aleppo province, a conflict which has seen Kurdish IS-opponents exchanging fire with Sunni IS-opponents in recent days. Furthermore, Russian jets have stepped up their bombing campaign against Syrian settlements along the border with Turkey while the Turkish secret service is sending weapons and ammunition into the fight against the Kurds. Both presidents have fragile egos, and Syria has emerged as the perfect playing field for them to get Kurdish YPG units and rebel groups -- both of which had thus far focused their efforts on Islamic State -- to fight against each other.

And Islamic State? The jihadists had been facing significant pressure in recent months from ongoing air strikes launched by the US-led coalition. Not because it had lost ground, but because it had been unable to continue its advance. The group's exploitative economy and its propaganda image both make a steady stream of victories necessary. The "caliphate" is facing financial difficulties and is also having trouble recruiting more foreign fighters. An expansion of allied air strikes could likely increase the pressure, while cooperation with Assad would put Islamic State in a perfect strategic position.

But for as long as Islamic State's enemies are busy fighting each other, the Islamists can carry on as before. Like last Wednesday, when the jihadists took over the small city of Kafra north of Aleppo -- not long after it had been bombed by Russian jets.

Russia and radicalisation: Homegrown problema

Moscow seeks to prevent the war in Syria from fuelling its Islamist insurgency in the North Caucasus
This image made from undated video posted during the weekend of June 28, 2014 on a social media account frequently used for communications by the Islamic State of Iraq and the Levant (ISIL), which has been verified and is consistent with other AP reporting, shows Omar al-Shishani standing next to the group's spokesman among a group of fighters as they declare the elimination of the border between Iraq and Syria. Al-Shishani, one of hundreds of Chechens who have been among the toughest jihadi fighters in Syria, has emerged as the face of the Islamic State of Iraq and the Levant, appearing frequently in its online videos — in contrast to the group's Iraqi leader, Abu Bakr al-Baghdadi, who remains deep in hiding and has hardly ever been photographed. (AP Photo/militant social media account via AP video)©AP
Abu Omar al-Shishani: the Islamist leader is from an ethnic Georgian group related to the Chechens, while many fighters from the North Caucasus republics have travelled to Syria
Every time Albina’s mobile phone buzzes, she winces. “It could be my sister, from Syria,” says the young woman, sitting in the kitchen of the small apartment she shares with her mother in Makhachkala, the capital of Dagestan.
In October, her brother-in-law, his wife and their three children disappeared, leaving a message that they had gone to live in the Islamic State. Since then, Albina and her mother have been taking turns staying at home to make sure they will not be overheard if the family calls to tell them they are safe.

Albina’s family is one of many in the North Caucasus brooding over the fate of their loved ones as hundreds, if not thousands, from the troubled southern fringe of Russia have followed the call of Islamists to go to Syria.

As in Europe and other western countries, Russia is struggling to stop the radicalisation of young Muslims and their recruitment by Isis or other jihadist groups. But Moscow has an even more urgent and difficult task at hand: to prevent the war in Syria from fuelling its homegrown Islamist insurgency in the republics of the North Caucasus.
Even though Moscow won the war in Chechnya, an Islamist underground continues to exist, and young men continue to join up, or, as the locals say, “go into the forest”.

Last week, President Vladimir Putin said security forces were hunting for Russian citizens classified as international terrorists. “Our servicemen were working in this area to prevent the possible return of these people to Russian territory to commit crimes,” he said.
According to Russia’s Federal Security Service, the number of Russian citizens fighting with Isis has risen from 1,700 in February to 2,400 in September. And while some analysts say these figures are exaggerated, there is consensus that the North Caucasus republics of Dagestan and Chechnya are the epicentre of the problem in Russia. The Chechen government says 405 of the republic’s citizens have left to fight with Isis. Dagestan has not published confirmed statistics, but an official estimates that more than 1,000 of its citizens are in Syria.
Many Central Asians seeking to fight in Syria travel through Russia. Some 80 to 90 per cent of Isis fighters from Uzbekistan, Tajikistan and Kyrgyzstan are radicalised and recruited while in Russia as migrant workers, according to estimates by Noah Tucker, author of a report on Central Asian involvement in the conflict in Syria and Iraq.
“In these countries, local or regional identity is much more important than the national one. When they move to Russia, they lose their community and replace their local identity with a Muslim one,” he says.
Radicalising factors
The radicalisation of people from Central Asia and the North Caucasus is closely intertwined: thousands of young men from Dagestan and Chechnya, driven from home by struggling economies and high unemployment, are on the move elsewhere in Russia. They mingle with central Asian workers in big cities from Moscow to Vladivostok, and also in Tyumen and Khanty-Mansiysk — oil producing regions in the northern Urals that are reliant on migrant labour.

