Crimea, Syria, Libya―Russia appears to go from success to success. In reality, however, the country’s power is declining.
Russia’s President Vladimir Putin appears to be going from strength to strength, restoring Russia’s global influence, be it in Syria, the Middle East or Africa. But is that assessment correct? Has 2019 really been an annus mirabilis for the Kremlin and its foreign affairs ambitions? How much is due to Russia’s strength (and strategic capabilities), and how much to US/the West’s mistakes? Is he overextending his military escapades and getting stuck in a Libyan quagmire? And by changing Russia’s constitution, has Putin secured his life-long hold on power without having to incorporate Belarus?
For a start, Russia’s resources are quite constrained, and its economy is stagnant. The Kremlin pays great attention to foreign policy to secure the legitimacy of its regime, so it is quite good at it. Unfortunately, the Donald Trump administration has offered the Kremlin inordinate possibilities to expand its power, and Europe remains weak in foreign policy.
60th in the World
By any measure, Russia is a classical declining power. Much has been written about Russia’s demographic crisis, but Russia’s population has been roughly stable around the current official number of 145 million since 1991. High levels of immigration from poorer former Soviet republics have compensated for Russians’ low life expectancy and low birth rates, and the substantial emigration of its elite to the West. At the same time, the population in the developing world is growing, so that while Russia has the ninth largest population country in the world after Bangladesh but before Mexico, several countries, such as Ethiopia and the Democratic Republic of Congo, will soon overtake it.
Meanwhile, Russia’s economic standing has become slightly worse. Its GDP at the current exchange rate peaked at $2.3 trillion in 2013 and has since declined to $1.6 trillion. Much of this decrease is due to lower oil prices, but it also reflects a trend. The International Monetary Fund ranks Russia as the 12th largest economy in the world after South Korea and just before Australia and Spain. Similarly, by export volume Russia ranks 11th biggest in the world. GDP per capita is the best measure of level of economic development and in 2017, Russia ranked 60th in the world after all EU countries save Bulgaria, and just before the BRICS countries China and Brazil. Russia is a middle-income country with a GDP per capita of around $10,000 per capita.
The country is an authoritarian kleptocracy, caught in an anti-reform trap. Its ruling elite, controlling the state, law enforcement, and state corporations, and Putin’s cronies have monopolized power and wealth. They would suffer from any political or economic reform, leveling of the playing field, and the opening of politics and economics to competition, while the vast majority of the population would benefit.
A serious reform would probably cause a major political destabilization, jeopardizing Putin’s policy of political and macroeconomic stability with budget surpluses, minimal public debt, large current account surpluses, and vast and rising currency reserves. Meanwhile, his regime ignores growth, efficiency, innovation, or the standard of living of the population.
When it comes to foreign policy, military power is the foremost measurement of power, and here Russia excels. According to the Stockholm International Peace Research Institute (SIPRI), Russia has the third largest military expenditures in the world after the United States and China, though three other countries have similar military expenditures. Furthermore, Russia remains a superpower because of its nuclear arms, with the United States as its only competitor.
The disparity between Russia’s current military and economic powers is great and potentially explosive, and its economic regression aggravates this tension. To the Kremlin, the temptation is great to utilize its military strength, as long as it lasts. Quite logically, Russia has pursued three wars since 2014 – the annexation of Crimea, the incursion in eastern Ukraine, and the military intervention in Syria, as well as a number of minor military interventions in Africa. It would be foolhardy not to expect more Russian-initiated wars.
Putin and His Many Wars
Putin’s first two terms in power, between 2000 and 2008, can be summarized as representing political stability and a rising standard of living. Russia enjoyed a wonderful growth rate, averaging 7 percent a year from 1999-2008, but since then, it has grown at average of only 1 percent a year. During the last five years, the population’s disposable real incomes have fallen by a shocking 2.5 percent a year.
Instead of modernizing Russia during the good years, Putin consolidated his political power. Economic and political stability remains, but the Kremlin considers significant economic growth neither likely nor essential. Strange as it may sound, the low growth rate has not been a serious topic of public discussion for years, while Putin praises the economic stability all the time.
