Wednesday, January 15, 2014

Power Without Purpose

16 January 2014 | Issue 5289

Klipping The Moscow Times

For more than two decades, August has been the cruelest month for Russian leaders. The August 1991 coup led to the departure of President Mikhail Gorbachev and the end of the Soviet Union. The August 1998 debt default and ruble collapse laid waste to President Boris Yeltsin's free-market reforms and resulted in the sacking of his prime minister, Sergei Kiriyenko.
The following August, a sick and feeble Yeltsin announced that Vladimir Putin, the fourth prime minister in a year, would soon take over as president. Four years later, in August 2003, a Kremlin-inspired tax raid against Russia's leading oligarch, Mikhail Khodorkovsky, followed by the confiscation of his oil company, Yukos, demonstrated what Putin meant by the "dictatorship of law."

It is far from clear what Russia wants to become: a reinvented empire, a "sovereign democracy" or something else.

This late-summer curse now precedes a "December of misery" — at least for democracy activists. In December 2011, mass protests against Putin's election-fixing and upcoming third presidential term simply fizzled out. Likewise, December 2013 was full of omens.
The month began with international calls to boycott February's Winter Olympics in Sochi in protest against a Kremlin-sanctioned law banning "gay propaganda." This was followed by political turmoil in neighboring Ukraine, where protesters tried, and once again failed, to topple their anti-democratic leaders. The year ended with two suicide bombings in Volgograd, which claimed dozens of lives. In attacking Volgograd, formerly Stalingrad, the symbol of Soviet wartime perseverance, the terrorists — most likely Islamic fundamentalists — could hardly have picked a more emblematic Russian city.
Moreover, in December, Putin made high-profile use of that most imperial of prerogatives, the presidential pardon, to bestow freedom on, among others, Khodorkovsky, who had spent a decade behind bars, and two members of the protest punk band Pussy Riot. These apparent acts of mercy were presented as the wise acts of a benevolent modern czar ruling in the name of traditional values and repulsed by Western decadence. Never mind that it was Western governments that had pressed most persistently for their release.
Indeed, Putin's real motivation for the pardons had nothing to do with any traditional concept of law and order, much less with a move toward democracy. Rather, by freeing his opponents, he sought to appease foreign critics before the upcoming Olympics. And to some degree, he has succeeded. Despite the transparent self-interest underlying the pardons, his critics are starting to speak of a Putin "thaw."
It appears that sometime last summer, Putin realized that his usual approach to public relations — kissing tigers, "discovering" sunken treasure and bare-chested horseback riding in the Siberian taiga — was hackneyed and inappropriate for a world leader. So, like the good KGB apparatchik that he is, Putin refocused his attention on exploiting his opponents' weaknesses — particularly those of U.S. President Barack Obama. That tactic has been successful, at least insofar as it has created buzz about a "resurgent Russia."
In his now customary New Year's address, a preening Putin celebrated 2013 by recalling how Russia had outplayed the U.S. and Western Europe. Without being too specific, he noted Russia's asylum offer to former U.S. intelligence contractor Edward Snowden last summer; his deal to dispose of Syria's chemical weapons, thereby preventing the U.S. from striking Russia's ally; and Ukraine's return to Russia's sphere of influence after its rejection, under Kremlin pressure, of an association agreement with the European Union.
But as the "inhumane acts of terrorism," as Putin himself put it, in Volgograd demonstrate, tactical victories do not always lead to strategic success. Putin's attempt to pacify the North Caucasus by installing the brutal Ramzan Kadyrov as head of Chechnya has brought little more than a fragile, largely elusive truce that has left Russia as vulnerable as ever to terrorism.
Even Putin's latest pet project — proving that Russia can host an Olympics as successfully as Beijing or London — could easily backfire. Russia's potential medal haul might generate a national feel-good moment, but only if the Sochi games proceed smoothly and safely. The risk is that the greater their success, the more likely it is that Chechen and other insurgents will seek more targets, at an even more terrible human cost.
By suppressing the opposition in Moscow, Grozny and elsewhere, Putin has only put a lid on a boiling pot. Part of the Kremlin's difficulty stems from its remarkable lack of vision — a fundamental failure to understand what Russia is or can become. We know that it is no longer an economic power, oil reserves notwithstanding. Nor is it a match for the U.S., or even China, in international affairs. But it is far from clear what Russia wants to become: a reinvented empire, a new autocracy, a "sovereign democracy" or perhaps something else.
A century ago, the month of August marked the start of a conflagration in Europe whose catastrophic effects continue to shape Russia. In 1913, simmering imperial tensions in the Balkans seemed to have subsided, and yet 1914 marked the start of the Great War. My hope for 2014 is that Putin's hubris will not lead Russia down a similar road.

