Download PDF The 11th IISS Global Strategic Review, Oslo, 19-21 September 2014.
Ine Eriksen Søreide

Ine Eriksen Søreide, Minister of Defence, Norway

The last time the IISS convened in Oslo, 25 years ago, coincided with the opening of the Hungary–Austria border to East Germans pushing West and the breach of the Berlin Wall. A quarter-century later, comparable questions concerning an upended European if not global order were once more the subject of discussion at the 11th Global Strategic Review (GSR), convened on 19–21 September 2014 under the rubric ‘Geopolitical Risks and Geo-economic Opportunities’.

Keynote Session on Nordic Perspectives on European Security

Both Sweden and Norway are Host Nation Supporters of the GSR, which in 2013 took place in Stockholm. This year’s opening keynote session was held at the imposing Oslo City Hall and chaired by Dr John Chipman, IISS Director-General and Chief Executive. Carl Bildt, Minister for Foreign Affairs of Sweden, and Bård Glad Pedersen, State Secretary, Ministry of Foreign Affairs of Norway, presented Nordic perspectives on European security.

Glad Pedersen pointed to rapid change in Europe’s security environment in both its southern and eastern neighbourhoods. At a time when fundamental elements of Europe’s security order are under threat because of Russia’s actions in Ukraine, it is up to NATO and EU member states to ‘safeguard the basic pillars of the international security order’, and not to abandon them. A crucial pillar is respect for international law, from which both small and large states benefit. According to the state secretary, the High North, an area of strategic interest from a Nordic perspective and one that involves Russia, shows that through cooperation, trade and confidence-building measures, conflict and a ‘race for resources’ can be avoided. However, Glad Pedersen stressed that the West must react assertively to Russia’s intervention in its Western neighbour: Ukraine was not a pawn in a game of chess but a sovereign nation with the right to determine its own path.

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Bård Glad Pedersen gives his keynote address

Bildt argued that persistent instability in Europe’s neighbourhood and beyond is reordering the strategic priorities for Europe. Governments must realise that Russia has become, and will remain for the time being, a revisionist power. The implications are not limited to Europe, Bildt said. Rather, the legitimacy of the global security order is at stake and the foreign minister believed that addressing ‘the return of geopolitics’ and avoiding the ‘spread of global disorder’ is destined to be a long-term task. With regard to the Russia–Ukraine crisis, Bildt insisted that sanctions against Russia had to be matched by strong support for Ukraine as the country goes about economic and political reform and attempts to battle corruption. Bildt concluded that strategic realities have created a ‘new sense of exposure and vulnerability’ in Europe. On balance, Europe is heading towards a more difficult security future.

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(l–r) Carl Bildt, Minister for Foreign Affairs, Sweden; Dr John Chipman, Director-General and Chief Executive, IISS; and Bård Glad Pedersen, State Secretary, Ministry of Foreign Affairs, Norway

Keynote Session on the International System and the Ukraine Crisis

The Ukraine keynote session was chaired by Adam Ward, Director of Studies of the IISS. Professor François Heisbourg, Chairman of the IISS Council, argued in his address that the Ukraine crisis is fundamentally different from other post-Cold War crises because the formal incorporation of territory by a predator state was an ‘exceedingly rare act’, signalling that Russia is exiting the post-Cold War system. In Heisbourg’s opinion, this emanated from the widely held view in Moscow of the ‘Versailles-like punishment of Russia’ following the collapse of the Soviet Union. In Moscow’s act of rebellion against this punishment, the ‘West’s rulebook no longer applies’. The crisis would likely last for a long time because, ‘it is not about [Russian President Vladimir] Putin, not even about the regime, it is about Russia’. The West’s strategy should be to strengthen Ukraine just as Finland and Yugoslavia were supported by the West in the Cold War. The analogy also suggests one important concession: the ‘goal should be a strong neutral Ukraine’. Ruling out NATO membership just might be part of a solution that Moscow could accept. Heisbourg added that leaving the NATO question ‘in abeyance … can only worry the Russians without reassuring the Ukrainians’.

Samuel Charap, IISS Senior Fellow for Russia and Eurasia, agreed with Heisbourg on the problematic nature of a sanctions strategy: it ‘focused largely on punishing Russia rather than addressing problems that led to this impasse’. There is a need for balance between sanctioning bad behaviour and leaving doors open to a solution. IISS Council Member Igor Yurgens, who is Chairman of the Moscow-based Institute for Contemporary Development, assessed the pluses and minuses of the crisis from Moscow’s perspective. On the positive side, the possibility of ruling out NATO membership for Ukraine might be on the table, and Putin has boosted his popularity and consolidated his leadership. On the negative side, this has come at a huge economic price – possibly $200 billion in 2014 alone. There will be a creeping renationalisation of oil and gas industries, further damaging the economy, as a consequence of sanctions. Russia meanwhile finds itself in a weak overall position: it has 200 million people and 2% of global GDP, compared to the ‘consolidated West’s’ 1bn people and 40% of global GDP.

Comments from the floor were balanced between those who doubted that anything like a no-NATO-membership guarantee would stop Russia’s depredations, and those who wondered if such a concession offered much earlier could have headed off the conflict. There was also a question of whether the eastward expansion of EU influence is considered, by Russia, to be as threatening as NATO expansion. In response, Yurgens reiterated that any revived Association Agreement between the EU and Ukraine needed to include special provisions for the exchange of goods, capital and people across the Ukraine–Russia border. More broadly, the West might contain Russian adventurism, but it should shed any illusions about solving Russia’s internal problems.

