Revisionist Russia

Ian Bremmer is a senior fellow at the World Policy Institute and president of Eurasia Group, a political risk consultancy.

In the hours that followed Barack Obama’s election-night victory, a number of world leaders telephoned to congratulate him. There was no call from Moscow. Instead, the Russian leadership greeted the new president with threats to advance nuclear-capable Iskander missiles into Kaliningrad, a Russian exclave that borders Poland and Lithuania. The intent was probably to gauge the strength of Obama’s commitment to follow through on Bush administration plans to install missile interceptors in Poland and a radar system in the Czech Republic—and generally to take the new president’s measure. This was Obama’s introduction to relations with Russia, now at their lowest point since the fall of the Soviet Union.

President Obama faces a quite different United States–Russian relationship from the one George W. Bush inherited in January 2001, largely because Russia has come a long way in a short time. Far from being the post-Soviet basket-case of the 1990s, it is today an increasingly self-confident “revisionist” state, one that means to re-establish a zone of political and economic influence that extends across former Soviet territory and to become again a central player in international politics. The Russian leadership’s determination to challenge the geopolitical status quo will force the Obama administration to balance resolute defence of US interests where necessary with a pragmatic focus on partnership where possible. To understand why this is so, it is important to understand how and why Russia has changed. 

The Rise of Revisionist Russia 

A decade ago, Boris Yeltsin’s cash-strapped Kremlin was wrestling with rebellious regional governors, grasping oligarchs, embittered communists, strident nationalists, and Chechen separatists. The debt default and currency crash of 1998 capped a time of troubles that Russians would just as soon forget—particularly now that the still-developing global financial crisis has forced a carefully managed devaluation of the rouble and sparked fears of bank runs and social unrest.

Yet, Russia’s current problems cannot obscure the country’s remarkable transformation. During the Putin presidency, Russia’s GDP grew by some 7.8 per cent per year. Three economic sectors vital to Russia’s growth—oil and gas, arms, and nuclear energy—have buoyed the country’s economy. Though per capita income remains far below European standards, Russia’s middle class has grown considerably over the past decade, generating a surge in foreign investment.

Relative prosperity has emboldened the Russian leadership to consolidate a considerable amount of domestic political and economic power, a process which has aroused the indignation of many in Europe and the United States. But Putin has remained enormously popular for nearly a decade by satisfying domestic demand for an end to the turmoil of the Gorbachev and Yeltsin years—a promise he continues to keep at the expense of political pluralism and the independence of the courts and the media.

Dmitry Medvedev’s election as president in March 2008 opened an era of political partnership in Russia—though few doubt that Putin will remain the senior partner for years to come. Medvedev speaks publicly of limiting the government’s role in the economy and the growth of state corporations. He speaks of checking the power and wealth that some Kremlin officials have amassed while sitting on corporate boards. He has called for greater independence for the Russian media.

Yet, anyone who doubts that Putin remains in charge should consider how the two men spent 30 January of this year. Prime Minister Putin delivered a keynote address before an assembly of world leaders gathered for the World Economic Forum at Davos in Switzerland. President Medvedev met the president of Ingushetia, appointed a new representative to UNESCO, and congratulated the new Russian Orthodox Patriarch. 

Greater Assertiveness 

The list of grievances and flashpoints that have roiled US–Russian relations has become familiar. During the 1990s, Moscow’s inability to stall the expansion of the North Atlantic Treaty Organisation (NATO) into former Warsaw Pact members Poland, Hungary, and the Czech Republic, and NATO’s bombing of Russia’s traditional ally Serbia in 1999, reminded ordinary Russians and their leaders alike that the Kremlin no longer commanded the attention and respect of the West. The trauma that Russia twice inflicted on Chechnya drew US criticism—and stoked fears in Washington that Russia’s government might not have full control of its military. Moscow complained that the United States had no right to condemn legitimate Russian efforts to combat terrorism.

