Steady State: Russian Foreign Policy After Coronavirus

If there is one piece of conventional wisdom that all experts on U.S.-Russian relations agree on, it’s that the relationship between the two countries is at its worst in decades. In Washington and Moscow, officials regularly trade accusations of violating long-standing conventions and agreements. Lawmakers in both capitals devise new legislation to punish each other. The worst stereotypes on both sides are rearing their heads again, including in the media. Wise heads counsel that the relationship will get worse before it gets even worse. Can anything be done to avoid that? To answer that question, it’s worth examining how five major elements of the bilateral U.S.-Russian relationship stack up right now.

The first element is the new coronavirus pandemic, which has eclipsed nuclear weapons as the most pressing facet of U.S.-Russian relations. Developing a vaccine and finding a cure for the disease must be the top priority—in terms of national security, the economy, and society—for both countries. Removing any barriers to meaningful scientific and medical cooperation in this area should be at the top of the list for both Washington and Moscow. That task is complicated considerably by enormous reservoirs of mistrust on both sides and the prevalence of every-man-for-himself thinking in a great many countries, not just the United States and Russia.

The second element is nuclear weapons and strategic stability—an area where the situation has deteriorated in the past few years. The nuclear arms control framework that Moscow and Washington inherited at the end of the Cold War is unraveling. In 2019, the United States withdrew from the Intermediate-Range Nuclear Forces (INF) Treaty after uncovering that Russia had violated it—a charge that Russia has denied but the United States insists on, along with its European allies, who have independently corroborated it. In May 2020, the Trump administration announced its intention to pull out of the Open Skies Treaty.

The New START Treaty that limits U.S. and Russian strategic nuclear weapons is due to expire in early 2021. It can be extended for an additional five-year term, but the current U.S. position that the U.S.-Russian nuclear arms control framework should be expanded to include China puts its future in doubt. The possible demise of arms control and a range of new weapons technologies—including hypersonics, precision conventional, low-yield nuclear, cyber, and space weapons—hold out the prospect of a new U.S.-Russian arms race. It promises to be costly, destabilizing, and dangerous, especially since the U.S. and its allies’ and Russia’s militaries are facing each other along the new dividing line in Europe from the Arctic to the Black Sea. Military analysts on both sides of the divide theorize about limited nuclear war and such destabilizing concepts as “escalate to de-escalate.” New START does not deal with these new developments, but, if extended, could serve as the foundation for a new arms control framework. Preserving it would be better than starting from scratch.

That said, the issue of the INF Treaty will have to be addressed eventually. Either the intelligence agencies and policymakers of all NATO member states are wrong, and Russia did not violate the INF Treaty, or it did. If there are other explanations that can resolve this disagreement, they need to be heard—albeit in a much calmer political atmosphere than exists now. Russia has concerns about U.S. actions that—as Russian officials claim—violate the INF Treaty; they should also be addressed. If left unresolved, this issue will undercut the credibility of future discussions about arms control and strategic stability.

The third element is terrorism, which for nearly two decades was the driving concern of U.S. national security policy, and which experts on U.S.-Russian relations have held up as an area where cooperation could serve the interests of both countries. Terrorism remains a threat to U.S. interests abroad, U.S. allies, and the U.S. homeland, but cooperation with Russia in this area is a very, very distant prospect at best. The reasons for it are many: long-standing differences between the United States and Russia on the conduct of counterterrorist campaigns; deeply entrenched mistrust between the two countries’ security establishments; and, most recently, reports that Russian operatives paid Taliban (an organization designated as terrorist in Russia, albeit not in the United States) militants to kill U.S. troops in Afghanistan. Needless to say, if U.S. officials come across a critical piece of information about an impending attack in Russia, it should and no doubt will be shared with Russian authorities. But beyond that, cooperation with Russia on combating terrorism will remain what it has always been—a sensible idea made impossible by real-world actions.

Crew members of the K-549 Borei-A-class nuclear-powered ballistic missile submarine Knyaz Vladimir [Prince Vladimir] line up for a bread-and-salt ceremony to welcome their arrival at Gadzhiyevo naval base of the Russian Northern Fleet. Photo: Lev Fedoseyev/TASS

The fourth element is information wars, which have risen to the top of the U.S.-Russian agenda in the aftermath of Russian interference in the 2016 U.S. presidential election. One consequence has been a series of U.S. sanctions intended to deter and punish Russia. There are lessons here for both sides. For U.S. policymakers and the general public, the lesson is that the main problem is not Russian disinformation, but the intense level of political polarization inside the U.S. body politic and in the widespread embrace of fake news by prominent U.S. political figures, media outlets, and audiences. The experience with the coronavirus shows that Russian propaganda is far less consequential than disinformation distributed by Fox News and the White House. At the same time, for those in Russia who might be interested in better ties with the United States, it may be hard to escape the conclusion that interference in the 2016 campaign has poisoned the image of Russia in the United States, with lasting consequences for the relationship.

The final element is U.S.-Russian trade and economic relations, which can be described as stagnant at best and irrelevant at worst. Bilateral trade in 2019 amounted to less than $30 billion. Yet in the past few weeks and months, U.S. oil producers, investors, and policymakers have discovered that what Russia does in the global oil marketplace can be highly consequential. “Energy independence” is a double-edged sword, and while low oil prices benefit consumers, they now threaten important economic interests in the United States. For Russian energy companies, the near-term blow to U.S. oil producers as a result of the Saudi-Russian oil price war is unlikely to conceal the fact that, aside from questions about U.S. shale oil producers’ resilience, the bigger long-term threat to Russian oil and its economy as a whole is climate change and the world’s major economies’ gradual transition to green energy. The lesson here is that Russia plays a larger role in global trade than the relatively modest size of its economy and bilateral trade with the United States may suggest. With Russia and the United States among the top three oil producers in the world, there may be utility in restarting the energy dialogue begun early in this century in very different circumstances.

There is more on the U.S.-Russian agenda—not least Ukraine, Syria, Venezuela, and, more recently, Libya—but the five issues outlined here comprise the bilateral U.S.-Russian agenda and need to be tackled first. The relationship did not get to this low point overnight, and it will not improve quickly. There is little chance of improvement before the 2020 U.S. presidential election. But afterward—regardless of who is elected in November—there will be a window of opportunity to change the course of the relationship. There will be a new team in Washington that seeks to develop a new domestic and foreign policy agenda. The challenge here will be not to attempt a new reset, or to sweep the existing differences aside, but to begin to manage them without false hopes or promises for a quick breakthrough. The key questions for that new team will be what really matters for the United States when it comes to Russia’s role on the global stage, and whether the current policy, which has been reduced to threatening or imposing sanctions to punish Russia, can deliver it. 

The relationship could also gain from Russian policymakers likewise asking what they want from it and whether their chosen course of action has delivered it. A lot will depend on what happens in Moscow. If 2020 becomes a repeat of Russian efforts to meddle in U.S. politics in 2016, the wise heads quoted above will be proven right, and the relationship will get worse before it gets even worse.

For Moscow, the global crisis provoked by the new coronavirus pandemic has provided a rare opportunity to try to reengage Washington. This is consistent with a historical pattern in which Russia tries to use a common threat to reset its relationship with the United States and look for areas of cooperation based on mutual interests. Traditionally, the U.S.-Russian relationship has always been top-heavy, with the personal connection between the two countries’ leaders playing a crucial role. This time is no different.

Hardly anyone in the Russian leadership expects a fundamental turnaround in Russian-American relations in the foreseeable future. The outlook is bleak: the current confrontation between the two countries is labeled systemic, and U.S. sanctions on Russia are deemed to be eternal. The Moscow-Washington rivalry, as asymmetric as it is, is seen as linked to the power redistribution processes changing the world order, and each country’s position and role within that order. However, tactical opportunities for even very limited engagement are not to be missed.

In a nutshell, what Russia wants from the United States is to resume dialogue based on mutual interests, and without preconditions. Moscow’s U.S. agenda is currently essentially limited to arms control issues. Following former U.S. president George W. Bush’s termination of the Anti-Ballistic Missile Treaty in 2002 and Donald Trump’s withdrawal from the Intermediate-Range Nuclear Forces accord in 2019, the New START negotiated by Barack Obama is the last major agreement in place providing strategic arms control and inspections. New START is, however, due to expire in February 2021. Russia wants it to be extended for another five years.