As a result, the non-traditional Salafist strand of Islam is on the rise in these areas, providing fertile ground for radicalisation, experts say.

“Some people from the North Caucasus get radicalised not at home but when they go out to other regions of Russia as migrant workers,” says Varvara Pakhomenko, a Caucasus expert at the International Crisis Group. “Many Central Asian migrant workers in Russia in turn get radicalised by people from the North Caucasus, recruited by them to go to Syria.” There is also a problem among Tatars and Bashkirs, two other predominantly Muslim ethnic groups in Russia, she adds.

Among the ranks of both Isis and groups affiliated with Jabhat al-Nusra, fighters from the North Caucasus often stand out because of their battlefield experience either in the Chechen wars or the 2008 Russia-Georgia war.

The risks of radicals flowing across borders were long ignored in Moscow. Initially, security officials acquiesced to or even encouraged Islamists from the North Caucasus leaving for Syria.

Yekaterina Sazhneva, a columnist at the Moskovsky Komsomolets daily who has long reported on the North Caucasus and the Middle East, says: “I find it very strange that they managed to leave Russia in the first place. The security services had many of these people on their lists, and their exit should have been blocked. But the idea behind it is clear: these people are radicals, we don’t need them here, and as long as they are in Syria, they’re not causing us any trouble back home.”

Troublemakers return

Such export of potential radicals seems to have been facilitated by Moscow’s efforts to guarantee security at the 2014 Winter Olympics in Sochi. “Before the Olympics, there was very, very strong pressure on regional security officials in the North Caucasus to make sure there was no security risk to the Games,” says Ms Pakhomenko.

Whether or not it was official Russian policy to use Syria as a pressure valve for the local insurgency, it appears to have worked — at least in the short term. Dagestan has not registered any terrorist attacks since early 2014.

Russia map

But government officials and experts are wary that the problem of Islamist radicalism is coming back to haunt the region. “The Russian government has changed tack since the middle of 2014, long before they started looking into a military operation in Syria,” says a European official involved in police and intelligence exchanges with Russia. “They saw our problems with jihadi recruits, and they woke up to the risk of people returning with more friends, weapons and money.”

Since the summer of 2014, Russian immigration officials have drastically stepped up exit checks of Russian citizens leaving for Turkey, Georgia and Azerbaijan, the main countries through which jihadi fighters are known to travel to Syria. “Security officials have been asking people who want to travel to Turkey their passwords for social media and checked their phones for jihadi videos,” says Ms Pakhomenko.

According to the interior ministry, 477 criminal cases were opened last year alone on individuals charged with fighting in an illegal armed formation abroad — almost double the number in 2013.

Since Russia started its military operation in Syria in late September, the crackdown on radical Islamist groups has been advertised as a part of the fight against Isis rather than an effort to root out homegrown terrorism.

In October, Chechen strongman ruler Ramzan Kadyrov, the man Mr Putin relies on to keep the republic stable, said a group of young men inspired by Isis had conspired to assassinate him. In a meeting broadcast live on state television, Mr Kadyrov told the men and their parents that the ignorant youngsters had been seduced by the treacherous teachings of Islam. Following this public shaming, the alleged participants of the plot promised to change their ways and were then forgiven by the ruler.

Authorities in Moscow are also trying to block the fast-changing social media channels through which terrorist groups in Syria recruit young Russians.