President George W. Bush’s 2001 decision to abrogate the Anti-Ballistic Missile Treaty and US investment in energy pipelines that bypass Russian territory added to the irritants. Vladimir Putin’s consolidation of power in the Kremlin, his government’s moves to dominate the Russian media, and a series of other diplomatic dust-ups elicited Bush administration rebukes and widened the divide still further. Putin’s government began to adopt a more openly antagonistic role.

In 2003, Russian officials visibly savoured the opportunity to join western European powers France and Germany in opposition to the US invasion of Iraq. Then came US-supported NATO expansion onto former Soviet territory with the admission into the alliance of Estonia, Latvia, and Lithuania in 2004. The entry of these states and other former Eastern Bloc countries into the European Union that year added to Russia’s sense of isolation.

It was easier for Washington to ignore Kremlin anger at US foreign policy when Russia was indebted and divided. In fact, few factors contributed more to the breakdown of US–Russian relations than the strength and self-confidence Russia gained from the seven-fold increase in crude-oil prices between 2003 and 2008. Russia is the world’s second-largest exporter of crude oil and the largest supplier of natural gas. Together, oil and gas account for more than 60 per cent of Russia’s export revenues. The surge in global energy prices that began in 2003 filled Kremlin coffers with enough cash for Putin’s government to repay Russia’s considerable foreign debt (to the International Monetary Fund in January 2005 and to the Paris Club in August 2006) ahead of schedule and to amass more than $600 billion in foreign exchange reserves by the summer of 2008.

Another reason Russia has become more confrontational abroad is that defying the West is more popular than ever at home. There is plenty of anti-US sentiment within the Russian government, some of it a holdover from the Cold War era. Many of today’s senior Russian officials were educated in Soviet schools and began their careers in Soviet state institutions. But much of the current animosity flows from memories of the national embarrassment that many Russians felt throughout the 1990s.

For the past six years, a more self-assured and assertive Russian government has formulated foreign policies intended to send Washington a message: “We are not your enemy, but we are not your children. If you treat us without respect, you will learn that we can say no.” The message resonates with many Russians, including some of those with substantial influence over Russian foreign policy. This sense of grievance—and the new self-confidence with which Russian officials express it—will figure among the toughest obstacles impeding better US–Russian relations for many years to come. 

Crisis-Points 

There are three key events that have damaged US–Russian relations more than any other. The first two, the “Rose Revolution” in Georgia (November 2003) and the “Orange Revolution” in Ukraine (November 2004), threatened Moscow’s sense of security as nothing that had come before. In both cases, the Russian political leadership looked on helplessly as the United States actively and publicly supported the rise to power of Western-friendly governments inside former Soviet territory. And these were not the Baltic States, hastily annexed years after the birth of the Soviet Union. Georgia is the only Western-oriented country situated near Russia’s soft southern underbelly in the Caucasus. Ukraine is an industrial powerhouse and the birthplace of imperial Russia.

Not everyone who works in the Kremlin wants a fight with the West. Despite the various controversies that have harmed US–Russian relations, state officials who favour stable ties with the West and a technocratic approach to Russia’s future (such as Finance Minister Alexei Kudrin and the former economy minister, German Gref) have competed for power and influence within the government with others who define Russian geopolitical and economic interests in zero-sum terms. US support, however limited, for the “colour revolutions” in Georgia and Ukraine helped tip the balance within the Kremlin towards hardliners. These are the officials who insist that Washington’s efforts at co-operation—such as Russia’s inclusion in the G8, the NATO partnership agreement with Russia, and the US–Russian energy dialogue—amount to little more than symbolic sops to a once-great empire. Washington talks about values but acts merely to advance its geopolitical interests, the hardliners argue. That’s why Russia can manage relations with the United States only from a position of strength.

