Rethinking Russia

The difficult socioeconomic conditions Russia has endured since the fall of the Soviet Union are reflected in the health of today’s conscripts. (...) Extreme efforts are considered necessary to keep the troops in order, and increasingly this entails use of extreme violence. (...) The Russian leadership will have to seriously invest in the safety, livelihood, and quality of its men...

While post-Cold War generation Americans are more sober in assessing Russia, the next Russian generation (those under 35) is in some ways more problematic. Russian youth are much more entrepreneurial and politically engaged than their elders, but also more skeptical of the US and more comfortable with intolerant nationalism. The Kremlin is also reinforcing some of the more worrying trends among Russian youths. There is no going back to the Cold War, but the coming of the new generation does not portend smooth sailing, unless current officials can figure out ways to fundamentally alter the nature of a relationship still dominated by mutual distrust.

The notion of multipolarity has shaped Russian foreign policy horizon since mid-90s, when it became clear that Russian integration into Western system as an equal partner was not an option. The idea of a multipolar world promoted by then foreign minister Yevgeni Primakov was reaction to American dominance in international affairs, a way to counterbalance rising U.S. unilateralism, but did not contain any serious strategy. That rhetoric revived 2003, when Russia decided to join France and Germany in their opposition to Iraq war, but the main purpose of Moscow was to achieve a breakthrough in relationship with the European Union, which didn’t happen. By the end of this decade emerging multipolarity and relative decline of the U.S. power turned into most frequently discussed international issue worldwide. Russian interest in that configuration started to evolve into real strategy of foreign policy diversification towards new centers of power like China, India, Brazil and Iran.

This article focuses on the changing security dynamics in Central Europe and the Western periphery of the post-Soviet space. Section I examines Russia’s resurgence and the challenges it poses. Section II focuses on Ukraine’s transition while section III discusses the impact on Central and Eastern Europe. Section IV analyzes the changing context of NATO enlargement. The final section discusses the implications of these trends for US policy.

European stability and prosperity are best served by a Ukraine that is democratic, secure in its borders, and integrated into both European and Euro-Atlantic institutions; the United States must therefore persist in its efforts to assist Ukraine on the path of democratic reforms that it has chosen for itself.

The European Union has its roots in energy, given that the ECSC and EURATOM treaties were two of the three first texts on which the European alliance was founded. The European Union is almost 50% dependent on imports for its energy consumption and it will be 70% in about 15 years. A large part of its oil and gas imports will come increasingly from Russia. However, the last crises over oil & gas deliveries from Russia to Ukraine have again triggered virulent criticism about Russian energy strategies and its abilities at being a safe supplier. This article describes how these conflicts have in fact an impact on European energy policies, which are now a mixing of panic, bilateral alliances and distrust. In fact, Europe should worry less about the exercise of a geopolitical strategy and more about Russia’s ability at reforming itself and being the right supplier for Europe's 21st century.

Russia is often presented as a classic example of the so-called “Resource Curse”­-the argument that natural resource wealth tends to undermine democracy. Given high oil prices, some observers see the country as virtually condemned to authoritarian government for the foreseeable future. Reexamining various data, I show that such fears are exaggerated.

The article analyzes the past, the present and the future of the global expansion of Russian oil and gas companies. During Socialism, geopolitical considerations were the main driver of overseas activities of the Soviet energy enterprises. During the 90s, given the maturing resource base of the oil sector, the going-abroad efforts of privatized Russian oil companies, mainly LUKOIL, in the upstream were aimed at acquiring promising assets in countries with lower production costs. Oilmen were also trying to get a foothold in the European downstream to improve their global competitiveness. Gazprom was expanding its presence in Europe which was essential for the company that suffered from non-payments in Russia. At the same time, LUKOIL and Gazprom helped Russia to maintain its influence over the former USSR republics. During the 2000s, with the growing étatisation of the energy sector in Russia, economic aspects of oil and gas companies’ global expansion became interlinked with geopolitical motives and the desire to reestablish the country as an energy power.

The recent growth performance and the short-term forecasts for the Russian economy strikingly remind the economic performance of South Korea 11 years earlier. Given that South Korea is an archetypical success story of economic development, do these data imply that Russia is on the right track and will close the gap with advanced economics in 10-20 years? We believe that Russia’s long-term perspectives are unlikely to be as bright.

The Russian policymakers had enough financial resources ($600 billion with the Central Bank of Russia) to manage the cost of a bailout package of $200 billion at 13 percent of GDP. It was used to support the declining ruble toward the end of 2008 and early 2009, to provide some funding to the oligarchs so that they could repay their hard currency loans, and above all to provide cash to the banks. With improving oil prices, the situation has improved for the budget, and the CBR reserves have moved up to $400 billion from a low $300 billion last December. But unemployment has been edging up and inflation still remains high at annual 7 percent. It limits the ability of the policymakers to mount another stimulus for helping the unemployed. The main problem however consists in diversifying the economy away from commodities (among them oil and natural gas) and dealing with massive corruption in the system. Russian President Medvedev described Russia as a "corrupt, raw-material based economy." That will be the challenge facing the policy makers in the years ahead.

If the Kremlin should not be held directly responsible for ordering murders against journalists, it certainly bears responsibility for the atmosphere of lawlessness that reigns in Russia. Today’s Kremlin doesn’t mind free and critical voices as long as they remain politically irrelevant and have no impact on decision-making. In other words, Russia has freedom of expression, but no press freedom if the latter is understood as one of the elements in an institutionalized democratic polity. Media may cover political news, but news can’t become a political event.

Assessments of Russia’s civil society development have been almost universally negative, yet the assessments are usually based on very limited and unsystematic evidence. Missing from the discussion are new developments such as institutions and competitive funding for NGOs and other civic groups that suggest there is a foundation in Russia to support citizen participation in governance. Future analysis should investigate, systematically and objectively, the positive and negative impacts of these developments.