Nina Khrushcheva, author of "Imagining Nabokov: Russia Between Art and Politics," teaches international affairs at The New School and is a senior fellow at the World Policy Institute in New York. © Project Syndicate

My Muted Optimism For Change in Russia

16 January 2014 | Issue 5289

By Konstantin Sonin

Klipping The Moscow Times

Although there was more bad news than good for Russia in 2013, the year unexpectedly ended on a positive note. For the first time in many years, the number of political prisoners dropped rather than rose. Optimists, including me, believe that this marks the end not only of a year, but of an entire decade.
But my current optimism is not the same as it was in 1985, 1991 or other years. Back then, I based my optimism on the belief that a single word, gesture, political appointment or law had the potential to significantly alter Russia for the better. Of course, that is never the case in politics, economics or anything else for that matter.
Imagine that the least turbulent of velvet revolutions takes place in Russia, and that the leader of your dreams comes to power — whether it is anti-corruption whistle-blower Alexei Navalny, Defense Minister Sergei Shoigu, former Finance Minister Alexei Kudrin or even former Yukos CEO Mikhail Khodorkovsky. For the purposes of this experiment, it doesn't matter who you choose. All that matters is that this new leader will carry out your vision for the reconstruction of the country's political system, economic development strategy and education and scientific research policies.
What would that leader do on his first day in office? Aside from having to spend the first month appointing trusted friends and associates to head Russia's oil and gas companies, his first step would probably be to hunt for that scant handful of individuals who are honest and competent. He might appoint them to head the Prosecutor General's Office, Federal Security Service, the judicial system and key technical posts, but would probably have to leave most other officials in place for lack of better candidates.
Would he dissolve the State Duma next? As most people reading this column believe, the current parliament is practically worthless as a democratic legislative body. But it does an exemplary job of rubber-stamping decisions from higher up. Therefore, the new leader might be tempted to preserve the Duma just long enough to pass his reforms, knowing that he would only get bogged down in prolonged debate with a real parliament.
The conclusion is that qualified and trustworthy professionals are in short supply in Russia, and it would be easier to carry out reforms with the Duma's current, purely nominal lawmakers.
Is this cause for optimism?
Sure — at least when you realize that no matter who becomes president or walks free from prison, Russia is not likely to change anytime soon.

Konstantin Sonin, a columnist for Vedomosti, is professor of economics and vice rector at the Higher School of Economics in Moscow.

Foreigners Optimistic at Gaidar Forum

16 January 2014 | Issue 5289

By Alexander Panin

Klipping The Moscow Times

Igor Tabakov / MT

Prime Minister Medvedev heading for the podium at the Gaidar Forum in Moscow on Wednesday, where he touted the Far East and diversification.

It became apparent that foreign economists and captains of industry view Russia's economy more positively than the country's officials, as they mingled and orated during the opening day of the Gaidar Forum in Moscow on Wednesday.
However, participants agreed that interdependence in the global economy is unavoidable.
Angel Gurria, the head of the Organization for Economic Cooperation and Development, or OECD, saw the broader economic situation as an engine of growth with four cylinders.
"I should say that this is a European car, because if it were an American car it would have eight cylinders, and it would be sucking a lot of gasoline, so this is only four cylinders, it is European," Gurria said.
The cylinders in his metaphor represent investment, trade, credit and the emerging economies, and they "are not working at full speed," he added.
But respected speakers like J.P. Morgan Chase International chairman Jacob Frenkel highlighted positive elements of the Russian economic picture.
The unemployment rate in Europe was 10 percent only four years ago, but now it is up to more than 20 percent in countries like Spain … and of those who are unemployed, more than half have been out of work for more than a year, Frenkel said.
Other speakers at the event agreed. "There is no great crisis here. The unemployment rate, budget deficit and poverty rate [Russia] has, the U.S. would happily trade for," said Jeffrey Sachs, Director of the Earth Institute at Columbia University, at a panel session.

Igor Tabakov / MT

Anatoly Chubias at the forum.