In 2018, when Russian President Vladimir Putin unveiled a range of new advanced strategic weaponry, he hoped that the impressive display would bring the United States to the negotiating table. Mindful of the experience of the Cold War, the Kremlin would much prefer to limit the U.S.-Russian arms race and preserve strategic stability than to engage in an unconstrained arms race. Make no mistake, though: Putin considers Russia’s deterrence of the United States to be effective and is not turning to Washington as a supplicant. Yet to this date, no substantive dialogue has begun on extending New START and developing a new strategic arms deal. 

In this respect, the coronavirus outbreak has created an unexpected opportunity. The American public’s attention is focused on China as the source of the pandemic. President Trump, for whom Beijing, rather than Moscow, has always been the main adversary, is tempted to drive wedges between Russia and China. At the same time, Trump is also concerned by the plight of the U.S. shale industry amid the steep drop in global demand for oil, exacerbated by the Saudi-Russian price war. To deal with the problem, Trump leaned hard on Riyadh and reached out to Moscow. This caused a spike in direct top-level contacts between the White House and the Kremlin.

Putin readily seized this overture. On China, Trump’s efforts will predictably be in vain. Although the Russian establishment espouses a healthy realist view of China, it would be ridiculous to expect it to alienate Beijing on Washington’s behalf. On oil, Russia cooperated with the United States and was rewarded by becoming part of the newly emerged global energy troika alongside the United States and Saudi Arabia. Putin also had his own agenda, of course. He made a nod to humanitarian diplomacy by sending a planeload of medical supplies to the United States, but, most significantly, sought to engage Trump in a conversation about arms control. If New START is to be saved, the U.S. administration must work with the Kremlin on it right now.

It is hard to say, however, whether the Trump administration, which is generally more hostile toward Russia than the president himself, is prepared to do that work. If the treaty expires without extension, there will be no legal grounds for on-site inspections of nuclear arsenals, and both sides will have to rely on their national technical means. The prospects of post-START nuclear arms talks that Moscow has also proposed are even more uncertain, and largely depend on the outcome of the 2020 U.S. presidential election. If the winner is backed by a comfortable majority, and accusations of Russian election interference are muted, there might be a small chance for the dialogue to begin, but even that will not occur immediately. One thing is clear: reaching new-era arms agreements will be infinitely more difficult than before.

US Secretary of State Mike Pompeo (R) and Russian Foreign Minister Sergey Lavrov take part in a press conference at the US State Department in Washington, DC on December 10, 2019. Source: Getty

The ceasefire in Ukraine’s Donbas region should remain stable and allow for humanitarian and economic exchanges across the line of contact. This is the most that can be done. Ukraine never liked the 2015 Minsk agreement, which stipulates amnesty for the separatists and near federal-level autonomy for Donbas. Russia, for its part, will not abandon Donbas for a vague and most probably empty promise of an end to sanctions. A solution to the frozen conflict in eastern Ukraine will likely remain out of reach for a long time. 

The longer-term consequences of the coronavirus will significantly impact the global context of Russia-U.S. relations. The most important factor will be the further intensification of U.S.-Chinese rivalry, and the emerging Sino-American bipolarity. The United States’ ongoing refocusing on itself, at the expense of its global leadership, together with the rise of nationalism in Europe, will continue to transform transatlantic ties and the nature of the European Union. In this environment, Russia’s top priority should be to carefully maintain equilibrium—though not equidistance—between the United States and China. Another priority would be to reduce concerns in Europe about the threat from Russia itself, and enhance relations with those EU countries that are more open to that. Finally, Moscow will have to draw a lesson from the spectacular fall in oil prices caused by the pandemic-linked economic recession and Russia’s ill-timed price war with Saudi Arabia.

While the context of Russian-American relations is changing as a result of the coronavirus, the relationship between Moscow and Washington is unlikely to be substantially altered by it. No new reset is in the offing, and the outlook remains negative, if generally stable. The U.S.-Russian confrontation will continue—with some guardrails around it.  

The coronavirus pandemic and the accompanying economic crisis are impacting Russia-China relations just like the 2014–2015 crisis unleashed by the war in Ukraine did: the bilateral relationship is not fundamentally changing, but existing trends are picking up speed. Russia’s economic and technological development will become increasingly dependent on China, and U.S.-China tensions, which are worsening as a result of the pandemic, may soon make Moscow’s balancing act more precarious.

Since 2014, far-reaching U.S.-EU sanctions have pushed the Kremlin to deepen Sino-Russian cooperation in multiple domains. Ever since, Russia’s asymmetrical dependence on the Chinese economy has grown continuously. China’s share in Russia’s trade turnover increased from 10.5 percent ($88.8 billion) in 2013 to 15.7 percent ($108.3 billion) in 2019. Meanwhile, Russia’s central bank has increased the proportion of the Chinese yuan in its foreign currency reserves from 0.1 percent in 2015 to the current 13.2 percent. Moscow is also increasingly relying on Chinese technology, and firms like Huawei are set to make major inroads in the Russian market as key decisions on 5G approach. In 2016, China for the first time surpassed Germany as the number one source of industrial equipment and other technology-related imports in the Russian market. This trend continued in 2019, as Russia imported $30.8 billion worth of equipment and technology-related products from China (28 percent of all technology-related imports that year), while imports from Germany dropped to $12.9 billion, or just 12 percent.

The deepening of Sino-Russian ties following the war in Ukraine and Western sanctions extended beyond trade. To highlight only a handful of key examples, in 2018 Russia’s armed forces carried out the biggest military exercises in the country’s history in which they were joined by a 3,200-strong contingent from China’s People’s Liberation Army. President Vladimir Putin announced in October 2019 that Moscow is helping Beijing create its own missile early warning system, thus tying China’s strategic nuclear deterrent to a Russian technological backbone.

Crises aside, however, there are several objective reasons for the Sino-Russian rapprochement. The structures of their economies naturally complement each other. The political regimes are similar, which frequently inspires joint approaches on issues like human rights, NGOs, and the future of the internet. The strategic imperative to spend once-scarce resources on a heavily fortified, 4,200-kilometer border has given way to new forms of cross-border cooperation and trade. For all of these reasons, Moscow and Beijing were well-inclined toward each other and likely to become closer partners even without a well-timed nudge from recent crises. But their actions scarcely would have been as coordinated as they are now.

The pandemic is accelerating a wide-ranging set of processes and incentives inside both Russia and China that are helping pull the two largest Eurasian powers toward each other. Unprecedented synchronized global economic turbulence and the drop in oil and gas demand from locked-down economies set the stage for a period of painful adjustment for the Russian economy. Trade with Beijing becomes increasingly important to offset the immediate shocks, as China appears to be the first major economy to recover after the pandemic.

By dealing with the coronavirus generally effectively, China’s leaders have had a head start on reinvigorating the economy. The pace of recovery is uncertain, not least because of weaker demand from traditional overseas markets, debt-related challenges, and deflationary pressures. The blueprint for China’s economic recovery is still in flux, and the scale of emergency measures unveiled to date at the annual “two sessions” in late May 2020 is decidedly more modest than those embraced by European and U.S. decisionmakers. Still, some measures announced by Premier Li Keqiang, such as ambitious infrastructure projects, could potentially lead to increased demand for Russian oil, gas, and other commodities.

Trade data show that Russia’s economic exposure to China continues to grow as a result of the pandemic. In the first quarter of 2020, China’s share in Russian trade turnover reached an all-time high of 17.3 percent ($31.8 billion) compared to 15.8 percent ($34.1 billion) in the same period last year, despite the decline in oil prices. (Since oil constitutes over 70 percent of Russian exports to China, price fluctuations can have outsized impact.) The recent Saudi-Russia oil price war prompted a spike in Russian crude exports to China as refiners sought to take advantage of lower prices. In March 2020, as energy prices plummeted, China bought a record 7.02 million tons from Russia. In the first quarter of 2020, Russia’s oil shipments were 16.7 percent higher than in the same period last year, rising from 18.06 to 21.07 million tons. In April, Russia overtook Saudi Arabia as the top oil supplier to China, shipping 18 percent more (7.2 million tons) than in 2019. The trend continued in May with Russian oil exports growing by 19.2 percent over the previous year.

A gradual reorientation of Russian oil exports from west to east is also an important factor. That dynamic has been increasingly evident since the opening of the Eastern Siberia–Pacific Ocean (ESPO) oil pipeline in 2010. ESPO’s key champion was Rosneft, Russia’s powerful state-owned oil company. In 2009, Rosneft borrowed $15 billion from the China Development Bank in order to complete ESPO and a branch pipeline (Skovorodino-Mohe) that brings oil from ESPO directly tо China.

