The Pandemic Depression
The Global Economy Will Never Be the Same
For half a millennium, Russian foreign policy has been characterized by soaring ambitions that have exceeded the country’s capabilities. Beginning with the reign of Ivan the Terrible in the sixteenth century, Russia managed to expand at an average rate of 50 square miles per day for hundreds of years, eventually covering one-sixth of the earth’s landmass. By 1900, it was the world’s fourth- or fifth-largest industrial power and the largest agricultural producer in Europe. But its per capita GDP reached only 20 percent of the United Kingdom’s and 40 percent of Germany’s. Imperial Russia’s average life span at birth was just 30 years—higher than British India’s (23) but the same as Qing China’s and far below the United Kingdom’s (52), Japan’s (51), and Germany’s (49). Russian literacy in the early twentieth century remained below 33 percent—lower than that of Great Britain in the eighteenth century. These comparisons were all well known by the Russian political establishment, because its members traveled to Europe frequently and measured their country against the world’s leaders (something that is true today, as well).
History records three fleeting moments of remarkable Russian ascendancy: Peter the Great’s victory over Charles XII and a declining Sweden in the early 1700s, which implanted Russian power on the Baltic Sea and in Europe; Alexander I’s victory over a wildly overstretched Napoleon in the second decade of the nineteenth century, which brought Russia to Paris as an arbiter of great-power affairs; and Stalin’s victory over the maniacal gambler Adolf Hitler in the 1940s, which gained Russia Berlin, a satellite empire in Eastern Europe, and a central role shaping the global postwar order.
These high-water marks aside, however, Russia has almost always been a relatively weak great power. It lost the Crimean War of 1853–56, a defeat that ended the post-Napoleonic glow and forced a belated emancipation of the serfs. It lost the Russo-Japanese War of 1904–5, the first defeat of a European country by an Asian one in the modern era. It lost World War I, a defeat that caused the collapse of the imperial regime. And it lost the Cold War, a defeat that helped cause the collapse of the imperial regime’s Soviet successor.
Throughout, the country has been haunted by its relative backwardness, particularly in the military and industrial spheres. This has led to repeated frenzies of government activity designed to help the country catch up, with a familiar cycle of coercive state-led industrial growth followed by stagnation. Most analysts had assumed that this pattern had ended for good in the 1990s, with the abandonment of Marxism-Leninism and the arrival of competitive elections and a buccaneer capitalist economy. But the impetus behind Russian grand strategy had not changed. And over the last decade, Russian President Vladimir Putin has returned to the trend of relying on the state to manage the gulf between Russia and the more powerful West.
Russian foreign policy has long been characterized by soaring ambitions that have exceeded the country’s capabilities.
With the breakup of the Soviet Union in 1991, Moscow lost some two million square miles of sovereign territory—more than the equivalent of the entire European Union (1.7 million square miles) or India (1.3 million). Russia forfeited the share of Germany it had conquered in World War II and its other satellites in Eastern Europe—all of which are now inside the Western military alliance, along with some advanced former regions of the Soviet Union, such as the Baltic states. Other former Soviet possessions, such as Azerbaijan, Georgia, and Ukraine, cooperate closely with the West on security matters. Notwithstanding the forcible annexation of Crimea, the war in eastern Ukraine, and the de facto occupation of Abkhazia and South Ossetia, Russia has had to retreat from most of Catherine the Great’s so-called New Russia, in the southern steppes, and from Transcaucasia. And apart from a few military bases, Russia is out of Central Asia, too.
Russia is still the largest country in the world, but it is much smaller than it was, and the extent of a country’s territory matters less for great-power status these days than economic dynamism and human capital—spheres in which Russia has also declined. Russian dollar-denominated GDP peaked in 2013 at slightly more than $2 trillion and has now dropped to about $1.2 trillion thanks to cratering oil prices and ruble exchange rates. To be sure, the contraction measured in purchasing power parity has been far less dramatic. But in comparative dollar-denominated terms, Russia’s economy amounts to a mere 1.5 percent of global GDP and is just one-15th the size of the U.S. economy. Russia also suffers the dubious distinction of being the most corrupt developed country in the world, and its resource-extracting, rent-seeking economic system has reached a dead end.
The geopolitical environment, meanwhile, has become only more challenging over time, with continuing U.S. global supremacy and the dramatic rise of China. And the spread of radical political Islam poses concerns, as about 15 percent of Russia’s 142 million citizens are Muslim and some of the country’s predominantly Muslim regions are seething with unrest and lawlessness. For Russian elites who assume that their country’s status and even survival depend on matching the West, the limits of the current course should be evident.
