This week's Economist leader includes Russia and the West; In search of a Putin policy. I have posted it below for your edification. I read it last night just before going to sleep, and woke up thinking about it with the sun this morning. Which is to say that I am not in entire agreement with the leader writers.
The Economist has failed to include economics in its discussion of Russia's place in the world (note to Editors - remember your title). In addition, certain of the Russian blogging community would have every right to accuse the leader writers of a degree of Nelsonian blindness.
Russia's recent refound confidence, which is causing such concern in the West, is proportionate to the economic rebound. The West's concerns are also directly proportionate to Russia's economic influence. No one could give a damn whether Russia was democratic, which it was not, when oil was $10/bbl. Yes we could all be paternalistically concerned over those poor Russians who drank a lot of vodka and allowed us to buy cheap caviar - but as a country its global impact was close to irrelevant.
This is no longer true. Failing to discuss Russian economics misses the point about Russia and its relationships with everyone else. Substantially all the major headlines emanating from Russia are essentially economic-political related (or the ones I read anyway) - gas supply and pipelines, IPO's (Comstar, NMLK, Rosneft), GAZP share deregulation and the use of natural resources as a political weapon both in the “near abroad” (Georgia & Ukraine) as well as playing Europe, the US and China/India off against each other. With oil and other commodities at or just short of historic highs in both nominal and real terms, Russia matters. It is also clear that economics and money (in Swiss bank accounts preferably) matter to Russia. The West can jump up and down and scream about media control and worry about racism, but until Europe and the US frees itself of oil & gas dependency and no longer queues up to invest in Rosneft's IPO it (the West) will have little impact. My assumption is that the two events will happen simultaneously and will be directly linked to the commodity price cycle.
Like F&C I believe that the West should demand an enormous risk-premium for investing in Rosneft - nothing else will convince the current administration that behaving in favor of the shareholders will create greater value. It is about as likely as me suddenly discovering a sunny disposition.
The Economist would like to see the West present a unanimous face, which in itself would be a remarkable achievement, over Russia revanchism and economic bullying. Angela Merkel comes under some criticism for her breaking of ranks. The economic cynic in me finds it strange that the two loudest voices are the US and Britain. The home of, Exxon Mobil, Chevron, BP and Shell - the largest players in Russian oil who are being denied access to reserves. The revanchism charge has merit - if you have ever driven here you will know that penis-size matters - banning Borjormi is ego politics. I struggle with the economic bullying argument. Russia has lots of oil & gas and has a responsibility to achieve the best value for its stakeholders - otherwise known as the narod. The US is not exactly shy about using its own economic strength to achieve other political aims. What is good for the goose is good for the gander. If the West wants to apply political pressure to Russia then that pressure would be better received if it were uniformly applied.
The caveat. Many of the Economist's charges carry weight but as I have argued previously the easy headlines (media control and controlled freedoms) lack the nuance required to fashion a rationale response.
THROUGHOUT its turbulent history, Russia has been prickly. At various times it has bullied, invaded or fought against almost all its neighbours. Yet at the same time it has demanded to be treated with respect, as a great power with a rightful place in the high chancelleries of Europe and the world. And for that reason, it has been surprisingly sensitive to outside criticism.
In his annual state address this week, President Vladimir Putin inveighed against those who clung to an era of global confrontation, and against enemies who would weaken his country. This followed the furious reaction in Moscow to last week's speech in Vilnius by Dick Cheney, in which the American vice-president criticised the Russian government for restricting the rights of its own people, interfering in neighbouring countries and exploiting its oil and gas reserves as tools for intimidation and blackmail. The Russians indignantly reject such charges; some even talk of a revival of Russophobia.
Many Russians also accuse the Americans of hypocrisy. The United States uses energy as a political tool, it influences and even invades other countries, its criticism of Russia is not matched by attacks on other autocratic governments such as Azerbaijan's or Kazakhstan's. A lot of Europeans share these criticisms, and they also question the wisdom of provoking Moscow when not only is their energy dependence on Russia increasing, but the West needs its help over Iran.
Given these reactions, it is worth emphasising that Mr Cheney's analysis was spot on. Admittedly, not everything has gone wrong in Russia. Thanks in good measure to high energy prices, the economy is growing fast and living standards are rising. Mr Putin still seems popular with ordinary Russians, who like the stability he has brought (though most see and hear only what the Kremlin wants them to). A respectable case can also be made for raising Russian gas prices to wean its near neighbours off their Soviet-era subsidies.
Living with a bear
Yet it is clear that Russia under Mr Putin has moved sharply away from the chaotic but recognisable democracy that he inherited, and towards a centralised and intolerant autocracy that stamps on the merest hints of independent opposition. The country is also drifting into a resurgent form of virulent nationalism, with a nastily racist edge to it (see article). Russia's bullying of small fry such as Georgia or Moldova continues apace. And it is pursuing an overt agenda of divide-and-rule when it comes to reminding both its near neighbours and the big countries of western Europe of their dependence on imports of Russian gas.
The real question for the West should no longer be: is Mr Putin's Russia heading in the wrong direction—for the answer is unarguably yes. Instead it should be: what can we do about it? One answer may be “not much”. Russia no longer needs the West's economic and financial help, as it did in the Yeltsin years. It is not going to shed its new-found self-confidence and assertiveness just because of a few speeches.
Even so, as his address this week confirmed, Mr Putin is by no means impervious to outside criticism. He is more likely to be impressed if such criticism is unanimous. Over the past five years disappointingly few European leaders have spoken as forthrightly as Mr Cheney did—indeed, nor has Mr Cheney's boss, George Bush. Worse, several countries have connived in Russia's divide-and-rule approach—notably Germany, which even under its new chancellor, Angela Merkel, has been far too keen on bilateral deals, such as the building of a new under-sea pipeline, heedless of the concerns of its nearest eastern neighbours. If western Europeans are to counter Russian aggressiveness over energy, they must present a united front: for example, by making clear that, should the Russians ever threaten to cut off energy supplies to individual countries, including former parts of the Soviet Union that are not yet in the European Union, their western friends will step in to help.
Should tougher sanctions be wielded, such as boycotting the G8 summit in St Petersburg in July, or obstructing Russian membership of the World Trade Organisation? No, for any such threats would serve only to encourage the paranoid view of some in the Kremlin who believe that the West will always be their enemy. The right approach is to engage constructively with Russia while not being afraid to criticise it—and to try hard to persuade the Russians that the West can be a friend, not an enemy, if only their country resumes its path towards being a properly functioning democracy.
[composed and posted with ecto]