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(l–r) Dr Igor Yurgens, Chairman, Institute of Contemporary Development; Member of the Council, IISS

GSR 2014

(l–r) Professor François Heisbourg, Chairman of the Council, IISS; Special Adviser, Fondation pour la Recherche Stratégique; Adam Ward, Director of Studies, IISS; and Dr Samuel Charap, Senior Fellow for Russia and Eurasia, IISS–US

First Plenary – The Transformation of the Geopolitical and Geo-economic Order in the Middle East

The rise of the Islamic State of Iraq and al-Sham (ISIS) has both exposed and exacerbated the grave structural weaknesses and political contradictions of Middle Eastern states. The crisis of legitimacy of governing Arab elites and the weakening of states have created vacuums increasingly filled by extremist, revisionist actors.

Former Iraqi deputy prime minister Dr Barham Salih noted that the challenge to post-First World War borders in the Middle East did not come from communities with old grievances but from a new, extremist Islamist movement, namely ISIS. Roula Khalaf, Foreign Editor of the Financial Times, reflected on the dashed hopes of the Arab uprisings and referred to the region as a ‘comprehensive mess’. Failing states such as Syria and Iraq are cohabiting with the increasingly autocratic Gulf states and regional dynamics, she explained, are shaped by an Iranian–Saudi cold war. This is taking dangerous and enduring sectarian forms and is exacerbated by the nuclear talks. The struggle over the future of political Islam – with Saudi Arabia, the UAE and Egypt vying against the Qatar- and Turkey-backed Muslim Brotherhood – is also a key factor. Such fault lines complicate any sustainable response to ISIS.

Toby Dodge, Senior IISS Consulting Fellow for the Middle East, insisted that the combination of weak, failing and failed states was the defining strategic issue in the Middle East. As a case in point, he detailed the failings of the Iraqi state since the US invasion of 2003 and explained how key Sunni communities, having lost trust in the central government, turned to sectarian and communal players for protection, order and services. Rather than hard partition into homogenous states, he predicted that no new, homogenous state would emerge from the current turmoil.

Salih, Khalaf and Dodge agreed that ISIS was a symptom of the failure of state-building, ailing societies and Western policies in the Arab world. Corruption, crises of institutions and lack of services have shaken the trust of citizens in their states and benefitted extremist players. ISIS’s rise was no surprise.

The response to ISIS will be challenging: Salih described the coalition against ISIS as ‘the alliance of the unwilling and the hesitant’. Khalaf described ISIS as a virus and Syria as its biggest victim but recognised the complexity of fighting ISIS in Syria. Intervention in Iraq was relatively easy given the request of the government and the presence of local partners, two ingredients sorely missing in Syria. Dodge advised that the solution in Iraq requires inclusive governance and the decentralisation of power, not just resorting to force.


(l–r) Dr Barham Salih, Former Prime Minister, Kurdistan Regional Government, Iraq; Dr Nicholas Redman, Director of Editorial and Senior Fellow for Geopolitical Risk and Economic Security, IISS


(l–r) Professor Toby Dodge, Consulting Senior Fellow for the Middle East, IISS; and Roula Khalaf, Foreign Editor, Financial Times

Second Plenary – Iran: Towards an Endgame?

The Second Plenary Session assessed the prospects of converting the interim nuclear deal between Tehran and the P5+1 powers – composed of China, France, Germany, Russia, the United Kingdom and the United States – into a final one. The speakers held contrasting views on how achievable a goal this is. However, all agreed that the complexity of events in the region is such that war against Iran over its nuclear capacity and ambitions is now less likely. For now, no major player, including Israel, has a clear interest in initiating a major state-to-state armed confrontation in the region.

Seyed Hossein Mousavian, the former Head of Iran’s Foreign Relations Committee, stated that a return to sanctions policy would result in failure. By contrast, the interim deal has delivered remarkably positive results which must be safeguarded, including Iran’s moves to convert enriched uranium to oxide fuel, halt the installation of centrifuges, and commit to no further reprocessing of nuclear fuel rods. Mousavian went on to explain that a broader dialogue, on the basis of a common agenda with the West over the security deterioration in Iraq as well as Afghanistan, might help bridge deep-rooted mistrust between the parties. He stressed the political nature of the impasse with regard to the nuclear negotiations.

Professor Ghassan Salamé, Dean of the Paris School of International Affairs at Sciences Po and Member of the IISS Council, reminded delegates that one of the key tenets that had helped negotiators reach an interim agreement was the decision to isolate nuclear talks from other geopolitical concerns. Any linkage would be anathema to the way in which the nuclear talks have been conducted so far and largely superficial. More fundamentally, competing interests and visions over developments in Syria, Gaza and Yemen are not favourable to a broader US–Iran strategic reconciliation in the region. Salamé concluded that a deal was still possible but the more likely alternative would be a decision to roll over negotiations or, short of this, a return to sanctions policy.

Dr Gary Samore – Former White House Coordinator for Arms Control and Weapons of Mass Destruction – lauded the ‘sensible ways’ in which negotiators have learned to engage with each other over the course of the negotiations. This includes a shift towards US–Iranian bilateral meetings because the P5+1 format was too cumbersome. Any deal would therefore have to be between Washington and Tehran and subsequently ratified by the broader P5+1 grouping. However, the two countries are still very far apart on agreeing Iran’s status as a ‘threshold state’ in the non-proliferation regime. Washington has demanded Iran reduce its existing enrichment capacity and cap it for 20 years. Iran continues to insist on building its civilian nuclear capacity through a much larger industrial-scale programme. A compromise is still possible, but in Samore’s view neither side is in a position to make fundamental concessions in order to achieve a final deal. The status quo is not perfect, but remains tolerable for all sides. We may therefore expect to see a renewal of an interim agreement involving additional actions for Tehran in return for further sanctions relief.