In addition, multibillion dollar loans from three Chinese state-owned oil companies in June 2013 helped Rosneft’s ambitious CEO Igor Sechin finance a shopping spree of domestic acquisitions. To service the loans, Rosneft agreed to advance sales of 360 million tons of oil to China over a twenty-five-year period. At the time of the deal, oil prices were on average $110, so the contract’s total volume was estimated at $270 billion, and Rosneft got $70 billion as an advance payment. Market conditions became far more challenging for Rosneft at the end of 2014 as prices declined sharply. As a result, Rosneft has prioritized pumping increasing volumes of oil to China and expanding pipeline capacity to carry additional volumes, including doubling the capacity of the Skovorodino-Mohe pipeline in 2018 and transit via Kazakhstan using swap deals with Kazmunaygas.

In the telecom sector, Huawei is now poised to expand its well-established presence. Russia’s top three telecom operators, especially Megafon, have relied on Chinese equipment produced by Huawei and ZTE alongside hardware supplied by Nokia and Ericsson. The Kremlin knows full well that Russia is unlikely to produce its own 5G hardware any time soon. In June 2020, a government working group on the digital economy (which includes regulators and the major telecom companies) blocked a proposal mandating the use of Russian-made hardware in the rollout of the new national 5G network. 

While there are national security concerns about the possible backdoors and kill switches in Chinese- or Western-supplied equipment, China is seen as the lesser evil. No one in the Kremlin loses sleep worrying that Beijing might try to topple the Putin government or impose sanctions on key members of the Russian elite. Huawei has also formed important marketing and technological partnerships with influential Russian players. For example, Sberbank’s ambitions to become the leading supplier of cloud computing services on the Russian market will now be powered by Huawei. Finally, Beijing’s reliance on AI-powered digital surveillance and facial recognition technology for tracking and controlling the spread of the virus has triggered widespread Russian interest in emulating the Chinese model of societal control. That newfound level of fascination carries with it a whole slew of commercial opportunities for Chinese firms.

Staff put the parcels from the cross-border e-commerce businesses onto a conveyor belt at the Changsha Huanghua International Airport in Changsha. An airplane carrying almost 40,000 parcels from the cross-border e-commerce businesses departed from Changsha to Moscow. Фото: Chen Sihan/ZUMA/TASS

The pandemic appears to be speeding up other preexisting trends. For example, in March 2020, Russian Railways, the Russian state-owned railway monopoly, revised its 2020 investment program. While the size of the investment program was cut by roughly a quarter to 622 billion rubles, significant funds were reallocated for upgrades of the Trans-Siberian and Baikal–Amur Mainline (BAM) railways. These are important transport corridors to China for Russian commodity exporters. Such investments will help facilitate future shipments of Russian commodities to Asian markets, primarily to China, which remains the major buyer of Russian coal and metals in the region.

Even more important is a recent political decision to revive the Power of Siberia-2 (PoS-2) project, which was announced by Gazprom CEO Alexei Miller in mid-May 2020. According to Miller, the company has already started design and survey work for a new natural gas pipeline that will carry up to 50 billion cubic meters (bcm) a year to Chinese customers. The previous route of PoS-2, which was intended to run from Western Siberia to China’s Xinjiang via the Altai Mountains according to a 2006 memorandum between Gazprom and China National Petroleum Corporation (CNPC), has been discarded. The new route for the pipeline now will go through Mongolia. Relying on a transit country had for many years been anathema to Beijing and Moscow. Both capitals feared that Ulaanbaatar would be able to play them off of each other. There was no appetite to re-create the long-running disputes between Ukraine and Russia over Europe-bound gas transit.

Such concerns have largely disappeared in light of Mongolia’s heavy economic dependence on China, as well as growing strategic cooperation between the Kremlin and Zhongnanhai. The new route will bring gas to China from fields in Western Siberia and Yamal that are already operational. This should make the project far less capital-intensive than the original Power of Siberia, which involved development of two entirely new gas fields, Kovykta and Chayanda, whose output required processing in order to meet contractual conditions imposed by Chinese purchasers. (The official cost estimate of the Power of Siberia project stands at $55 billion.) Also, the benchmark gas price on PoS-2 will be the price for Power of Siberia, which is one of the most profitable prices in Gazprom’s export portfolio. In theory, bringing gas to China from the same fields that currently supply the EU is intended to strengthen Russia’s position in the European market, where Gazprom currently faces multiple challenges.

As with the 2014 crisis, the pandemic is helping to reorient Russia’s trade from west to east, gradually reducing the share of EU-bound exports and slowly but surely increasing the amount of exposure to China. To be sure, the dramatic jump in physical volumes of oil shipments from Russia to China may be short-lived. Yet the behavior of leading Russian players such Rosneft, Gazprom, and Russian Railways suggests that a new strategic imperative is guiding post-coronavirus decisions on expanding land-based pipeline and railway infrastructure that tie Russian commodities exports to the Chinese market. It is not unreasonable to view such decisions as merely an acceleration of existing trends. But there is every reason to believe that eventually bringing trade with China to the same levels seen with the EU (roughly 40 percent of total trade turnover) will have potentially far-reaching consequences.

For all of the traditional Russian grumbling about dealing with EU customers, the Kremlin knows how to maneuver between Brussels and national capitals such as Berlin. It also mastered long ago how to navigate European institutions such as the Stockholm Court of Arbitration. Dealing with China, where there are no competitive power centers beyond the Communist Party, is another story entirely. If the Party decides one of these days to treat Russia’s growing dependence on China as a source of leverage to squeeze concessions, that ought to surprise no one. Beijing has already used such tactics in the high-profile 2011 spat between Rosneft and CNPC on oil pricing. Even back then, when Russia’s ties with the United States and the EU were booming under then president Medvedev, Moscow still had no choice but to knuckle under China’s pressure.

Going forward, the strategic landscape for Russia is likely to be less favorable. The pandemic has pulled the curtain back on the country’s one-dimensional economic model. There is no likelihood of a speedy reconciliation with the West, which is contending with serious coronavirus-related economic challenges of its own. Against that backdrop, the Kremlin’s hand vis-à-vis Zhongnanhai is likely to become even weaker.

In recent years, the relationship between Moscow and Brussels resembled a balancing act based on asymmetrical weaknesses rather than strengths. Russia’s Achilles’ heel was its stagnating and archaic resource-based economic model, which caused Russia’s share in the global economy to steadily decline, and consequently its significance as an economic partner of the European Union.

The EU’s weaknesses mostly stemmed from the irreversible decline of traditional party and political systems in its leading member states that had prevailed throughout the post-war era and, consequently, their inability to provide the political leadership that the EU so badly needed. This led to a lack of European unity, which manifested itself in the EU states’ responses to many issues, from the migration crisis and the rise of right-wing populism to their halting attempts at unity in approaching their difficult neighbor to the east in the wake of the Ukraine conflict.

For the past five or six years, Russia and the EU have been waiting for a black swan event that would compel their opponent to acknowledge the error of their ways, to rethink their attitudes, and to make at least symbolic concessions. During that time frame, numerous black swans in global politics flew by without disrupting the new normal for EU-Russia relations that had emerged in 2014, and which proved surprisingly stable and quite acceptable to both sides ever since.

But then along came the mother of all black swan events: the coronavirus pandemic. It’s already clear that the EU and Russia will be among its prime victims. The EU states have found themselves at the epicenter of the pandemic, while Russia must simultaneously deal with a major threat to public health and its long-running economic model.

 

German Chancellor Angela Merkel openly acknowledges that the EU is facing “the biggest challenge since its foundation.” Russian President Vladimir Putin eschews such admissions, but he hasn’t had to fight such a complex battle on two fronts since coming to power over twenty years ago.

The end of the current public health and economic crisis is nowhere in sight, but it’s already clear that both Moscow and Brussels will come out of it weakened, both in absolute terms and relative to other global political actors. Ostensibly, this sad reality should prod both sides toward conciliatory gestures. But nothing at this time suggests that a relationship founded on a balancing act of weaknesses is likely to change substantially in the context of the pandemic.

Brussels, it seems, is still not prepared to have a serious discussion of EU strategy toward Moscow, even internally. Nor does the Kremlin seem to have anything new to offer the EU. There have been no radical breakthroughs nor even any major positive developments in the implementation of the Minsk agreements on ending the conflict in eastern Ukraine. The EU is reluctant to consider any relaxation of sanctions against Moscow amid the pandemic, although internal divisions widened somewhat in the wake of French President Emmanuel Macron’s outreach to Russia earlier this year. On the contrary, the advent of the coronavirus has only exacerbated the fierce information war between Russia and the West.

