May 11

The Nuclear Arms Race Is Back: Russia Furious As US Launches European Ballistic Missile Shield:

Back in November 2008, then Russian president Dmitry Medvedev made a stark warning to NATO: “Russia will deploy Iskander missile systems in its enclave in Kaliningrad to neutralize, if necessary, the anti-ballistic missile system in Europe.

Iskander truck_0_0

Several years we followed up with a report that as Europe was ramping up NATO expansion, Russia may have followed through on its warning when as Bild then reported, Russia stationed missiles with a range of about 500 kilometers in its Kaliningrad enclave and along its border with the Baltic states of Estonia, Latvia and Lithuania.

Iskander Range

There was not official confirmation at the time however we expect the European ICBM theater will get hot in the coming days because as Reuters reports, the United States’ European missile defense shield goes live on Thursday almost a decade after Washington proposed protecting NATO from Iranian rockets and despite repeated Russian warnings that the West is threatening the peace in central Europe.

Amid high Russia-West tension, U.S. and NATO officials will declare operational the shield at a remote air base in Deveselu, Romania, after years of planning, billions of dollars in investment and failed attempts to assuage Russian concerns that the shield could be used against Moscow.

As Robert Bell, a NATO-based envoy of U.S. Defense Secretary Ash Carter explained “we now have the capability to protect NATO in Europe. The Iranians are increasing their capabilities and we have to be ahead of that. The system is not aimed against Russia,” he told reporters, adding that the system will soon be handed over to NATO command.

First agreed by the U.S. government 2007 and then canceled and relaunched by the newly-elected U.S. President Barack Obama in 2009, the missile defense shield’s stated aim is to protect North America and Europe from so-called rogue states such as Iran and North Korea. That is part of a U.S. strategy that includes missile interceptors in California and Alaska.

To be sure the Kremlin was not content with this explanation, which is a clear defection from the carefully established Game Theory equilibrium in the aftermath of the nuclear arms race, and one which potentially removes a Russian first strike threat, thereby pressuring Russia.

As a result, Reuters notes that “Russia is incensed at such of show of force by its Cold War rival in formerly communist-ruled eastern Europe where it once held sway. Moscow says the U.S.-led alliance is trying to encircle it close to the strategically important Black Sea, home to a Russian naval fleet and where NATO is also considering increasing patrols.”

Worse, the precarious nuclear balance of power in Europe has suddenly shifted, and quite dramatically: despite U.S. assurances, the Kremlin says the missile shield’s real aim is to neutralize Moscow’s nuclear arsenal long enough for the United States to make a first strike on Russia in the event of war.

The move will also prompt further escalations on both sides: as a reminder, the readying of the shield also comes as NATO prepares a new deterrent in Poland and the Baltics, following Russia’s Crimean adventure in 2014. In response, Russia is reinforcing its western and southern flanks with three new divisions.

The missile defense shield relies on radars to detect a ballistic missile launch into space. Tracking sensors then measure the rocket’s trajectory and intercept and destroy it in space, before it re-enters the earth’s atmosphere. The interceptors can be fired from ships or ground sites. It is being launched despite repeated Russian warnings that its activation would prompt an appropriate response.

The Russian ambassador to Denmark warned a year ago that Danish warships would become targets for Russian nuclear missiles if Denmark joined the shield project by installing radars on its vessels. Denmark is upgrading at least one frigate to house a ballistic missile sensor.

“Ballistic missile defense sites could pose threats to the stability and strategic assets of the Russian Federation,” Russia’s ambassador to NATO, Alexander Grushko, told Reuters last month.

Meanwhile, Turkey is already hosting a U.S. radar and the Netherlands has equipped ships with radars. The United States also has four ships in Spain as part of the defenses, while all NATO nations are contributing funding. US officials have tried to tone down Russian concerns and dismiss the Russian view as “strategic paranoia”, blaming Moscow for breaking off talks with NATO in 2013 that were aimed at explaining how the shield would operate. What is ignored is that at the same time, the US State Department and the CIA were plotting NATO expansion into Ukraine to bring the alliance that much closer to Russia.

nato vs russia_0

The United States says Russia was seeking a treaty limiting the capability and range of ballistic missile interceptors. “No government could agree to that,” U.S. adviser Bell said.

Russian officials are concerned about technology that the United States says it does not have, including a missile defense interceptor capable of speeds of 10 km (6.2 miles) per second that could destroy Russian missiles.

Curiously, the US continues to push the argument that the missile shield is only there to defend against Iranian agressions, despite a historic deal between world powers and Tehran to limit Iran’s nuclear program. The West believes Iran’s Revolutionary Guards continue to develop ballistic missile technology, carrying out two tests late last year. “They are looking for greater distance and accuracy,” said Douglas Barrie, an aerospace defense specialist at the International Institute for Strategic Studies (IISS). “They can still miss by hundreds of meters, but that doesn’t rule out firing against a city or a very large airfield.”

Which is strange considering that on Friday the United States will also start construction on a second site in Poland due to be ready in 2018, giving NATO a permanent, round-the-clock shield in addition to radars and ships already in the Mediterranean. Poland, one can argue, is hardly the target of millitant Iranian clerics, and makes it very clear that this deterrence step is merely aimed at Russia.

But what makes this step particuarly dangerous is that Russia will now have to be forced to retaliate and since it does not have a comparable defensive technology, Putin will have no choice but to deploy more ICBMs on Russia’s borders, which in turn will exponentially escalate the threat of an “inadvertent” launch. Although considering how the “market” responds to newsflow these past few years, this may also be seen as a bullish catalyst for stocks.

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