(l–r) Seyed Hossein Mousavian, Former Head, Foreign Relations Committee, Supreme National Security Council, Iran; Professor Ghassan Salamé, Dean, Paris School of International Affairs, Sciences Po; Member of the Council, IISS; and Dr Gary Samore, Former White House Coordinator for Arms Control and Weapons of Mass Destruction


Dr Gary Samore, Former White House Coordinator for Arms Control and Weapons of Mass Destruction

Special Session One – The Political, Economic and Strategic Future of Ukraine

Four themes dominated the discussion of Ukraine’s strategic future. Firstly, it was argued that reconciliation between the east and west of the country is imperative to overcome long-standing divisions in society and to transfer the conflict we have witnessed in 2014 from the military to the political realm. The second theme was the need for fundamental political and economic reform. Arguably, the authorities have a unique chance because the Maidan protests were mainly against the corrupt political model; society has thus far shown tolerance or even appetite for change. However, Ukraine seems to lack the capacity and strategy to effect a fundamental overhaul of the oligarchic and political model. The best prospect seems to rest with the EU: Ukrainian negotiators requested that the Association Agreement (AA) and the Deep and Comprehensive Free-Trade Agreement (DCFTA) commit Ukraine to legally binding change, because they recognised that external pressure was needed to overcome resistance to reform. Implementation of the agreements, which will be delayed and may never be completed, would bring Ukraine into line with up to 90% of the single market’s rules. However, there is concern that the EU is not ready to extend the assistance that Ukraine will need to implement the AA in crisis conditions.

The third theme was urgent challenges. Ukraine is unprepared for winter. It has stopped importing gas from Russia and has barely enough in storage or domestic production to meet internal demand. One solution would be to burn more coal, but 80% of the country’s coal comes from the Donbas. Electricity imports will also be needed but Europe cannot provide them. Thus there is a pressing need to resolve energy-trade disputes with Russia. Beyond the winter, Ukrainian and EU officials have until the end of 2015 to reach agreement with Russia on how Ukrainian–Russian trade will be conducted once Ukraine opens to EU goods under the DCFTA. Without this, many Ukrainian enterprises will be cut off from their traditional market in the east. This relates to the final theme: the need for reconciliation between Ukraine and the EU and US on one hand, and Russia on the other. Ukraine cannot be stabilised without a constructive contribution from Russia – economically, financially and politically. This in turn seems unlikely without some agreement that would address Russia’s concerns about the possibility of further NATO enlargement.


(l–r) Oleksandr Chalyi, President, Grant Thorton Ukraine; former Deputy Minister for Foreign Affairs, Ukraine; Dr Igor Yurgens, Chairman, Institute of Contemporary Development; Member of the Council, IISS; and Pavlo Sheremeta, Former Minister of Economic Development and Trade, Ukraine


(l–r) Dr Samuel Charap, Senior Fellow for Russia and Eurasia, IISS–US; Dr Tor Bukkvoll, Senior Research Fellow, Norwegian Defence Research Establishment (FFI); and Dr Kataryna Wolczuk, Reader in Politics and International Studies, Centre for Russian and East European Studies, University of Birmingham

Special Session Two – Egypt’s Political Trajectory and Economic Prospects: Regional Effects

Participants depicted the current political mood in Egypt following the 2011 revolution and subsequent military takeover as one of fatigue and disillusionment with the democratic process. The speakers agreed regime stability is presently considered the most important priority. Although the Sisi regime is still in the process of consolidation, it is not in danger of being overthrown.

Power brokers are divided on the future role of Islamist players, with one camp calling for their total eradication and another demanding their gradual political integration. It was noted that political repression, which initially targeted the ousted President Muhammad Morsi and Muslim Brotherhood supporters, is now expanding to other opposition and civil activists. The overthrow of old operators has also led to a fractured security landscape. In particular, there is growing insecurity along the borders with Sudan, Libya and Gaza because of discontent among border communities: this is reflected in increased trafficking of humans, arms and illicit goods.

Delegates agreed it is too early to predict the success of Egypt’s recent economic reforms. Gains from the energy subsidy reform could be channelled toward health and education. Other fiscal reforms, such as imposing the 5% income tax on high earners, are significant and reflect the regime’s commitment to a new paradigm: enshrining social justice in economic development. In the long term, Egypt’s two main challenges consist of tackling its high levels of poverty and food insecurity.


(l–r) Islam El Tayeb, Research Associate, IISS–Middle East; Alia Moubayed, Senior Economist, Middle East and North Africa, Barclays Capital; Emile Hokayem, Senior Fellow for Regional Security, IISS–Middle East; and Michael Wahid Hanna, Senior Fellow, The Century Foundation

Special Session Three – International Efforts to Secure the Cyber Domain

The cyber domain now stands at a critical juncture in terms of technology and policy, with technological developments outpacing policy. Speakers agreed that decisions taken now in both arenas and in the intersection between them would have an impact for decades to come. There have never been a greater number of damaging cyber incidents, with more actors and more targets demonstrating sophisticated attack tools and vectors. The cyber domain is becoming militarised with a trend towards more strategic use of military cyber tools amid a climate of mistrust. The current inability of states to determine adequately what military cyber capabilities other states possess creates conditions for an escalatory spiral with implications far beyond the purely military dimension.

On a more positive note, there is now more top-level policy understanding of cyber issues, which are no longer seen as matters purely for the technical community, and there has been progress in international negotiations on cyber governance and cyber security. There are still major differences of approach between the US and its allies who argue for the status quo and states such as China and Russia advocating a top-down governance model focused on information security – i.e. control of online content. Progress had been made at the UN where the Governmental Group of Experts had been able to agree on the applicability of existing international law to the cyber domain. A key concern would be to determine what constitutes acceptable conduct in peacetime and how behaviour could be monitored and policed – such as not targeting another state’s critical national infrastructure or Computer Emergency Response Teams.

International diplomacy still hankers after treaties but a pragmatic approach aimed at building consensus on specifics and the voluntary adoption of emerging best practice seems a more realistic aspiration. No state can secure the cyber domain on its own and the cyber domain now affects all aspects of human life.


