Lighthouse in Crete, Greece, January 29, 2009 (Helen Sotiriadis)

Greece’s debt crisis has brought to the surface a surface a serious question—where actually does Greece belong in financial, geopolitical and social terms?

The modern Greek state was founded on a strange mix of Arab, European, Levantine and Ottoman influences. Two of its greatest leaders of the last century, Eleftherios Venizelos and especially Konstantínos Karamanlís, firmly believed that the nation was an inseparable part of the West.

Before Greece entered the European Union in 1981, Karamanlís, who was serving out his fourth term as prime minister, argued that European culture “is a synthesis of the Hellenistic, Roman and Christian spirit.”

A synthesis to which the Greek spirit introduced the idea of freedom, truth and beauty; the Roman spirit contributed the idea of the state and justice and to which the Christian spirit gave faith and love.

Even Greece’s socialist party, which initially rejected Greece’s European Union membership, came to recognize the political and financial benefits which it offered.

Some thirty years later, Greece’s is at the center of Europe’s sovereign debt crisis and without political leadership. The rise of radical left and right wing parties has shocked European leaders from Berlin to Brussels. The call for Greece to leave the eurozone is heard ever more loudly. It would likely mean Greece’s exodus from the European Union as well.

If that happens, what path should Greece follow?

Ian Bremmer, president of the Eurasia Group, suggests in the Financial Times that Greece could be an integral part of Russian strategy in the Mediterranean.

Russia currently shields Syrian president Bashar al-Assad, who has been internationally condemned for his brutal crackdown of an anti-government uprising in his country, because Moscow needs him right where he is. Syria is its most reliable Middle Eastern commercial partner. Moreover, for Russia, access to a Mediterranean port holds considerable strategic value.

If Assad falls, could Greece be its Middle Eastern proxy? It shares some affinity with at least several of the nations in the Levant, where, controversially stating, the only marker of qualifying is to be in a state of ongoing decline.

Greece meets several of the criteria to be considered part of Middle or Near East.It is heavily in debt, its church is deeply involved in politics and protected by the State. It has a long time sworn enemy—Turkey.

A Greek exit from Europe could actually prompt a series of geopolitical domino effects. As Nick Ottens wrote at the Atlantic Sentinel earlier this week, “If Greece is forced to leave Europe’s single currency union and possibly suffers a bankruptcy, its Cypriot allies would necessarily lean more heavily on their newfound friends in Israel.” He also pointed out that Russia could seek to take advantage of the situation.

The question is now in the hands of Greek voters. Will they choose Europe or Middle East? The euro or the drachma? If the tone of the political debate is any indication, the Greeks are as divided as the rest of Europe is undecided about whether to let them stay in.

View of Mount Ararat in Turkey from Yerevan, the capital of Armenia, November 18, 2004 (Scott LaPierre)

A minor incident could cause the frozen Nagorno-Karabakh conflict to turn hot, threatening European oil supplies, the regional balance in the Caucasus and Anatolia as well as increasing the European Union’s dependence on Russia.

The border dispute over Nagorno-Karabakh conflict could flare up again, as recently demonstrated by an alleged ambush of Armenian troops by Azerbaijani forces. The incident, taking in place in Armenia proper, not the contested area of Nagorno-Karabakh, is viewed as an escalation of tensions. Conflict is now more likely due to Azerbaijan’s petrofueled growth of its military capabilities.

A small incident could spiral into a full blown conflict. While a conflict would threaten European interests—i.e., threaten oil supplies and increase Europe’s dependance on Russian energy—the European Union is expected to do little under such circumstances except condemn Azerbaijan and continue to offer free trade and visas to Armenia.

Analysis

The military solution is not in the interest of either country. Armenia is feeling its military weaknesses and aware that it would need Russia to come and help it.

The price to pay for a military conflict could be a further loss of independence for both countries, including political and military autonomy.