In the military strategic sphere, no joint efforts were made to absorb the shock of the U.S. withdrawal from the Intermediate-Range Nuclear Forces Treaty. NATO is unable to reach internal consensus about engaging in substantive dialogue with Russian military officials, even as chances for the extension of the New START Treaty grow increasingly slim.

A cleander in a face mask mops the floor at the Pulkovo International Airport. Russia suspends most flights from the European Union, the United Kingdom, Norway and Switzerland over coronavirus concerns. Photo: Alexander Demianchuk/TASS

Earlier this year, there was hope that a serious conversation on European security might take place in Moscow during the seventy-fifth anniversary of Victory Day. But those hopes were dashed when commemorative events were postponed because of the pandemic.

Additional economic problems between Russia and the EU are looming. The collapse of oil prices has demolished the core of Russian exports to Europe, while the decline in real incomes combined with the ruble’s devaluation has done the same to European exports to Russia. Some European leaders such as Macron insist that Europe needs to advocate for a rethink of Moscow’s budding partnership with China. Yet, if anything, the current crisis appears to be pushing Moscow and Beijing closer together, especially in the energy and economic spheres. In addition, the Trump administration is reportedly threatening another wave of U.S. sanctions against the controversial Nord Stream 2 gas pipeline, a move which would deepen divisions inside the EU and between Washington and Berlin.

Have new opportunities for EU-Russian cooperation appeared since the start of the epidemic? Russia could use the model of its cooperation with Italy to help other EU members, but not everyone in Europe considers that model effective. Moscow and Brussels could coordinate their anti-pandemic programs in neighboring regions—from Central Asia and the Western Balkans to the Middle East and North Africa—but both sides have very limited capabilities for such work under the current conditions.

Then there is the traditional agenda, which includes diverse subjects such as maintaining EU-Eurasian Economic Union dialogue, strengthening the OSCE, developing 5G technology, trying to preserve the Iranian nuclear deal, and cooperating on environmental issues. A fundamental reset of bilateral relations within this framework, however, seems unlikely.

Yet even these relatively modest opportunities shouldn’t be ignored. Many experts predict that the coronavirus pandemic will sharply accelerate the ongoing restructuring of international relations, which may eventually lead to U.S.-China bipolarity. Neither Russia nor the EU is interested in the creation of a rigid global bipolar system that would hamstring freedom of maneuver on the world stage for both sides. Maintaining and developing cooperation between Moscow and Brussels could be one mechanism for inhibiting that negative trend.

This article is part of the Russia-EU: Promoting Informed Dialogue project supported by the EU Delegation to Russia. Andrey Kortunov is one of the EU-Russia Expert Network on Foreign Policy (EUREN) core group members.”

The new coronavirus pandemic has rocked the already tortuous relationship between Russia and Ukraine. Their borders remain closed. In-person contacts between negotiators are now impossible because of the pandemic. Their online talks continue, but without informal conversations on the sidelines they have become far less productive and useful. Any hopes for a breakthrough in resolving the conflict this year have been dashed, and the situation remains where it has been for years—at an impasse.

Volodymyr Zelensky’s election to the presidency of Ukraine in April 2019 on a platform that promised to do whatever it takes to end the war with Russia prompted expectations in Moscow that the new leader would be ready to make concessions and the Kremlin would be able to set the terms for dealing with him. However, these expectations were soon dashed by Zelensky’s unwillingness to back away from the demands made by his predecessor Petro Poroshenko. Zelensky was not invited to the parade marking the seventy-fifth anniversary of the victory in World War II in June 2020, which was attended by several other leaders of former Soviet republics. Zelensky’s office announced that the Ukrainian leader would not have gone to the Moscow parade even if invited.

Moreover, Zelensky has discovered that a compromise with Russia on the terms acceptable to it is likely to be seen by the Ukrainian public as a surrender to Russia. His apparent concession in March to Russia and its proxies in the occupied territories to enter direct negotiations with the latter triggered a domestic backlash. The backlash was limited because of the pandemic-necessitated lockdown, but it must have sent a clear signal to all parties that Ukrainians were not ready for a compromise on the terms demanded by Russia.

In Kyiv, hopes are still strong that the coronavirus-provoked economic crisis in Russia and the collapse of energy prices might affect Russian policy toward Ukraine. In particular, there are expectations that the self-proclaimed Donetsk and Luhansk people’s republics would become an overly expensive luxury for the Kremlin due to the mounting costs of supporting them, as well as international sanctions slapped on Russia over the conflict. The Ukrainian authorities eagerly interpret even minor developments in the settlement process as signs of Russia’s growing readiness to compromise, as was the case with a rather routine visit to Germany of the Kremlin’s point man on Donbas Dmitri Kozak and Moscow’s decision to revoke its own sanctions against the Ukrainian oligarch Rinat Akhmetov.

Apparently the Ukrainian leadership believes that the consequences of the coronavirus will make Russia more inclined to cut a deal with Kyiv. Oleksii Reznikov, the new minister for reintegration of the breakaway territories, speaks openly about Ukraine’s wait-and-see attitude to the prospect of conflict settlement. When questioned in an interview whether the Russian people would continue to accept the high cost of maintaining the defense and day-to-day functioning of the breakaway territories, he stated that “everything is going to change—and fast—and we might see a window of opportunity.”

The lamentable state of Ukraine’s own economy after the pandemic bodes ill for its ability to outwait the Kremlin. Indeed, Ukraine’s economic weakness could give Moscow more leverage vis-à-vis Kyiv. The Ukrainian economy was already slowing before the coronavirus outbreak, which is only adding to the mood of uncertainty and despair in Ukrainian society.

The nature of domestic politics in Ukraine and the public mood must be another source of disappointment for Zelensky and his team. A total of 68 percent of Ukrainians expect the situation in their country to get worse, and this is already impacting on Zelensky’s main asset, his personal popularity. The president’s rating fell from 74 percent in the fall of 2019 to 44 percent in April 2020, while support for his predecessor Petro Poroshenko’s party has almost doubled.

Activists holds placard reading "Russia is more dangerous than coronavirus" during the rally of veterans of the war with Russia-backed separatists called "No surrender" in Kiev on March 14, 2020. Source: Getty

Zelensky’s reversal of fortune is hardly unprecedented in Ukrainian politics, but is still a blow to the young president who was elected on hopes for change, yet now has no choice but to engage in Kyiv politics as usual. He has been losing support even within his own party, and as a result has turned to the tactic used by his predecessors—striking deals with ad hoc allies. He reached out to the national-patriotic camp to secure its vote on land reform, and then to the pro-Russia opposition to gain its support for the appointment of a new prosecutor general and several ministers. Zelensky’s political maneuvering is getting increasingly complicated, which bodes ill for any prospect of a compromise with Russia.

Any hope Zelensky and his team may entertain that Ukraine’s outside backers—Europe and the United States—will shift the balance with Russia in its favor is highly unlikely to materialize in the foreseeable future. Both are preoccupied with their own affairs. Europe is reeling from the pandemic and its consequences, whereas the United States is in the midst of a heated presidential campaign—in addition to the pandemic—in which Ukraine has become a toxic, divisive issue.

A year into Zelensky’s presidency, his main goal—peace with Russia—appears to be no closer than when he took the oath of office. The coronavirus pandemic and the economic fallout from it have weakened his hand in dealing with both principal obstacles he is facing—Russia’s refusal to make concessions and the usual factional politics in Kyiv. He has been forced into making compromises with the latter, which in turn has undercut his ability to deal with the former.

COVID-19 is exacting a cruel toll on Ukraine. Its economy, its presidency, its prospects for peace with Russia, and its ties with its key Western partners have all suffered as a result of the pandemic. The consequences of this affliction are likely to last well beyond the cycle of the disease itself.

The coronavirus pandemic has emerged as yet another source of conflict in the relationship between Minsk and Moscow, which in recent years has become strained. Both sides have turned the pandemic into another opportunity to trade complaints and insults. Each country has followed its own path in dealing with the outbreak, with little regard for the interests of the other or maintaining the appearance of the union state.

By the start of the pandemic, the relationship between Russia and Belarus was already suffering from multiple disagreements. The two governments had largely lost trust in one another. Throughout 2019, they repeatedly failed to agree on what their supposed closer integration should look like. For many months, they could not agree on the price of oil—all-important for the Belarusian economy, which is heavily dependent on cheap Russian oil and its re-export downstream to Europe—until oil prices collapsed as a result of the pandemic.