The Safe Internet League, a pro-government body, last month launched a hotline on which internet users can report extremist content related to Isis for blocking. In another initiative, a Moscow-based institute believed to be backed by the security services is trying to identify and locate Isis recruiters through data-mining software.

But experts complain that Moscow’s high-profile push does little to address the root causes of radicalisation, warning that the heavy-handed approach to homegrown Islamist insurgents risks driving even more young people into the arms of Isis. “Russia is not giving any ideological answers to the calls of radical Islam,” says Yana Amelina, an expert on the Caucasus and co-author of Russia’s first comprehensive report on Isis.

Security experts say Russia’s long and painful experience with terror attacks has bred a reflex to throw money and military hardware at the problem.

“Profiling Isis recruiters is fine, but what needs to be done at the same time is profiling their targets,” says Alexei Filatov, vice-president of the International Alpha Veterans Organisation, a club of former anti-terror special forces members. “We must find those members of our society who are vulnerable to such propaganda, and find out why they are vulnerable — that’s the only way that we can protect them and all of us.”

Distortions in Dagestan

In Dagestan, those working with young people face this challenge everyday. Gasan Osmanov, head of a youth centre in the Babayurt region, is worried about some of the secular students he meets at sports and other activities organised by his centre. “The level of knowledge about our religion is very low, and the children soak up all sorts of distorted stuff way faster than you can imagine,” he says. “Much of the time, we have no clue what’s going on in their heads.”

Videos circulating under the “Unexpected jihad” meme and featuring the cartoon character SpongeBob SquarePants are all the rage among Mr Osmanov’s students. But while such videos — remixes featuring explosions, cries of “Allahu akbar” and Islamic prayer song — were produced as a mockery of jihadism, many Dagestani youngsters watch them without any sense of irony. “Yes, they think this is funny, but in the sense of cool. They pick up ‘Allahu akbar’ as something they can identify with,” says Mr Osmanov. “They need to be taught what is right and what is wrong, what is good and what is evil. But we don’t know how to reach them.”

Such descriptions mirror the personal histories of many young men from Muslim immigrant families in western countries who fall for Isis. Many of them know little about the religion of their ancestors but absorb jihadist ideology in search of an identity as they feel marginalised in the country they grew up in.

In the Russian North Caucasus, the local insurgency and the government’s campaign to stamp it out have instilled a sense of disaffection at least as strong.

To quash the rebellion, Moscow largely relies on omnipresent security forces and brutal crackdowns on those identified as insurgents and everyone connected with them. Mr Kadyrov has gained notoriety for expelling the families of Chechen insurgents and destroying their homes. Since 2013, Dagestan has adopted these practices as well, while turning away from programmes to rehabilitate insurgents.

Local experts believe that this practice is backfiring and driving young Dagestanis into the arms of Isis. “Our problem is how we deal with our own terrorists, the men who get caught and imprisoned or killed in special operations,” says Patimat Omarova, dean of the special education department at Dagestan State Pedagogical University. “If we don’t work with their families, we will get many more fighters. We will lose an entire generation.”

Educators, psychologists and muftis (Islamic scholars) in Dagestan argue that death or imprisonment transforms local insurgents into heroes in the eyes of their children and inclines them to view the state and its representatives as enemies. In this situation, they warn, the government’s persistent talk of the Islamic State will only make it more attractive.

“Our men used to go into the forest,” says a Salafi preacher with reference to the insurgency.

“Now Syria has taken the place of the forest.”

Neighbours share fears as estimates of fighters vary
 Just how many Russians are fighting in Syria is the subject of fierce debate. While there are Russian-speaking battalions among jihadi groups and some of the most prominent foreign fighters are Chechens, many of them are not Russian citizens.

The most famous example is the red-bearded Isis commander Abu Omar al-Shishani, who has several times been reported dead, only to resurface again every time. He is frequently referred to as Chechen but is in fact a Kist, a member of an ethnic group close to the Chechens, from the Pankisi Gorge in Georgia. Many members of Russian speaking battalions, on the other hand, are from Central Asia.

