Prominent political risk consultant offers Armenia, regional outlook for 2009
by Emil Sanamyan
Ian Bremmer, 2d from right with, from left, Pres. Ilham Aliyev of Azerbaijan, Prime Minister Recep Tayyip Erdogan of Turkey, Foreign Minister Edward Nalbandian of Armenia, and Foreign Minister Manouchehr Mottaki of Iran at the World Economic Forum in Davos, Switzerland, on Thursday Jan. 29. AP Photo: Michel Euler Ian Bremmer is founder and President of Eurasia Group, one of the world's leading providers of political risk analysis for corporate clients. Self-described "intellectual entrepreneur" Mr. Bremmer, who turns 40 this year and is of Armenian and German descent, has built the consultancy from the ground up since 1998. The group is at 100 full-time staff in offices in New York, Washington and London, including former senior U.S. government planners and analysts, and hundreds more contributing experts worldwide. On February 9 Mr. Bremmer spoke with Armenian Reporter's Washington editor Emil Sanamyan about risks faced by Armenia and the world.
Nonpolar world and Russian regional dominance
AR: In a Foreign Affairs article last year, Richard Haass, the president of the Council on Foreign Relations, observed that the world order was shifting from U.S.-dominated "uni-polar" one to a "non-polar" state of affairs. And you agree with that view. What does this mean for the world and for countries like Armenia?
IB: This [nonpolar arrangement] is unlikely to be the equilibrium outcome, [i.e., the world order will continue to undergo changes]. But there is no question that America's ability and willingness to do the heavy lifting on global issues is much more limited than it was five years ago or even one year ago.
What it means for a country like Armenia is that you are dealing much more with your immediate neighborhood. At the end of the day that means countries like Russia.
Look at what happened in Georgia. The Russian government, after a number of provocations, basically goaded the [Georgian President Mikheil] Saakashvili to do something stupid and he did. And the Russians would have probably gone to Tbilisi if it was not for the U.S. and France.
The end of that story is they have got control [over the region]. You saw that the U.S. base in Kyrgyz Republic was forced out after the Russians threw a little more cash and engaged in political pressure [against the Kyrgyz government].
It is very clear that Russia believes that there is a region of the world that is in its sphere of influence, where [Russian interests] are privileged. In the same way the United States exists in Latin America. And the Russians intend to behave that way.
So if you are Armenia, a tiny landlocked country with very limited resources, it means that your relationship with Russia is going to become even more important than it has been.
AR: How significant an event was the war in Georgia last year? In terms of regional impact, was it on the scale of the September 11, 2001, attacks or perhaps even the Soviet breakup?
IB: No, because [Georgia] is a tiny little country and because, at the end of the day, you can give Russia 75 percent of the blame, but you have to give Saakashvili 25 percent [of the blame] for sheer lack of understanding of what he was getting himself into. Or lack of care.
Georgia is a small country, where the United States and Europeans are not prepared to move quickly on NATO integration or send troops to stop the Russians. It could have 9/11-type implications if Americans and Europeans decided that Georgia was an ally they could not allow to fall, but that was not the case.
When I wrote my early 2008 paper about expectant risks going forward [in 2008], I talked about Georgia. I didn't say it was going to be the number one risk, because it is not that big of a deal, but certainly the likelihood that Russians could have gone in, we could predict a while back.
AR: Do you see this sort of Russian resurgence exhibited again in 2009?
IB: We just saw that in the Kyrgyz Republic, and we saw that in a natural gas cut off to Ukraine earlier in the year that had implications for European countries.
And if people said that Russia attacked Georgia when a barrel of oil was $120 and Russians felt a lot stronger, the fact is that Russia cut off gas to Ukraine when oil was at $40 a barrel. So clearly, it is not just economic interest that is playing a role here for the Russian government.
The willingness of the Russian government to ensure that they have dominant political influence over Ukraine is significant. That may well mean that they play a more proactive role in trying to get [former prime minister Viktor] Yanukovich as the next president of Ukraine.