(l–r) Eneken Tikk-Ringas, Senior Fellow for Cyber Security, IISS–Middle East; Bjørn Svenungsen, Coordinator for Cyber Issues, Ministry of Foreign Affairs, Norway; Christopher Painter, Coordinator for Cyber Issues, US State Department; Dr Jarno Limnell, Director of Cyber Security, Intel; and Sean Kanuck, National Intelligence Officer for Cyber Issues, Office of the Director of National Intelligence, US

Special Session Four – Southeast Asia’s Arc of Political Conflict and Economic Risk

The speakers at this session addressed political changes in three countries in mainland Southeast Asia: Cambodia, Myanmar and Thailand. As well as the nature of the changes – embedded, it was argued, in a regional political paradigm of constrained democracy – the discussion centred on their impact on relations with external powers, and implications for investment risk.

Thailand faced its 13th successful coup in May. Local opinions on the coup have not been as condemnatory as in the West: many Thais see the military’s reputation for efficient reform and restoration of order as part-justification for its intervention in public life. However, a second stage of political reform could be at risk if the economy fails to improve next year – economic stimulus is thus likely. On a more fundamental level, the re-instatement of military rule may do little to quell the divisions and political malaise afflicting the country. While the coup’s full impact on relations with external powers is not yet clear, it is unlikely that it will lead to a substantial deterioration in its relationship with Washington – such as a cancellation of next year’s joint military Cobra Gold exercise – as this could open the door for China to build a stronger relationship with Thailand.

Myanmar’s transition from a military dictatorship to a more democratic state has been ongoing since 1993, a fact often forgotten when assessing the reform trajectory of the present government. Expectations that a true democracy will emerge soon should be tempered by the existence of fairly intractable constitutional red lines limiting the extent of political participation. Nevertheless, reforms have had a profound impact on the rebalancing of Myanmar’s foreign relations, with Western powers lifting most sanctions. China remains a hugely important neighbour, but both the extent of its influence under military rule and subsequent decline have been overstated.

In Cambodia, the 1990s post-conflict democratic transition stalled, enabling a system where the ruling Cambodian People’s Party (CPP) integrated itself deeply into the economy and bureaucracy. Despite a controversial 2013 election, Cambodia is currently stable due to a CPP deal with the opposition. The CPP is unlikely to give up power if defeated at the ballot box at the next election in 2018, given the country’s ‘winner takes all’ political culture. However, the country has a strong interest in a safe investment environment despite potential political turmoil in 2017–18. Although the CPP was installed by Vietnam, Phnom Penh has more recently sided with China against ASEAN over the South China Sea, where Beijing and Hanoi are adversaries.


(l–r) Professor Joakim Öjendal, School of Global Studies, University of Gothenburg; Dr Tim Huxley, Executive Director, IISS–Asia; Dr Panitan Wattanayagorn, Associate Professor, Department of International Relations, Chulalongkorn University; and Hervé Lemahieu, Research Associate for Political Economy and Security, IISS

Special Session Five – The Consequences of Crisis: the Eurozone and European Strategy

Participants heard a familiar listing of the challenges facing Europe, but were also able to identify some positive indicators for the future. On the financial front, the Eurozone crisis has left a divisive legacy and substantial risks remain: debt levels are high and economic growth has been slow with high levels of youth unemployment. The crisis has both occupied leaders’ attention and restricted resources. As a result, the EU was accused in the session of turning its so-called ‘comprehensive approach to crisis management’ into an excuse to give up on a greater strategic vision. In defence and foreign policy, Europe has persistently failed to meet its own targets in terms of defence spending, capabilities and coordination. A Europe resting on these unsound foundations suddenly had to face the Ukraine crisis and a Russia that could no longer be viewed as a strategic partner. Previously, Europe had proceeded on the basis that its neighbours, whether to the east or south, wanted to be ‘like us’. Sanctions on Moscow have added to Europe’s economic and financial woes.

It was felt that NATO’s recent Wales summit had made important decisions to improve military readiness and flexibility, and to bolster both reassurance and deterrence, while also seeking – less convincingly – to reverse the downward trajectory of defence spending. Earlier, the EU’s December 2013 summit had been significant in reasserting a defence focus. In a broader sense, participants were reminded that Europe had pulled together – albeit in crisis mode – to save the euro. Moreover, a new team of top officials in Brussels had begun a ‘reboot’ of EU foreign policy. However, the sense of the session was that much more action is needed to improve European cooperation in all areas of policy. There remains a contradiction between the combined clout that could be gained from strengthening Europe-wide institutions and the tendency of governments to cling on to what one participant called ‘the illusion of sovereignty’ – an arresting phrase guaranteed to provoke euro-sceptics across the continent.


(l–r) Graham Muir, Head of Strategy and Policy, European Defence Agency; Daniela Schwarzer, Director, Europe Program, German Marshall Fund of the United States; and Sarah Raine, Consulting Senior Fellow for Geo-Economics and Security, IISS


(l–r) Camille Grand, Director, Fondation pour la Recherche Stratégique; Nick Witney, Senior Policy Fellow, European Council on Foreign Relations; and Ulf Sverdrup, Director, Norwegian Institute of International Affairs

Special Session Six – Hybrid Conflict, New Insecurities and the Developing World

This session explored the ways in which different types of non-state armed groups have interacted and increasingly merged in Africa, Latin America and Eastern Europe. Globalisation has allowed activities such as drugs and human trafficking, the spread of militant radicalisation and cyber crime to take on an increasingly transnational dimension which threatens regional security and stability.

Islamist groups display increasing hybridity and have successfully involved a greater number of nationalities in their core operations. This international dimension has been used to good propaganda effect by groups such as ISIS. The use of the Internet as a means of radicalisation has also increased the exchange of tactics and funding mechanisms between different Islamist groups.

Panellists agreed that hybrid conflict is more likely in countries with weak or divisive economic and state structures, such as Ukraine. It was pointed out that the use of proxy non-state armed groups by state actors is a long-standing issue in international affairs, but one that has acquired new relevance as a form of hybrid warfare that expands options to surprise adversaries and avoid detection.