As a result, estimates of Russian fighters in Syria diverge wildly. Peter Neumann, director of the International Centre for the Study of Radicalisation and Political Violence, estimated the number of Russian citizens fighting with Sunni groups in Syria and Iraq at between 800 and 1,500 in January this year.
The Russian government’s own figures are much higher, and have risen fast over the past few months. Sergei Smirnov, deputy head of the Federal Security Bureau, in September put the number of Russian citizens fighting with Isis alone at 2,400, up from 1,700 in February.

The FSB says that another 2,600 militants from Central Asian countries are fighting with Isis, an estimate also vastly higher than ICSR’s. Independent observers doubt the Russian figures, arguing that Moscow is using the threat posed by Isis to justify its intervention in Syria and increase its security role in Central Asia.

“Some of these numbers are created out of thin air by the FSB, as are claims that Isis has territorial ambitions in central Asia through Afghanistan,” says Noah Tucker, managing editor of Registan, a website focused on Central Asia.

“They are then carried and spread by previously unknown news outlets in Central Asian countries and serve as an argument to restore a Russian presence on Kyrgyzstan’s border with Afghanistan.”

Will Argentina’s New President Bring a New Reality?

As President-elect Mauricio Macri prepares to take office in Argentina, the country is at a crossroads:

Will Macri’s administration mark a bright new age? Or will the current revival of optimism in Argentina be short-lived?

For the past 12 years, successive populist governments headed by the late Nestor Kirchner and his widow, outgoing President Cristina Fernandez de Kirchner, have staked the nation’s prosperity on high commodity prices and free-spending social programs, leaving Argentina mired in high inflation and a huge public-sector deficit, and isolated from access to international financial markets.

Under Macri, “important aftershocks are going to be felt across the region,” says Peter Schechter, director of the Latin America Center of the Atlantic Council, a Washington-based think-tank. The results of the Argentine presidential election will eventually have a profound effect on much more than domestic economic policy in Argentina, he adds. “It is a dramatic moment of inflection for the country.”  

And yet, opinion is widely divided about Argentina’s prospects. Is the stage finally being set for Argentina to deliver on the enormous promise of its vast natural resources? Or will the nation of 43 million — the third most populous in South America after Brazil and Colombia — remain stymied by its deep-seated tradition of political divisiveness? The optimists stress that Argentina has a sizable middle class, huge energy reserves already popular with Chevron, Total and ExxonMobil, and an educated population. Those assets could offer significant additional opportunities for foreign investors and open new markets in Argentina for foreign providers of sophisticated consumer goods and value-added technologies and services — provided the Macri administration manages to make the critical economic reforms that he advocated during his campaign. Although everyone agrees that Argentina has vast potential for growth, the pessimists argue that Argentina’s long history of political instability and corruption does not bode well for Macri’s prospects to make those reforms over the next few years.

The New Reality

Argentina is the first out of the gate for the new reality in Latin America,” says Kirk Sherr, president of Clearview Strategy Group, a Washington-based advisory firm for the Latin American energy sector. The November elections in Argentina were the first in the region to judge a voting population’s response to a new governing style that doesn’t rely on high commodity prices and is more adjusted to global realities, Sherr notes.

It’s not just the future of Argentina that is at stake because of over-dependence on the prices of soybeans, sugar, corn, beef and other commodities. “If we look at Peru and Chile, it’s mining; in Venezuela, it’s oil and gas; in Bolivia, it’s oil and gas with a little mining; in Brazil it’s oil and gas, soybeans, sugar,” Sherr points out. Like Argentina, all of those countries managed to ride a wave of high commodity prices that allowed the state to grow, while enabling the government and state-owned companies to gain wealth and power, and corruption to thrive. Argentina is the first country in the region to have an election under the new reality of lower commodity prices. Facing even more catastrophic economic conditions, Venezuela is slated to have its own parliamentary elections on December 6.

According to the latest forecasts of the International Monetary Fund, the Argentine economy will grow by a mere 0.4% this year, compared with 0.5% in 2014. In 2016, it may well even contract, said the IMF. On the other hand, the country has been suffering an enormous fiscal deficit that could exceed 6% of its GDP this year, and a powerful outward flow of capital.

