Russian foreign policy at a crossroad?

Vladimir Putin, Sergey Lavrov
Russian President Vladimir Putin, left, and Foreign Minister Sergey Lavrov attend the ASEAN – Russia summit in the Black Sea resort of Sochi, Russia, Thursday, May 19, 2016. (AP Photo/Alexander Zemlianichenko, pool)

By Michelangelo Freyrie

Times of cultural uncertainty often cause dissonance between the real causes of a crisis and the narrative surrounding it. Since the annexation of Crimea in 2014, Russia is often characterized as a power in the process of a great comeback, capable of projecting its power abroad – be it with the Syrian intervention or the cyberattacks on the US Democratic National Congress – and representing a credible threat to the West. This image of Moscow as an unstoppable revanchist power however lacks the perspective needed to realistically assess the risks coming from Europe´s eastern borders. To understand the future of this ongoing confrontation it´s important to understand how realistically Russia can count on the creation of a system of power alternative to the transatlantic alliance. This threat is what has historically allowed the different iterations of the Russian state to leverage its western rivals, granting a geopolitical independence crucial for the upholding of its internal social structure. Putin is well aware of this requirement, and with the majority of experts convinced he´s going to pursuit a third presidential mandate, diplomatic normalization will be a priority for his next six-years term. The reasons are essentially of economic nature: while the Russian people has had no difficulties buying into the “sieged country” rhetoric to justify the sanctions and economic isolation, polls seem to suggest that they will hardly tolerate further economic deterioration. The anemic growth of the next few years are a far cry from the real GDP increase the country would need to face problmes such as a rising labor costs and aging infrastructure. Cuts to socials security and a VAT increase would hardly turn the base against Putin, as he´s generally regarded as a guarantee of stability in a country where the trust in the ruling class has historically been wishful thinking.  Still, a desire of normalcy is slowly reemerging, eroding the tacit pact between Putin´s cronies and the citizens. With the oil-fueled economic boom gone, tolerance for corruption is at a long time low, putting Putin´s executioners of power at risk and potentially crippling his ability to rule. The necessity of maintaining his network of associates is however also the main obstacle in the way of economic recovery: with 70% of Russia´s GDP generated by State-owned companies, a true market liberalization would betray the compact between the tsar and his court nobility, a system of distribution of spoils on which the whole power architecture of the Kremlin rests.  A third alternative for Moscow would be to restore its commercial ties with the world as soon as possible if Putin wants to survive the potential backlash economic satisfaction will provoke in his people.

A pivot to Asia?

putin2

The Belt and Road Initiative (B&R), launched in 2013, is a project that from its inception was meant to safeguard the Chinese economic from the potential fallouts of a US-imposed maritime blockade, which would threaten both its energy import and the preferential export route. Although the investments are primarily destined to Central Asian Republics, Moscow was set to play a significant role from the beginning: not only is Siberia one of the world´s richest region in terms of raw materials, but the colonization of its “backyard” by the People´s Republic would have been far more difficult  and would have greatly harmed bilateral relationships. Although the harmonization of B&R with the Eurasian Economic Space has shown that Russia is willing to give up the exclusive control over the region in exchange for concrete benefits, much is still to be done to realize a true pivot towards the Far East. First of all, Chinese investments in the project have significantly slowed down because of Beijing’s decision to contain and “clean” its massive debt. Secondly, the direct investments in Russia have until now been rather meager: the high-speed railroad between the capital and Kazan has experienced some setbacks and none of the 40 projects proposed by the governance of the EES have been launched.

russian export
Russian export by country. (tradingeconomics.com)

On a whole, investments are largely discouraged by the high cost of “non-tariff barriers” which contributed in the maintenance of  Russia´s State Capitalism and protect its highly uncompetitive firms from tough competitors. As Alexander Gabuev of Moscow´s Carnegie Center reports,”[…] Beijing now uses the [Silk Road Fund] as a political purse: it is not linked to the global financial system and can therefore finance politically controversial projects. In fact, the Chinese used the SRF to invest in Yamal SPG and Sibur, which are co-owned by the head of the Russia-China Business Council, Gennady Timchenko, a close friend of Putin’s who is on Western sanctions lists. These two politically motivated investments are arguably the only tangible results of Russia’s participation in the Belt and Road Initiative.”[1]

This isn´t the only hurdle in the way of a deeper collaboration with China. Arguably, on an export level B&R´s target isn´t Russia but Europe, and although the collaboration with Moscow is deemed necessary to achieve this goal, frictions aren´t completely absent. Although until now no point of contention has been impossible to overcome, one has to keep in mind that China´s grand strategy doesn´t contemplate antagonizing Europe. Another aspect that has been long debated is the threat of so-called “sinicization”. While the fears of mass immigration from Manchuria to Siberia have been largely abused and overplayed in the last decades, nativist hysteria has the ugly tendency to just ignore reality. There are a number of declarations by Russian officials that largely overestimate the reality of the immigration flux, sometimes bordering pure fantasy.[2] Despite this, a slight increase of Chinese immigrants following the economic revitalization of the Far East District could be easily exploited by ambitious politicians that don´t disdain ethnically charged rhetoric like Aleksei Navalny.[3]

Another issue in regards to which Moscow and Beijing need to wrap their head around for a long-term strategic partnership is India. A rival to China, Russia entertains relations with the subcontinent since its independence, and while the military exports to China are set to decrease due to the development of indigenous designs, 68% of India´s import still passes through the Kremlin. This isn´t a secondary factor if we consider the key role military industry plays in this period of recession.

