Russia's New Policy of Strength: Style or Substance

IMGXYZ479IMGZYXOn April 26, 2006, the Carnegie Endowment for International Peace hosted a meeting entitled “Russia’s New Policy of Strength: Style or Substance?” with Dmitri Trenin, of the Carnegie Moscow Center. Andrew Kuchins, director of the Carnegie Russia and Eurasian Progra, chaired the session. Trenin’s remarks are summarized below.

Last year marked a turning point in the course of Russian foreign policy, certainly since 1991, and perhaps since 1985. One could call the current policy the antithesis of Gorbachev’s “new political thinking.” The Pluto of the Western political system has left its orbit to form a new system.

Russia’s new assertiveness has roots not only in high energy prices, but in the failure of two processes: integration with the West and integration into the West. For the Russian elite assertiveness is a psychological liberation. In the late 1980s and early 1990s they felt humiliated, and now they are reacting. Russia, last among the post-Soviet states, is embracing nationalism.

Moscow now views competition as the mother of all things. Cooperation is seen as the result of successful competition. To the elite Russia is friendless in the world. This idea goes back to the nineteenth century, when it was said that Russia had two allies—her army and her navy. Now it has oil and gas. The elite equates sovereignty with being a great power and according to this logic there are fewer than twelve sovereign countries in the world.

Within the CIS the Russian strategy is liberal empire, seeking to roll back U.S. influence. Russia sees the Uzbek turn away from the U.S. as a victory. Globally Russia would like to be an independent player, ensconced in splendid isolation, staying out of conflicts and preserving freedom of action.

How realistic is this strategy? The idea that Russia can only modernize alone, rather than through NATO or EU integration, is sound. The policy of national self-empowerment is reasonable and agrees with the psychological code of the elite.

The Russian strategy does entail risks. The country’s energy resource base is weak and its broader economic development uncertain. Gazprom is not healthy internally. There is the risk of clumsy execution of sound policy, as during the Ukrainian gas crisis. Cynical people behaved naively. Russia expected the West to blame Ukraine. Officials, including Gazprom CEO Aleksei Miller, made strong statements that journalists then spun. Russia also runs the risk of fostering anti-Western fervor, which could ultimately be self-destructive. One can see such anti-Western feeling in the reaction to the recent Foreign Affairs article on U.S. nuclear supremacy [Keir A. Lieber and Daryl G. Press, “The Rise of U.S. Nuclear Primacy,” Foreign Affairs, March/April 2006, vol. 85 no. 2. This article argues the U.S. now has nuclear first-strike capability against Russia.] The vehement Russian response sprang not from Kremlin prompting, but from the attitudes just below the surface of Russian elite thinking.

The G-8 summit is first among the challenges Russia anticipates. The elite will breathe a sigh of relief when the summit is past. Vicious criticism has made the Russian leadership less interested in the G-8 and the summit will not be seen as the crown jewel of Putin’s foreign policy. Two or three years ago the Russian attitude was very different. Analysts in Russia know roughly what the 2008 presidential election will look like, but they don’t know what the Western reaction will be, particularly with the U.S. in the midst of its own presidential campaign. Russia is also concerned about future competition in the CIS, for example if NATO announces a Membership Action Plan for Ukraine. Georgia, Kosovo, and Iran will remain irritants in Russian relations with the U.S.

Both Russia and the U.S. need to recognize their new relationship, putting aside 1990s delusions and 2000s pretensions. Now the relationship will be competitive, though not antagonistic. The degree of mutual disinterest will grow, as there is no foundation for a deeper relationship. The U.S. should acknowledge the limits of its leverage and focus on the interests that are really at stake in its relationship with Russia, firstly nuclear issues. With arms control treaties expiring, the U.S. and Russia need to arrange new inspection regimes for strategic weapons, nuclear materials, and nuclear power. In energy the two powers are interdependent. Energy can’t be used as a weapon. There is little room for security cooperation, except on Afghanistan. To these ends, the U.S. should neither embrace nor demonize Putin’s successor, whoever he turns out to be. They should expand contacts at lower levels of the bureaucracy.

Russia is not a market economy. It is not a democracy. It is not even pluralistic. But Russia is evolving toward capitalism and becoming part of the world system. This evolution depends on human greed, not human enlightenment. Ultimately Russia will be Western, but not pro-European and not pro-U.S.

Q&A

Q: However you slice it, Russia has enjoyed fivefold GDP growth in real terms in less than a decade. What’s happening now?
Trenin: There is a relevant historical example. In the late 19th century Russia had a booming economy and an authoritarian regime. The ruble went on the gold standard and there was peace. Then a group of people from St. Petersburg, led by Aleksandr Mikhailovich Bezobrazov, initiated an aggressive policy in Northeast China. This led to the Russo-Japanese War, defeat, and the mortal wounding of the monarchy before it could modernize. Russia embarked on a disastrous foreign expansion and then collapsed. Now the sense of measure may not be there. The narrow interests of elite groups and the problems of a large and complex country may come into conflict. The basics of economic development in Russia are ok, but misguided policies could bring disaster.

Q: Since WWII most economies have modernized by integrating. Going it alone may be more problematic than you think. Oil and gas don’t create linkages and you can’t spend too much of the revenue without causing inflation.
Trenin: I agree. Energy is a weak foundation for foreign policy. I would distinguish between integration into a finite community and integration into the world economy. Russia is essentially an open country. It isn’t terribly hospitable to FDI, but Russian businesses want listings on international exchanges, so corporate governance is improving. Russia does face an unusual problem in its attempt to modernize outside integrative mechanisms. In some respects Russia’s situation resembles that of 19th-century Japan.