Argentina’s monetary reserves are some $27.7 billion, or about 40% less than when President Cristina Fernandez de Kirchner assumed power in 2007.

Monica de Bolle, a senior fellow at the Peterson Institute for International Economics, says that Macri has promised to completely overhaul the Argentine government’s macroeconomic policies, while arguing that Argentina’s Kirchner-era capital controls “are a mistake.” De Bolle adds that during the era of “Kirchnerism,” the central bank has lacked any independence from political leadership, and “there is no access to statistics” because INDEC, the national bureau of statistics, regularly generates figures that make the economy look a lot stronger than it really is.

Macri has criticized the outgoing administration for relying on widely discredited statistics to measure everything from inflation to poverty rates. “Argentina today doesn’t have credible information on the economy,” Macri said during his campaign. “We need to know the real condition of public accounts.”

Bright Spots and Shadows
Experts agree that Macri will have to confront the heritage of Peronism, the populist movement founded by late Juan Peron (Argentina’s president from 1946-1955 and 1973-74), and carried forward by President Nestor Kirchner and then his wife, Cristina. Although Cristina Fernandez de Kirchner’s term as president ends on December 10, she will vie to remain leader of the Peronist Party, which maintains a majority in the Senate, the largest bloc in the lower house, and governorships of 15 out of Argentina’s 24 electoral districts.

Barred from running for a third term as president, Cristina Fernandez de Kirchner’s voter-approval rate remains high. Nevertheless, Guido Sandleris, dean of the business school at Torcuato di Tella University in Buenos Aires, says that the outgoing president leaves office with Argentina’s economy in shambles. “The Argentine economy has been exhausted for four years.

Along with Venezuela, it is the country that has grown the least during this period. It also has one of the highest inflation rates in the world — about 25% in 2015 — and the poverty rate has begun to grow again.”

Rafael Pampillón, an economics professor at the IE Business School in Madrid, notes that not everything about the 12 years of Kirchnerism was negative. Pampillón notes that the first Kirchnerist government enjoyed years of very strong growth as a result of high prices for raw materials, which permitted the government “to earn a great deal from its exports (above all, from shipments of soy), to raise salaries, undertake public sector spending initiatives, grant subsidies and take care of the poorest people” in the country.

The data from the early years of Kirchnerist government were spectacular, says Pampillón.

Under President Nestor Kirchner (2003-2007), the economy grew at an average rate of 8.7%, leading to job growth and a substantial reduction in poverty. Nevertheless, starting in 2005, notes Pampillón, the government “intervened strongly in the economy as prices for primary products began to decline, and [the government] started to take the blame for the fact that the public-sector deficit was growing.”

Pampillón suggests that interventionism even had an impact on the agrarian sector, which was the most competitive sector in the Argentine economy. Agribusiness in Argentina had made major advances under Nestor Kirchner’s presidency, thanks to a few factors: First, “over the years, landholders had been dividing their lands among their sons; second, new players had entered the sector by purchasing lands; and finally, new technologies had been adopted” in the sector. Pampillón notes that Kirchnerism imposed tariffs on Argentine exports “in order to be able to enter the sector.

As commodity prices collapsed, some landholdings were abandoned because people could not make any money from the crops that were cultivated there.” Moreover, Pampillón adds, the government showed “strong hostility to foreign investment.”

The Next Stage

Turning Argentina around will be no small task, given the fractured political dynamics of the nation.

Despite Macri’s victory, Argentina remains a deeply divided country, notes Wharton management professor Mauro Guillen, director of The Lauder Institute. About one half of the population remains loyal to the uniquely Argentine-brand of populism of the Kirchners — the party defeated by Macri.

The new president is expected to encounter fierce resistance in the Congress, where he doesn’t have majorities in either chamber. Congressional approval is particularly important for the long-standing debt dispute between Argentina and a group of creditors in the United States.

Under Cristina Kirchner, Argentina refused to negotiate despite repeated rulings by a U.S. federal court judge against Argentina, a stance that prevented Argentina from accessing international credit markets.