Russians have always had an abiding sense of living in a providential country with a special mission—an attitude often traced to Byzantium, which Russia claims as an inheritance. In truth, most great powers have exhibited similar feelings. Both China and the United States have claimed a heavenly mandated exceptionalism, as did England and France throughout much of their histories. Germany and Japan had their exceptionalism bombed out of them. Russia’s is remarkably resilient. It has been expressed differently over time—the Third Rome, the pan-Slavic kingdom, the world headquarters of the Communist International. Today’s version involves Eurasianism, a movement launched among Russian émigrés in 1921 that imagined Russia as neither European nor Asian but a sui generis fusion.
The sense of having a special mission has contributed to Russia’s paucity of formal alliances and reluctance to join international bodies except as an exceptional or dominant member. It furnishes Russia’s people and leaders with pride, but it also fuels resentment toward the West for supposedly underappreciating Russia’s uniqueness and importance. Thus is psychological alienation added to the institutional divergence driven by relative economic backwardness. As a result, Russian governments have generally oscillated between seeking closer ties with the West and recoiling in fury at perceived slights, with neither tendency able to prevail permanently.
Yet another factor that has shaped Russia’s role in the world has been the country’s unique geography. It has no natural borders, except the Pacific Ocean and the Arctic Ocean (the latter of which is now becoming a contested space, too). Buffeted throughout its history by often turbulent developments in East Asia, Europe, and the Middle East, Russia has felt perennially vulnerable and has often displayed a kind of defensive aggressiveness. Whatever the original causes behind early Russian expansionism—much of which was unplanned—many in the country’s political class came to believe over time that only further expansion could secure the earlier acquisitions. Russian security has thus traditionally been partly predicated on moving outward, in the name of preempting external attack.
Today, too, smaller countries on Russia’s borders are viewed less as potential friends than as potential beachheads for enemies. In fact, this sentiment was strengthened by the Soviet collapse. Unlike Stalin, Putin does not recognize the existence of a Ukrainian nation separate from a Russian one. But like Stalin, he views all nominally independent borderland states, now including Ukraine, as weapons in the hands of Western powers intent on wielding them against Russia.
Russia is the most corrupt developed country in the world, and its resource-extracting, rent-seeking economic system has reached a dead end.
A final driver of Russian foreign policy has been the country’s perennial quest for a strong state. In a dangerous world with few natural defenses, the thinking runs, the only guarantor of Russia’s security is a powerful state willing and able to act aggressively in its own interests. A strong state has also been seen as the guarantor of domestic order, and the result has been a trend captured in the nineteenth-century historian Vasily Klyuchevsky’s one-line summation of a millennium of Russian history: “The state grew fat, but the people grew lean.”
Paradoxically, however, the efforts to build a strong state have invariably led to subverted institutions and personalistic rule. Peter the Great, the original strong-state builder, emasculated individual initiative, exacerbated inbred distrust among officials, and fortified patron-client tendencies. His coercive modernization brought indispensable new industries, but his project for a strengthened state actually entrenched personal whim. This syndrome characterized the reigns of successive Romanov autocrats and those of Lenin and, especially, Stalin, and it has persisted to this day. Unbridled personalism tends to render decision-making on Russian grand strategy opaque and potentially capricious, for it ends up conflating state interests with the political fortunes of one person.
Anti-Western resentment and Russian patriotism appear particularly pronounced in Putin’s personality and life experiences, but a different Russian government not run by former KGB types would still be confronted with the challenge of weakness vis-à-vis the West and the desire for a special role in the world. Russia’s foreign policy orientation, in other words, is as much a condition as a choice. But if Russian elites could somehow redefine their sense of exceptionalism and put aside their unwinnable competition with the West, they could set their country on a less costly, more promising course.
Russian governments have generally oscillated between seeking closer ties with the West and recoiling in fury at perceived slights.
Superficially, this appeared to be what was happening during the 1990s, before Putin took the helm, and in Russia a powerful “stab in the back” story has taken shape about how it was an arrogant West that spurned Russian overtures over the last couple of decades rather than the reverse. But such a view downplays the dynamic inside Russia. Certainly, Washington exploited Russia’s enfeeblement during the tenure of Russian President Boris Yeltsin and beyond. But it is not necessary to have supported every aspect of Western policy in recent decades to see Putin’s evolving stance less as a reaction to external moves than as the latest example of a deep, recurring pattern driven by internal factors. What precluded post-Soviet Russia from joining Europe as just another country or forming an (inevitably) unequal partnership with the United States was the country’s abiding great-power pride and sense of special mission. Until Russia brings its aspirations into line with its actual capabilities, it cannot become a “normal” country, no matter what the rise in its per capita GDP or other quantitative indicators is.
