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A Western Strategy for a Declining Russia

CAMBRIDGE – The Aspen Strategy Group, a non-partisan group of foreign-policy experts that former US National Security Adviser Brent Scowcroft and I co-chair, recently wrestled with the question of how to respond to Russia’s actions in Ukraine. And now NATO is wrestling with the same question.

While the West must resist Russian President Vladimir Putin’s challenge to the post-1945 norm of not claiming territory by force, it must not completely isolate Russia, a country with which the West has overlapping interests concerning nuclear security, non-proliferation, anti-terrorism, the Arctic, and regional issues like Iran and Afghanistan. Moreover, simple geography gives Putin the advantage in any escalation of the conflict in Ukraine.

It is natural to feel angry at Putin’s deceptions, but anger is not a strategy. The West needs to impose financial and energy sanctions to deter Russia in Ukraine; but it also must not lose sight of the need to work with Russia on other issues. Reconciling these objectives is not easy, and neither side would gain from a new Cold War. Thus, it is not surprising that when it came to specific policy recommendations, the Aspen group was divided between “squeezers” and “dealers.”

This dilemma should be put in long-term perspective: What type of Russia do we hope to see a decade from now? Despite Putin’s aggressive use of force and blustery propaganda, Russia is a country in decline. Putin’s illiberal strategy of looking East while waging unconventional war on the West will turn Russia into China’s gas station while cutting off its economy from the Western capital, technology, and contacts that it needs.

Some of Russia’s opponents might welcome the country’s decline on the grounds that the problem will eventually solve itself. But that would be shortsighted. A century ago, the decline of the Austro-Hungarian and Ottoman Empires proved highly disruptive to the international system. A gradual decline, like that of ancient Rome or eighteenth-century Spain, is less disruptive than a rapid one, but ultimately the best scenario would feature a recovering and rebalanced Russia over the next decade.

The evidence of Russia’s decline is pervasive. The rise in oil prices at the beginning of the century gave the economy an artificial boost, leading Goldman Sachs to include it among the world’s major emerging markets (one of the “BRICs,” along with Brazil, India, and China). Today, however, that growth has vanished. Russia’s GDP is about one-seventh the size of America’s, and its per capita income (in purchasing-power-parity terms) of $18,000 is roughly one-third that of the US.

Oil and gas account for two-thirds of Russian exports, half of state revenues, and 20% of GDP, whereas high-tech exports represent only 7% of its manufactured exports (compared to 28% for the US). Resources are allocated inefficiently across the economy, with a corrupt institutional and legal structure that impedes private investment. Despite the attractiveness of traditional Russian culture and Putin’s calls to boost Russian soft power, his bullying behavior has sown mistrust. Few foreigners watch Russian films, and no Russian university was ranked in the global top 100 last year.

The likelihood of ethnic fragmentation is lower than in Soviet days, but it still remains a problem in the Caucasus. Non-Russians comprised half of the Soviet population; they now make up 20% of the Russian Federation and occupy 30% of its territory.

The public health system is in disarray. The birth rate is declining, mortality rates have increased, and the average Russian male dies in his early sixties. Mid-range estimates by United Nations demographers suggest that Russia’s population may decline from 145 million today to 121 million by mid-century.

But, though Russia at this point appears to be an industrial banana republic, many futures are still possible. It has talented human resources, and some sectors, like the defense industry, can produce sophisticated products. Some analysts believe that with reform and modernization, Russia would be able to surmount its problems.

Former President Dmitri Medvedev, who worried that Russia would fall into the so-called middle-income trap rather than graduate to advanced-country status, laid out plans to do just that. But little has been implemented, owing to rampant corruption. Under Putin, Russia’s post-imperial transformation has failed, and Russia remains pre-occupied with its place in the world and torn between its historical European and Slavophile identities.

Putin lacks a strategy for Russia’s long-term recovery and reacts opportunistically – albeit sometimes successfully in the short run – to domestic insecurity, perceived external threats, and the weakness of his neighbors. Russia has thus become a revisionist spoiler of the international status quo – one that seeks to be a catalyst for other revisionist powers.

But an ideology of anti-liberalism and Russian nationalism is a poor source of the soft power that the country needs to increase its regional and global influence. Thus, the prospects that a Russian-led Eurasian Union can compete with the European Union are limited.

Whatever the outcome of Putin’s revisionism, Russia’s nuclear weapons, oil and gas, skills in cyber technology, and proximity to Europe, will give him the resources to cause problems for the West and the international system. Designing and implementing a strategy that contains Putin’s behavior while maintaining long-term engagement with Russia is one of the most important challenges facing the international community today.

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