Regarding Macri’s populist opponents, Guillen explains, “Many of these people are pro-labor in the wrong way – meaning, ‘let’s just work as little as possible, and let’s just use the natural resources in the country’ — while the other half of the population is much more cosmopolitan, more export-oriented, more competitive and better educated.”

These sorts of social and political tensions are not going to disappear under Macri, Guillen notes. “In Argentina, you have this pendulum depending on the circumstances,” swinging between the populist Peronists, who tend to be more inward-looking, and the other half, who are more conservative, more pro-business and also more internationalist.

“I am not very optimistic,” Guillen says. “In Argentina, history gets repeated. It’s like a Greek drama. Macri was a mayor, and is someone who clearly knows how to run a business. From now on, the Peronists are going to do whatever it takes to make the Macri presidency end in a bad way.” And if they can get rid of him earlier in his term, so much the better, Guillen adds.

“That’s what happened with [President] Fernando de la Rua in 1999,” he notes. “They just made life impossible for him, and in the end he had to resign because Argentina went into default. The problem is that you have these stalemates in politics between the Peronists and [their opposition, who are] pro-export, pro-business — and they never get resolved.”

The good news, says Sherr, is that even in the darkest times in the last few years of Kirchner’s political policies, foreign oil and gas companies have been keen to get into the Vaca Muerta geological formation, containing major deposits of shale oil and shale gas, in the Neuquén Basin in Argentina. Total, Exxon, and Chevron have all gone into the region. “If they’ve been keen on the geological and developmental capacities of those shale deposits, they should be really keen to go in [now] under a better government,” he said. “What I remind them is that the Peronists are not going away. They still have considerable power. We’re just going to go through another cycle.”

Macris Number-one Priority

What should be Macri’s number-one priority? Guillen suggests that, “In the short run, he needs to bring inflation under control. Unless he gets inflation under control, everything else will fall apart.

You cannot run an economy with 40% inflation. The other thing: Macri can be more or less lucky from now on, if demand for Argentine commodities picks up.”

Macri also needs to share power with the more moderate Peronists, Guillen says. “He cannot believe, like the Peronists do, that if you have half of Argentina behind you, you can rule the other half,” Guillen notes. “No one can rule that country by saying, ‘I am going to do what I told my half of the country that I was going to do.’ Macri will need to compromise; unless he does that, he is going to fail.”

Shortly after Macri’s victory, Science and Technology Minister Lino Barañao became the only member of President Cristina Fernández de Kirchner’s cabinet to make it onto Macri’s team, noting that he accepted the position following assurances that the budget for his portfolio would not be slashed. In a radio interview, Baranao said that his decision to accept Macri’s offer was influenced by the fact that “science is something that is not the object of partisan opinions and is rather based on the rigor of data.” He also cited the importance of continuing science programs that started as early as 2003. “That’s the right thing” for Macri to do, said Guillen.

“If he ignores the Peronists or clashes with them, eventually Macri will lose because the Peronists have too much power, and power at mobilization [of the public].”

In another promising move toward power-sharing, Rogelio Frigerio, Macri’s new minister of interior, said that one of his goals will be “to recover the importance of federalism.” Guillen said, “I think that may be a good signal. That would be, at the end of the day, power-sharing with the 15 Peronist governors in the provinces. So that is a good thing.” Argentina is a federal system. Being president in a federal system — as in the U.S. — doesn’t give the president absolute power.

A Flicker of Hope

On the other hand, Macri’s other cabinet selections have been more contentious. For finance minister, Macri has appointed Alfonso Prat-Gay, who once ran the currency research unit at J.P. Morgan Chase in London. Prat-Gay said that the Macri administration will move “as soon as possible” to unravel its complex system of currency controls. Only a few days after Macri was declared the winner in the runoff election, American Airlines Group announced that it would stop accepting Argentine pesos for tickets, because currency controls were affecting its ability to repatriate earnings. Although dismantling currency controls could further fuel inflation, and stymie economic growth, Prat-Gay told a radio audience, “This is a tall task but we’re convinced that we’ve got the support of the people.” Prat-Gay has said the central bank hasn’t been independent in recent years and it is unclear how many foreign-currency reserves the bank has on hand.