Let’s be clear: Russia is a remarkable civilization of tremendous depth. It is not the only former absolute monarchy that has had trouble attaining political stability or that retains a statist bent (think of France, for example). And Russia is right in thinking that the post–Cold War settlement was unbalanced, even unfair. But that was not because of any intentional humiliation or betrayal. It was the inevitable result of the West’s decisive victory in the contest with the Soviet Union. In a multidimensional global rivalry—political, economic, cultural, technological, and military—the Soviet Union lost across the board. Mikhail Gorbachev’s Kremlin chose to bow out gracefully rather than pull the world down along with it, but that extraordinarily benevolent endgame did not change the nature of the outcome or its causes—something that post-Soviet Russia has never really accepted.
The outside world cannot force such a psychological recognition, what the Germans call Vergangenheitsbewältigung—“coming to terms with the past.” But there is no reason it could not come about organically, among Russians themselves. Eventually, the country could try to follow something like the trajectory of France, which retains a lingering sense of exceptionalism yet has made peace with its loss of its external empire and its special mission in the world, recalibrating its national idea to fit its reduced role and joining with lesser powers and small countries in Europe on terms of equality.
Whether even a transformed Russia would be accepted into and merge well with Europe is an open question. But the start of the process would need to be a Russian leadership able to get its public to accept permanent retrenchment and agree to embark on an arduous domestic restructuring. Outsiders should be humble as they contemplate how wrenching such an adjustment would be, especially without a hot-war defeat and military occupation.
It took France and the United Kingdom decades to relinquish their own senses of exceptionalism and global responsibility, and some would argue that their elites have still not fully done so. But even they have high GDPs, top-rated universities, financial power, and global languages. Russia has none of that. It does possess a permanent veto in the UN Security Council, as well as one of the world’s two foremost doomsday arsenals and world-class cyberwarfare capabilities. These, plus its unique geography, do give it a kind of global reach. And yet, Russia is living proof that hard power is brittle without the other dimensions of great-power status. However much Russia might insist on being acknowledged as an equal to the United States, the European Union, or even China, it is not, and it has no near- or medium-term prospect of becoming one.
What are Russia’s concrete alternatives to a European-style restructuring and orientation? It has a very long history of being on the Pacific—and failing to become an Asian power. What it can claim is predominance in its region. There is no match for its conventional military among the other Soviet successor states, and the latter (with the exception of the Baltic states) are also economically dependent on Russia to various degrees. But regional military supremacy and economic leverage in Eurasia cannot underwrite enduring great-power status. Putin has failed to make the Eurasian Economic Union successful—but even if all potential members joined and worked together, their combined economic capabilities would still be relatively small.
Until Russia brings its aspirations into line with its actual capabilities, it cannot become a “normal” country.
Russia is a big market, and that can be attractive, but neighboring countries see risks as well as rewards in bilateral trade with the country. Estonia, Georgia, and Ukraine, for example, are generally willing to do business with Russia only provided they have an anchor in the West. Other states that are more economically dependent on Russia, such as Belarus and Kazakhstan, see risks in partnering with a country that not only lacks a model for sustained development but also, in the wake of its annexation of Crimea, might have territorial designs on them. A ballyhooed “strategic partnership” with China, meanwhile, has predictably produced little Chinese financing or investment to compensate for Western sanctions. And all the while, China has openly and vigorously been building its own Greater Eurasia, from the South China Sea through inner Asia to Europe, at Russia’s expense and with its cooperation.
Today’s muscular Russia is actually in structural decline, and Putin’s actions have unwittingly yielded a Ukraine more ethnically homogeneous and more Western-oriented than ever before. Moscow has tense relations with nearly every one of its neighbors and even with its biggest trading partners, including most recently Turkey. Even Germany, Russia’s most important foreign policy counterpart and one of its most important economic partners, has had enough, backing sanctions at a cost to its own domestic situation.