Putin’s regime is best characterized as a personal authoritarian system. Such a regime usually ends with the death or ouster of the incumbent. It has no spiritual source of legitimacy, such as monarchy, ideology, party, nationalism, or religion. Putin seems well aware of his need for another source of legitimacy beside stability. Yet he has clearly excluded political or economic reforms as too dangerous and possibly destabilizing. The Kremlin keeps itself well informed through opinion polls, and the FSB intelligence service is more focused on collecting intelligence than on repression.
An oft-quoted Russian saying runs, “We need a small victorious war.” The tsarist Minister of Interior Vyacheslav von Plehve uttered these words in 1904 before he was assassinated. The Russian foreign policy elite continues to cherish this idea, and few have embraced it more than Putin. His popularity rose on the back of the housing bombings in the fall of 1999 and the ensuing second Chechen war.
In October 2003, the arrest of the leading oligarch Mikhail Khodorkovsky amounted to a war on the oligarchs. In August 2008, Putin pursued a five-day war in Georgia, which took his popularity rating to a new peak of 88 percent, according to the independent polling institute Levada Center. In February 2014, he instigated the swift occupation of Crimea, and on March 18 of that year, he annexed it. This nearly bloodless action took his popularity to the same high level as in August 2008. The ensuing war in eastern Ukraine, however, has been neither small nor victorious.
The Skills of an Old Imperial Power
Russian television has turned increasingly propagandistic, and it has little good to report about the domestic situation. Therefore, news programs tend to focus on misery in other countries and Russia successes abroad, just like the Soviet television used to. As a consequence, foreign policy gains importance in the eyes of the population.
In his excellent book Destined for War, the eminent Harvard Professor Graham Allison discusses the risk of war between the United States and China, presuming that China will overtake the United States economically and militarily. A subtheme in his book is that Austria-Hungary was a declining power at the beginning of World War I. It started the war by declaring war on Serbia, and the Russian Empire, then a rising power, defended Serbia.
Today, it is Russia that is a destabilizing declining power. Its impressive military is set to decline because of its stagnant economy but, as an old imperial power, Russia possesses great strategic thinking and considerable diplomatic skills. It wants to be represented at each important international table, and it knows how to make its presence felt. The danger that Russia poses lies in its interest in aggression abroad to boost the regime’s domestic popularity, while the rulers understand that its military strength is set to decline with its economy. Therefore, the Kremlin is inclined to take ever greater risks.
Through its war with Ukraine, Russia alienated the United States, Europe, and all the former Soviet Republics. Putin seeks an evasive victory and is not ready to return to any respect of international law. The Kremlin is trying to compensate by reaching out to other countries—to China, the BRICS, the Pacific nations, the Middle East, Africa, and Latin America.
The Gerasimov Doctrine
The Russian authorities are well aware of their resource constraints. A year before they launched their war in Ukraine, Russia’s powerful chief of the general staff, General Valery Gerasimov, published an article that has become known as the Gerasimov Doctrine. The author noted that, as nobody declared war any longer, the line between war and peace had been blurred. Focusing on the Ukrainian Orange Revolution and the Arab Spring, his salient argument was that “the role of nonmilitary means of achieving political and strategic goals has grown, and, in many cases, they have exceeded the power of weapons in their efficacy.”
The Gerasimov Doctrine acknowledges that Russia’s economic resources are limited and military hardware is expensive. Therefore, Russian warfare has to rely more on unconventional or hybrid military techniques, such a cyber, disinformation, economic warfare, corruption, subversion, and assassinations. Especially cyber has dissolved the dividing line between war and politics, and Russia possesses particular strengths in its intelligence and special services. The Kremlin has abandoned many of the old constraints, while rationally focusing on its relative strengths. Not without reason, Gerasimov noted that the US has jeopardized many international rules—so why should Russia abide?
These factors shed light on Russia’s new foreign policy. It is highly imaginative and surprising. Neither the Russian annexation of Crimea nor its intervention in Syria were predicted. The Kremlin respects financial constraints and is anxious to keep its costs of warfare down. It uses outsourcing, just like the United States, with mercenaries, cyber war, corruption by oligarchs, and information war. Russian mercenaries seem to pop up anywhere. Modern social media and electronic means are used extensively because they are cheap and effective. The Russian security services are also keen on engaging with organized crime and using corruption as a means of warfare. Most worrisome is that Russia appears to raise its risk acceptance all the time.