Macri also announced that his president of the Central Bank would be another internationalist: Federico Sturzenegger, an economist who earned his Ph.D. at the Massachusetts Institute of Technology and has taught at the University of California.

Guillen warns that the lessons of Argentina’s troubled political history cannot be ignored. “Argentina has a highly educated population, and it has natural resources. It should rival countries like Australia and New Zealand for productivity, growth, etc., and yet it’s a mess,” he notes.

Nevertheless, Guillen adds, “Having said that, the fact that Macri is trying to establish some power-sharing formula with the Peronists gives me some hope. Without that, there is very little hope. Because the Peronists really, really hate losing power.”

Image credit: “Mauricio Macri encabezó los actos por el 202 aniversario de la Revolución de Mayo (7297041188)” by Gobierno de la Ciudad de Buenos Aires from Ciudad Autónoma de Buenos Aires, Argentina. Uploaded by russavia. Licensed under CC BY 2.0 via Wikimedia Commons.

Has a Currency Collapse Already Started?

Justin Spittler

Yesterday, oil plummeted to its lowest level in nearly seven years...

The price of oil fell 6.2% to $37.65, its lowest level since February 2009. Oil has now fallen an incredible 65% since peaking at $106 in June 2014.

The world has a massive oil surplus right now. The oil stockpiles of developed countries hit a record high of nearly 3 billion barrels in September, according to the International Energy Agency. Yet major producers are still pumping oil...

Monthly oil output for the U.S., the world’s largest oil producer, is at its highest level in nearly three decades. Russia, the world’s third-largest oil producer, is pumping more oil than it has since the Soviet era.

The Organization of Petroleum Exporting Countries (OPEC) is also pumping near record amounts of oil. OPEC is a cartel of 12 oil-producing nations. It accounts for 40% of the world’s annual oil production. On Friday, OPEC made clear it isn’t cutting production.

• Weak oil prices have crushed energy stocks...

SPDR S&P Oil & Gas Exploration & Production ETF (XOP), which tracks large U.S. oil producers, has dropped 61% since oil peaked last June.

Oil services companies, which sell “picks and shovels” to the oil industry, have also tanked. The Market Vectors Oil Services ETF (OIH), which holds 26 oil services companies, has lost 50% since last June.

• Oil companies have shelved billions of dollars’ worth of projects...

Energy consulting firm Wood Mackenzie estimates that North American oil companies alone have cut spending by $220 billion since last summer.

And that’s only the beginning. The firm estimates that $1.5 trillion worth of North American oil projects can’t make money when oil trades for $50 or less. With oil trading below $40 now, they’ll likely make even bigger cuts.

Meanwhile, investment research firm Moody’s expects cash flow for the global oil industry to drop by at least 20% this year.

• Canada’s energy sector is in a full-blown crisis...

Canada is the world’s fifth-largest oil-producing country. Crude oil makes up 18% of Canada’s exports, making it by far the country’s biggest export.

In October, The Conference Board of Canada said it expects revenues for Canada’s energy sector to fall 22% this year. It also expects the industry to record a net loss of about C$2.1 billion ($1.6 billion) in 2015. Last year, Canada’s energy industry made a C$6 billion profit.

• E.B. Tucker, editor of The Casey Report, said this would happen...

A few months back, E.B. visited Canada’s oil country to see the crisis firsthand. E.B. shared his analysis in the October issue of The Casey Report.

In that issue, E.B. said Alberta would become ground zero for Canada’s energy crisis.

Alberta accounts for 16% of Canada’s $2 trillion annual GDP. And energy makes up a quarter of Alberta’s economic output. That means the entire province of Alberta is heavily influenced by the price of oil.

Alberta’s economy shed 63,500 jobs from the start of the year through August. It hasn’t lost that many jobs in the first eight months of the year since the Great Recession. Last month, Alberta’s unemployment rate jumped to 7%, its highest level in five years.

• E.B. also said the crisis would spread from the oil patch to other parts of Alberta’s economy...