This is not to say that this alliance hasn´t potential, as the two countries have previously shown the willingness to set their differences aside. The joint collaboration with Pakistan on terrorism and the power projection towards Afghanistan are the most recent example: while on one hand the dangers posed by Islamic terrorism in Xinjiang and by an eventual spillover to Russia´s southern borders have forced stricter collaboration, the suspected arming and collaboration with the Taliban to force the US out of a strategic sector of the world show a partnership dead-set on a containment policy against NATO and its partners.

Second scenario: Back to Europe

putin

It would however be foolish to think that an economic pivot towards China wouldn´t be difficult and traumatic for the Russian industry. In 2015, with the sanctions already in place, exports to Europe accounted for $161Bn, or 56% of Russia´s total exports, while exports to the People´s Republic accounted for five times less[4][5]. EU countries also completely trump China´s FDIs, and with the doubts surrounding B&R, there would be good reasons for Moscow to warm her relationship with Europe. Diplomatic ties Bruxelles have however never been so strained in the last decade. Rhetorically, the liberation of Crimea seems to be the basic condition on which normalization seems to rest. In practice however there are many factors that could increase the odds of success in a possible return to the negotiation table. While no country will formally recognize the occupation of Crimea, Europe has shown difficulties in sticking to the common punishment, especially because of the disadvantages the sanctions have cast on export-heavy economies such as Italy and Germany. Political blunders like the pursuit of the North Stream Pipeline are also symptomatic of the internal pressure exercised by the business-friendly right-wing parties, akin to the German CSU. Their ability to influence European capitals still hold by the Center has clearly emerged in the last years and has diligently been exploited by Moscow.

The political instability of Mr. Poroshenko´s government in Ukraine and the difficulties of forging a strong anti-Russian coalition have encouraged Moscow to play patiently and wait the first cracks to open in Europe´s resolution.[6] However, if on one hand pressure from the eastern members of the Union (as well as the US) has been the prime reason for the harsh European response, the recent accusations of “meddling” in the French and American elections have put new wind in the seals of hardliners and pushing newly elected leaders like Macron to adopt a tougher stance on Russia-related issues. The overt support by antiestablishment parties for Moscow has also the potential to highly politicize the relationship with Russia in internal debates, crafting a strong ideological correlation between liberalism and opposition to Putin´s government. In this context it´s likely that the long game could be far longer than what the Kremlin expected it to be, maybe too long considering the looming “2021 trap”[7] of new austerity measures. To anticipate some degree of normalization Putin would indeed have to walk a very thin line between signaling goodwill to the West and not betraying years of nationalist rhetoric fed by the Russian media. To start, a truce on cyberwarfare would entail little cost on Moscow´s part: while the public´s reaction to piloted deals has been virulent, many agree that the recent events have been more the result of profiting from incidental occasions rather than of a deliberate, thought out strategy. Involving Bruxelles in the reconstruction of Syria could also result in a similar signal: while still having the military upper hand on the field, Russia could sell Europe the illusion of being able to somewhat pilot the transition to a better outcome than a total repression by the regime. Finally, the horrific treatment of homosexuals in Chechenia could be cynically used as an element to bargain on in the event of such a deal.[8]

Conclusion

The next few years will be crucial for the Russian foreign policy. While Putin has been able to maintain his hierarchy numbing his citizen with revanchist propaganda until now, economic stagnation would not only represent a serious blowback to the Kremlin´s ambitions but it could even break the spell he has imposed on its people.[9] A third alternative to the scenarios proposed here would be the one rarely considered when performing these analyses: sticking to the current set of policies risking a prolonged stagnation akin to the one of the Brezhnev era. The grip of the security apparatus over Russia would probably be enough to prevent serious threats to the regime, but it would also mean stirring social distress among vast chunks of the populations and, most importantly, dropping the ambitions that seem to have led the Russian leadership in the last few years. What route the Kremlin will take entirely depends on how optimistically it will judge the weak albeit real exit from the recession in 2017.

 

[1] http://carnegie.ru/commentary/?fa=70061

[2] http://thediplomat.com/2016/01/russia-china-and-the-far-east-question/

[3] https://www.theatlantic.com/international/archive/2013/07/is-aleksei-navalny-a-liberal-or-a-nationalist/278186/

[4] https://tradingeconomics.com/russia/exports-by-country

[5] http://ec.europa.eu/trade/policy/countries-and-regions/countries/russia/

[6] http://www.ecfr.eu/article/commentary_g7_shirking_its_responsibilities_on_russia_7294

[7] http://carnegie.ru/2017/05/18/burden-of-predictability-russia-s-2018-presidential-election-pub-70013

[8] http://www.independent.co.uk/news/world/europe/gay-chechens-beating-electro-shock-torture-detain-camps-chechnya-russia-thugs-homophobia-human-a7713391.html

[9] Arkady Ostrovosky, “The invention of Russia“, Atlantic Books.

Additional sources:

https://www.ft.com/content/590a20c4-43a4-11e7-8d27-59b4dd6296b8

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