At the start of the pandemic, Russia closed its borders to foreign nationals, including Belarusians, who are not used to being treated as foreigners in Russia. As the Russian government explained, the move was triggered by the Belarusian government’s decision to leave its borders to other countries open. Belarusian President Alexander Lukashenko responded with his trademark outrage, and claimed that the virus was far more widespread in Russia than in Belarus. The Russian government criticized Lukashenko in turn, and then the Russian state media got involved, mocking Lukashenko and lambasting his government’s denial of the threat posed by the coronavirus.

To the present day, the Belarusian government has not implemented a lockdown or a ban on mass gatherings. Lukashenko has given the media plenty of sound bites and headlines, including such bizarre claims as advice to Belarusian citizens to drink vodka, go to the sauna, ride tractors, or play his favorite sport—ice hockey—in order to protect themselves from the virus.

However, along with making fun of Lukashenko, Russian TV and Telegram channels have broadcast some ominous ideas, such as the need to save the brotherly Belarusian people from the impending humanitarian catastrophe—if need be, by force. Belarusian state TV channels hit back by ridiculing some poorly executed lockdown measures in Russia, such as checkpoints set up by Moscow police in metro stations that led to crowds forming.

The war of words has made cooperation between the two countries in fighting the coronavirus impossible. The Russian government has used deliveries of humanitarian aid to Belarus to put down the government of Belarus. The Belarusian government replied by pointing to the poor quality of goods coming from Russia and dismissed them as useless. Lukashenko has criticized Russian coronavirus tests as unreliable.

This atmosphere leaves little room for a positive agenda. Any existing road maps for closer integration have been discarded as useless. But the relationship does not stand still, and is constantly encountering new challenges. Minsk is now demanding a discount on Russian gas, since many European customers are getting discounts on Russian gas or cancelling shipments altogether because of the drop in energy prices caused by the pandemic. Unfortunately for the Belarusian government, it does not have a strong legal argument to demand a price change, since it has recently signed a contract to buy Russian gas at a fixed price for all of 2020. Gazprom’s export revenues have plunged since the start of the year, so it is unlikely to offer Minsk a new discount. Belarus will have to either accept the price and harbor yet another grudge, or raise the stakes by withholding payment.

Another looming problem is the future of two Russian military facilities in Belarus. The lease agreement on the Vileyka Russian naval communications station and the Hantsavichy early warning radar, both in the Minsk region, expires in 2021. The two sides needed to agree on an extension by June 2020. Minsk has not declared it would pull out of the agreement, but is holding internal consultations on its future operation.

A border guard checks documents at the Russian-Belarus border checkpoint near the village of Krasnaya Gorka, some 470 km west of Moscow, on March 29, 2020. Source: Getty

Making matters even more complicated is the fact that on August 9, 2020, Belarus is holding presidential elections. Lukashenko, in power since 1994, is running again, but this time the environment is shaped by the pandemic and its economic and political consequences. Normally, Lukashenko would get reelected easily for another term. Now, unexpectedly, he is being challenged by members of the usually docile Belarusian establishment. One of them, Viktor Babariko, who served until recently as head of Gazprom-owned Belgazprombank, was arrested in June. Lukashenko blamed a “foreign power” for interference in the election campaign, leaving little doubt that he suspects Russian involvement. Meanwhile, Babariko’s detention provoked an outpouring of anti-Lukashenko sentiment both at the grassroots level across the country and online.  

If the election itself, or the worsening economic situation in the country, triggers political unrest, and if Lukashenko is unable to handle it, Moscow will face a difficult choice—to stand by and let another “color revolution” take place in its most important neighboring country, or to intervene. The Kremlin presumably has little desire for another high-stakes conflict on its border that would create worse tensions with Europe. Nobody in Minsk is predicting such a turn of events as of this writing. But the fact that events in Ukraine in late 2013 took the entire world by surprise should not be lost on anyone.

Right now, Lukashenko is trying to construct a public image that he is staunchly defending Belarusian sovereignty against a close yet overbearing neighbor, Russia. The Russian media, for their part, continue to highlight shortcomings in Lukashenko’s performance as the forever leader of Belarus.

At the same time, no relationship is more important for Minsk than with Moscow and vice versa. In both Minsk and Moscow, the course of the bilateral relationship is decided ultimately by Lukashenko and Putin personally. Together, they have almost fifty years of experience managing this relationship through deals and compromises that only they know and understand. With both countries contending with the many dimensions of the pandemic, neither leader has an interest in raising the stakes and escalating tensions. And although the pandemic has cast a harsh spotlight on the true quality of the Belarusian-Russian relationship, both leaders have an interest in maintaining the pretense of the union state and finding ad hoc compromises even if the old grand bargain no longer applies. The fact that Putin’s first trip outside Moscow since the beginning of the pandemic was to a meeting with Lukashenko in Tver Region testifies to that.

In keeping with Russia’s long-standing “divide and conquer” approach to the Balkans, the Kremlin has deployed a variety of pandemic-related assistance to shore up longtime friends and partners while largely ignoring everyone else. Unexpectedly, this tried-and-true approach has now run into its own share of obstacles—namely, China’s vastly superior resources and clever maneuvers by major players in the region who see the pandemic as an opportunity to extract resources from multiple suitors—i.e., Russia, China, and the European Union.

In early April, Russian cargo planes carrying military equipment, ventilators, and chemical-biological specialists made eleven flights to Belgrade. Soon after arriving in the Serbian capital, the Russian troops fanned out to other major cities. Five days later, a smaller series of flights arrived in Banja Luka, the de facto capital of Republika Srpska, the predominantly ethnic Serb constituent unit of Bosnia-Herzegovina. Republika Srpska has long been the object of special attention by the Kremlin and an array of Russian nationalists and state proxies. The Federation of Bosnia and Herzegovina—the country’s constituency dominated by Croats and Bosnians—did not receive any of Moscow’s humanitarian aid, and Russia’s outreach to Republika Srpska seems to have occurred with little coordination with Bosnia-Herzegovina’s national government.

To be sure, Russia’s use of humanitarian aid for political purposes was a very calculated move, coming fast on the heels of similar efforts in Italy when it emerged as one of the key epicenters of the pandemic. Moscow gave the cold shoulder to recent NATO entrants Montenegro and North Macedonia. It offered them no assistance and even dragged its feet when it came to helping Montenegro evacuate several dozen citizens who had been stranded in Russia. Meanwhile, Russian planes raced to Montenegro to repatriate hundreds of Russian tourists from their haunts on the Adriatic.

Serbia has long been able to count on Russian assistance in emergencies. In 2009, Moscow and Belgrade signed an agreement deepening bilateral cooperation on humanitarian responses. The subsequent establishment of a Russian-Serbian humanitarian training center in Nis generated controversy in Western policy circles, including accusations by the U.S. State Department that it might be used as a “special center for espionage or other nefarious activities.” During the following decade, both governments were eager to showcase their countries’ friendship by having Russian rescue teams fight floods and forest fires in Serbia.

However, this time, things were different. In a significant break with previous contingencies, Russian assistance was spearheaded by the Ministry of Defense rather than the Ministry of Emergency Situations, which is party to the 2009 agreement and the overseer of the center in Nis.

Russian servicemen stayed for six weeks in Serbia, operating throughout the country with little oversight, ostensibly to disinfect various facilities, including military hospitals. Along the way, they cooperated with a range of Serbian military and civilian officials, none of whom appeared to have much say over the mission’s itinerary or timing. According to Russian commanders, the troops intended to remain in the field until their “work is done.” The deployment of Russian military personnel to Republika Srpska was less open-ended and lasted only two weeks. In early May, Bosnian authorities blocked a return mission, citing its military character, even though they had been hapless in preventing the initial deployment.

In the end, Russia’s humanitarian assistance to Serbia was actually quite limited. NIS, the Serbian oil giant controlled by Russia’s Gazprom Neft, provided Serbia’s police, ambulance, and firefighting services with free gasoline. The Serbian subsidiary of Russia’s biggest bank, Sberbank, donated an undisclosed sum for the procurement of medical equipment. YugoRosGaz, which imports Russian gas to Serbia and is partly owned by Gazprom, contributed 2 million dinars (about 17,000 euros) to Serbia’s Health Ministry to help it fight the coronavirus. Taken together, these donations hardly compare with the assistance offered by the European Union: up to 15 million euros for Serbia’s immediate needs, and up to 78.4 million euros, reallocated from pre-accession assistance funds, for the country’s economic recovery.

