GM, Opel, US, Germany, Russia, & Iran

In a story that might have more than it appears, GM announced it will not go through with a deal it announced in early summer to sell their German division Opel.

The story really first appears as the auto company bail-out was in full swing in the US.  GM had pushed a reorganization plan that cut jobs in all countries.  With German Chancellor Angela Merkel getting pressure due to the global economic crisis and facing a re-election, Opel became more important than first assumed (@BusinessWeek):

….On Tuesday, though, German Chancellor Angela Merkel said Opel was not a “system-critical” corporation. “There are system-critical financial institutions,” she told her conservative party’s parliamentary group, according to the Rheinische Post newspaper. “But there are no system-critical industrial firms.” It was Merkel’s indirect way of saying that Opel is less important to Germany than its crisis-stricken banks. Her statements were intended to counter earlier comments made by the head of the left-leaning Social Democratic Party that Opel was indeed “system relevant.” She added, however, that Opel should be given a chance to survive and that like all companies, it has the “right to apply for state aid.”…

It not only became more important, but Chancellor Merkel started treating it as imperative to re-election (@France24.c0m):

Just five weeks before German elections, leading politicians are putting pressure on General Motors and the US authorities to choose a candidate to take over GM’s troubled Opel unit. Angela Merkel has called for an urgent decision….

As the German government and GM Opel executives worked hard to save as many jobs as possible, they looked for potential investors.  They had competing bids, but finally accepted a bid from Canadian auto-parts manufacturer Magna, using money from the Russians (@Bloomberg):

May 30 (Bloomberg) — German Chancellor Angela Merkel’s government chose Magna International Inc. as the buyer for General Motors Corp.’s Opel and confirmed a financing plan aimed at helping the money-losing unit avert insolvency….

…German state leaders and labor representatives have said repeatedly since bids were submitted on May 20 that they favor Magna’s offer, which includes as much as 700 million euros in investments in partnership with Russia’s OAO Sberbank. The plan also foresees a linkup with OAO GAZ, which said today it could produce 180,000 Opel cars a year at its main Russian site….

Now the simple truth is, that while Russia does have money, it has its own economic problems that would generally preclude it from loaning hundreds of millions of dollars for a fading industry.

But Russia’s decisions highlights aims that are well beyond helping GM’s European division.  Their goal was to use the split in US-German relations caused by, among other things, inflamed rhetoric from Ms. Merkel blaming US mismanagement on Opel’s problems, to increase its international influence.  It also lined up with Russia’s continued movement towards setting itself up as a competing power to the US and expand its control in the former Eastern bloc countries & Europe.

We can see Russia doing this in many ways, including Opel, but none as clearly as Russia countering any attempts from the US and other nations to help with sanctions on Iran (@USAToday):

MOSCOW (AP) — Russian Foreign Minister Sergey Lavrov said Tuesday that the threat of sanctions against Iran would be counterproductive, resisting U.S. efforts to win agreement for measures if Iran fails to prove its nuclear program is peaceful….

Russia has even gone so far as to state they will continue shipping fuel and anything else Iran needs if UN sanctions were passed.  Meeting with US Secretary of State Hillary Clinton, Russia called any discussion or implementation of new sanctions to be “counterproductive”.

So Russia sees it’s relationship with Iran as a point of leverage to use against the US while it tries to expand its influence throughout the former Soviet Bloc and Eastern Europe, while the US sees Iran as a potential source of instability in the middle east.  Sure, the US has no desire to see Iran with nuclear weapons, but Iran does not have the technology to end with a weapon capable of really harming the US anytime soon (probably two decades away).

So the US’s main desire now is to protect allies within the region and minimize Iran’s potential at gaining enough power to potentially affect world oil supplies other than it’s won & the US needs Russia’s help.  Indeed, the decision to remove a missile defense shield from Poland and Czechoslovakia was likely a carrot dangled towards Russia to increase their cooperation.

Enter GM & Opel and GM’s recent decision to forgo the sale (@NYTimes):

DETROIT — The new board of General Motors reversed course Tuesday on the planned sale of its Opel division in Europe and decided that G.M. would retain and reorganize the business itself….

Now, it’s completely possible all this is just many, many coincidences, but with President Obama’s administration hand picking GM’s board, and the international decisions we know of – there’s likely much more here than first meets the eye.

Missile Defense and International Politics Continued

I wrote last week about Mr. Obama’s decision to forgo plans to put ballistic missile defense systems in Poland.  At that time, I considered the Republican talking points to be more than excessive.

Sound bites about  appeasing Russia and abandoning our allies was disingenuous considering all the known facts.

As seems typical with this President however, is that each time I agree, he does something so stupid as to defy rational thought:

WASHINGTON — President Barack Obama sharply dismisses criticism that Russian opposition influenced his decision to scrap a European missile defense system, calling it merely a bonus if the leaders of Russia end up “a little less paranoid” about the U.S.