Azerbaijan does not want to have Russia any closer to its borders and will never undertake substantial action without a green light from Turkey.

The costs of war, for the economy and state budgets, will not be a positive factor. For both countries, though, a conflict would galvanize and unite the people beyond the current leadership.

Turkey would likely try to herald a deal between the parties in order to promote its role as a stabilizing power in its neighborhood vis-à-vis Europe and the United States. Brokering a deal with Armenia might solve the national dispute between the two countries but it could also upset Azerbaijan, which shares the same people, culture and language with Turkey.

Russia would end up with a greater say in Caucasus affairs and after having established military posts in Abkhazia and South Ossetia, it might do the same in the contested regions.

Oil and gas flows would be only partially affected as there are no major pipelines crossing through the territory of Nagorno-Karabakh.

For now, a total war between the two countries is to be excluded as Azerbaijan will try to make all it can to keep a constant and regular income for its development programs and investments. Price will rise in the short term but the shock would be easily absorbed.

Wikistrat Bottom Lines

Marinko Bobic, Finn Maigaard, Graham O’Brien and Miguel Nunes Silva contributed to this analysis.

A Greek F-4 Phantom plane prepares to leave Aviano Air Base in northeastern Italy, March 19, 2007 (US Air Force/Bethann Caporaletti)

As if to remind the world of the geopolitical implications of a Greek exit from the eurozone, Turkey on Thursday said it had scrambled military jets earlier in the week to intercept an Israeli plane that violated northern Cypriot airspace.

Monday’s reported incursion coincides with mounting tensions on the Mediterranean island over oil and natural gas exploration plans there. Turkey previously condemned the Greek speaking south when it announced plans to drill for natural resources off Cyprus’ coasts but has since endorsed similar plans on the part of the Turkish government in the north which only Turkey recognizes.

Athens naturally supports Greek Cyprus in its energy and political disputes with Turkey and has signed mutual defense guarantees with Israel following the Israeli-Turkish rift.

Relations between Ankara and Jerusalem soured when Israeli commandos raided a Turkish vessel that was bound for Gaza in May 2010 and killed nine Turkish activists on board.

Cyprus has been divided since 1974 when the Turkish military invaded the island after a short lived Greek Cypriot coup engineered by the military junta then in power in Athens.

Turkey still keeps some thirty thousand troops in the north while a buffer zones that separates the two sides is monitored by the United Nations. Greek-Turkish relations have been strained ever since Greece won its independence from the Ottoman Empire in 1821. Maritime border disputes between the two nations in the Aegean Sea are unresolved to this very day.

Israel’s support of Greek Cypriot exploration efforts complicates the picture. As analysts from the geostrategic consultancy firm Wikistrat pointed out in February, “While Israel views Cyprus as the best and most direct way to transfer gas to Europe, Turkey will view this as a way to undermine Turkish Cypriot interests.”

If Greece is forced to leave Europe’s single currency union and possibly suffers a bankruptcy, its Cypriot allies would necessarily lean more heavily on their newfound friends in Israel. Moreover, there is a good chance that Russia will step in to take advantage of the situation.

As the Financial Times explains, the damage to Cyprus’ financial system, heavily exposed to Greek debt, would be devastating if the nation left the euro.

Cyprus last year received a cheap €2.5 billion loan from Russia in a gesture that reflected the Kremlin’s interest in protecting wealthy Russian depositors with billions parked in Cypriot banks. It may soon need more aid.

The links between Greece and Russia have historically been strong, writes Walter Russell Mead at The American Interest.

In Ottoman times, Orthodox Russia was the protector of Orthodox Christians in the great Islamic empire and frequently used its diplomatic clout to defend the rights of its coreligionists. Greece looked to Russia as a reliable ally during much of the troubled period after modern Greece gained independence from the Turks.

If Greece feels abandoned by its European partners, it may look to Moscow for shelter again. That would leave Europe without a foothold in the eastern Mediterranean.

