In 2015, foreign policy in the European Union and the United States has been “annus horribilis”, which was also outlined in last week's monthly newsletter, Insightperspectives (click the image on the right). To some, such as the far right in the Republican Party, this shows that being inactive (or withdrawing troops too early) endangers political stability. To others, today’s political mess in the Middle East and with that the refugee crisis in Europe are the consequences of too much foreign policy action in the past. 
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‌The financial market, however, “only” needs to focus on the future consequences of policy decisions made in the past. In this context, Russia’s president, Mr. Putin, plays a significant role. In contrast to the European Union (Berlin), Russia has played its foreign policy cards prudently, at least from Moscow's perspective. The Syrian conflict provided an opportunity for Russia to break out from a dead-end having been cornered by economic sanctions imposed on Russia by Brussels and Washington due to the conflict in Ukraine. 
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‌Ironically, the roles have been changed. Suddenly, the German chancellor, Mrs. Merkel, has cornered herself by autocratically opening the border to all Syrian refugees without consulting Berlin or other European capitals. This now risks derailing the European integration process - read the article, This time around, spontaneous and high-handed Merkel risks alienating more than just her own party. More worryingly, this could endanger German unity in the same year as Berlin is celebrating the reunification 25 years ago - read the Wirtschaftswoche article, Flüchtlingskrise: Schafft Merkel das? The only gain, from Mrs. Merkel's perspective, could be if she is awarded the Nobel Peace Price on Friday. More importantly, Ukraine could end up being the big loser. 
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Putin's game plan
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‌Russia's strategy will be walking a tightrope as Moscow needs to balance three highly integrated crises: The Ukrainian crisis, the Syrian Civil War and the Oil Crisis - click the image on the right or click here to see Putin's "road map". Moscow probably sees Syria as a tool for obtaining its ultimate goal namely to prevent Ukraine from becoming a member of the European Union and NATO. In addition, Mr. Putin's game plan may even succeed boosting the oil price, which is highly needed to mitigate the current economic downturn in Russia.
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‌So far, it seems everything is going according to Mr. Putin's game plan. Moscow has only made few errors such as offending Turkey after having violated Turkish airspace - read the article, NATO rejects Russia explanation on Turkish air space. Offending Turkey makes no sense from a Russian point of view; the Turkish president is highly ambiguous when it comes to taking side, which may be to Russia's benefit further down the road. In Europe, the escalating refugee crisis has suddenly made Mr. Putin highly needed. Ironically, the European Union even believes one should talk to Syrian president Assad. ‌‌ 
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‌Putin is a key player in Syria
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When it comes to Syria, many players are involved - click the image on the right to read an interesting article from the Financial Times. President Assad (minority Shia) is supported by Iran (Shia) and Russia. Assad, however, is opposed indirectly by Saudi Arabia (Sunni) and Turkey (Sunni) via military support to different opposition groups in Syria (moderate Muslims and ISIS). ‌The United States has also financed moderate opposition groups in Syria although this has been concluded to be a huge failure. Saudi Arabia is well aware that if Russia steps up military involvement in Syria, which seems to be the case, Riyadh's goal in Syria will not be achieved. Furthermore, there is no backing in Washington for another military adventure in the Middle East in front of presidential elections.
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‌This is also why Saudi Arabia and Washington will add political pressure on Moscow to find a solution. Berlin will add pressure on Washington to soften its stance on Russia as a solution to the Syrian crisis is urgently needed to end the influx of refugees. Indeed, this is probably all part of Mr. Putin's game plan. Mr. Putin is suddenly negotiating from a position of strength rather than weakness. This may end up with the fact that Saudi Arabia accepts lowering OPEC's oil output, which should help raise the oil price. In addition, the European Union will have to "abandon" Ukraine. 
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Indeed, if Mr. Putin's game plan proves successful, this may end the civil war in Syria. If not, the oil price may still move higher as the Syrian conflict may potentially end up with a direct confrontation between Saudi Arabia and  Iran - read also Insightview's article, Iranian nuclear deal risks creating security vacuum beyond the Middle East (April 2015). In Europe, the "only" difference is that Ukraine will be left alone, which will leave Poland and the Baltic countries rather confused. ‌Anyhow, realpolitik is what matters in the financial market. The question is whether chancellor Merkel will politically survive such an outcome, which will leave the European Union even more empty-handed? 

‌14. September 2015 - EU: Syrian refugee crisis provides window of opportunity for Russia and Berlin to find common ground
‌21. July 2015 - TAA - Re-enter oil overweight