Russia: Reasserting Power in Regions of the Former Soviet Union Since the collapse of the Soviet Union in 1991 Russia has struggled to regain power in Eurasia. Russia is reasserting its power in regions of the former Soviet Union by seizing control of Crimea, reforming the military and conducting cyber-attacks. Crimea: The military seizure of Crimea was a strategic move by Russia. The situation in Crimea has caused problems for the US and Western Europe, and has taken the focus off of other international concerns (i.e. Syria). -- Russia seized effective control of the Crimean region of the Ukraine -- Russian annexation of Crimea It is likely that Russian military will move beyond Crimea into eastern Ukraine. Economic sanctions by the US and EU on Russia will not likely influence Russia to leave Ukraine. Reformation of the Military: The main goals of the 2013 Russian military reformation included increasing the size of the military to one million personnel, and modernizing the weapons and equipment. -- Russia began a $723 billion modernization program that includes procuring 1,700 warplanes, including cutting edge fighters and new air defense batteries -- Russia committed $138 billion to naval capabilities Russia will likely continue to increase its military capability in terms of readiness level, force protection and sustainability. Russia will also likely continue to develop more modern weapons and equipment. Cyber-attacks: Russian signals intelligence launched cyber-attacks against former Soviet Union nations and their allies in effort to disrupt the government and telecommunications. -- Distributed denial of service attacks on Georgia -- Distributed denial of service attacks on NATO-affiliated websites It is likely that Russia will use moderation in conducting cyber-attacks on Ukraine and other former Soviet Union nations with capable computer personnel. Russia will not likely want to engage in cyber warfare against nations capable of returning equally devastating cyber-attacks. We assess that Russia will continue to exert its influence over regions of the former Soviet Union through the application of military pressure and the use of cyber-attacks. We also assess that economic sanctions alone will not deter Russia from spreading out beyond the Crimean borders. Analyst: Carrie Bowers 1
Vietnam: Economic Expansion We assess the economic concerns of Vietnam reflect a reformed economy and regional disputes and agreements. Vietnam continues to expand their economy with international investments, allowing their government to compete with China. Tensions between China and Vietnam increase due to sea lane disputes, encouraging the Vietnamese government to pursue economic and diplomatic alliances with Russia. 1. Since 2009, the Vietnamese economy continues to grow annually, presenting new opportunities for international businesses to invest in Vietnam which supports their Communist government. The foreign direct investment into Vietnam s economy stalled in 2009 due to government scandals, soaring inflation rates, and currency depreciation; since 2009, the government has enacted major economic reforms designed to market and liberalize the economy for foreign investors. The substantial presence of a young, cheap labor pool, favorable sea access to the global supply chain, political stability, and new policies involving direct investments has allowed the Vietnamese economy to slowly rival China s economy and seize businesses leaving China for cheap countries. The Communist government of Vietnam continues to pursue their international strategy by suggesting a name change from the Socialist Republic of Vietnam to the Democratic Republic of Vietnam in hopes of creating more favorable direct investments from international, democratic countries 2. While Vietnam s competition with China aids US strategy, Hanoi s increasing economic ties with Russia creates new concerns within Asia. Tensions between Vietnam and China have increased over the past two years due to territorial disputes regarding the South China Sea, maritime shipping lanes, and the increase in Vietnam s regional power; naval conflicts will most likely continue as Vietnam s economy grows. Vietnam holds political and economic influences over Cambodia, Laos, Spratly Islands, and Paracel Islands, increasing their influence in Asia as a regional economic contender with China. Russian defense relations with Vietnam will continue to increase in the next decade as Russia supplies military equipment to Vietnam, has recently signed twenty-seven bilateral agreements on energy and defense, and has suggested potential military technological development in Vietnam with weapon and training agreements. We assess that Vietnam s economy will continue to expand, but at a reduced rate, over the next decade, increasing tensions and naval disputes with China. The growth in Vietnam s economy coupled with their influences over surrounding countries enables Vietnam to emerge as a regional power committed to contesting China s influence, potentially resulting in increased conflict. Vietnam will most likely seeking US aid in investing in their economy and combatting China s regional power; 2
however, Vietnam s close ties with Russia will complicate American involvement. Vietnam will likely choose Russian aid over US aid and will continue to enhance their military capabilities with Russian technology. Analyst: Lauren Parker 3
India: An Emerging Economic Power in Asia India has the size and growth potential to be a significant economic power in Asia over the next 20 years. Currently, there are 56 Indian companies on the Fortune 2,000 list. India also ranks third in terms of attractiveness as a destination for Foreign Direct Investment (FDI). Some major factors effecting the potential growth of India s economy include competition with China over resources in Asia, Russian interest in India and affordable green growth options. Competition with China: India s economic expansion through overseas operations and investments is impacted by the country s declining oil and gas production. The size, proximity, and similar economic ambitions of India and China have historically made them natural competitors. -- China and India both have emphasized focus on maritime interests, and Southeast Asia is one region where both countries seek to consolidate their position -- Myanmar in particular has abundant energy and natural resources, accounting for the world s tenth-largest natural gas reserves, of over 90 trillion cubic feet (tcf) spread over nineteen onshore and three main offshore fields Rivalry between India and China will increase as each country competes for access to strategic economic resources throughout different regions of Asia. Russian Interest in India: Challenges for Russia in exporting energy to Europe have made a positioning towards Asia more desirable for Moscow. -- In October 2013, Russia and India established a joint study group to examine the potential for overland supply of Russian natural gas to India -- India is currently the fourth-largest energy consumer worldwide, and the International Energy Agency estimates that it will become the third largest by 2020 India will likely continue to partner with Russia in mutually lucrative deals, especially ones that would also undermine the economic dominance of China in Asia. Affordable Green Growth: Affordable green growth options can be implemented by India to reduce environmental degradation at the minimal cost of 0.02% to 0.04% of the average annual GDP growth rate. -- The annual cost of environmental degradation in India amounts to about $80 billion, equivalent to 5.7% of the Gross Domestic Product (GDP) --The main source of environmental degradation is particle pollution from the burning of fossil fuels, which has serious health consequences amounting to up to 3% of India s GDP India will likely decide to implement measures to reduce their environmental degradation. The affordable green growth options will allow India to maintain a high pace of economic growth without jeopardizing future environmental sustainability. 4
We assess that the emergence of India as an economic power in Asia will continue to be impacted by competition with China, Russian interest, and the implementation of green growth options. Rivalry between India and China will continue to increase as both countries compete for energy resources to provide for their increasingly large populations. Russia will likely continue to support Indian economic growth to develop a strong energy trading partner, and counter the growing economic dominance of China in Asia. Analyst: Carrie Bowers 5