A picture taken on March 30, 2020, shows a billboard bearing Chinese President Xi Jinping's face looking down over a boulevard next to the words "Thank you brother Xi", a message paid for and by a pro-government tabloid. Source: Getty

In the past, the modest size of Russian assistance to Serbia compared to ongoing EU support has been distorted by Serbian officials’ ostentatious displays of gratitude and exaggerated coverage in local media. However, this time around, things played out differently because Belgrade had a new best friend: China. Serbian officials exploited this situation aggressively. Serbian President Aleksandar Vucic criticized the EU for “abandoning his country,” while also making clear that China had replaced Russia as the main object of his government’s affection. China was the first country from which Belgrade officially sought assistance, and Vucic kissed the Chinese flag when he personally greeted the first Chinese plane carrying six doctors and medical equipment. (Vucic was conspicuously absent when eighty-seven Russian servicemen arrived in Belgrade a few days later.)

Vucic’s flamboyant tactics paid off with respect to the EU. As of this writing, Brussels has showered Serbia and other countries in the Western Balkans with assistance programs worth a total of $3.6 billion. At a special summit meeting in early May, European Commission President Ursula von der Leyen touted the region’s EU membership prospects and promised a follow-on economic initiative.

Vucic’s use of the China card also strengthened his hand with Washington. Vucic hopes that he can leverage U.S. support in Serbia’s ongoing talks with Kosovo. Even if the Trump administration remains a fickle partner that overpromises and underdelivers, Beijing is likely to make good on potential loans, investment, and even diplomatic support for Vucic’s dealings with Pristina, whose independence China, like Russia, does not recognize. The growing centrality of China in Vucic’s calculations threatens to supplant Russia, which has piously presented itself as Serbia’s most important ally for centuries. But the Balkan modern-day realities have not been kind to Russians pushing symbolic gestures over the cold hard cash offered by Beijing and Brussels.

Still, the fact that there is no love lost between Vucic and Russian President Putin is not exactly new news. The Kremlin has never trusted Vucic, and it is determined to play a prominent role in Balkan security issues. Moscow can still count on the strength of pro-Russian sentiment in many quarters of the Serbian military and extremely positive views of Russia from the general public. China may have moved quickly to expand its regional influence, but the enduring nature of the coronavirus pandemic promises to give the Kremlin a rare chance to convert its established assets in the Western Balkans into an ever-greater military role in a contested region.

This material is part of the Russia-EU: Promoting Informed Dialogue project, supported by the EU Delegation to Russia.

The coronavirus pandemic has exposed long-standing structural problems and vulnerabilities in the South Caucasus and Central Asia. Heavy reliance on hydrocarbons, dependence on remittances from migrant workers in Russia, widespread poverty, and lack of social safety nets leave the states in the former Soviet Union’s southern belt few options for dealing with the pandemic and its economic fallout. Some, relatively better off, like Kazakhstan, can dip into their sovereign wealth funds. Others, less fortunate, like Kyrgyzstan or Tajikistan, have had to seek bailouts from China or the IMF. Coordinated, region-wide responses have been made impossible by foot-dragging in acknowledging the impending catastrophe in Tajikistan and Turkmenistan, and by frozen conflicts in the Caucasus.

The pandemic and the resulting economic crisis are likely to aggravate many preexisting conditions in these societies: mistrust of governments, pervasive corruption, and widespread poverty. The crisis will disproportionately affect small and medium-sized businesses, which are key to diversifying these regions’ economies and expanding the role of the private sector. With the United States and the European Union (EU) struggling to deal with their own crises, and international institutions stretched thin, the role of Russia and China will likely increase.

Every Unhappy Family…

The vast region that stretches from Europe’s east to China’s west is no exception in that it will not escape the consequences—societal, economic, and political—of the coronavirus pandemic. Some countries, however, appear to be handling it better than others.

Georgia stands out for its success—to date—in keeping infection and mortality rates relatively low. Officials have approached the crisis responsibly, taking their cues from medical professionals, informing the public directly about the severity of the crisis, and issuing guidance about responsible behavior during the pandemic. The government was unable or unwilling to stop the powerful Georgian church from holding large Easter services, but senior officials refused to attend in person, as did many Georgians.

The country’s apparent success at handling the pandemic thus far is probably due to multiple Georgian governments’ long-standing efforts to reform and professionalize the civil service and curb corruption. Georgian border guards and medical workers acted quickly to identify, quarantine, and treat the first suspected cases of COVID-19 in late February 2020. Public trust in professionals has contributed to better compliance with emergency regulations and guidance on behavior during the pandemic. Unfortunately, Georgia’s economy is getting hit hard by the crisis, with its currency plunging, its once-burgeoning tourism sector collapsing, and key trading partners—Azerbaijan, the EU, Russia, and Turkey—reeling from the same crisis.

Information about the coronavirus in the breakaway regions of Abkhazia and South Ossetia is scarce, but their capacity to respond appears limited. Neither has taken up Tbilisi’s offer of assistance in combating the virus, preferring to depend on Moscow. Help from Russia, however, has been inadequate and Abkhazia at least is taking up offers of international assistance. Yet, deep mistrust between Tbilisi and the separatist territories will impede any region-wide public health response to a disease that does not recognize boundaries.

Armenia is getting hit hard by the pandemic. Some members of the public initially were reluctant to report symptoms of the disease to authorities or self-quarantine, leading to an early rise in community transmission. By late March 2020, the government had instituted a state of emergency to shut down nonessential businesses and activities, postponed the constitutional referendum, encouraged civil society organizations to help secure supplies, and prepared the medical system for the onslaught that came fast. Infection rates slowed in April, leading to hope that measures were working. Social cohesion among the Armenian people likely helped in this initial phase. However, under pressure to jump-start the economy, the government eased lockdown measures in early May, but infection rates suddenly began rising quickly with even Prime Minister Nikol Pashinyan and his entire family testing positive. With calls to reimpose stricter lockdown measures, the government is now balancing the public health threat COVID-19 continues to pose with the urgent need to keep the economy open.

Pashinyan has tried to use the crisis to broaden his government’s powers, including restrictions on media (which were subsequently lifted) and cell phone monitoring for contact tracing. Both measures were criticized in parliament and by the general public, ultimately forcing the government to agree to use information only for public health protection and destroy all data after the state of emergency ends. As the economic and public health crises grow, Armenian politics is becoming even more polarized, with the parliamentary opposition voicing sharp criticism of the government’s response and calling for its resignation.

In Azerbaijan, with its repressive political atmosphere, the government’s first reaction to the pandemic was to accuse its critics of treason and detain opponents for spreading negative information. More focused on shoring up its hold on power than dealing with the pandemic, the regime was slow to act to contain it. Infection rates soon spiked, laying bare the government’s lack of preparedness in the public health and emergency response sectors—both notoriously corrupt.

After discovering large-scale lockdown violations and a black market in travel permits, the government imposed more rigorous quarantine measures, including the use of an SMS system to monitor the population and issue movement permits. Infection rates continue to rise rapidly. The collapse of oil prices has dealt a heavy blow to Azerbaijan’s economy, forcing the government to dip into the sovereign wealth fund. The government has also set up an emergency fund to finance rising health and social welfare spending. Private companies and wealthy Azerbaijanis, including the president’s family, have contributed funds. However, the distribution of benefits to the public has been poorly organized and, for many, difficult to access, likely feeding more discontent in a country where protests and calls for change have been rising.

In Central Asia, Kazakhstan is showing greater competence than many expected, including a surprising level of transparency about infection rates. However, the virus has spread nationwide, even reaching senior levels of government. Former president Nursultan Nazarbayev was diagnosed with the virus in June. Disproportionately high infection rates among Almaty medical workers exposed poor preparedness and shortages of protective gear in Central Asia’s wealthiest country, which could exacerbate social tensions, given the regime’s history of wasteful spending on high-profile projects. Kazakhstan is clamping down on civil society activism and deployed digital tools to monitor the population during lockdown, including drones and traffic cameras to identify unauthorized movement in cities. Yet these technologies did not stem the disease’s spread.

The crisis has also put the spotlight on the dynamics within the country’s top leadership. Nazarbayev, who reportedly still controls many levers of power, has retreated into the background even before announcing his illness. Nazarbayev’s absence has empowered his successor President Kassym-Jomart Tokayev to take on a greater leadership role and thus enhance his independent stature. He even dismissed Nazarbayev’s daughter from her powerful position as chairwoman of the Senate. Tokayev has pledged to boost salaries for frontline medical staff and to reform the healthcare system. However, this could prove to be a risky move if he fails to deliver on his promises.