Russia's per capita income, a measurement of purchasing power, is in the range of $20,000 to $24,000 dollars, which exceeds that of China's by more than two times, he said.
"It is a substantial increase from what it was 20 years ago, a tremendous accomplishment," Sachs said.
Despite an increasing disposable income, Russian officials were not upbeat about overall growth. "The growth rate for the Russian economy will not exceed 2.5 percent in 2014, and that will possibly be true for the following years," Economic Development Minister Alexei Ulyukayev said.
Meanwhile, forum attendees highlighted the fact that Russia's demographic challenges might be a blessing in disguise.
"In the next 20 years the world will have an additional 1.5 billion people. Most of them will come from emerging economies," Frenkel said, adding that this means that the action today has switched from industrialized to developing countries.
"I think that 7.2 billion people, soon to be 8 billion and then 9 billion is reckless for the world," Sachs said. "A stable population is good because that means there will be no unemployment crisis and massive infrastructure needs to compensate for rising population. The attention can be focused on quality, not quantity."
Russia's stable population level is beneficial for the world as well as for its own economy, Sachs said.
At the same time the country has a lot of what the world needs, he added.
"The world is resource-scarce and Russia is resource-rich. There is land to produce a lot of the food that the world needs and there is a lot of gas to power the world's economy, which will become more important for future years," Sachs said.
"If the world needs our resources we can provide them," First Deputy Prime Minister Igor Shuvalov said at a news conference following a panel discussion.
"But in the end, we should come to an economy less dependent on resource-based revenues and see profits originating in other sectors more," he added.
This will free more funds acquired from extracting and selling resources to be saved for future generations, Shuvalov said.
OECD chief Gurria said the evolution is inevitable.
"Russia is now bound to develop in the knowledge-based economy. That means manufacturing with a heavy dose of technology, knowledge [complemented with] more and more services," he said.
Russia has a huge opportunity to lead the world in such sectors as aviation, aerospace, high-speed rail, nuclear power generation technology, robotics and heavy machinery, both Sachs and Gurria said.
Other highlights of the Wednesday's Gaidar Forum include:
• The Central Bank has no exchange rate target and is shifting toward a free float of the ruble to insulate the real economy from volatility on global markets, the regulator's First Deputy Chairwoman Ksenia Yudayeva said.
"We really don't have an exchange rate target — we are exiting the market," Yudayeva said.
The Central Bank has said it plans to shift to a full free float of the ruble by the start of 2015. This week it scrapped so-called targeted currency interventions in a technical step toward that goal.
"Targeting the exchange rate is incompatible with targeting inflation," Yudayeva said. "The country is experiencing stagflation," she added.

Igor Tabakov / MT

Finance Minister Anton Siluanov speaking at the Gaidar Forum on Wednesday as delegates study their screens.

• The federal budget in 2013 operated with a 0.5 percent deficit, which was less than the 0.8 percent that was planned, Finance Minister Anton Siluanov said.
• The most reliable international currencies are Swiss francs, Norwegian kroner and Swedish kronor, but Russians should keep their savings in rubles, said Sberbank chief executive German Gref.
• The Federal Property Management Agency will develop the technical parameters and format for privatization of national telecommunications company Rostelecom by April, when the company publishes its results for 2013, said agency chief Olga Dergunova.
The state controls 51 percent of the voting shares and 47 percent of the charter capital of Rostelecom. Sale of the state's stake could take place in 2014, Dergunova said earlier.
• The government will sell its stakes in state companies as soon as it gets good offers for them, but by 2020 the state should control no more than 25 percent of the overall economy, First Deputy Prime Minister Igor Shuvalov said.
According to various estimates the government controls about 50 percent of the economy, he added. Shuvalov also said that although the government could borrow money on international markets at favorable rates, it does not intend to.
• Prime Minister Dmitry Medvedev promised to personally oversee the creation of beneficial terms for those entrepreneurs willing to invest in the Far East.
Medvedev said there would be 5-year holidays on profit, property and payroll taxes for those investing in the region.

Contact the author at a.panin@imedia.ru

Foreigners Optimistic at Gaidar Forum

16 January 2014 | Issue 5289

By Alexander Panin

Klipping The Moscow Times

Igor Tabakov / MT

Prime Minister Medvedev heading for the podium at the Gaidar Forum in Moscow on Wednesday, where he touted the Far East and diversification.

Igor Tabakov / MT

Anatoly Chubias at the forum.

Igor Tabakov / MT

Finance Minister Anton Siluanov speaking at the Gaidar Forum on Wednesday as delegates study their screens.

Contact the author at a.panin@imedia.ru

Foreigners Optimistic at Gaidar Forum

16 January 2014 | Issue 5289

By Alexander Panin

Klipping The Moscow Times

Igor Tabakov / MT

Prime Minister Medvedev heading for the podium at the Gaidar Forum in Moscow on Wednesday, where he touted the Far East and diversification.

