Washington’s Dangerous New Consensus on China
Don’t Start Another Cold War
Russian President Vladimir Putin’s startling military takeover of Crimea in response to the February revolution in Kiev left Western leaders scrambling. Internationally, Putin seems the master grand strategist, just as he had after his successful effort in September 2013 to head off potential aerial strikes on Syria. At home, he appears equally in command, having ruled Russia for the last 15 years, with another ten years a distinct possibility. It would be a mistake, however, to overestimate Putin or Russia -- or to underestimate how badly his gambit in Ukraine could turn out for him. Finding a way out of this crisis requires an understanding both of why Putin instigated it and of how it will affect his rule.
Putin’s thinking was on display in a March 4 press conference, his first public statement since the Crimea crisis began. He referred to the events in Kiev not as a revolution but as “an anticonstitutional coup and armed seizure of power,” calling the current authorities in Kiev “illegitimate.” He blamed the West for interference in Ukraine, drawing a comparison to “America employees of some laboratory … conducting experiments like on rats, not understanding the consequences of what they are doing.” And he denied that Russia had deployed forces in Crimea, but reserved the right to do so (and not only in Crimea) to protect the local population. Several Western journalists immediately asked whether Putin had lost his mind.
Putin’s statements, however, were neither new nor crazy, although obviously one-sided and, to Western ears, occasionally bizarre. (The claim about “local self-defense forces” not being Russian soldiers was, to put it mildly, inconsistent with other reports.) Rather, they were the product of a worldview fairly widely shared among the Russian political elite, who believe that the West is out to get them. At any rate, the main audience for Putin’s statements was not Westerners but Russians, whom Putin would like to convince of the West’s nefarious ends. Putin sees the Ukrainian revolution not simply as a geostrategic defeat for Russia but one that was engineered in the West. He believes that the West instigated the revolution to bring the country into the Western orbit, despite its natural propensity to ally with Russia. Furthermore, he notes, the West was prepared to cynically make common cause with violent extreme nationalists to achieve its goals.
The behavior of Western diplomats during the revolution reinforced this viewpoint. For example, although the highlight for Western listeners from a leaked phone conversation between Assistant Secretary of State Victoria Nuland and U.S. Ambassador to Ukraine Geoffrey Pyatt earlier this year was Nuland’s blunt declaration “Fuck the EU,” the important part of the conversation for Russian observers was the seemingly casual way in which Nuland indicated her preferences about the best political course of action for “Yats” and “Klitsch,” the Ukrainian opposition leaders Arseniy Yatsenyuk and Vitali Klitschko. Russia thus sees U.S. claims that it did not interfere in the Ukrainian revolution and that it wants Ukrainians “to determine their own future” as hypocritical and even mendacious.
Moreover, for Putin, the recent Ukrainian revolution was just the latest episode in a long-term and cynical game the West has played to try to bring former Soviet republics such as Belarus, Georgia, Moldova, and Ukraine into the Western orbit, including through externally sponsored “regime change.” He sees both the 2003 Georgian Rose Revolution and the 2004 Ukrainian Orange Revolution through this lens. And that view was further reinforced in 2008 when NATO committed to eventual membership for Georgia and Ukraine.
Worse, Putin and his circle believe that the West has every intention of infecting Russia with what pro-Putin commentators call the “Orange plague,” referring to the 2004 Ukrainian Revolution. Putin believes his domestic opponents are part of the same conspiracy to weaken Russia; in November 2007, he told supporters that “those who oppose us…need a weak, sick state,” accusing them of being “jackals” scavenging for foreign support. Putin’s fears were seemingly confirmed when large public protests broke out in Moscow after falsified parliamentary elections in December 2011. When Hillary Clinton, the U.S. Secretary of State at the time, criticized the conduct of the elections, Putin stated that opposition leaders “heard the signal and with the support of the U.S. State Department began active work." In June 2013, Putin again complained about Western double standards and interference, maintaining that the U.S. diplomatic mission “works together [with] and directly supports the Russian opposition.” Accordingly, over the last several years, he has worked to limit foreign influence in Russia, including by prohibiting the U.S. Agency for International Development from operating inside the country.
STRONG, SELF-CONFIDENT, AND STABLE
Although it would be easy to dismiss Putin’s suspicions about nefarious Western intentions as propaganda for domestic consumption only, this vision has been articulated too often (including in unscripted settings) by too many Russian elites for too many years to ignore. What the United States sees as democracy promotion Putin sees as encouragement for regime change. On one level, he is right; if Russia had a more open political system, his ability to keep power might be threatened.
In the face of this perceived threat, Putin’s central goal is not to re-create the Soviet Union, although his proposed Eurasian Economic Union is a step in that direction, but to hang on to power at home. Accentuating the threat from the West -- and the costs of revolution in Ukraine -- are signals to all Russians about the importance of internal stability (and thus the continuation of the current political system, with Putin at its top). He went out of his way in his March 4 press conference to stress the much higher standard of living in Russia compared to Ukraine, and maintained that if the Ukrainian state had been “strong, self-confident, and stable” then chaos would have been averted.
The Ukrainian revolution is particularly troublesome for Putin because it comes at a time of growing concern about the fragility of the Russian political and economic system, and the Ukrainians’ complaints about their regime -- dissatisfaction with a corrupt kleptocracy based on close links between ruling elites and economic oligarchs provided fuel to the revolution -- are echoed in Russia. Some of Putin’s closest acquaintances from his St. Petersburg past have grown fabulously wealthy, and many of these same people profited handsomely from contracts for the Sochi Olympics. The Russian opposition leader Alexi Navalny’s meme about how the ruling United Russia party is the “party of swindlers and thieves” was one of the most effective opposition slogans during the 2011–2012 protests.