The third defining event in twenty-first-century US–Russian relations occurred in August 2008, when Russian troops answered Georgian provocations in the breakaway province of South Ossetia by pouring across Georgia’s borders and pounding its military into submission. This conflict revealed just how far Moscow will now go to make its point. The invasion itself accomplished little. Georgia’s fiercely anti-Russian president, Mikheil Saakashvili, remains in power, and the Kremlin has frightened and antagonised previously ambivalent populations in central and eastern Europe. Yet, Russia shows little sign of moderating its foreign-policy approach. 

Russian Insecurity 

Beneath this increasingly aggressive Russian posture is a deep sense of insecurity. Comparison with China helps make the point. First, China faces fewer geopolitical threats than Russia does. China enjoys relatively positive relations with the governments of every country with which it shares a border. If their rhetoric provides any indication, Russian officials are far more likely than their Chinese counterparts to see hostile (and potentially hostile) forces on all sides—in Georgia, Ukraine, the Baltic States, and Central Asia. Russia is threatened by the expansion of NATO and the European Union into areas that many Russians feel are within their legitimate sphere of influence.

Second, the Chinese Communist Party relies for unity and coherence less than ever before on the personal strength of a single supreme leader. Hu Jintao does not have the personal power wielded by Jiang Zemin, much less Deng Xiaoping or Mao Zedong. China’s leadership is now more collective, and state power flows from the strength of the party as an institution. Russia can rely for stability on powerful and respected leaders, but not on powerful or respected institutions. Vladimir Putin continues to exert enormous personal influence, but there is no political party or governing institution that adds measurably to his legitimacy. In the long term, that makes Russia’s stability more brittle than China’s—and the impact of sustained unrest in Russia more unpredictable than comparable turbulence in China.

Russian leaders are also insecure, because the global financial crisis has taken a toll on Russia’s economic growth prospects, disposable incomes, and investment flows. In 2009, unemployment will reach its highest level in a decade. The Russian finance ministry knows it must allow the value of the rouble to fall if the country is to avoid an especially hard economic landing. But it also knows it must manage this devaluation slowly and carefully, since millions of Russians remember the impact of the 1998 rouble crash all too well. Russia’s foreign-currency reserves have fallen by a third in the past several months, and will remain under considerable pressure as the government spends on anti-crisis measures and addresses budget shortfalls.

The slowdown could also spark social unrest, a risk Russia hasn’t faced since Putin first rose to power. The seemingly innocuous issue of car import duties has already provoked small-scale protests in several Russian cities—and a surprisingly large police presence in response. (The Kremlin accepts risks in its foreign policy. It is far more risk averse when it comes to maintaining public order.) The government is aware that larger demonstrations could become more likely once winter’s bitter cold subsides and the financial crisis forces large enterprises to cut jobs in the one-company towns of the Urals and Siberian industrial regions.

Comparison with China also helps explain Russia’s willingness to antagonise the United States and European Union. China profits from participation in the global economy; it has become a status quo power. China knows it must venture into new parts of the world to secure long-term access to all the commodities on which longer-term growth will depend. China prefers international stability, because stability is good for business. Russia is open for business too, but its growth depends much more on the export—not the import—of oil, gas, and other raw materials. Russia doesn’t need to reach US consumers as China does. So Moscow worries less about smoothly functioning international relations and more about building its domestic popularity by showing the Russian people that the Kremlin is again strong enough to stand up to the United States and its European allies. Anti-Americanism matters in China, just as it does in many other parts of the world. But it is a much more potent political weapon in Russia than in China—or in most other emerging-market countries. 

The Challenge for Obama 

Can President Barack Obama reverse the slide in US–Russian relations? A more realistic goal would simply be to stop the bleeding. The new US president used Russia’s threat to move missiles into Kaliningrad to reiterate a point he had made on the campaign trail—that missile interceptors intended for Poland have not been fully tested and that they will not be activated until they are. The Obama team has also pledged to go slow on a NATO membership plan for Ukraine and Georgia. Putin has welcomed these developments, allowing Obama some room for manoeuvre by blaming misunderstandings on the “previous administration” in Washington.