There is greater possibility for tensions over Crimea - both directly with local population that has a pro-Russian orientation and also in terms of the Russian naval base in [Crimea's port of] Sevastopol - and Russia continuing to leverage their energy influence over Ukraine.
I do not expect to see Russian tanks rolling into Kiev or anywhere else in the region. While there is always a possibility, if we are looking at the immediate future in 2009, there is not the same level of expectation of military confrontation that Russians could provoke that we saw with Georgia.
Aliyev's success and Karabakh stability
AR: Considering the increase in Russian influence and the fall of oil prices, which is very important to Azerbaijan, where do you see the Karabakh stand-off going?
IB: Clearly, the Armenians are showing more flexibility [in negotiations] than the Azeris are since [Armenians] recognize that they are increasingly in a weaker position than the Azeris, with all their resources and regional allies.
When I met [Azerbaijani President] Ilham Aliyev [before the panel that Mr. Bremmer moderated] in Davos, it struck me that he felt that he had more of an upper hand to play.
But Karabakh is not an area where Russians are actively playing one side against the other. Moscow's relationships with Yerevan and Baku are both pretty good.
If you do see Aliyev saying, "I am going independent, I am going to build Nabucco [a gas pipeline to Europe bypassing Russia] all by myself, I don't care about Russia and their energy interests," then you could see Russians promoting more conflict and trying to squeeze the Azeris.
Aliyev has been a comparative success story in the region. When he first became president, everyone said he was a playboy, not an intellectual, not serious. But he actually became a pretty good and articulate head of state. And he is aware of the difficulty of Azerbaijan's geopolitical position even in the context of Russia economically being a bit on the back foot.
AR: What do you make of all of Aliyev's threats to go to war over Karabakh that have been coming for many years? What do you think has held Aliyev back?
IB: First of all, they know that it's not in their interests. I think it is much more rhetoric, knowing that Armenians are in a difficult position and taking the more maximalist diplomatic line to try to improve the terms of any eventual settlement.
Secondly, the Azeris do listen to Russia; they listen to Turkey. Neither of those countries is pushing the Azeris toward a military confrontation with Armenia. And I just don't expect it.
And certainly Azerbaijan is an oil producer and oil prices being now at about a quarter of what they were at the peak, it's not the time I'd be wanting to launch military excursions. They are expensive.
Armenian-Turkish dialogue
AR: The other Davos panel that involved Turkish and Israeli leaders created quite a bit of news. Where do you see Turkey going and what does that mean for Armenia?
IB: You know that the Armenian and Turkish foreign ministers met privately three times the day before the panel that I moderated. I had been told directly that those meetings went quite well. And [Turkish prime minister Recep Tayyip] Erdogan met with Armenian president Serge Sargsian. When I asked Mr. Erdogan, he was cautiously optimistic that [the matter of] relations with Armenia is going well.
The Armenian government understands it has to play a very sensitive role. The diaspora is much more focused on the Genocide issue and is much more loath to support Armenia opening relations with Turkey. But it really behooves the leaders of the Armenian diaspora to recognize that opening diplomatic and trade relations between Armenia and Turkey would be an incredibly positive step that does not mean that Armenians should never talk about genocide again.
The genocide recognition should not be a precondition. Armenia is in the difficult position. The leaders in Yerevan and citizens of Armenia have to live in that geopolitical context. Members of the diaspora living in Watertown or Pasadena do not. And I think there needs be a level of sensitivity with the extraordinary pressure that the Armenian government is presently under.
There is a real opportunity with the Erdogan government right now. And if diplomatic relations with Armenia are opened, that creates more of an opportunity over the longer term through dialogue and through closer relations to get the Turks to move to the place where they could finally recognize and offer an historical apology for what happened between our two nations.
AR: Over the past number of years, whenever there are improved expectations of headway for Armenian Genocide recognition, especially a congressional resolution in the United States, Turkey becomes more interested in talking to Armenia on a high level. And as soon as the resolutions get shelved, dialogue on normalization gets shelved as well. Would it be too unfair to suggest that Turks are using these talks to simply try and prevent once again a congressional resolution?