Panellists emphasised development as a necessary condition for defeating hybrid armed groups. It was noted that political reforms, inclusive civilian partnerships and improved infrastructure have been used successfully in some states affected by hybrid conflict.


(l–r) Hanna Tetteh, Minister of Foreign Affairs and Regional Integration, Ghana; Diana Quintero, Vice Minister of Defense for Strategy and Planning, Colombia; Virginia Comolli, Research Fellow for Security and Development, IISS; Dr Alexander Evans, Coordinator, Al-Qaida and Taliban Monitoring Team, UN; and Fabrice Pothier, Head of Policy Planning, Office of the Secretary General, NATO

Special Session Seven – Russian Military Modernisation

In the context of concerns over Russia’s military actions in Ukraine, this session on Russian military modernisation generated a wide-ranging, detailed and energetic discussion. The current round of military-reform initiatives began after the short 2008 war with Georgia; this exposed Russia’s forces to combat against troops equipped with modern equipment and armaments. Improved finances after the mid-2000s spurred the current reforms. Russia’s forces are now very dissimilar to those before 2008. Moving away from ambitions to deploy far out-of-area, Russia’s armed forces are instead being shaped for regional and local contingencies as the result of key developments in terms of personnel, training and equipment.

Russia is thought to have between 800,000–850,000 personnel in its armed forces, comprising a mixture of conscripts and contract personnel. However, the country is still grappling with the effects of the demographic slump of the 1990s; this reduced the available pool of manpower. The aspiration is to recruit more contract-service personnel, though recruitment targets have so far remained simply that. Personnel are now better paid and there is renewed pride in military service; however, the management of conscript personnel remains an issue.

The armed forces are receiving more capable and modern equipment, but problems remain in the defence industry’s capacity to deliver the numbers planned. Air and naval forces have seen new capabilities introduced, as have Russia’s strategic rocket forces. With personnel being a key objective of the reform process, personal military equipment has seen substantial change, and there have been notable developments in personal load-carrying equipment, body armour and personal communications, among others. However, the benefits of these reforms for the broader armed forces are not as readily apparent as they are for Russia’s rapid-reaction forces.

With rising wages, young people are being attracted to the defence-industry sector; the gap is in the middle, reflective of problems inherited from the 1990s. The focus is on increasing the ability to serially produce advanced equipment and also introduce modern processes, such as modular construction in shipbuilding, to better match building techniques common elsewhere.


(l–r) Ruslan Pukhov, Director, Centre for Analysis of Strategies and Technologies; Keir Giles, Director, Conflict Studies Research Centre; Douglas Barrie, Senior Fellow for Military Aerospace, IISS; Dr Kristian Åtland, Senior Research Fellow, Norwegian Defence Research Establishment; and Dr Bettina Renz, Lecturer in International Security, University of Nottingham

Special Session Eight – Nuclear Postures in the Asia–Pacific

This session addressed the principle nuclear-proliferation challenges in Asia. In particular, it examined China’s technological advance and doctrinal inflections; Pakistan’s nuclear programme, which is the fastest growing in the world; and ongoing concerns regarding North Korea’s nuclear trajectory. It was suggested that, paradoxically, US President Barack Obama’s promulgation of a world without nuclear weapons has been met with increased nuclear developments in Asia. The expansion and modernisation of nuclear-weapons programmes is occurring against a backdrop of rising regional tensions, doctrinal dissonance, weak command and control systems and a worrying absence of crisis-stability mechanisms. The speakers highlighted several situations in which strategic miscalculation could lead to a troubling escalation.

The first of these potential flashpoints to be explored was the relationship between China and the US. China is undertaking to modernise its nuclear arsenal, seeking to develop a lean and effective deterrent force. However, there is a lack of communication between the US and China on doctrinal issues. The US discredits China’s no-first-use policy and criticises what it perceives to be excessive secrecy. Questions were also asked about US commitment to its security guarantees in the region. China’s growing conventional assertiveness is combined with a bellicose North Korea, where capabilities are also difficult to assess. Since its third nuclear test in 2013, North Korea has been presumed capable of weaponising its stockpile of nuclear material, although any device may have low reliability. Capabilities in India and Pakistan are more transparent, but there is an urgent need for risk reduction: nuclear rivalry is driven by declaratory policies and neither side has the other’s measure.

A key theme throughout the session was the clear gaps in bilateral and multilateral dialogues on these issues. Habits of communication and interchange need to be enhanced in Asia, possibly in the form of an Asian nuclear dialogue. Definitions of deterrence and how the concept is perceived by different parties in the region also need to be addressed.


(l–r) Brigadier Zahir Kazmi, Director, Arms Control and Disarmament, Joint Staff Headquarters, Pakistan Army ; and Dr Narushige Michishita, Director, Security and International Studies Program, National Graduate Institute for Policy Studies; Dr Michael Chase, Senior Political Scientist, RAND; Alexander Neill, Shangri-La Dialogue Senior Fellow for Asia-Pacific Security, IISS–Asia; and Dr Tanya Ogilvie-White, Research Director, Centre for Nuclear Non-Proliferation and Disarmament, Australian National University

Special Session Nine – Complex Instability in the Broader Sahel: Geopolitical and Geo-economic Implications

Although Mali returned to civilian rule following the coup in 2012 and a civil war in the north, the country has yet to see stability. The conflict there has required a regional and international response which, albeit partly successful, has revealed a number of shortcomings, not least the dichotomy between rhetoric and practice, the political limitations of cross-departmental AU–ECOWAS cooperation, and the need for a much-awaited African rapid-response force.

It was made clear in the session that, although Mali is the epicentre of instability, the Sahel faces a growing, region-wide problem linked to the failure of public institutions, underdevelopment, unresolved ethnic-minority grievances, and the cultural and social divides relating to North and sub-Saharan Africa. The Sahel is not insulated from events unfolding further afield, such as in Somalia, Egypt and even Syria. In particular, the crisis in Libya has acted as an accelerant of insecurity across the broader region – not least because many militants have relocated to its southern region. This trend reflects the broadening of the jihadi threat, a concern that is increasingly widespread across North and West African countries. Pre-existing tensions among key regional players, such as between Morocco and Algeria, are undermining prospects for stabilisation.