“My task here was not to negotiate with the Russians,” Obama told CBS’ “Face the Nation” in an interview for broadcast Sunday. “The Russians don’t make determinations about what our defense posture is.”…

This seems extremely hard to believe and if you analyze the situation while taking the President’s words at face value, you’re only left with one looming question, “If not for Russia, then why?”

Mr. Obama’s current position:

…In its place will be a different missile-defense plan relying on a network of sensors and interceptor missiles based at sea, on land and in the air. Obama says that adapts to the most pressing threat from Iran to U.S. troops and allies in Europe, potential attacks by short- and medium-range missiles….

Which, according to the CBO, will be more expensive and make us less safe overall.  From the report:

  • Defense of Europe. All of the alternatives CBO considered would provide defense of most of Europe roughly equivalent to the defense provided by MDA’s proposal against most types of ballistic missiles that Iran is thought to have developed or could develop in the future. Because the alternatives CBO considered would locate interceptors closer to Iran than MDA’s planned system, they would generally provide more extensive defense of southeastern Europe than would MDA’s proposal. Moreover, because they would be composed of mobile or transportable components, deploying the alternative systems would not require building permanent facilities—including missile silos—at European sites.
  • Extended defense of the United States. A second goal of MDA’s proposed European system is to give the United States an extra layer of defense against potential Iranian intercontinental ballistic missiles. CBO’s analysis indicates that by 2012 systems already in place at two bases in the United States would protect more than 99 percent of the U.S. population from this threat. MDA’s proposed European system would extend defensive coverage to the other 1 percent of the U.S. population. It would also provide redundant defense from a third interceptor site for all of the continental United States, giving system operators more flexibility by creating an opportunity to launch a second interceptor from the United States, if necessary. None of the alternatives considered by CBO provide as much additional defense of the United States.
  • Costs. For roughly the same cost as MDA’s European system—a total of about $9 billion to $14 billion over 20 years—the United States could deploy either of the ground-based alternatives. The ship-based alternative would cost almost twice as much as MDA’s proposal—a total of about $18 billion to $26 billion over 20 years—largely because CBO assumed that the Navy would need to buy additional ships to operate it.
  • Availability. The alternatives that CBO examined might not be available as early as MDA’s proposed European system.

So again Mr. President – if this wasn’t to sooth relations with Russia and the alternative path you’ve chosen is both more expensive and makes us less safe – then why?

Missile Defense and International Politics

Today, MO Congressmen Todd Akin – R (and I’m sure others) released a statement concerning a change the President is making in foreign policy arena:

“The President’s decision to back away from our plans to put missile defense sites in Poland and the Czech Republic effectively abandons two of our allies who had worked hard and taken political risks for the sake of European and American security. The Administration has sent a clear signal to our central and eastern European allies that the United States, under this President, cannot be counted on to stand by our commitments.”

“With the Iranian regime continuing its aggressive pursuit of nuclear weapons and Russia’s commitment to reassert its regional hegemony, the United States must strengthen, not weaken, their commitment to the safety of our friends and allies around the world. The technology changes proposed may be of some merit, but the Administration needs to fully brief the Congress and our NATO allies before proceeding with this dramatic change in course.”

“Given our desire and need for a stronger commitment by our NATO allies in Afghanistan, President Obama’s decision to abandon our Polish and Czech allies will only make that effort all the more difficult.”

Not to attack Mr. Akin directly on this view as he is ranking Member of the House Armed Services Subcommittee on Seapower and Expeditionary Forces, the rhetoric is simplifying a more complex issue.  As Russia tries to reassert itself within the region and the question of giving missile defense technology to Poland and Chech is tricky.  These countries are seen by Russia as inside their historical sphere of influence (Eastern Bloc).

Additionally, Russia has used these countries as a man made border to reduce any potential opponents ability to invade.  They do this and are concerned by it because they have no real natural borders such as the US with two oceans.

So while it’s true that this move strengthens Russia, what we need right now is Russia’s help to control Iran from building nukes.  When the UN passes embargo’s against Iran, but Russia and others continue to trade with Iran, we basically haven’t done anything that is likely to deter Iran from their current stated goal of obtaining nuclear weapons.

Realistically and by all known analysis, Iran isn’t anywhere near being able to build an actual weapon.  They are close to having the fuel required, but the technology to actually make that fuel into a weapon is very complex and not something with which they have experience.

Additionally, even if Iran could build a nuclear war head that could result in a very large explosion, they still don’t have good missile technology, circuits capable of withstanding the radiation, and many other technologies required to make all of it useful.

Having said that, Iran is a threat and as a proactive supporter of terrorism, remains a country we have to be cognizant of.

So my personal opinion is that our fear of Iran right this second might be overblown which would make this decision unnecessary, but I also know what I don’t know… like whether Russia has given us assurances of help with Iran, whether the existing publicly available analysis is correct, or any number of other factors which should be used in the calculus for deciding on any given action.

Either way, taking knowns & the unknowns together, the decision itself isn’t as easy as the “abandoning our allies” rhetoric would make one think.