Russia and the US: friends at last?

The former rivals form a politically symbolic alliance over a shared problem: Afghanistan.

The ancient Chinese proverb "The enemy of my enemy is my friend" has been a cornerstone of realist statecraft since the dawn of, well, realist statecraft. For example, Britain formed an alliance with its long-standing enemy, France, in order to counteract the Germans during the First World War. Responding to criticism of his Second World War allegiance to Stalin's Soviet Union, Winston Churchill claimed that "if Hitler invaded hell, I would at least make positive reference to the devil in the House of Commons".

Comparatively, during the cold war, liberal-democratic states often formed alliances with non-communist dictators, such as Mobutu of Zaire. The Soviet Union provided financial assistance to a handful of anti-communist states to strengthen their cold war sphere of influence. The US supported the Afghan mujahedin during the ten-year Soviet occupation of Afghanistan.

However, the principle alone may serve as a weak basis for alliance: after the break-up of the Soviet Union some of the mujahedin spawned the Taliban and turned against the United States.

Now, in a twist of fate, a partnership between Russia and the United States is materialising, based on this timeless principle.

Last week, Mikhail Gorbachev declared that, like the Soviet Union 21 years earlier, Nato would not be able to beat the Taliban. The 79-year-old former president claimed that no feasible increase in troop numbers could ever improve the situation for the US, and that Afghanistan is at risk of turning into "another Vietnam".

It seems that the Russians, thus far passive observers of the war raging in their backyard, have decided to contribute their topographical expertise in the area. Ironically, both countries are said to be articulating the definition of the alliance at Nato's Lisbon Summit on 19 November. This has been received with speculative cries in the field of international relations, Foreign Policy dubbing it "Nato 3.0".

Despite the cessation of the cold war, Russia has not extended its hand to the US in this way before. Nonetheless, Russia has not necessarily offered a hand of friendship, and there is speculation that Moscow's concerns are solely interest-fuelled.

It has been widely reported that the Russians agreed to assist the Americans with their operations in Afghanistan because Russia has one of the worst heroin addiction rates in the world. Its two million heroin addicts consume 21 per cent of the world's supply, and Russia blames the severity of the problem on the US's failure to spray poppy fields in Afghanistan.

Last Friday, Moscow announced that a joint narcotics raid with US forces had destroyed four drug laboratories and one tonne of heroin.

This sudden change on the international playing field invites a host of fresh and important questions for foreign policy experts. If Russia and the US achieve their common goal, will the alliance between them survive? Do these former rivals share enough common ground to be considered friends? And what is the true nature of this politically significant alliance?

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There are risks as well as opportunities ahead for George Osborne

The Chancellor is in a tight spot, but expect his political wiles to be on full display, says Spencer Thompson.

The most significant fiscal event of this parliament will take place in late November, when the Chancellor presents the spending review setting out his plans for funding government departments over the next four years. This week, across Whitehall and up and down the country, ministers, lobbyists, advocacy groups and town halls are busily finalising their pitches ahead of Friday’s deadline for submissions to the review

It is difficult to overstate the challenge faced by the Chancellor. Under his current spending forecast and planned protections for the NHS, schools, defence and international aid spending, other areas of government will need to be cut by 16.4 per cent in real terms between 2015/16 and 2019/20. Focusing on services spending outside of protected areas, the cumulative cut will reach 26.5 per cent. Despite this, the Chancellor nonetheless has significant room for manoeuvre.

Firstly, under plans unveiled at the budget, the government intends to expand capital investment significantly in both 2018-19 and 2019-20. Over the last parliament capital spending was cut by around a quarter, but between now and 2019-20 it will grow by almost 20 per cent. How this growth in spending should be distributed across departments and between investment projects should be at the heart of the spending review.

In a paper published on Monday, we highlighted three urgent priorities for any additional capital spending: re-balancing transport investment away from London and the greater South East towards the North of England, a £2bn per year boost in public spending on housebuilding, and £1bn of extra investment per year in energy efficiency improvements for fuel-poor households.

Secondly, despite the tough fiscal environment, the Chancellor has the scope to fund a range of areas of policy in dire need of extra resources. These include social care, where rising costs at a time of falling resources are set to generate a severe funding squeeze for local government, 16-19 education, where many 6th-form and FE colleges are at risk of great financial difficulty, and funding a guaranteed paid job for young people in long-term unemployment. Our paper suggests a range of options for how to put these and other areas of policy on a sustainable funding footing.

There is a political angle to this as well. The Conservatives are keen to be seen as a party representing all working people, as shown by the "blue-collar Conservatism" agenda. In addition, the spending review offers the Conservative party the opportunity to return to ‘Compassionate Conservatism’ as a going concern.  If they are truly serious about being seen in this light, this should be reflected in a social investment agenda pursued through the spending review that promotes employment and secures a future for public services outside the NHS and schools.

This will come at a cost, however. In our paper, we show how the Chancellor could fund our package of proposed policies without increasing the pain on other areas of government, while remaining consistent with the government’s fiscal rules that require him to reach a surplus on overall government borrowing by 2019-20. We do not agree that the Government needs to reach a surplus in that year. But given this target wont be scrapped ahead of the spending review, we suggest that he should target a slightly lower surplus in 2019/20 of £7bn, with the deficit the year before being £2bn higher. In addition, we propose several revenue-raising measures in line with recent government tax policy that together would unlock an additional £5bn of resource for government departments.

Make no mistake, this will be a tough settlement for government departments and for public services. But the Chancellor does have a range of options open as he plans the upcoming spending review. Expect his reputation as a highly political Chancellor to be on full display.

Spencer Thompson is economic analyst at IPPR