Igor Tabakov / MT

Anatoly Chubias at the forum.

Igor Tabakov / MT

Finance Minister Anton Siluanov speaking at the Gaidar Forum on Wednesday as delegates study their screens.

Contact the author at a.panin@imedia.ru

Friday, January 10, 2014

Unrealpolitik in Russia and China

09 January 2014 | Issue 5286

By Dominique Moisi

Klipping The Moscow Times

In her recent book on the origins of World War I, The War That Ended Peace, Margaret MacMillan concludes that the only thing one can say with certainty about its causes is that leadership matters. No one really wanted war, but no one knew how to oppose it, because great statesmen like Germany's Otto von Bismarck, whose self-restraint preserved peace in Europe for decades, were missing in Europe in 1914. A similar leadership void has become palpable in recent behavior by Russia and China.
In the run-up to World War I, political and military leaders failed to grasp how industrial production and mass transportation had altered the character of warfare. The American Civil War should have served as a warning for Europeans. But a Europe that considered itself the center of the world, exporting its rivalries to Africa and Asia in the name of a "civilizing mission," was utterly incapable of paying attention to the harsh lessons of the New World.
Today, neither President Vladimir Putin nor Chinese President Xi Jinping seem to have learned those lessons, either. In Ukraine, Russia must choose what kind of relationship it wants to have with Europe. If Ukraine returns to the Kremlin's orbit, whether through direct reintegration or some kind of "Finlandization," Russia will end up reenacting an old European problem: like France from 1643 to 1815 and Wilhelmine Germany, it will be both "too much" for its neighbors and "not enough" for its ambitions.
Leaving aside why Russia should want to pay so much money to sustain a Ukrainian regime that is even more corrupt and dysfunctional than its own, Ukraine, with a territory greater than France and a population of 45 million, is the de facto linchpin of Europe's geopolitical equilibrium. Unlike Poland three times in the 18th century, there can be no question of partition, with western Ukraine joining Europe and the country's east returning to Russia. As a result, Ukraine's civilizational choice — between a democratic European Union and an autocratic Russia — will necessarily have major strategic consequences for the entire European continent.
The problem that China faces in the South China Sea — and now in its airspace — is of a similar nature. Is China, too, losing the sense of restraint that characterized its foreign policy until recently?
The Chinese seem now to be displaying an impatience that is contrary to their country's long-term interests. China's heightened global status is obvious and recognized by all. But where is the serenity of a great power so confident in the superiority of its civilization, and so secure in its future, that it bides its time?
By flaunting its hegemonic regional ambitions, China has managed to unify against it countries as diverse as Vietnam, Indonesia, and the Philippines. These countries now want more than ever America's continuing presence as an Asian power. Indeed, transcending their historical enmity with Japan, they tend to show more understanding for the rhetoric of Japanese Prime Minister Shinzo Abe's government — and its new and more muscular defense policy — than for China's recent demonstration of force.
It is sometimes said that history teaches us nothing, for it contains everything. Yet the teachings of classical diplomacy are probably more useful today than they were in the 20th century. The age of grand ideologies is behind us; an era marked by strict calculation of interest beckons. In the interim, war may have changed more than diplomacy — and probably for the worse. Our weapons' destructive power has peaked at a time when the "enemy" is becoming more diffuse. How do you make war on instability? How do you fight an adversary that disappears into civil society?
Even if technological progress has changed the diplomat's job, the rules of the diplomatic game remain fundamentally the same. Success presupposes an understanding of the interests and perceptions of one's counterparts, as well as an innate sense of moderation and self-limitation, something that both Russia and China seem to be lacking.
By contrast, one may wonder whether U.S. President Barack Obama should not also learn from Bismarck — but from Bismarck the Iron Chancellor, who united Germany behind Prussia. Is he demonstrating enough toughness and clarity of vision in his policy toward Iran — or, even more to the point, toward Syria? Cold-blooded realpolitik, as Bismarck showed, is the best way to keep the peace.
Dominique Moisi is senior adviser at The French Institute for International Affairs (IFRI) and a professor at L'Institut d'études politiques de Paris (Sciences Po). He is the author of The Geopolitics of Emotion: How Cultures of Fear, Humiliation, and Hope are Reshaping the World. © Project Syndicate.