Turkey is formally still engaged in European Union membership talks but the prospect of it joining the union any time soon is dim indeed.

Cyprus is in the euro but would likely require financial support if Greece collapsed, raising the question of whether it wants to submit to the very austerity measures that doomed Greece or seek its future elsewhere.

Israel has a clear interest in balancing against what it perceives as Turkish hostility and will be quite willing to strengthen ties with both Cyprus and Greece.

Russia could finally attain what Greek and Turkish NATO membership was supposed to deny it—unfettered access to the eastern Mediterranean Sea for its navy.

A young man carries the flag of newly independent South Sudan in the capital city of Juba, July 9, 2011 (Steve Evans)

China is still reluctant to intervene in the border dispute in Sudan. An $8 billion loan that was committed by Beijing has yet to be made to South Sudan while Chinese officials rejected a proposal to finance the construction of a pipeline in the South.

Newly independent South Sudan’s central bank governor, Kornelio Koriom Mayik, told the Financial Times that only a fraction of the money promised by China has arrived yet.

The South Sudanese had hoped that China would help them build a pipeline through east Africa so they won’t have to use export infrastructure in the north anymore. Khartoum confiscated South Sudanese oil sales in January of this year to make up for what it said where unpaid transit fees.

According to Mayik, “The Chinese didn’t agree to build a new pipeline. They said ‘we built one [in the north already], you use it’.”

China has made billions worth of investments on both sides of the border but in the escalating conflict between the two Sudans, it may be forced to pick sides.

South Sudan’s minister in charge of reconciliation urged China in May to play “a more active role” to help resolve disputes over borders and oil exports. “By trying to move away from Khartoum so as to get closer to South Sudan and trying not to get too close to South Sudan so as not to cause displeasure to Khartoum—neither Khartoum nor Juba will be happy with China,” said Pagan Amum Okech.

South Sudan declared independence last year after decades of war with the north. Despite a 2005 peace deal, possession of oil reserves which are situated near the border remains a source of contention. As recently as last month, hostilities broke out again with north Sudanese air forces reportedly bombing oil fields and the South attacking a border town.

Land locked South Sudan has two thirds of the former unified Sudan’s oil output but needs access to northern pipelines and port facilities to sell overseas. South Sudan pumps around 350,000 barrels per day, according to government data. The north needs the entirety of its oil production, some 115,000 barrels per day, to meet domestic demand. The Chinese have to maintain stable relations with both governments if they are to continue buying Sudanese oil.

President Lee Myung-bak of South Korea (Reuters/Petar Kujundzic)

On Monday, South Korean president Lee Myung-bak visited Myanmar and promised to extend loans and grants to the poverty stricken country.

The surprise visit came as Japan and South Korea have stepped up their diplomatic engagement in Southeast Asia over the last month, which, in turn, comes on the heels of closer engagement by the United States since 2009.

This stems not only from a desire to gain access to the region’s natural resources but more importantly, to bolster their soft power in the Mekong region, an area that is becoming increasingly important as concerns persist about Chinese foreign policy amid the rapid modernization of the People’s Liberation Army. However, while the Mekong countries are interested in the economic and political benefits from closer relations with the United States, they are mindful of the risk of antagonizing China.

The Mekong countries include Cambodia, Laos, Myanmar, Thailand and Vietnam, even though the Mekong River begins on the Tibetan Plateau in China’s Yunnan Province where it is known as the Lancang River. The Mekong is revered by the locals and is considered the lifeblood of Southeast Asia with an estimated sixty million people dependant on it for food, water and transportation.

Lee’s visit to Myanmar, the first by a South Korean president in twenty-nine years, came after a regional summit in Thailand last week where South Korea promised to double its development aid to the Mekong region by 2015. During a summit in April, Japan pledged ¥600 billion ($7.4 billion) in aid, which was a renewal of a prior commitment of ¥500 billion that expired this year. Japan also wrote off half of the ¥500 billion ($6 billion) in debt that Myanmar owed it.