Russia’s domestic outlook is also considerably less rosy than it was in 2008, when Russian troops went into Georgia, and elite confidence in the Kremlin is consequently weaker. In 2008, Putin’s popularity ratings were at an all-time high (over 80 percent), Russia had experienced eight years of sustained economic growth of roughly seven percent a year, and world oil prices had temporarily shot to over $140 per barrel (although the average for the whole year was slightly less than $100 per barrel). Today, Putin is still popular (over 60 percent approval ratings), but the economic outlook is very different. Growth in 2013 was a mere 1.4 percent, and this at a time when the price of oil has remained over $100 per barrel for three years straight. Oil and gas revenues account for over half of Russian budget receipts, but it now takes world oil prices of around $110–115 per barrel to balance the budget, compared to $20 per barrel in 2005. Further, the Russian state-controlled energy giants of Rosneft (oil) and Gazprom (gas) have been slow to keep up with revolutionary changes in world energy production and transportation, such as hydrofracking and liquid natural gas.
Russian elites are increasingly concerned that Russia’s economic stagnation is not temporary but systemic, a product of accumulated problems and inefficiencies. Last year, the Ministry of Economic Development downgraded its long-range economic growth projections from annual increases of 4.3 to 2.5 percent, well below the rates to which Russia had grown accustomed in the 2000s. Productivity and investment remain low, and human capital spending (spending on education and health care) suffers at the expense of higher salaries for state officials and an ambitious defense buildup, which has been marked by corruption, cost overruns, and unrealistic targets. Russia is economically uncompetitive with developed economies, which have innovative and productive work forces, and poorer countries, which have lower wages and competitive manufacturing industries, and thus more dependent than ever on oil and gas exports.
The consensus view among most Russian economists, and a view endorsed both by Putin and Prime Minister Dmitry Medvedev, is that Russia needs institutional reforms to encourage investment, reduce capital flight, and modernize and diversify the economy. But “institutional reform” is simply code for a stronger rule of law, less corruption, and more robust protection of private property rights. All of these changes are unlikely absent broader political reforms that increase accountability, transparency, and competition -- in other words, a total reversal of Russian politics since Putin came to power.
Finally, the image of Putin as Russia’s unrivaled strongman is at best an oversimplification. The current Russian regime is not a monolith but a fractious group of competing oligarchs, clans, and temporary alliances. The security elites (the so-called siloviki) who surround Putin may agree that the West is a threat and that Russia needs to restrict domestic opposition in the name of stability, but they are also often at odds with each other, especially when there are bribes to be extorted. Just last week, a turf dispute between the Federal Security Service and the Ministry of Internal Affairs led to recriminations, dismissals, and arrests. Meanwhile, the prosecutor’s office has been locked in bitter conflict with the Investigative Committee for several years. Putin’s Russia is more a disordered police state than a well-ordered one.
The Economist presciently observed in early February that “the danger for the world is that a weaker Mr. Putin may be a more aggressive one, in Ukraine and elsewhere.” Indeed, even if we accept that Putin blames the West for the Ukraine crisis, his Crimean démarche seems both emotional and dangerously provocative. Certainly, understanding Putin’s worldview and the real problems and challenges facing his regime does not excuse Russian actions in Crimea, but it does provide a better standpoint from which to end the crisis than a framework emphasizing alleged innate Russian characteristics or overemphasizing the Russian challenge.
A good start would be to avoid as much as possible a zero-sum framing of the Ukraine crisis, in which a victory for Russia is a loss for the West, and vice versa. Economic sanctions targeted on the Russian political and economic elite, along the lines being proposed by the United States, are much more likely to have a positive effect than confrontational steps, especially military ones, that will simply confirm for Putin that he is right about the West’s real and nefarious intentions. Recent proposals to provide Putin an “off ramp” by brokering a diplomatic agreement for Russia to pull back its troops while international monitors come in to prevent human rights violations are smart. The West should also push Kiev to clean up its act and legitimize itself, not only through new elections but also with efforts to reach out to politicians from Ukraine’s south and east that were previously allied with Yanukovych. That would undercut Putin’s stated concern about the illegitimacy of the new government and about the need for a “humanitarian mission” to defend Ukrainian citizens. A commitment by Ukraine’s current leaders to honor the Russian Black Sea Fleet basing agreement and not push for NATO membership would also help.
There may still be some space to defuse the Crimean crisis. Unfortunately, the March 6 fast-tracking of a Crimean referendum on unification with Russia, if Putin is behind it, suggests that he decided to speed right past the “off ramp” and head straight for formal annexation. In that case, the prospects for positive-sum outcomes will have shrunk considerably. If Russia does formally annex Crimea, the United States and Europe should go ahead with sanctions, in order to hit Russian elites in their pocketbooks. In the medium term, the United States should help Central and Eastern European governments to diversify their energy supplies, away from their dependence on Russian gas.
Finally, annexation and its inevitable consequences of sanctions and isolation for Russia would probably also mean a further strengthening of the fortress mentality that is already dominant among Putin’s circle. He might choose to tighten the screws domestically even more. Such steps would not, however, create either the economic prosperity or the political stability that Putin desires and which ordinary Russians deserve.