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Mind the Gap: Russia’s National Interests Unhinged from the Power

mindthegap082708.jpgI believe that anyone who tries to argue that they aren’t surprised, concerned, and upset about the recent blustery behavior of Russia in the execution and aftermath of the war in Georgia is probably not being honest. Not many people thought it would go this far. The disproportionately undiplomatic handling of the situation by Moscow reached a fever pitch when President Dmitry Medvedev announced that “We are not afraid of anything, including the prospect of a Cold War,” surprising even those of us who believed that Russia would seek to protect its war gains and advance its national interests by slowing opening up diplomacy. Instead, Russia has declared war on its most important customer, seeming to have temporarily forgotten that the entire nation depends on selling resources to the West, while simultaneously infuriating China with the recognition of breakaway states. The result has been catastrophic in terms of Russia’s national interests, and finally we are beginning to see a very important gap appear between the personalistic power and wealth of the siloviki (as represented by Putinist capitalist authoritarianism) and what’s good for the Russian public. For so many years, similar to the effect achieved in Castro’s Cuban Revolution, these two interests were practically conceptually indivisible, thanks to tight media control and very effective simulations of normal civic activities (controlled elections, fake grassroots movements like the Nashi). Now the public and the wider world is getting its first glimpse of the fractures between the government’s actions and actual interests which Russia should be pursuing – finally we are seeing that this group of former KGB officers is actually doing a very poor job guiding the country’s foreign policy, seemingly more interested in their Cypriot bank accounts and oil trading shares. Sweden’s Foreign Minister Carl Bildt has also caught on to this appearance of the gap, commenting to the FT that “They are opening up a Pandora’s box of questions that will be extremely difficult to answer. If you are interested in the stability of the Caucasus – and Russia is more interested in that than anyone else – you should be very careful with borders. . . They have fought two wars in Chechnya. (…) The Russians are effectively opting out of the WTO process. They are imposing sanctions on themselves.

It’s always frustrating to watch someone shoot themselves in the foot, even if the pessimist in you knew it was coming all along.Exhibit A that Russia’s leaders have lost the plot: they have willingly discarded their most important strategic asset for future growth and future influence – the disaggregation and disunity of Washington, Europe, and EU members themselves on Russia policy.Not in recent memory have I seen so many different influential governments speaking in the same tones on Russia as the past week, with the United States, France, Germany, and now, especially the United Kingdom, making tough demands. In a dramatic trip to the Ukraine, UK Foreign Secretary David Miliband has called for “the widest possible coalition against Russian aggression in Georgia.” Not even Silvio Berlusconi is willing to put his head on the block to defend Moscow (he probably saw what happened to Schroeder). I agree with all the other analysts that the war exposed how much leverage the West has lost, but it seemed to me strategically very unwise for Moscow to make any move that would cause these various governments to achieve unity.These constant disagreements among Western governments about how to handle the “challenge,” “problem,” “threat,” or even “opportunity” of the Russian resurgence was a critical factor allowing for the successful forgery of a democratic election, a very rapid and significant penetration into the European energy infrastructure, joint venture deals with a variety of producers, from Bolivia to Nigeria to Libya and Algeria, and a variety of other policies which have served to drastically increase Russian power. The Caucasus represented the only transit point of energy to the West that was not under Moscow’s control, though had they more patience, they probably could have been successful in subverting the Azeris for the right price, and putting an end to Matthew Bryza’s dream of a competing energy route.Exhibit B, as Carl Bilt noted, the siloviki are causing enormous financial damage to Russian markets, and will likely see economically focused actions as a response beyond just the scuppering of WTO membership. Yesterday the New York Times reported that the RTS had dipped to its lowest level since 2006 on Tuesday, and quoted a hedge fund manager who commented “The market perception is extremely negative. They’re being perceived as the evil empire. They’re going to have to do some serious things to change it.” Today the FT similarly reports that foreign investors are running scared, and that all sorts of deals are falling apart in response to this “unambiguously negative impact.”Then, of course, there will be efforts in the future for the West to crackdown on the Kremlin’s finances rather than simple and ineffectual isolation, political resolutions, sanctions, etc. (which it is clear that the siloviki have welcomed with nationalistic zeal). Did Russia clearly think about the ways Washington and Europe might seek to apply pressure? The best explanation of these options, which I agree are much more palatable and effective than outright isolation, is explained in the Washington Post today by two lawyers:

Bereft of any significant civilian manufacturing, Russia’s economy depends on natural resources exports. As a result, Russia, though grotesquely corrupt, is tightly plugged into global financial and commercial networks. (…)Whenever they have jurisdiction to do so — which should be often — U.S. and E.U. regulators should examine the business transactions of people close to Putin’s regime for money laundering or for securities, tax and other economic irregularities. Asset tracing and long statutes of limitation should enable Western authorities to examine years’ worth of business activities. The U.S. Justice Department should aggressively prosecute any instances of Kremlin-connected market manipulation, fraud, tax evasion and money laundering that fall within its reach.Subpoenas, indictments, asset forfeitures, judgments and travel restrictions will hit where even the most callous bullies feel pain: squarely in the wallet. Western governments should also support private investors who try to challenge Kremlin-backed thievery. Moscow’s blatant manipulation of oil and gas deliveries, often masquerading as technical problems, should be vigorously contested by Western customers and substantial penalties sought. Russian efforts to purchase additional refineries and pipelines in the West should be challenged on antitrust grounds.

Prompting the West to resort to these kinds of policies is indeed the last thing that the Russian people need, especially when significant progress toward the same goals of changing relations with Georgia and achieving near-abroad security could likely have been achieved with smarter Russian diplomacy.All of this should be carefully considered because at the end of the day, yes, Russia does actually foreign policy goals and the right to pursue them like any other nation. The encroachment of NATO around her borders is viewed as intolerable. The flow of Caspian energy to Europe without their hand on the tap diminishes the power of their energy weapon. A long list of cases of double standards in international law in which Russia feels its voice has been ignored, such as Kosovo. The attempts to negotiate a middle ground for the placement of a jointly operated missile shield with Washington failed. Russia is stronger politically and economically than it was in the past, yet feels it was still being treated as the Yeltsin-ite failed state – this “adjustment” on the global stage was a long time coming.Let’s not pretend like the West hasn’t been playing dumb to these Russian complaints … particularly when U.S. officials can only scratch their heads in confusion as a response to Russian opposition to the missile shield. But the argument that the invasion and recognition was an obligatory outcome for Moscow doesn’t hold water. An international coalition could have been formed with sufficient preparation to give a stronger international law basis the military action. Plans and organization among other states for the recognition could also have been achieved. In relations with Washington, Moscow probably could have dangled a few much sought-after meetings and demands on Iran’s nuclear program in exchange for a change in the relationship with Georgia. There are so many areas of natural strategic convergence, especially in terms of security issues, that Russia needs Western cooperation with. And, as noted above, they most definitely need them as a market. Russia is losing a lot more than she’s gained this week, and there is a clear signal that the public interest is now divergent from that of its leaders.It appears that we must be careful in assuming that we are dealing with a rationale decision making process at the Kremlin, not just the function of internal clan fighting over foreign policy which has led us to this unnecessary juncture.