Here’s E.B.:

While energy only makes up 25% of the province’s GDP, Albertans will be shocked when they see what happens to other sectors now that the oil business has been cut in half. Construction, finance, real estate, and services all benefited from a 15-year oil boom. These other sectors will start shrinking soon. And it’s not going to be pretty.

E.B was right. The boom times are clearly over...but Canada’s economic problems are just starting.

• Canada’s central bank is scrambling to fight the crisis...

Lowering interest rates is the main tool central bankers use to stimulate the economy. To fight the financial crisis, the U.S. Federal Reserve cut its key rate to effectively zero in December 2008. Low rates make it cheaper for consumers and businesses to borrow and spend, which helps the economy…at least in theory.

The Bank of Canada (BoC) – Canada’s version of the Fed – has already cut rates twice this year. Its key rate is now 0.5%.

• The Bank of Canada might drop its key rate to zero soon...

Last month, Carolyn Wilkins, the BoC’s number two official, said, “It’s more likely that policy rates will fall to zero than in the past.”

Even so, more rate cuts are unlikely to help Canada’s economy. Last month, Bloomberg Business reported that the Bank of Canada is already considering other options.

“One important challenge for central banks now is that conventional monetary policy is stretched to its limits in some countries, where policy interest rates are at, or below, zero,” [Wilkins] said.

“Because of this, a number of countries are using innovative monetary policy measures to return inflation to target.”

Wilkins is essentially saying the BoC might launch its first quantitative easing (QE) program. QE is when a central bank creates money from nothing and pumps it into its financial system. It’s basically another term for money printing.

• QE would devalue Canada’s currency even more...

Yesterday, low oil prices pushed the Canadian dollar to an 11-year low against the U.S. dollar.

The Canadian dollar is now down 15% against the U.S. dollar over the past year.

QE pumps money into a financial system without creating anything. The result is more currency units chasing the same number of goods. This makes a currency less valuable. QE is the last thing the Canadian dollar needs right now.

As Casey readers know, the Canadian dollar is just one of many major currencies that has lost a huge amount of value this year. The Japanese yen has lost 16% against the U.S. dollar over the past year...the euro has lost 18%...the Australian dollar has lost 19%...the Mexican peso has lost 22%...and the Brazilian real is down 39%.

These are stupendous moves for major currencies. After all, we’re not talking about volatile biotech stocks. This is the value of money in peoples’ bank accounts.

• These huge losses suggest we may be in the early stages of a global currency crisis...

Casey Research founder Doug Casey has been warning of a currency collapse. He believes a collapse of major currencies could wipe out trillions of dollars in wealth, including pensions. Here’s Doug:

It’s going to be much more severe, different, and longer-lasting than what we saw in 2008 and 2009…The U.S. created trillions of dollars to fight the financial crisis of 2008 and 2009. Most of those dollars are still sitting in the banking system and aren’t in the economy. Some have found their way into the stock markets and the bond markets, creating a stock bubble and a bond super-bubble. The higher stocks and bonds go, the harder they’re going to fall.”

Unlike most people, Doug Casey has actually lived through a currency crisis. He was in Argentina when its currency collapsed in 2001 during the largest sovereign debt default ever.

By making smart investments, he even managed to make a large gain on his money in the aftermath of the crisis.

We recently recorded a video presentation with Doug on this topic. In the video, Doug shares his advice on how to position your money and investments for the collapse of a major currency like the U.S. dollar. Click here to watch the video.

Chart of the Day

The currencies of several major oil-producing nations are collapsing...

Crude oil is the number one export of Canada, Norway, Russia, and Colombia. Each country’s currency tends to move with the price of oil.

Today’s chart shows the performance of all four currencies versus the U.S. dollar. As you can see they have all crashed over the past year.

The Canadian dollar (CAD) has dropped 15% to an 11-year low. The Norwegian kroner (NOK) has dropped 18% to a 13-year low. The Russian ruble (RUB) has dropped 23%. It’s now within 2% of the all-time low it hit in August. The Columbian peso (COP) has dropped 30%. It’s also flirting with its all-time low.