Putin's Rearguard Battle

09 January 2014 | Issue 5286

By Shlomo Ben-Ami

Klipping The Moscow Times

Russia's recent diplomatic successes in Syria and Iran, together with foreign-policy missteps by U.S. President Barack Obama, have emboldened President Vladimir Putin in his drive to position Russia as capable of challenging American exceptionalism and Western universalism. But Putin's December address to the Federal Assembly was more a reflection of his resentment of Russia's geopolitical marginalization than a battle cry from a rising empire.
To be sure, with America exhausted from its fruitless wars in the Middle East, and Europe turning inward as it faces its own crises, the case for a multipolar discourse is more convincing today than at any other time since the Cold War. But this does not change the fact that Russia is a declining power, whose diplomatic triumphs are mere tactical achievements that do not add up to a strategic game changer for the world.
If, as Lenin put it, communism was, "Soviet power plus the electrification of the whole country," Putinism can be reduced to nuclear weapons and oil extraction. In all other areas, the West retains a clear advantage: Russia's demographic decline, antiquated military forces, one-dimensional economy, low productivity and chronic internal unrest dwarf the challenges faced by the U.S. and Europe.
In fact, Putin's recent address was replete with references to Russia's weaknesses — specifically, "interethnic tensions," local-government authorities "constantly shaken by corruption scandals," an incompetent administration, capital flight through economic "offshore activity" and the inability to achieve "technology breakthroughs." These traits certainly are not the makings of a dominant power in a globalized world. Like it or not, talk of Russia competing with the West is nothing more than sentimental nostalgia or meaningless rhetoric.
For Putin, the agreement reached in 1945 at the Yalta Conference is not dead; its limits on the Kremlin's influence have simply shifted eastward, essentially to the boundaries of the former Soviet Union. While Putin managed to stop Georgia from joining NATO, his Eurasian Economic Community, is a poor replica of the Council for Mutual Economic Assistance, which included all of the countries of the Eastern Bloc and a few other socialist states. Likewise, the Collective Security Treaty Organization, a Russia-led Eurasian defense alliance, is a far cry from the old Warsaw Pact.
Moreover, although Putin and his Ukrainian counterpart, Viktor Yanukovych, have so far managed to derail Ukraine's association agreement with the European Union, they probably will not be able to block it for long. Despite having been cajoled by Putin with lavish financial support and cheap gas, Ukraine is unlikely to join a Russia-led Customs Union, which is more a means of anchoring former Soviet republics to Russia's sphere of influence than it is a vehicle to promote trade.
But the most serious threat to Russia's global status is the coming obsolescence of its nuclear arsenal. Putin has been unable to counter America's development of "prompt global strike," which would render Russia's nuclear deterrent irrelevant, by enabling the United States to hit targets worldwide with conventional weapons within an hour. Russia is no more able to compete with Western technology and capabilities today than the Soviet Union was when it collapsed under the stress of its arms race with the U.S.
In his address to the Federal Assembly, Putin positioned himself as a defender of conservative values against "tolerance, neutered and barren" (a euphemism for gay rights) and a champion of morality and traditional family values. Russia might not be a superpower anymore; but, according to Putin, it represents a morally superior civilization battling America's foreign-policy recklessness, malevolent economic practices and moral depravity.
Putin's moral claims are, however, mired in politically unsustainable contradictions. "Today, many nations," he warned, "are revising their moral values and ethical norms, eroding ethnic traditions and differences between peoples and cultures." But Russia is a kaleidoscope of ethnicities and cultures, whose efforts to assert themselves were dismissed in the very same address as the criminal behavior of "ethnic mafias."
Furthermore, the Western values that Putin rejects in the name of Russian nationalism (and anti-Americanism) are precisely those that many Russians endorse. More than a cultural statement, Putin's description of Russia in Slavophile or Eurasianist terms reflects his aspiration to forge an alliance with China and other emerging economies to offset America's global dominance.
But Putin cannot expect China to underwrite his pretensions. China may have joined Russia in opposing the West's embrace of "humanitarian intervention" in other countries' internal conflicts, but the Cold War premise that ideological affinity is an adequate basis for military alliance would not work for China today. Simply put, China has no interest in revolutionizing an international system from which it has benefited so much.
For all of his grandstanding, Putin's ambitions are not new. Indeed, he represents a continuation of Russia's centuries-old drive to be treated as a great power in a world order that it views as a Hobbesian struggle of all against all. But authoritarianism and ham-fisted diplomacy are not exactly a recipe for success in the twenty-first century.

Shlomo Ben-Ami, a former Israeli foreign minister who now serves as vice president of the Toledo International Center for Peace, is the author of Scars of War, Wounds of Peace: The Israeli-Arab Tragedy. © Project Syndicate.