The EU – the region’s largest donor – faces the challenge of coordinating its own Sahel strategy at a time when insecurity in Ukraine, Iraq and Syria has overshadowed the Sahel crisis. There is a risk that regional leaders will not implement promised reforms in the face of diminishing Western interest.

Going forward, the following were deemed to be key factors in determining the stability of the region: the ongoing talks in Algeria, continuing attacks against peacekeepers, the expansion of Boko Haram, instability in Libya, elections in Burkina Faso and Niger and the risk of Ebola spreading northward.


(l–r) Virginia Comolli, Research Fellow for Security and Development, IISS; Ahmedou Ould-Abdallah, President, Centre for Strategies and Security for the Sahel Sahara; former Special Representative of the Secretary-General for West Africa, UN; Jean-Claude Mallet, Special Adviser to the Minister of Defence, France; Member of the Council, IISS; Peteris Ustubs, Sahel Coordinator and Director for West and Central Africa, European External Action Service; and Dr Lori-Anne Théroux-Bénoni, Head, Institute for Security Studies, Dakar

Special Session Ten – Inter-Regional Geo-Economics: The Pacific Alliance and the Asia–Pacific

This session analysed the growing links between the four countries of the Pacific Alliance trade bloc – Chile, Peru, Colombia and Mexico – and the Asia–Pacific. It was argued that previous integration projects in Latin America have failed because of a prioritisation of proximity over affinity of political and economic strategies. Crises in the vicinity of the Andean countries were cited as examples of why the principle of proximity is not enough to form strong integration movements. Pacific Alliance countries, on the other hand, have common ideas about globalisation and are among the most open and fastest-growing economies in the region. It was pointed out that the integration being pursued by the Pacific Alliance is broader than just trade, also encompassing people, services and the increasing competitiveness of the bloc’s small and medium companies – for example through visa wavering and integration into global value chains. To develop competitiveness, the countries of the bloc are also investing in infrastructure projects such as ports, airports and railways.

The participants agreed that the Pacific Alliance is working towards becoming a hub of interaction between Latin America and Asia. This is attracting growing interest from neighbours – not only Costa Rica and Panama, who are on their way to becoming members of the new bloc, but also among private-sector companies in Brazil. The largest economy in the Asia–Pacific, China, sees the Pacific Alliance as a business opportunity. Latin America as a whole has already seen substantial Chinese investments in the agriculture and infrastructure sectors. Chinese firms have committed to investing in transportation infrastructure in a bid to reduce shipping costs and diversify trade with the regional bloc.


(l–r) Dr Wenguang Shao, Consulting Senior Fellow for China and International Affairs, IISS; and Maria del Carmen Dominguez, Director of Strategic Planning, Ministry of Foreign Affairs, Chile; Dr John Chipman, Director-General and Chief Executive, IISS; and José García-Belaúnde, Former Minister of Foreign Affairs, Peru

Special Session Eleven – Syria: Conflict and Spill-Over

The rise of ISIS is a symptom of a multi-front war in Syria and a polarised regional landscape. The brutality of the Assad regime, the failure of the mainstream Syrian opposition and the rapidly shrinking space for grassroots activism have created a power vacuum increasingly filled by radical forces. Where support for the Assad regime remains, it is largely attributed to the lack of viable alternatives. Similarly, increased support for the Jabat al-Nusra, ISIS and others is largely a result of their superior funding and organisation, rather than ideological commitment.

The role played by Iran and the Gulf states in supporting their respective local partners leaves little prospect for a clean victory. Nonetheless, panellists agreed that the primary drivers of the conflict remain local. For now, ISIS is primarily concerned with local consolidation rather than attacks against the far enemy, but Western strikes may compel the group to refocus. Western involvement has often validated the jihadi narrative and motivated new recruits to join the fight. Policy options, including containment in Syria and creating an off-ramp for the end of a mission in Iraq, were deliberated.


(l–r) Dr Thomas Hegghammer, Director of Terrorism Research, Norwegian Defence Research Establishment (FFI); Sarah Birke, Middle East and North Africa Correspondent, The Economist; Ellen Laipson, President and Chief Executive Officer, Henry L. Stimson Center; Member of the Council, IISS; and Emile Hokayem, Senior Fellow for Regional Security, IISS Middle East

Special Session Twelve – Narendra Modi’s India

This session took stock of Prime Minister Narendra Modi’s first 100 days in power and assessed prospects for change and continuity to 2019. For the first time in three decades, India is ruled by a single, absolute-majority government, under the right-of-centre Bharatiya Janata Party (BJP). While the full scope of Modi’s reforms will only take shape in 2015, his first step has been to deflate unreasonable expectations. He has staked his success on incremental results, rather than untenable promises and quick fixes. The government’s liberalisation programme aims to restore annual GDP growth to over 7% by promoting investment and manufacturing, as well as consumption and the welfare of the rising middle class. However, it remains to be seen whether bureaucracies and union states can work alongside, and not against, the administration to bring about this change.

Tactical, rather than strategic, shifts will likely characterise the Modi government’s outreach to South Asian neighbours. India remains committed to normalising ties with Pakistan. However, the government has signalled that it will only revive a dormant dialogue on its own terms, and at a time and pace of its own choosing. In practice, Pakistan’s internal turmoil and rising ceasefire violations in Kashmir, coupled with security uncertainties in Afghanistan, will continue to shape India’s most important bilateral relationship.