The United States jump started their engagement back in 2009 with the Lower Mekong Initiative, targeting Cambodia, Laos, Thailand and Vietnam with increased development aid. Washington also began lifting sanctions on Myanmar when it adopted political reforms and held what was considered by observers a mostly free and fair election in April.

Myanmar was cut off from Western investment and international aid for the last thirty years while it was under military rule which gave China virtually free rein over the country’s resources.

The Americans have also taken more overt measures to demonstrate their presence in the region. Last month, the United States held noncombat maritime exercises with the Vietnamese navy and military maneuvers with the Philippines.

There is still tension between China and the Philippines over the Scarborough Shoal and between China and Vietnam, which have a dispute over the Paracel Islands, in addition to the other disputes with nations fronting the South China Sea.

The governments in the Mekong region are faced with a delicate balancing act. While they are open to greater engagement with the United States and their allies due to concerns over China’s rise, they are careful not to embrace them too tight and alienate the Chinese.

China’s long term security plans in the region are often vague and cloaked in secrecy. On top of the lack of transparency, China has refused to submit to a multilateral forum for negotiations with its neighbors over the territorial disputes in the South China Sea.

Instead, it remains firm in demanding bilateral talks, fueling suspicion that it prefers this as a way to exercise leverage over smaller countries for a more favorable outcome for itself.

Complicating matters for a negotiated outcome to these disputes is that governments have often resorted to using the issue to stoke nationalism in their countries to rally support for the government, making it harder for them to compromise now.

Given the strategic uncertainty and the fear of being bullied, Mekong countries share an interest with the United States in balancing China’s presence in the region. The Obama Administration’s much heralded Asian “pivot” is clear evidence of the importance which the Americans attach to Asia, a part of the world it has identified as strategically vital to the United States in the twenty-first century.

The administration’s dual approach is to reassure nervous allies about American staying power in Asia and to balance China’s rising power.

The distrust, lack of transparency and outstanding territorial disagreements between China and its neighbors means that relations in Southeast Asia will remain unsettled and vulnerable to flareups. Going forward, given their size and location, the Mekong countries will remain in the difficult position of trying to accommodate both sides, while staying out of what is shaping up to be a wary relationship between China and the United States.

Prime Minister Mykola Azarov of Ukraine during a conference with European Union officials in Brussels, May 15

Ukraine’s prime minister urged European leaders not to draw an “iron curtain” around the union and promised to wean his country from Russian influence.

Ukraine will increase its natural gas production by as much as 25 percent in the next three years to decrease its dependence on costly Russian imports and wriggle free of Moscow, Prime Minister Mykola Azarov told The Wall Street Journal. He added that shale gas holds the key to eventually “covering all of Ukraine’s needs.”

The United States Energy Information Administration estimates that Ukraine has the third largest shale gas reserves in Europe at 1.2 trillion cubic meters, some twenty times its annual consumption.

Russia holds significant leverage over Ukraine as the supplier of nearly two thirds of the sixty billion cubic meters of gas it uses every year. Twice in recent years has it turned off supplies amid price disputes. Russian state oil company Transneft said in February that it was in talks with the Czech Republic and Germany to bypass Ukraine’s export infrastructure entirely. Gazprom blamed Ukrainian siphoning of gas supplies for shortages in Europe last winter.

For more than two years now, Moscow has had a better friend in Ukraine and its president Viktor Yanukovych who doesn’t want his country to join the European Union. Even he is reluctant to give Russia more control over Ukraine’s gas transit system though because it is the only leverage Kiev has over its neighbour.

Yanukovych replaced the pro-Western president Viktor Yushchenko in February 2010 amid allegations of Russian meddling in Ukraine’s election.