Q: I agree on the need to revive the nuclear dialogue. Money reveals the priorities of a state. I’ve been looking at military spending and the energy money isn’t going there. It isn’t going to the energy sector. Russia faces serious problems with democracy, health care, and deindustrialization. Where are the Putin brigada’s priorities?
Trenin: The siloviki group does not want to create a national security state. They have a healthy view of the relevance of Russian military might. They know the chance of military confrontation with the U.S. is zero. The U.S.-Russia relationship will be competitive, but not antagonistic. There is no fundamental clash of interests. Much of the money is going to enrich certain elites. It’s also going to the formation of “national champion” companies, like in aircraft. There is some genuine attention to human capital; it isn’t all for show. There’s interest in education in infrastructure and some of the money will go there. But now is not the time to set priorities, with the election ahead. Reform will continue after 2008. Economic forces will continue to push Russia to modernize and catch up with the rest of the world.

Q: But we’re talking hundreds of billions, and only the 60 billion in the stabilization fund is transparent. It’s amazing you can’t track the money.
Trenin: Well the stabilization fund is good, because populism is the greatest danger today.

Q: You say there will be Russia-U.S. competition. Over what? You told the Economist Russia wants to show it is “not a piece of furniture” [“Russia is not a Piece of Furniture,” Economist, April 20, 2006]. Is it just showing it can be a spoiler? On the elite, you mentioned that they “run and own” the country. The elite is integrated, but it’s against the integration of the whole country, because that would mean accepting Western rules and they couldn’t be owners anymore. I think Russia will make a huge mistake if it tries to absorb Belarus. That is the first bezobrazie we will see.
Trenin: Spoiling, as in the case with Hamas, is just a mechanism Russia uses. The government doesn’t care about the Palestinian-Israeli conflict. They want to show they’re a player in the region. Russia is in a different time zone than Europe. It’s comparable to the Europe of the 1930s in both GDP and values. The Belarusian issue will be resolved by Belarusian elites, not the Kremlin. If the Belarusians think they can create a viable state, they will go it alone. Otherwise they will go with Russia. Today Belarus is identical with the personality of Lukashenka. His legacy could live on. I think they will go their own way.

Q: You said oil and gas are Russia’s allies. Then you said energy is not a unilateral tool. There’s a tension there. What must happen for Russia to accept this?
Trenin: The tension is not in my presentation, but in Russian elite thinking. After Ukraine the Kremlin realized this. Now the project is asset swaps. The Putin-Merkel meeting yielded a swap of one third of a Russian gas field for shares in Wingas. We will see a similar deal on Shtokman. In my analysis I rely on greed, which will lead to the rule of law.
Q: The Foreign Affairs article provoked a firestorm. On TV Aleksei Arbatov said Russia shouldn’t wait to deploy strategic nukes on subs, but should instead deploy lots of Topol-M missiles. He said something like, “Nobody is going to attack Russia, but nobody is negotiating with us either.” What is it just below the surface in Russian elite thinking? Post-traumatic stress disorder?
Trenin: Arbatov believes in a strong nuclear force. It’s relatively cheap and commands the respect of the U.S. It’s easier to increase nuclear strength than to become an economic powerhouse. Russia sees Iran as a normal, rational power with a 2500-year history. They worry more about Pakistan, knowing that A.Q. Khan hardly engaged in all that proliferation on his own. Again on Iran, Russia sees terror as a normal state tool. The USSR sponsored terror for years. Iran is populous and has huge gas reserves. One day there could be a Russia-Iran-Turkmenistan “gas OPEC.” Russia would not welcome a nuclear-armed Iran, but it is becoming resigned to two possibilities: an Iranian nuclear bomb or a U.S. attack on Iran. So Russia has a huge incentive to sit it out. The Kremlin is acting responsibly and negotiating in good faith. But everybody knows the current deal gives Iran nothing. Russia will cooperate as long as it’s safe, and the red line is sanctions. Russia is selling missiles to Iran and launching satellites for Israel. It’s almost Venetian.

Q: If Russia is isolated that will have negative effects on its foreign and domestic policy. The contrary U.S. response could be to bring Russia into the WTO now, make isolation harder, bring over tons of students, and never deny a visa. Right now Russia thinks the U.S. will never back them up. They see American power declining and their business is increasingly not in dollars. Russian support for Hamas is not just a “furniture” thing. It’s aimed at Muslims at home, in places like Dagestan.
Q: This is the most confident Russian leadership we’ve seen in years. It reminds me of NASDAQ investors thinking the business cycle doesn’t apply to them. They’re not fixing the problems. How will they react when things go wrong? Between now and 2008 could we have another Beslan, Kursk, or Ostankino? As with hurricane Katrina in the U.S., an exogenous event can expose weak leadership.
Q: You talked about a non pro-American, non-European path to modernity. Is that policy not entirely unsound because of external circumstances, or because the elite doesn’t want to pay the price of the usual path—giving up money and Russian “specialness?”
Trenin: There are always multiple futures, and the path I foresee isn’t the only possible way. But the EU doesn’t have the capacity to integrate Russia, and Russia can’t be a partner like Japan was for the U.S. in the Cold War. Right now ordinary Russians don’t care how the country is being run. They’re busy buying apartments. But that won’t always be so. Elite greed will lead to the rule of law so the elite can preserve its wealth. The middle class will eventually be interested in better governance: police, utilities, etc. I don’t know if this will happen in three, five, or ten years, but it will be sooner rather than later. If Russia doesn’t reform it will move forward by way of crises. I agree on the WTO. It’s in the U.S. interest to bring Russia in. Blocking Russia’s bid only encourages the elite’s bad psychological instincts. Isolation could be destructive, but Russia’s authoritarians do not want to become totalitarians.

Summary prepared by Matthew Gibson, junior fellow with the Russia and Eurasia Program at the Carnegie Endowment for International Peace.