Further afield, Modi has travelled to Japan and Australia, hosted China’s president, and travelled to Washington at the end of September. This ‘foreign-policy blitz’ signals Modi’s efforts to portray India as open for business, especially since trade now accounts for half of its GDP. India will continue to assert its strategic autonomy by leveraging its position in the Indo–Pacific, particularly in the context of a renewed Western focus on Asia. The US has lowered its short-term expectations and now looks for convergence rather than a meeting of minds on regional strategy. Conversely, Western diplomats can only support – not promise – the inward investment Modi seeks for India.


(l–r) Dr Habil Khorakiwala, Chairman, Wockhardt; Dr Sanjaya Baru, Director for Geo-Economics and Strategy, IISS–Middle East; Teresita Schaffer, Non-Resident Senior Fellow, Brookings Institution; and Rahul Roy-Chaudhury, Senior Fellow for South Asia, IISS

Keynote Session on Strategic Risk: The Perspective from Business

The Saturday-evening keynote featured three global business leaders: Marilyn Hirsch, Global Head of Strategic Planning at AIG; John Knight, Statoil Executive Vice President for Global Strategy and Business Development; and Andrés Rozental, Founding President of the Mexican Council on Foreign Relations. Each shared his or her perspective on crafting a robust corporate foreign policy to deal with the exigencies and demands posed by changing patterns in international relations.

Marilyn Hirsch emphasised AIG’s need for real-time and forward-looking evaluation of political and economic risk, a lesson underlined during the 2008 global financial crisis, which necessitated a multi-billion-dollar US government takeover of the company. Since then, the global insurer has returned to profitability but remains, according to Hirsch, a complex international business exposed to both country-level and transnational risks through its operations in over 90 countries. The company has had to develop a corporate strategy for crises and political transitions as varied and geographically dispersed as those taking place in Egypt, Thailand, Russia and Ukraine, to name a few. Enhanced due diligence, if managed correctly, can also serve to identify geopolitical opportunity. In this regard, Hirsch reflected on the potential opportunity to insure an aspiring, well-educated and growing market of potential customers in Iran, should the country continue to normalise its relations with Western powers and re-engage with international markets.

John Knight acknowledged a growing consensus among Statoil executives that heightened geopolitical and investment risk, volatile energy costs and prices, and the emergence of new global players with ever-larger energy and geopolitical footprints are profoundly reshaping the industry. The rise of unconventional hydrocarbons and the uncertainty generated by the prospect of US energy self-dependence have furthered that belief. Statoil has set about restructuring its strategy department with an emphasis on optionality and resilience to better cope with the ‘age of the unthinkable’. The energy major now has teams in place to assess threats to its business operations and market capitalisation in terms of country and transnational risk, and deploys a third unit to develop a geopolitical strategy tailored to these assessments. Significantly, Statoil has also undertaken to externalise its risk analysis to challenge and cross-check its views of strategic change in the world. This priority was reflected in Statoil’s decision to become a corporate member of the IISS.

Andrés Rozental spoke of the top-ten risks of conducting business globally, and approached these thematically. At the global level these included, in his view, an emerging power vacuum marked by the increasing absence of an efficient ‘global crisis manager’ in the shape of the United States and set in parallel with the rise of China as a great power. At the local level, substantial risks emanate from the rising number of young people in the world. This demographic trend presents both a market opportunity and a potential source of further global political volatility. Social unrest in authoritarian countries, problems related to cyber attacks and espionage, religious extremism and the consequences of a slowdown in growth in key emerging markets could all exacerbate these overarching trends.


(l–r) Marilyn Hirsch, Global Head of Strategic Planning, AIG; Dr John Chipman, Director-General and Chief Executive, IISS; Andrés Rozental, Founding President, Mexican Council on Foreign Relations; and John Knight, Executive Vice President, Global Strategy and Business Development, Statoil


(l–r) Andrés Rozental, Founding President, Mexican Council on Foreign Relations; and John Knight, Executive Vice President, Global Strategy and Business Development, Statoil

Third Plenary – Global Energy: A Strategic Assessment

The panellists explored opportunities and hurdles faced by the two emerging strategic energy relationships facing Northeast Asia: that with Russia and that with North America. Dr Xavier Chen analysed the potential role of Russian energy in the region, focusing on the question of why the energy trading links between Russia and Northeast Asia have traditionally been weak, despite geographic proximity and demand–supply complementarity between the two regions. This complementarity has recently taken on greater significance for Russia, which faces the prospect of economic sanctions over its actions in Ukraine.

Dr Chen suggested three factors limiting the rapid acceleration in intra-regional energy relations. The first of these was the limited pipeline network between Russia and Northeast Asia: currently, bilateral pipelines only exist between Russia and China, with territorial disputes and the instability of North Korea impeding pipeline construction with Japan and South Korea, respectively. The second was Russia’s limited domestic technical and production capacity in ramping up supply – production levels are declining in Russia, and questions have been raised over Gazprom’s ability to build processing plants and construct pipelines in a timely manner. Finally, as a late entrant to the Asian energy market, Russia has to compete with alternative energy sources in the region, among them the oil and gas pipelines from Central Asia and Myanmar, cheap and abundant domestic coal in China, and rising liquefied natural gas (LNG) supplies from the Middle East, Australia and, in future, the United States and Canada.

Tadashi Maeda pointed out that, although the United States could probably commence unconventional hydrocarbon exports to Japan around the same time as the new Russo-Chinese pipeline is completed (around 2018), an outdated 1938 legal framework for US gas exports, along with the additional costs of delivering shale gas using the US’s existing pipeline distribution network – which would force exports via the Gulf of Mexico and the Panama Canal rather than via newly constructed pipelines to the West Coast – could pose regulatory and cost hurdles. Potential LNG exports from Canada were being hindered by First Nations and tax issues, while Alaskan LNG supply to Asia was unlikely to come on-stream before 2023. Nonetheless, Maeda noted that the gradual restarting of Japan’s nuclear power plants following the Fukushima nuclear accident would act against Russian supply prospects, as would the Japanese domestic energy-distribution monopoly, which has impeded pipeline construction in the past. Dr William Pizer added that renewable energy was set to play an increasing role in the region, with half the capacity additions in China over the past year coming from non-fossil sources, along with the potential imposition of a cap on energy production using coal in 2015.