European leaders have since cooled to prospects of Ukrainian membership. In recent weeks, German president Joachim Gauck and other heads of state fiercely criticized Yanokovych’s government over its treatment of former prime minister Yulia Tymoshenko who was found guilty in October 2011 of abuse of office and incarcerated. Tymoshenko alleged that she has been abused by prison guards and only gave up a hunger strike when Ukraine allowed German doctors to treat her.

Azarov accused the Europeans of using the Tymoshenko case to delay Ukraine’s integration. He brushed aside threats of a boycott of the European football championship which starts in Poland and Ukraine next month. “We do not accept the principle of diktats and ultimatums,” he said.

The city of Medina in Saudi Arabia, September 27, 2008 (Noushad Akambadam)

Arab Gulf states on Monday delayed plans to deepen political cooperation between them, reflecting unease on the part of smaller nations in the six member Gulf Cooperation Council about handing more power to Saudi Arabia.

Saudi Arabia and its neighboring Arab Gulf kingdom of Bahrain had expected to announce plans for increased economic and security cooperation in a move that Riyadh hoped would have spurred political integration all of the Sunni monarchies on the peninsula.

With rival Iran pursuing an uranium enrichment programs which neighboring Arab countries and the West suspect is designed to develop nuclear weapons and sectarian tensions between Sunni and Shī’ah Muslims rising across the Middle East, forming a union “has become urgent,” Bahrain’s prime minister Khalifa bin Salman said on Sunday. Several of his allies disagreed.

Qatar enjoys the freedom to pursue a foreign policy that is more independent of the United States than Saudi Arabia’s and like the United Arab Emirates, it fears Saudi domination.

The emirates pulled out of a planned monetary union among the GCC states in 2009 after Saudi Arabia was voted as the host of a common central bank. Unable to agree to the creation of a joint missile shield, they also purchased their own defense system late last year.

Kuwait would have difficulty joining “with countries whose prisons are full of thousands who are guilty of speaking their minds,” the speaker of the emirate’s parliament said in February of last year in a reference to the Saudi kingdom. Persecution of the Shī’ah minority sect has only increased in Saudi Arabia with the onset of the “Arab spring” which forced its longtime Egyptian president and ally Hosni Mubarak out of office last year.

In December, Saudi king Abdullah made an impassioned appeal for fellow Sunni rulers to join forces. “You all know that we are targeted in our safety and security,” he told his neighbors at the time.

Saudi Arabia’s foreign minister Saud bin Faisal Al Saud added last month, “The threats of all kinds require the hard works of the GCC countries to shift from a current formula of cooperation to a union formula acceptable to the six countries.” He didn’t specify what threats the Gulf states face but their leaders suspect that Iran is conniving with Shī’ah opposition in their countries to destabilize the Sunni regimes.

Because they have common interest, the delay came as a surprise. The meeting of Arab Gulf leaders on Monday was expected to endorse what has happened on the ground—an effective union between Bahrain and Saudi Arabia. The island nation is highly dependent on its neighbor for financial assistance, trade and military protection. Saudi troops that were deployed to Bahrain in May to quell a largely Shī’ah uprising against the ruling Al Kalifa family have yet to depart.

President Richard Nixon and Chinese premier Zhou Enlai toast at a banquet during Nixon's visit to China, February 25, 1972

When President Richard Nixon and his national security advisor Henry Kissinger opened up relations with China in the 1970s, it was done in the context of needing a new lever in the Cold War, especially when the United States was still mired in Vietnam. The goal was for the United States to be closer to both China and the Soviet Union than either was to each other and to be able to swing back and forth between the two powers as needed depending on what the exigencies of the balance of power dictated.

At that time, China was clearly the lesser power and required bolstering. The time for the United States to consider an inversion of that policy may soon become ripe.

The strategic environment today is vastly different than when Nixon met Mao. The Cold War is over, the Soviet Union is no more and China is rapidly ascending to the position of a global superpower. Under these conditions, the United States are struggling to manage a multiplicity of strategic interests in every major region of the world. Paramount among those are relations with China.