The West has been slow in catching up with Russia’s new tactics. The news website Buzzfeed has suggested that no fewer than 14 people have been murdered by the Russians in the United Kingdom, starting with Alexander Litvinenko in 2006, but only after the attempted poising of the former GRU officer Sergei Skripal in March 2018 did the British authorities wake up. No less than 29 allied countries responded with expulsions of Russian diplomats that month, which certainly surprised the Kremlin.
After the Russian military aggression against Georgia in August 2008, the West did virtually nothing. Within a year, newly-elected President Barack Obama even launched his “reset” with Russia. The Kremlin took note. The Georgian war did not cost it anything. Encouraged, the Kremlin went ahead with the annexation of Crimea in February-March 2014, but now the Western attitudes had hardened. In a coordinated move, the United States and the European Union imposed substantial sanctions on the people and enterprises involved. These sanctions have remained effective, isolating Crimea economically.
The West also did something new. It sanctioned several close business friends of Putin, something that Putin reacted to quite sharply in public. He even pushed through a law allowing state compensation for oligarchs who had their assets frozen by Western sanctions. Such personal sanctions, freezing assets and prohibiting travel, are clearly hurting the Kremlin.
A Very Bloody War
Yet Russia was not deterred. It tried to arouse unrest in the eastern and southern half of Ukraine to create a “New Russia.” However, the Ukrainian armed forces reacted by getting organized with amazing speed, prompting the Kremlin to send regular Russian military forces into Ukraine in July 2014. In response, the United States introduced serious sectoral sanctions, hitting three sectors of the economy, finance, defense technology, and oil technology.
The EU hesitated, but on July 17, 2014, a sophisticated Russian missile shot down a Malaysian airliner with 298 people over rebel-controlled territory. The next day, the EU imposed the same kinds of sectoral sanctions as the United States. The Russian military attack stalled, but three percent of Ukraine’s territory in its two easternmost regions, Donetsk and Luhansk, remains under Russian-backed occupation, and a total of 13,000 Ukrainians have been killed in this very bloody war.
The West had never sanctioned such a large economy before, about three times as large as the Iranian economy. If Russia had defaulted, it could have caused a global financial crisis, a risk that prompted the West to limit its financial restrictions. Therefore, the West did not sanction Russia’s participation in the international payment system or its central bank reserves. Nor did the West sanction ordinary trade.
The severity of the Western sanctions on Russia must not be exaggerated, but they are a significant constraint on Russia. The International Monetary Fund has estimated that the Western financial sanctions have cost Russia 1-1.5 percent of GDP each year.
What More To Do
A few Western countries have provided Ukraine with some military equipment and training, but all the fighting has been carried out by Ukrainians and a limited number of foreign volunteers. Ukraine has obtained its Association Agreement with the EU, but this does not envision accession to the EU. NATO has been supportive, but it has not offered any possibility of accession either.
Even before Donald Trump became US president, he made it clear that he favored Russia and Vladimir Putin over Ukraine and opposed military support to Ukraine. Yet initially his possibilities to act were constrained. In the summer of 2017, the suspicious US Congress almost unanimously adopted the Combating America’s Adversaries Through Sanctions Act (CAATSA), which codified the existing sanctions on Russia so that Trump could not end them. However, Trump minimized coordination of sanctions with allies and constrained new sanctions, though he did not stop them. The United States no longer drives sanctions on Russia.
Some EU countries oppose sanctions on Russia (Italy, Cyprus, Greece, Hungary, and Austria), but the majority support them and keep them going. Germany, Austria, the Netherlands, and Belgium have pushed ahead with Nord Stream 2, which will allow Russia to reduce the transit of its gas through Ukraine, depriving the country of about 2 percent of its GDP annually.
The West remains disorganized with regard to countermeasures on cyber, disinformation, and corruption. Much more can be done. Western retired politicians should be prohibited from working for Russian state or crony companies for a long time after leaving office. Former German chancellor, Gerhard Schröder, has been legally bought by Putin. The same is true of several former Austrian chancellors. This should be prohibited.
The best weapon against corruption is far-reaching transparency. The fifth EU anti-money-laundering directive of June 2018 requires the public registration of the ultimate beneficial owners of all significant assets. That would do the trick in Europe. The United States is considering similar legislation. The great risk is that with Brexit, the United Kingdom will become a black hole of dark Russian money.
Countermeasures like these will help the West restrict Russia’s interference and aggression. Its small wars may be going well, but Russia, the world’s largest country, is in decline.