Syrian Conflict

Russian Strikes Escalate Crisis

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Russian military jets carried out airstrikes in Syria for the first time on Wednesday in Talbiseh in Homs province, targeting what Moscow said were Islamic State positions.
  • Why it matters

    Why it matters

    • Russian actions in Syria are designed to expand its influence in the region. They are also a distraction from the terrible economy at home.
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  • Facts

    Facts

    • Russia carried out air strikes on Syria on Wednesday.
    • Russia’s gross domestic product shrank by 3.8 percent in the first eight months of 2015.
    • The International Monetary Fund expects GDP to keep contracting next year, at a weaker rate of 0.6 percent.
  • Audio

    Audio

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On Wednesday, only two days after President Vladimir Putin held talks with U.S. counterpart Barack Obama in New York, Russian fighter jets bombed targets in Syria. The unexpected military strikes risked escalating the conflict.

After the Russian parliament Wednesday authorized the use of military force abroad, events moved quickly. A Russian official walked into the U.S. embassy in Baghdad to announce his country would begin the air strikes within an hour and requested the U.S. keep out of Syrian airspace.

Mr. Putin claims he shares the West’s aim of crushing the Islamic State, which controls large areas of Syria. However, the bombings on Wednesday were carried out north of Homs, an area where IS is not thought to be active.

U.S. defense chief said his understanding was also that the Russian strikes 'were in areas where there were probably not ISIL forces.'

Syrian opposition fighters, who are backed by the U.S., said they were targets of Russia’s attacks. The action heightened fears Russia is using Islamic State as a pretext to weaken rebels opposing President Bashir al-Assad.

Russia supports the Assad regime, while the U.S. favors the ouster of Mr. Assad, whom it says ordered the indiscriminate dropping of barrel bombs on civilian areas that has killed thousands of innocent Syrians.

Ashton Carter, the U.S. defense secretary, said on Wednesday that his understanding was that the Russian strikes “were in areas where there were probably not ISIL forces.”

Supporting Mr. Assad would not help end the conflict, he said.

“Fighting ISIL without pursuing a parallel political transition only risks escalating the civil war in Syria – and with it, the very extremism and instability that Moscow claims to be concerned about and aspire to fighting,” Mr.Carter said at a press conference. “That approach is tantamount … to pouring gasoline on the fire.”

U.S. Secretary of State John Kerry held talks with Russian counterpart Sergei Lavrov on Wednesday and afterwards announced the two countries planned military-to-military talks to avoid airspace accidents.

At the press conference, a terse Mr. Kerry said: “It’s one thing to be targeting ISlL. We are concerned if that is not what is happening.”

The German foreign minister, Frank-Walter Steinmeier, warned there was a “great danger” the conflict could escalate amid “misunderstandings.”

“Up to now, we have no concrete indication of the aims or methods of these air strikes,” Mr. Kerry said. Moscow, he added, should “provide clarification as soon as possible.”

Mr. Kerry warned that Russian military action would make a peaceful resolution of the conflict more difficult to achieve.

Russia, which recently sent military equipment such as tanks and jets to Syria, has said the conflict can only be resolved by keeping Mr. Assad in power.

Opposition groups accuse the Syrian president of human rights abuses and of killing of tens of thousands since the country’s civil war began in 2011.

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A woman watches a Russia-24 news program on TV allegedly showing Russian airstrikes in Syria. Source: DPA/Anatoly Maltsev

 

The Russian military action has also been criticized at home. “The risk is that such missions become very long,” said Fyodor Lukyanov, head of Russia’s Council on Foreign and Defense Policy, at a Russia-Europe business conference in Moscow on Wednesday.

Mr. Putin’s chief of staff, Sergei Ivanov, defended the action.

“This is not about achieving any foreign-policy goals or satisfying any ambitions, which our Western partners often accuse us of,”  Mr. Ivanov said. “This is exclusively about Russia’s national interests.”

Russia is pursuing two goals in Syria: First, keeping Mr. Assad in power would ensure Moscow’s influence in the Middle East. Russia could retain a big military base in Syria and support Russian oil and gas refineries in the region.

Secondly, the Islamic State is also a threat to Russia’s internal security. Many of its fighters have come from Russia and the former Soviet states. Moscow fears their return could destabilize the region, particularly in the Caucasus.

Mr. Putin has said that Russia’s military intervention will be confined to air strikes. With memories of the Soviet involvement in Afghanistan in the 1980s still fresh, there is little appetite for sending in ground troops.

Getting involved in a prolonged battle against IS is a risk and it is clear that even if Mr. Assad holds on, he will never control the entire country.

Yet the conflict allows Russia to reassert itself on the international stage, and provides a distraction from its failing economy.

Hit by low oil prices and Western sanctions, each day brings fresh bad news. Russian Standard Bank is in the red and the second-biggest airline, Transaero, is on the brink of bankruptcy.