While no one disputes outgoing World Bank President Robert Zoellick’s statement that it would be advantageous for China to become a “responsible stakeholder” in global affairs, the prospect of this not happening means that the United States need additional levers to balance against China in the soon to be economically dominant Asia.

The Obama Administration’s vaunted “pivot” shows Washington’s recognition of this need. To fully embrace this strategy, though, the United States must secure its Western flank from instability. This means securing Europe.

Inconveniently for the United States as it seeks to shift its focus to Asia, the ongoing European fiscal crisis opens the door to all kinds of medium to long term challenges. It also opens the door for Russian mischief under the nationalistic president Vladimir Putin.

Left unattended and unresolved, the Russian question could become a significant enough distraction that the United States find themselves unable to be decisive in Asia.

To the extent that the Obama Administration realized building better relations with the Russians would be essential for European stability, it should be commended. Yet, its much vaunted “reset” looks set to run aground as Putin reassumes his undisputed position on the top of the Kremlin’s power pyramid.

This can be confirmed from recent news of Russian threats of preemption against NATO missile defense sites in Europe. If the United States are not to be squeezed by a perennially dissatisfied Russia in Central Asia and Eastern Europe while trying to deal with China, they are going to have to move beyond the “reset” and seek a more comprehensive engagement.

This entails opening the door to a legitimate and wide ranging understanding with Russia that can finally deal with the lingering aftermath of the collapse of the Soviet Union and President Putin’s taste for revanchism.

Discarding the mere symbolism of the “reset,” the United States should consider a broader and deeper outreach to Russia in order to pull it into a far less bellicose attitude vis-à-vis the West. In essence, much as Nixon and Kissinger sought the “dragon” to balance against the stronger “bear,” the United States must consider the reverse.

Doing so could minimize Russian aggression toward Europe. Even more important, having Russia ensconced in the West will offer the United States an additional lever it can employ to force China to divert its military focus from Asia.

Such a move could also expand the economic base of the West by capturing the huge hydrocarbon wealth of both Russia and Central Asia while having more ability to squeeze China’s energy supply if it is ever seen as necessary due to geopolitical tensions with the Middle Kingdom.

Such a policy has many possible pitfalls.

First, distrust pervades Western and, particularly, NATO relations with Russia. Moscow continues to believe that NATO expansion in Central and Eastern Europe violates promises made in the George H.W. Bush Administration and during the immediate aftermath of the Soviet implosion. It is essential to address this substantively, through mechanisms such as American support for NATO opening missile defense cooperation to Russia rather than insisting on two separate systems.

In addition, the United States should reduce funding to nongovernmental organizations in critical countries such as Ukraine and Georgia and quietly move from supporting the mercurial Mikheil Saakashvili.

The United States should also encourage President Putin’s push for a “Eurasian Union.” This would entail the United States no longer hectoring Russia over the slow pace of political reform. By contrast, it should simply argue for an “eventual transition to genuine multiparty democracy founded on generally liberal principles.”

Other policy options over the longer term could include an expansion of a free trade zone to encompass not only the traditional “transatlantic” partnership with the European Union but also an eventual “Eurasian Union.”

Finally, a real invitation for Russia to join NATO should eventually be considered but not made contingent upon the domestic political evolution of the Russian state.

Fundamentally, this is about changing Lord Ismay’s comments on NATO and changing its raison d’être from “keeping the Russians out, the Americans in and the Germans down” to “keeping both the Americans and Russians in and the rest of Europe quiet” while Asia rises.

In light of current headlines, these policy proposals seem fanciful. Yet, it is important to recollect the arc of Russian history.

Russia has long been torn between its desire enter a more Western orbit, something Russian modernizers since Peter the Great have desired, and its Byzantine based Orthodox Christian heritage, as well as a tendency towards “Oriental Despotism” as inherited from its time under the Mongol Yoke.