“It looks like the so-called ‘winners’ of the Cold War are determined to have it all and reshape the world into a place that could better serve their interests alone,” Putin lectured the annual Valdai Discussion Club gathering in October 2014, following his Crimean annexation. But what poses an existential threat to Russia is not NATO or the West but Russia’s own regime. Putin helped rescue the Russian state but has put it back on a trajectory of stagnation and even possible failure. The president and his clique have repeatedly announced the dire necessity of prioritizing economic and human development, yet they shrink from the far-reaching internal restructuring necessary to make that happen, instead pouring resources into military modernization. What Russia really needs to compete effectively and secure a stable place in the international order is transparent, competent, and accountable government; a real civil service; a genuine parliament; a professional and impartial judiciary; free and professional media; and a vigorous, nonpolitical crackdown on corruption.
Russia’s current leadership continues to make the country bear the burdens of a truculent and independent foreign policy that is beyond the country’s means and has produced few positive results. The temporary high afforded by a cunning and ruthless policy in Syria’s civil war should not obscure the severity of Russia’s recurrent strategic bind—one in which weakness and grandeur combine to produce an autocrat who tries to leap forward by concentrating power, which results in a worsening of the very strategic dilemma he is supposed to be solving. What are the implications of this for Western policy? How should Washington manage relations with a nuclear- and cyber-armed country whose rulers seek to restore its lost dominance, albeit a lesser version; undercut European unity; and make the country “relevant,” come what may?
In this context, it is useful to recognize that there has actually never been a period of sustained good relations between Russia and the United States. (Declassified documents reveal that even the World War II alliance was fraught with deeper distrust and greater cross-purposes than has generally been understood.) This has been due not to misunderstandings, miscommunication, or hurt feelings but rather to divergent fundamental values and state interests, as each country has defined them. For Russia, the highest value is the state; for the United States, it is individual liberty, private property, and human rights, usually set out in opposition to the state. So expectations should be kept in check. Equally important, the United States should neither exaggerate the Russian threat nor underplay its own many advantages.
Russia today is not a revolutionary power threatening to overthrow the international order. Moscow operates within a familiar great-power school of international relations, one that prioritizes room for maneuver over morality and assumes the inevitability of conflict, the supremacy of hard power, and the cynicism of others’ motives. In certain places and on certain issues, Russia has the ability to thwart U.S. interests, but it does not even remotely approach the scale of the threat posed by the Soviet Union, so there is no need to respond to it with a new Cold War.
The real challenge today boils down to Moscow’s desire for Western recognition of a Russian sphere of influence in the former Soviet space (with the exception of the Baltic states). This is the price for reaching accommodation with Putin—something advocates of such accommodation do not always acknowledge frankly. It was the sticking point that prevented enduring cooperation after 9/11, and it remains a concession the West should never grant. Neither, however, is the West really able to protect the territorial integrity of the states inside Moscow’s desired sphere of influence. And bluffing will not work. So what should be done?
There has actually never been a period of sustained good relations between Russia and the United States.
Some invoke George Kennan and call for a revival of containment, arguing that external pressure will keep Russia at bay until its authoritarian regime liberalizes or collapses. And certainly, many of Kennan’s insights remain pertinent, such as his emphasis in the “Long Telegram” that he dispatched from Moscow 70 years ago on the deep insecurity that drove Soviet behavior. Adopting his thinking now would entail maintaining or intensifying sanctions in response to Russian violations of international law, shoring up Western alliances politically, and upgrading NATO’s military readiness. But a new containment could become a trap, re-elevating Russia to the status of rival superpower, Russia’s quest for which has helped bring about the current confrontation.
Once again, patient resolve is the key. It is not clear how long Russia can play its weak hand in opposition to the United States and the EU, frightening its neighbors, alienating its most important trading partners, ravaging its own business climate, and hemorrhaging talent. At some point, feelers will be put out for some sort of rapprochement, just as sanctions fatigue will eventually kick in, creating the possibility for some sort of deal. That said, it is also possible that the present standoff might not end anytime soon, since Russia’s pursuit of a Eurasian sphere of influence is a matter of national identity not readily susceptible to material cost-benefit calculations.
The trick will be to hold a firm line when necessary—such as refusing to recognize a privileged Russian sphere even when Moscow is able to enact one militarily—while offering negotiations only from a position of strength and avoiding stumbling into unnecessary and counterproductive confrontations on most other issues. Someday, Russia’s leaders may come to terms with the glaring limits of standing up to the West and seeking to dominate Eurasia. Until then, Russia will remain not another necessary crusade to be won but a problem to be managed.