Raw materials giants Gazprom and Rosneft are short of equipment and lack funds for the costly development of oil and gas fields off the Russian coast where the government has postponed planned drilling by two to three years.

Russian gross domestic product contracted by 3.8 percent in the first eight months of 2015 and fell by as much as 4.6 percent in the month of August. The International Monetary Fund has just cut its growth forecast for Russia yet again and now expects GDP to shrink 3.8 percent this year and 0.6 percent next.

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Russian President Vladimir Putin (left) holds a meeting with senior government officials at the Novo-Ogaryovo residence outside Moscow, Russia on Wednesday to discuss the air strikes in Syria. Source: AP

 

As the economy worsens, industry leaders are pinning their hopes on Russia improving its ties with the West and getting the sanctions lifted.

Relations between Russia and the West have deteriorated since Moscow annexed Crimea last May and then backed separatists in eastern Ukraine. The sanctions the West imposed have taken their toll, as has the drop in oil prices.

The head of Russia’s Sberbank, Herman Gref, urged governments “not to seek out who’s to blame for the crisis and to punish them but to look to the future.” Speaking at a Russia-Europe business meeting organized by Handelsblatt and French magazine Le Nouvel Observateur this week in Moscow he said: “We need a solution now that everyone can profit from.” The key now was for both sides to cool their emotions and seek a pragmatic solution, he said.

Russia, Ukraine and Europe should work together to tackle their economic issues, which would make it easier to solve political differences, Mr. Gref said.

The former head of the World Trade Organisation, Pascal Lamy, challenged that stance, saying that the Ukraine crisis wasn’t about emotions but about a breach of international law. The sanctions, he said, would likely “remain in force for a very, very long time.”

Nevertheless, a number of Russian and European business leaders echoed the call for more pragmatism. “The sanctions are wrong, they won’t change Vladimir Putin’s actions,” said Jacques de Boisseson, the head of Russian operations for French oil company Total. Russia and Europe should acknowledge their mutual dependence and work together, especially in the energy sector, he said.

“Otherwise Europe will fall massively behind America,” said Mikhail Leontyev, the head of Rosneft’s external communications. Lionel Champeaud, the Russia chief of Airbus, said the “main task is to rebuild lost confidence and to reestablish political dialogue.” Russian-French restaurant entrepreneur Andrey Dellos even called for the establishment of a commission of reconciliation between Russia and Europe.

The Western sanctions have made it difficult for Russian state banks like
Sberbank, VTB or VEB to refinance themselves. Mr. Gref of Sberbank said the sanctions had “significantly affected” his bank but didn’t put its survival at risk. The bigger problem was that relations between Europe and Russia were suffering and both were losing international competitiveness as a result, he said.

German companies too are feeling the problems. German exports to Russia fell by a further 31 percent in the first half of this year, partly because Russia banned the import of Western food.

For the first time since Mr. Putin came to power, the Russians are suffering real income losses. Consumer spending is falling. Car sales in Russia fell by 33.5 percent in the first eight months of 2015 to just under 1.6 million vehicles.

“Next year will be the toughest year for the Russian economy,” Alexander Shokhin, the president of the Russian Union of Industrialists and Entrepreneurs, told Handelsblatt in an interview. “The economy continues to stagnate. It will start to grow again in 2017 according to consensus forecasts.”

He said the three main problems facing the economy were the weak oil price, the sanctions and a lack of structural reforms. “We must diversify the economy and substitute imports. It’s not about simply making everything ourselves but about the targeted development of economic sectors that are capable of exporting. The biggest problem for most companies with this is the current lack of financing.”

Despite the political tensions, Bielefeld-based engineering company DMG Mori, has just opened a factory in Ulyanovsk on the Volga river to supply the Russian market with milling machines and lathes. “We’re making high-tech machines here, the most efficient ones we have,” DMG Chief Executive Rüdiger Kapitza said. The company built the plant for €70 million and it has an initial capacity of 1,200 machines per year, with room for expansion. “The market is big enough to absorb the machines,” said Mr. Kapitza, adding that that until a few years ago Russia was buying machine tools worth €1.5 billion a year. That total has fallen to €1.1 billion because of the crisis.

German engineering exports to Russia fell 28 percent in the first seven months of 2015, according to figures from German engineering industry association VDMA. Russia fell to 10th position in German engineering exports from fourth in 2013, before the standoff began with the West over Moscow’s role in the Ukraine conflict.

 

André Ballin writes for Handelsblatt from Moscow, Russia. Moritz Koch has been the Washington correspondent for Handelsblatt since 2013. Mathias Brüggmann is the head of Handelsblatt’s foreign affairs desk, leading the coverage of the Ukraine crisis. Nicole Bastian is currently the coordinating editor of foreign affairs in Düsseldorf.  Regine Palm in Ulyanovsk contributed to this report. To contact the authors: ballin@handelsblatt.comkoch@handelsblatt.combrueggmann@handelsblatt.com and bastian@handelsblatt.com

 

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