With its current demographic challenges and the return to great power status of multiple Asian states, Russia faces several choices: attempt to compete with China and maintain an independent pole of power based on Central Asia, embrace China and become a junior partner, or join the West. Each of those options appeals to one of Russia’s historical self images while also raising fears in certain segments of Russian society.

The jury is out as to which direction Russia will ultimately choose. It is up to the United States to incentivize Russia to make the final decision of tilting toward the West, which will also enable it to more fully realize its Central Asian goals.

A new global reality demands creativity and flexibility as opposed to rigidity. Moving to bring Russia into the West could be the most dramatic diplomatic move in a generation. Such a policy clearly runs against many American traditions. Yet, so did the Nixon policy when he traveled to Beijing in 1972. That move is now considered a powerful triumph.

Sharm el Sheikh, Egypt, July 15, 2010 (Essexdiver)

Due to the fall of the Mubarak regime, government authority has collapsed in the Sinai Peninsula, leaving a vacuum that is rapidly being filled by Islamist militant groups. This has created a security risk for Egypt and Israel, as well as for the international community due to the strategic importance of the Suez Canal zone and threatens the durability of Israeli-Egyptian relations.

Last week, Israeli defense minister Ehud Barak called on Egypt to take control of the increasing lawlessness in the Sinai as a condition for maintaining the peace treaty with Israel.

Since February 2011 when Egyptian president Hosni Mubarak was ousted from power, border security incidents have increased. These incidents range from crossborder infiltration of militants into Israel, where they launch attacks against Israeli civilians, smuggling and an increase in rocket attacks into southern Israel emanating from the Sinai.

The heightened lawlessness that has occurred along the Egyptian-Israeli border has taken place despite steps taken by the interim Egyptian government to deploy thousands of troops to the Sinai region to curb militant activity.

Analysis

Israel remains caught between a rock and a hard place, balancing the need to defend its citizens in the south, while trying to avoid the collapse of the peace agreement with Egypt.

Despite three decades of relative quiet along the Egypt-Israeli border, an increase in tensions since the fall of the Mubarak Government last year has prompted the Israeli Government to construct a new barrier along the 266 kilometer border, that when finished will cover the area from Gaza to Eilat. In addition to the fence, the Israeli Defense Forces are taking additional steps to monitor the border and bar infiltrators.

Egypt, too, has paid an economic price for the increase in militant activity in the Sinai Peninsula, ranging from fourteen terrorist attacks targeting the natural gas pipeline that supplied both Israel and Jordan as well as a significant loss in tourism in the Red Sea resort area due to the increase in violence. Both are a significant source of income for the country. The tourism industry employs around one in eight Egyptians.

Egyptian security officers who have attempted in the past year to reestablish security in the Sinai have been attacked by the militants, with the result being that areas in the Sinai are now completely out of the government’s control. These changes to the security situation in the peninsula have prompted Israeli officials to suggest that at the moment, “Egypt is more dangerous to Israel than Iran.”

Though for the moment, the militants appear to be focused on maintaining a hold on life in the Sinai area, as time passes there is a risk that these groups may begin to align more closely with the global jihadi movement now led by Egyptian-born Ayman al-Zawahiri.

Despite the growing lawlessness in the region, both Egypt and Israel have been treading carefully to avoid escalating tensions further, especially while the political situation in Egypt remains volatile.

Israeli policymakers however are growing frustrated, as the Islamist militants continue to increase their hold over the Sinai. Israel has stated it has no intention of entering Egyptian territory but government officials have acknowledged the need to sit on their hands and wait for a new government to emerge in Cairo to rein in the militant activity in the Sinai.

However, the inability of the interim government to curb the growing militant activity in the Sinai is another indication to Israel that the new Islamist controlled Egyptian government has no intention of maintaining the peace treaty with Israel.