IB: Certainly, pressure in Congress under the Obama Administration is something that is talked about in Turkey frequently and that plays into their calculus.
But that does not mean you do not open relations. What the Armenian diaspora does vis-à-vis Washington is separate from what the Armenian government does vis-à-vis Ankara. And these need to be recognized as dual tracks.
The diaspora telling the Obama administration and their representatives in Congress that the Genocide resolution is important to the community is very different from the diaspora telling Yerevan you can't open relations with Turkey.
AR: In your outlook for 2009, you wrote that "Turkey-U.S. relations could suffer significantly if President Obama decides to fulfill his electoral pledge to approve the Armenian genocide resolution, a step that would seriously inflame the Turkish government and public opinion." Do you think that perhaps the adoption of the resolution could be helpful in that it would no longer "threaten" U.S.-Turkish relations as it has for the past two or three decades?
IB: No, it will always threaten U.S.-Turkish relations but that does not mean it is not helpful for the Armenian diaspora. We need to recognize that the diaspora has a different view of priorities than the U.S. government does, which is perfectly reasonable for a special interest group.
The pro-Israel lobby in U.S. has interests that differ from U.S. priorities in the Middle East or even in U.S-Israel relations.
And it is appropriate for the Armenian diaspora to push for what they feel is incredibly important to them. But it is also appropriate for the Obama administration to resist that, because Turkey is an important country. And that is healthy for a democracy.
Openness, stability, and risks
AR: In your 2006 book The J Curve: A New Way to Understand Why Nations Rise and Fall, you argued that there is a peculiar relationship between a country's stability and its openness toward the flow of people, goods, and information (not necessarily being a democracy). Sometimes it seems that Armenia is just open enough to frequently find itself at the bottom of this curve, do you agree with that?IB: No, Armenia is reasonably closed at this point and it pretty much has to be in the present environment. Armenia is a country that lost about thirty percent of its population in the 1980s and 90s, some of the most pro-globalization, pro-entrepreneurial citizens of that country, because they had opportunities outside of Armenia.
So it is not a surprise in that context that the Armenian government is focused on stability. They fought a war against Azerbaijan and their closest relationship is with authoritarian Russia. It is a very difficult geopolitical position and no surprise it finds itself on the left side of the curve.
AR: Overall, is the so-called Putin model of authoritarian leadership the best possible fit for Armenia?
IB: Not long-term. Being a small country with a very active diaspora, Armenia could open up in a relatively short time, developing ties and trade with Turkey, and move toward settlement with Azerbaijan. And if Georgia remains less stable, Armenia becomes a better option for things like pipelines. A small country like that with a relatively small amount of money gets a lot of optionality. But we are not there yet.
AR: And you have a new book coming out in the next couple of weeks, The Fat Tail: The Power of Political Knowledge for Strategic Investing. What is that about?
IB: The book tries to explain how politics increasingly affect the market. The notion of the "fat tail" is that so many of the things that affect us in the global economy today are things that we think are very, very unlikely to happen, but they actually happen much more frequently.
A lot of people say that these things cannot be predicted. And what I am saying in the book is that increasingly the biggest risks in the market are not economic but political in nature. And I am trying to help people understand what these political risks are all about.
Top 10 risks of 2009 according to Eurasia Group
(Eurasia Group's Jan. 5, 2009 release)
1. Congress: how the U.S. reacts to the economic crisis
2. South Asia security: Afghanistan, Pakistan, and India
3. Iran/Israel: Nuclear Iran to shift regional balance
4. Russia: economic problems and tension with the West
5. Iraq: reduced U.S. presence to lead to spike in violence
6. Venezuela: Chavez to fight to retain power
7. Mexico: War on drugs taking a violent turn
8. Ukraine: economic implosion and political bickering
9. Turkey: Islamists v. secularists; drift from the West
10. South Africa: elections and political instability
Red herrings:
China: no domestic unrest and resilient economy
The Persian Gulf: Petro-states to weather the oil prices
Climate change: Issue to take back seat to economic crisis
Brief description for each item inserted after colon is the Reporter's summary of Eurasia Group findings.
connect: www.eurasiagroup.net
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