In its first major crisis under President Shavkat Mirziyoyev, the government of Uzbekistan has also demonstrated unusual transparency and published information about infection rates. The Uzbek government put in place draconian measures to limit movement within and between cities, with harsh punishments for violators and those who fail to wear masks in public. It solicited help from China to learn about curbing population movement and preventing the disease from spreading. However, it has struggled to contain the disease, including among medical staff. The government received emergency loans from both the IMF and the World Bank as it deals with growing economic problems as remittances fall, tourists and investors stay away, and demand for its exports remains limited. Mirziyoyev has shown leadership in coordinating his government’s response to the crisis with other Central Asian leaders, which could improve his standing at home and abroad. Coordination with neighbors is very important as the virus spreads to the densely populated Fergana Valley, where Uzbekistan, Kyrgyzstan, and Tajikistan meet and capacity to respond to a public health crisis is limited.  

At first glance, Kyrgyzstan appears to be coping with the pandemic better than expected. The number of infections remained relatively low for the region as of early July. However, with Kyrgyzstan’s history of instability, widespread poverty, and poor governance, the crisis has become a major challenge to the country. Kyrgyzstan is dependent on the international community for essential medical supplies and protective gear. The Health Ministry admitted that more than half of the country’s ventilators are inoperable. Infections are rising among medical staff, large-scale testing started late, and its efficacy is uncertain, which means that infections could be far more widespread than official numbers suggest. Poor public awareness and police corruption have undercut the effectiveness of quarantine measures.

In addition to the pandemic, the government is having to deal with rising poverty as remittances from Russia have been falling, and unemployment and wage arrears rising. The government has promised relief for hard-hit citizens and businesses, but it lacks the money, and has to seek help from China and other international partners. Keenly aware of the country’s history of social discontent and unrest, Kyrgyz President Sooronbay Jeenbekov has fired his deputy prime minister, health minister, and two senior aides in the middle of the crisis, evidently in an effort to pin the blame on them for the government’s failure to prevent the spread of the disease. However, these public relations moves can do little to contain the pandemic or help the economy.

A medic wearing a protective gear checks the temperature of a woman at a checkpoint on the outskirts of Almaty on March 19, 2020, after authorities locked down the city to contain the spread of the COVID-19 coronavirus. Source: Getty

Information about the situation with COVID-19 in Tajikistan and Turkmenistan is limited. Both governments for a long time denied the presence of the disease within their borders, and refused to follow World Health Organization recommendations on social distancing. They held mass public gatherings in late March and early April 2020 designed to show support for their autocratic leaders, while their neighbors mobilized to deal with the pandemic. Not surprisingly, Tajikistan soon began experiencing a rise in respiratory illnesses and deaths, which its government implausibly attributed to pneumonia, swine flu, or complications from tuberculosis. Finally, faced with the impending arrival of WHO specialists in the country, it closed schools in late April, banned large gatherings, stopped grain exports, and announced it too had COVID-19 cases. Infection rates have since spiked. Remittances are down significantly in Tajikistan—a major problem for a country where they accounted for the equivalent of about 30 percent of GDP in 2018 and where basic human security (vaccines, healthcare, and education) are not guaranteed even when times are good.

Exiled Turkmenistani journalists report that coronavirus cases are rising in that country, even though the government has denied it. Reports of food shortages and runs on banks belie the government’s claim that everything is under control. Collapsing oil prices and falling gas demand in China—Turkmenistan’s main export market—have been devastating to Turkmenistan’s economy, but its unwillingness to admit the presence of COVID-19 cases in the country has kept it from requesting and receiving EU and other financial assistance.

Neither the Tajikistani nor the Turkmenistani government has demonstrated the capacity or the will to mobilize to respond to the health and economic crises before it. COVID-19 spells trouble for both, as well as for their impoverished citizens.   

Long-Term Implications

The countries of Central Asia and the South Caucasus are facing an unprecedented challenge that will test every aspect of their political systems, economies, societies, and foreign relations. Their traditional partners in the West that have for the past three decades supported their state-building and economic and political reforms are distracted. Normally, Russia might be eager to capitalize on the West’s distraction and the region’s need for assistance, but it has limited resources to do so at best, and is struggling to deal with the pandemic. The economic downturn that the coronavirus has caused across the region will likely have long-term impacts for Russia’s Eurasian Economic Union (EAEU) as well. In the midst of the pandemic, Kazakhstan pushed back at Moscow’s draft vision for Eurasian integration through 2025. With global gas demand down, Moscow and Yerevan have started squabbling again over gas prices, while closed borders and the growing economic problems have caused migrant labor opportunities to dry up in Russia, reducing a key lever of influence Moscow holds over weaker EAEU and prospective EAEU members states.

That leaves China as the sole remaining potential source of help to the struggling region. Beijing has been trying to whitewash its COVID-19 record and has targeted the leaders and the general publics of the South Caucasus and Central Asia. It has used the Shanghai Cooperation Organization to promote its narrative about its response to the pandemic. In its effort to make inroads in both regions, China has been sending high-profile humanitarian and medical aid missions and promoting its digital technologies as the means to keep the virus from spreading. 

Finally, as COVID-19 spreads across Eurasia, no clear pattern is emerging as to whether the region’s autocracies are doing better than its democracies in responding to the pandemic. All are struggling to manage the economic fallout, but authoritarian leaders—in Azerbaijan, Tajikistan, and Turkmenistan, where governments would not admit the severity or even presence of the disease at first—appear nervous. The region’s autocrats are using lockdowns to control not just the spread of the disease, but also the flow of information about it; clamp down on any potential dissent; and strengthen their hold on power. Governments that are more open with their citizens seem to perform better. However, no country in the vast region has all three—adequate resources, the ability to deploy them effectively, and a record of public trust and good governance. With luck, some may emerge from this crisis with better governance and enhanced public trust, but its consequences will be felt throughout the region for a long time.

“Like any family, they go through differences … but we don’t need any divorce lawyers.” This is how Saudi Arabia’s energy minister, Prince Abdulaziz bin Salman, described his country’s relationship with Russia in mid-April 2020, the day after the world’s top oil-producing nations had finally reached an agreement on reducing output to stabilize plummeting prices.

The minister’s comments gloss over how fiercely Riyadh waged its price war against Russia after the latter refused in early March to commit to deeper cuts to its output than previously agreed with OPEC members and other oil producers. Moscow’s refusal was based on its growing unease that previous reductions had only served the interests of U.S. shale oil producers unconstrained by any commitments, and on the unease about the cavalier fashion in which the Saudis sought to impose their will on their partners.

While both concerns were valid, the timing of the Russian decision was extremely ill-chosen, as it came right at the time that the pandemic was already ruining the world economy. Even though it was Saudi Arabia that immediately started dumping its oil on the market, Russia was equally blamed for starting the price war and doing damage to other producers, including the United States. The Russian calculus that they were in a stronger financial situation to win in the standoff with the Saudis proved to be right, but again it did Russia little good.     

Apart from the Kremlin’s fateful slowness in understanding the full scale of the pandemic’s impact on the global economy, President Vladimir Putin may have misread the reckless Saudi leader. Putin’s famous high-five greeting with Saudi Crown Prince Mohammed bin Salman (known as MBS) during the 2018 G20 summit in Argentina—at a time when MBS was under attack internationally following the murder of Jamal Khashoggi in Istanbul—created the impression of a perfect rapport and affinity between the Russian president and the Saudi crown prince. Moscow did not use the journalist’s murder to try to ostracize MBS, and Putin’s gesture was aimed at creating a lasting relationship. So far, he has lost his bet. Yet Putin, who has gained much experience managing the region’s strongmen, from Syria’s Bashar al-Assad to Turkey’s Recep Erdogan to the Iranian leaders, is probably unperturbed: Saudi Arabia remains a key player in the region where Moscow has returned after a quarter-century absence.

While the Russian and Saudi leaders looked unable to resolve their dispute, U.S. President Donald Trump intervened personally to help them reach a deal. While Trump’s intervention might have irritated Putin, the trilateral accord placed Russia alongside Saudi Arabia and the United States as a member of the world’s Oil Big Three. Thus, the United States has for the first time entered an international understanding not only as an energy consumer, but also as a top producer. Even though Trump did not assume any formal commitments, he made the United States a party to a global oil compact. In principle, this newly formed triangle could be an asset for Moscow’s foreign policy in the future.

