• Investing replay

    HEDGEYE INVESTING SUMMIT

    SPECIAL HEDGEYE TV EVENT

    The sharpest minds in investing discuss the most important market and economic developments and their investing implications.
    Watch the free replay.

Editor's Note: Below is a complimentary research note written by National Security analyst LTG Dan Christman. To access our Macro Policy research please email sales@hedgeye.com.

Moscow, Minsk, and Eastern Europe | Dynamic Changes Coming?  - 9 15 2020 8 21 30 AM

Lenin Monument In Independence Square, Minsk 

We may never know the true story behind the poisoning of prominent Russian opposition leader Alexei Navalny. 

But it’s pretty easy to connect the nerve agent dots that have dispatched or disabled countless numbers of Russian opposition leaders.

Navalny was clearly a political thorn for Vladimir Putin and the Russian ruling elite; as one former U.S. diplomat stated recently, the nerve-agent poisoning was an obvious message to political opponents that the Kremlin “can do this with impunity, at a time and place of their choosing.”  

But the pressure Putin now feels is not purely domestic.

Although the Russian president “won overwhelmingly” last month in the referendum on Russian constitutional changes (no one believes the final 80% approval tally), his political antenna are also tuned to Minsk, where hundreds of thousands of Belarusians are clamoring for the ouster of long-serving president Alexander Lukashenko. 

On the Russian domestic front, as protests continued to grow, it was no surprise that Moscow ordered the arrest in July of the popular Sergey Furgal, Governor of the Khabarovsk Region in eastern Russia.

To be clear, Furgal is no Russian James Madison; he belongs to an ultra-nationalist party that admires the imperialism of Joseph Stalin. But the tens of thousands who continue to turn out in Khabarovsk to support him and oppose the Moscow-directed replacement are clearly worrying Putin – on top of the COVID damage to Russia’s economy and health system.

It’s another reason why the Kremlin was so frightened of Navalny: Alexei had enjoyed major success in rallying opposition through his “smart voting” strategy (essentially, supporting anybody who was opposed to the Kremlin) ahead of this week’s regional elections.

And in Belarus, as with the “Maidan” protests in Ukraine, the last thing Vladimir Putin wants to see are large scale protests hard by the Russian western border. The Putin fear of course is that opposition successes there resonate domestically. 

So, what to watch over the coming weeks? To stress at the outset, market-moving geopolitical events emanating from eastern Europe are not in the cards.

Putin and his team, for example, are not headed for the exits; to the contrary, it is virtually certain he will take advantage of the approved constitutional changes and restart his presidential terms in 2024, to rule until 2036. But over the short term, look at two issues: 

First, Lukashenko’s future: what’s the “over/under” on the duration of his retention? At this point, I’d take any “over.” But even if Lukashenko goes, it doesn’t mean a strategic realignment by Minsk with the west. The Council on Foreign Relations’ Russian analyst Stephen Sestanovich posits that even some of Lukashenko’s strongest opponents want close ties to Russia; this gives Putin “many ways to foster a transition away from Lukashenko.”

Second, the Russian moves: more “little Green Men” in Belarus? A reprise of Crimea? Probably not. Both NATO and the EU have been cautious in statements and actions not to give Lukashenko a pretext to call for Russian help – although long-planned NATO exercises in neighboring Lithuania are offering the Belarus president a convenient excuse to bang the “foreign interference” drum. Further, unlike Ukraine, Belarusian nationalism has yet to surface.   

But if Belarusians by the hundreds of thousands begin to clamor for deeper associations with the west - and at this point they are not - there is little doubt Putin will act, through an offer of police support to Minsk or a conveniently scheduled military “exercise.” 

Bottom Line: an important interlude in eastern Europe’s political dynamics, and it's worth a close watch. But to make another point clear: U.S. and European abilities to influence what happens are extremely limited.

Despite the predictable calls by some western politicians for more sanctions and even the scrubbing of the NORDSTREAM II gas pipeline linking Russia and Germany, the impacts of any actions like these will be inconsequential.

As former National Security Advisor Brent Scowcroft used to say, "We need to remember, Moscow in this region will always control escalation dominance!" 

Our interests there may be regional and significant; but Russia’s are strategic, even existential.

*  *  *

ABOUT LIEUTENANT GENERAL DAN CHRISTMAN

LTG Dan Christman, USA, Ret. serves as Hedgeye Potomac Research’s Senior National Security Analyst, providing deep insight into international affairs and national security. Most recently, Dan provided strategic leadership on international issues affecting the business community for organizations such as the US Chamber of Commerce. Dan’s long history of leadership includes his service as a United States Army lieutenant general and former Superintendent of the United States Military Academy. He served in highly visible and strategically important positions and four times was awarded the Defense Distinguished Service Medal, the nation's highest peacetime service award.

He also served for two years as assistant to the chairman of the Joint Chiefs of Staff, during which time he traveled with and advised Secretary of State Warren Christopher. He was centrally involved during this period with negotiations between Israel and Syria as a member of the Secretary's Middle East Peace Team. Further, Christman represented the United States as a member of NATO's Military Committee in Brussels, Belgium.

Graduating first in his class from West Point, Christman also received MPA and MSE degrees in public affairs and civil engineering from Princeton University and graduated with honors from The George Washington University Law School. He is a decorated combat veteran of Southeast Asia, where he commanded a company in the 101st Airborne Division in 1969.