(l–r) Dr Xavier Chen, President, Beijing Energy Club; Dr Pierre Noël, Sultan Hassanal Bolkiah Senior Fellow for Economic and Energy Security, IISS–Asia; Tadashi Maeda, Senior Managing Director, Japan Bank for International Cooperation; Member of the Council, IISS; and Dr William Pizer, Professor of Public Policy, Duke University; former Deputy Assistant Secretary for Environment and Energy, US Department of the Treasury

Fourth Plenary – A New Cold War in Asia?

The question posed in the fourth plenary threw up several imponderables in Asia-Pacific security: the conundrum posed by China’s rise, the sustainability of the US rebalance to the region, and Asian countries’ ability to adjust to major shifts in the regional security environment. The three panellists – Eric Li, Chairman of Chengwei Capital and Member of the IISS Council; Sarah Raine, IISS Consulting Senior Fellow for Geo-Economics and Security; and Ichita Yamamoto, former Japanese minister in charge of Ocean Policy and Territorial Issues – were generally agreed that a contemporary parallel in Asia to Cold War-era bipolar competition does not exist. Nonetheless, each warned of systemic shifts that might raise tensions and even spark outright conflict.

According to Yamamoto, Asia stands at a ‘fork in the road’: the region must choose either to cooperate to build a new regional order or to allow some states to undermine that order. He proposed three ‘Yamamoto principles’ for the fostering of regional collaboration: emphasising the rule of law, promoting bilateral relationships with Japan’s neighbours and strengthening the regional community.

Li stressed that the post-Cold War global architecture was under pressure, given the decline of the United States and the ‘rise of the rest’. But a new Cold War is not emerging, he said. China is engaged on all fronts with its neighbours, even Japan – a country with which it has had difficult relations. China, Li said, wants to be a pre-eminent power in Asia, a goal which would at times raise tensions in the region. While Western entreaties that China become a ‘responsible stakeholder’ are ‘correct in principle’, China is being asked to participate in the building of a regional order that does not take Beijing’s interests into account. In the end, the most important bilateral relationship is the one between China and the US; both great powers are involved in a ‘long and complex negotiation’ in the search for a new power configuration.

Raine’s take on the situation was less sanguine. She observed that China’s strategy is effectively to seek a de facto hegemony in the region – a process that is contested and might result in the establishment of deterrence policies. Chinese attempts at changing facts on the ground in its maritime disputes with various Asian countries could have serious escalatory ramifications. To provide the stability needed for a regional order, Japan needs to deal with the country’s historical issues to build strategic trust. In such a fluid environment, observers of Asia-Pacific security cannot rely on the axiom that complex economic interdependence precludes conflict. History has proven that the obverse is possible.


(l–r) Ichita Yamamoto, former Minister in charge of Ocean Policy and Territorial Issues, Japan; and Eric Li, Chairman, Chengwei Capital; Member of the Council, IISS


(l–r)Sarah Raine, Consulting Senior Fellow for Geo-Economics and Security, IISS; and Dr Tim Huxley, Executive Director, IISS–Asia

Fifth Plenary – The Purposes and Extent of Western Strategic and Military Capacity

The concluding plenary of the GSR brought together Ine Eriksen Søreide, Norwegian Minister for Defence; Michael Rich, President and Chief Executive Officer of RAND; and Professor Sir Hew Strachan, Chichele Professor of the History of War at the University of Oxford.

Søreide set out the consequences for NATO of the changing European security environment. The relative predictability of the threat of high-intensity conflict was contrasted with a more diverse range of contemporary threats, including cyber attacks and long-range precision firepower. Meanwhile, the confluence of falling defence budgets and rising costs, she predicted, will push more Western states towards multinational cooperation to fulfil defence capabilities. She noted that, while NATO has once again begun to focus on territorial defence, it is unclear whether societies in member states have fully grasped the significance of this.

Rich, in turn, focused on identifying what he believed were the highest-priority areas of interest for American foreign and security policy. Chief among these were the preservation of a liberal international order, the development of a constructive relationship with China and the containment and eradication of the most violent anti-Western extremists in the Middle East. Secondary goals fit within these broader themes, such as tackling the root causes of sectarian disputes in the Middle East, supporting the liberal-democratic orientation of former Soviet states in Eastern Europe, preventing the spread of nuclear weapons into unstable regions, and the development and adoption of clean energy.

Professor Strachan began by articulating a number of lessons of the First World War that are relevant to the current environment: that economic interdependence does not guarantee peace; that local conflicts can aggregate into larger ones; and that rhetoric can often get in the way of crisis management. With these in mind, he suggested that the West needs to build a vocabulary for war that contains, rather than magnifies, conflict. He also identified particular areas in need of improvement: urging decision-makers to see strategy as more than simply reacting to threats; to avoid undermining deterrence through over-promising; to recognise that military advisers and proxy local forces are not distinct from ‘boots on the ground’, nor a reliable policy instrument; and to stop substituting labels for proper analysis.

The IISS is grateful to the Ministries of Foreign Affairs of Sweden and Norway for their generous support of the GSR, Statoil for support of the Opening Dinner, and the following Corporate Patrons: Statoil, BAE Systems, Lockheed Martin, Northrop Grumman, Orascom Construction Industries and Reliance Industries Limited.


Ine Eriksen Søreide, Minister of Defence, Norway


(l–r) Professor François Heisbourg, Chairman of the Council, IISS; Special Adviser, Fondation pour la Recherche Stratégique; Michael Rich, President and Chief Executive Officer, RAND; Member of the Council, IISS; and Professor Sir Hew Strachan, Chichele Professor of the History of War, All Souls College, University of Oxford; Member of the Council, IISS

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GSR 2014

Global Strategic Review 2014 Highlights