Saudi Arabia's Crown Prince Mohammed bin Salman (L) sits beside Russia's President Vladimir Putin as they attend a meeting on the digital economy at the G20 Summit in Osaka on June 28, 2019. Source: Getty Images

Although Trump’s involvement was very visible, much hard lifting had to be done by the Russians and the Saudis themselves, behind the scenes. Efforts to come to agreement began soon after the start of the price war. Next to Russian Energy Minister Alexander Novak, Moscow’s official point man for the oil talks, Kirill Dmitriev, head of the Russian Direct Investment Fund, long tasked with attracting investors from the Gulf region, was another prominent figure. His access to the Kremlin and his high-level contacts in the United States allowed him to have a pivotal role.     

Going forward, Russia will not necessarily align with the Saudis against the United States: it appreciates the strength of the Saudi-U.S. connection, and should be wary of Riyadh playing Moscow off Washington. While the personal connection between Putin and MBS helped boost economic ties between the two countries, the bilateral trade turnover in 2019 stood at a little more than $1.6 billion. In particular, the Kingdom bought 120,000 tons of wheat, which is considered a breakthrough. Still, Moscow should be careful with expectations. Over the years, the Saudis have time and again indicated their interest in concluding large-scale contracts with Russia, including for the S-300 air defense system, which never materialized in actual deals.  

The Russian-Saudi relationship in the Middle East is checkered. Moscow and Riyadh used to be bitter opponents in Syria in the years right after the start of the Russian military intervention there. Later, however, the two countries managed to find some common ground to engage in limited cooperation. In the kaleidoscope of Middle Eastern geopolitics, Saudi Arabia foots Egypt’s bills for Russian military hardware, and in neighboring Libya, Riyadh and Moscow are on the same side backing the army of General Khalifa Haftar and the eastern Libyan authority in Tobruk. On other regional issues, however, Russia and Saudi Arabia have serious differences.

The Saudis are fully focused on their regional rival, Iran, that partners with Russia in Syria and buys arms from Moscow. The Russo-Iranian relationship is outwardly friendly, but competitive, squarely based on interests rather than trust. The Saudis have been recently trying to wean Moscow off Tehran, but the Russians, true to their basic approach in the Middle East to maintain contacts with all relevant parties while not taking anyone’s side other than their own, have professed willingness to develop relations with both sides across the Gulf. In 2019, they even unveiled a security concept for the region and actively sought to promote it. On another regional issue, the war in Yemen with Saudi direct participation and Iranian involvement, Russia used to seek an internationally brokered peace settlement. However, these efforts have slackened in the past two years.

Thus, amid the pandemic, the Russian-Saudi ties have taken a serious test, and have largely survived. Typically for Moscow’s current relations with the countries in the Middle East, a few shared interests with its partner are flanked and occasionally overshadowed by serious divergencies. This produces an inherently unstable mix and calls for a highly pragmatic approach. For Russia to succeed in pursuing its regional interests—upgrading its geopolitical standing, securing strategic outposts, promoting arms sales, co-setting oil prices, luring investment to Russia, and so on—it needs to have active relations with the key Middle Eastern powers, including Saudi Arabia. And, given the nature of the political regimes in both countries, much will depend on the personal relationship between the two leaders.     

How serious a challenge will fallout from the coronavirus pose to Russia’s long-standing economic model, which remains heavily dependent on oil and gas exports? The first phase of the global pandemic and lockdown measures froze much of the economic activity around the world. In turn, energy demand dropped virtually overnight, and oil and gas prices plummeted.

The scale of the disruption was truly staggering. As a significant part of the global economy is starting to reopen in places like China, the United States, the European Union, and Russia, the key question for Russian policymakers is whether this shock should prompt a rethink about radically reducing Russia’s income from energy exports and the prospect of fundamental changes to global energy markets over the long term.

The global oil industry is undergoing the biggest crisis it has ever seen, thanks to an unprecedented 30 percent year-on-year fall in demand in April 2020. That drop led to a dramatic oversupply of oil in storage, which is part of the reason why West Texas Intermediate (WTI) oil futures prices in the United States briefly traded below $0 per barrel in April. Spot prices for Brent fell by 87 percent from year-end 2019 through mid-April 2020. (Prices have partially recovered since then, but are still down 50 percent as of end-May 2020.)

The so-called “OPEC Plus” group of leading oil-producing countries, which includes Russia, agreed on emergency production cuts to stabilize prices in early April. That agreement has started to pay off, and demand has started to recover somewhat with the understandable exceptions of important sectors such as aviation and U.S. domestic transportation. The leaders of OPEC Plus, Saudi Arabia and Russia, along with their U.S. counterparts, are now thinking through a complicated challenge: how best to avoid further turmoil in oil markets as some economic activity comes back online even though there is still great uncertainty about a possible second wave of the pandemic.

Still, it seems reasonable to expect that prices in 2020–2021 will stay far below $60 a barrel, which was the annual average price during 2019. Russian producers remain perfectly competitive even at lower price levels. However, we should not lose sight of the fact that during the Saudi-Russian price war just a few months ago, Urals crude fell to levels at which budget revenues were wiped out, new projects became unprofitable, and even current ones just barely made economic sense.

The gas industry has not experienced a comparable drop in demand during this crisis. The brunt of the pandemic-induced drop in demand has largely been concentrated in the industrial and commercial sectors, resulting in a 4 percent average annual global decrease, according to International Energy Agency estimates. In Europe, the gas market was oversupplied, and a buildup in storage facilities resulted in sharp declines in exports from countries like Russia and Norway. But globally the situation has been far less dramatic than the disruptions experienced by the oil industry.

For Russia, the turmoil in energy markets created a large reduction in export revenues, lower profits for energy companies, and reduced funding for the state budget. Even in the most optimistic scenario, oil export revenues will be approximately half of what they were pre-crisis. It’s entirely possible that the picture will be gloomier still, with budget revenues in 2020 falling to a quarter of what was envisioned before the crisis. In an extreme scenario caused by a severe resurgence of the virus, the Russian oil industry could find itself teetering on the brink of operating at a loss, virtually depriving the state budget of revenues from export and extraction taxes.

Freight trains at Krasnodar-1 railway station. As supply exceeds demand and oil prices fall, oil producers find themselves confronted with storage challenges. Railway companies are ready to offer them tank cars. Photo: Igor Onuchin/TASS

The fallout is also already being felt by Russian gas exports, though their impact on the budget is far smaller. Judging by the results of the first quarter and the decrease in European demand, by the end of the year, deliveries of Russian pipeline gas to Europe may drop by 25–30 billion cubic meters. The remaining deliveries will have to be supplied amid significantly lower prices. Market oversaturation, warmer weather, and ongoing lockdown measures will all drag gas prices in Europe down even further.

We’re looking at gas prices halving and oil prices reducing by one-third. All told, that means a combined 20–25 percent decrease in volumes of Russian exports of oil, gas, and coal, which is equivalent to a 50 percent loss of export revenues. For the budget, this means a sharp fall in income (of about 25 percent), just as the public and private sector are experiencing the greatest need for state support.

For fuel and energy companies, all of this will mean adopting strict cost-cutting measures and making cuts to capital investment programs, which will in turn impact other companies that serve the oil and gas sector. According to our calculations, this could lead to an additional fall in GDP of 5–13 percent in 2020 (on top of the 5 percent reduction in GDP caused by the coronavirus and lockdown measures).

Still, the current shocks faced by Russian energy markets, serious as they are, may pale in comparison to their potential long-term consequences. It is highly likely that the coronavirus crisis will amplify and accelerate trends for decarbonization, decentralization, and digitalization, especially in Europe, Russia’s main market. There are already increasingly vocal calls from governments and international organizations to adopt a low-carbon approach to getting the economy going again. The instability on the oil market only strengthens the hand of renewable energy, which is attracting increasing attention from investors.

Economic revival could follow the traditional trajectory, or it could take the form of an accelerated transition to other forms of energy. In the first scenario, low oil prices will spur demand for energy commodities, and demand will start rising again fast. Then the failure to invest during the crisis will make itself felt, leading eventually to higher oil and gas prices, which will in turn again revive interest in alternative energy sources and increasing energy efficiency.

In the second scenario, the state will make a more decisive choice in favor of green energy, which hands a significant advantage to sectors that compete with oil and gas. Energy-importing countries could come out of the crisis with transformed energy systems, strict carbon footprint restrictions on any imported raw materials, and permanently reduced demand for hydrocarbons.

In the current conditions, the Russian oil and gas sector must not only survive, but also think about long-term options for restructuring the entire industry and integrating hydrocarbons into the green agenda. A key role in this could be played by the trend for decarbonizing oil and gas: a complex, expensive process that requires new technologies and skills that Russia currently doesn’t have. For now, however, there are no other options in sight for securing the long-term stability of Russia’s export-focused resource-based economy.