Wikistrat Bottom Lines

Steven Aiello and Martin Skold contributed to this analysis.

Prime Ministers Recep Tayyip Erdoğan of Turkey and Wen Jiabao of China meet in Ankara, October 8, 2010 (AP)

In the last two decades, the linkages among nation states have deepened to an unprecedented level. In terms of commerce and finance, the world has recovered and surpassed the degree of interconnectedness that was achieved before the Great Depression. Moreover, new issues have emerged, creating new linkages, deepening the web that connects the international community and giving a much wider sense to the notion of globalization.

This has come at a price. As the 2008-2009 financial crisis demonstrated, the consequences of the actions of one state or one nonstate actor can resonate across the globe. The countries which are more likely to have a wider impact are, obviously, the most powerful ones.

It is in this context that the rise of a number of nations has caused both interest and alarm. Among them, Brazil, Russia, India and China are regarded as the emerging powers. Their growing power has enabled them to present the most credible challenge to the hegemony and legitimacy to run world affairs which the United States and their Western allies enjoyed after the Cold War.

The BRICs know it. Their leaders regularly meet to announce their agreement on certain issues and to let the world know that they can act in unison. By doing so, they increase their own power as well as the legitimacy of the group, helping them to provide an alternative forum to all states, including, if not especially, those that are not well regarded in the West.

One thing to note is that the BRICs are all developing countries when comparing their gross domestic product per capita levels with those of the Western powers. This characteristic and their growing international legitimacy has led them to become representatives of the interests of the developing world in certain negotiations with developed nations.

As a group, the BRICs have advanced the notion of reforming the current international system to give more say to the developing world. Among the most important demands are expansion of the United Nations Security Council and an increased voting shares for developing nations in the World Bank.

In the area of global commerce, the BRICs have demanded a decrease of trade barriers. With respect to climate change and efforts by the West to reduce green emissions, the BRICs argue that the current environmental problems are the largely consequence of the industrialized world’s actions and that they have no right to stop others from developing.

But the BRICs are not a coherent group. China and Russia are authoritarian states and sit on the UN Security Council while Brazil and india are democracies and looking to become permanent members. Would China and Russia still endorse the claim of expanding Security Council permanent membership if there was a strong possibility of doing so? Not likely.

Furthermore, China and India are very suspicious of one another and have territorial disputes. India also fears a Chinese monopoly of the Indian Ocean and has recently increased its investment in maritime capabilities. Energy relations among China, India and Russia are very complex. China and India need Russian oil and gas, allowing Moscow to trade energy concessions for strategic gains elsewhere at the detriment of the other two BRIC powers.

Unlike its peers, Brazil is not a nuclear power, which severely decreases its leverage on hard power issues. Brazil is also more adamant about trade liberalization while India seeks to protect its rice farmers.

In short, each one of these countries has its own particular interests and will not renounce to them in favor of an alliance.

While Brazil plays the role of model global citizen, Russia is far more focused on its security. China has serious domestic problems in terms of political accountability and sustainable growth. India struggles between its growth prospects and the institutional inefficiencies which prevent it from achieving them.

The BRICs’ sole factor of cohesion is a shared interest to promote change in the international community. This implies that its usefulness as a grouping in the future will depend on the following perception in the member states—will acting as a group benefit their own particular agendas?

Another question is whether these four countries are the only ones that can be qualified as the emerging powers and therefore legitimate representatives of the developing world? They answered that question by including South Africa in the group. Although it doesn’t compare in size and power to the BRICs, South Africa’s inclusion amply demonstrated there are other countries with sufficient assets and capabilities to be considered as rising powers.

Other clear examples are Indonesia and Turkey. The BRICs would do well to include them. After all, the only requirement for joining seem to be power and an opposition to the existing international system.

However, more members means more national interests to consider. Soon enough, an expanded BRICs could resemble a “G20 minus G7″ which would hinder the very notion of promoting dialogue between the developing and the developed world.