Yet, a change in Moscow’s rhetorical tone does not signal a shift in how Russia understands its core interests. The Russian leadership will continue to define its national security interests in zero-sum terms, and opportunities for substantive co-operation will be limited. Washington and Moscow will continue to butt heads over Russian weapons sales to Iran, Syria, and Venezuela. Russia’s decision to complete construction of Iran’s nuclear reactor at Bushehr and to provide Tehran with advanced air-defence systems won’t win the Kremlin new friends at the Pentagon. But US policymakers can look to Japan for an example of how relations with Russia can achieve their very limited near-term potential.

Until recently, no G8 government had more troubled relations with Moscow than did Tokyo. But Tokyo has lately set aside longstanding disputes over control of the Kurile Islands/Northern Territories to develop a more mutually profitable commercial partnership with Russia.

In recent years, the Kremlin has sharply restricted foreign investment access to the so-called strategic sectors of its economy. But there are plenty of opportunities for foreign companies to sell consumer products to Russia’s growing middle class. There are also plenty of American companies doing just that. The Bush administration successfully streamlined its China policy by allowing Treasury Secretary Henry Paulson to take the lead in developing a strategic dialogue. The Obama administration should promote the US Department of Commerce as the lead agency in improving US–Russian relations.

Trade is the least nettlesome aspect of the broader bilateral relationship. Given the very high likelihood that new flashpoints will test the patience of policymakers on both sides, building on some positive aspect of the relationship is a wise investment.

Lastly, the Obama team should recognise that Germany will be the key go-between in Russia’s relationship with the West. Berlin cannot afford to antagonise Moscow as freely as Washington, London or even Paris can, because Germany is more vulnerable than its friends in America or western Europe to Russia’s commercial power. Germany imports about one-third of its oil and more than one-third of its gas from Russia. More than four thousand German companies have branches or operations in Russia. Germany has become Russia’s number one trading partner. German energy firms have a huge interest in Russia. If the European Union is to apply meaningful political or economic pressure on Russia, Germany must help. 

Not the Soviet Union 

But perhaps the most important trap that US policymakers can avoid is in refighting the Cold War. We should not exaggerate Russia’s new strength.

It is not the Soviet Union and is no danger of becoming the Soviet Union. Russia lacks the political and military clout to exert strong influence in Latin America, Africa or South Asia. The United States spent ten times more on defence in 2008 than Russia did. Russia’s economy is about the same size as Brazil’s—and a little more than one-third the size of China’s. Countries like Iran, Syria and Venezuela buy Russian-made arms, but none of them believes Moscow can guarantee its security. Nor does Russia offer the world an ideological alternative to the United States.

Yes, Russia can rely on energy exports for a significant portion of state revenue, but much of Russia’s growth will continue to depend on openness to foreign investment. The global financial crisis, and the civil unrest it might yet generate in Russia, underlines this reality. Any compulsion in Washington to respond to Russian belligerence by reviving the ideological divide of another era will undermine US interests and any hope for a near-term improvement in the relationship.

On the other hand, ignoring Russia is not an option since Moscow can certainly obstruct US policy on a range of important issues. The country’s seat on the United Nations Security Council ensures that only limited pressure can be brought to bear on states like Iran and North Korea without its help. Moscow can bolster or undermine any sanctions that Washington might use as instruments of coercive diplomacy.

US policymakers should also avoid political posturing when considering proposed Russian investment in the United States. The Committee on Foreign Investment in the United States has become a political football in recent years, but the openness of Russian markets to US-based companies will depend in part on the openness of US markets to Russian investment. US lawmakers should resist the temptation to demonise Russia at the expense of a deepening commercial relationship.

Over the next generation, the global balance of political and economic power will shift from US dominance towards a non-polar order in which no government is fully willing and fully able to accept global leadership on issues that carry risk and require sacrifice. Yet, a range of emerging powers will play a more important role on the international stage. President Obama may not be receiving too many friendly phone calls from Moscow, but he has plenty of geopolitical incentives to try to halt the deterioration of US–Russian relations.