Monday, November 24, 2014

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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    1. CommentedDavid Morgan

      The one thing for certain is that the standard of living for ordinary Russians is in for a sharp fall. Russia is a great country great corruption, great criminals , great murderers, great ambitions but no idea how to achieve them.

    2. CommentedJean-Louis Piel

      The question is not about decline - who cares because so many parameters could move the course in one or opposite direction . The
      Decline of the West has been since 200 years a topic that the West itself loves to speak about. Two facts are real and meaningfull since 150 years
      - the development of capitalism around the World ( industrial revolution, revolution in transports. And all types of communication, the
      Revolution in finance , revolution in science and technology, revolution in the way to make war, etc) . The second fact is population - in 150 years
      From more than 1 billion to soon 8 billions of human beings.
      In 1907 the prime minister of the Russian Empire predicted that in 2007 the Russian empire will have 650 millions citizens.
      Today inside the Russian Federation there is only 110 millions Ethnic Russians.
      History of these Ethnic Russians are related to the history of the medieval Moscovy of the XVi and XVII century. The History of their Empire
      Starts Only really in XVIII pratically at the same Time as USA.
      The Russians have , during thiese Three centuries up to now Always demonstrated they have loved dictators , the greatest were foreign.
      Ukrainians History starts in X th century. They are Europeans . They are free men. They have been brutally colonized by the Russians in mid XVII
      And in XVIIITH .
      The Russians have no choice except to search a new foreign master - and the best one will be the Chinese. We must help them to be separated from us and to become under the control of the Chinese.
      The Ukrainians are our brothers and we must arm them and help them to defeat the Russians, to help them to get their independence
      The borders of EU includes Ukraine and Turkey both are or will be members of EU and of NATO
      The number of Russians to be killed for this liberation depends of Them : it could up to hundred thousands or perhaps millions.
      Ukraine for her security will build new nuclear missiles - they have the know how. It will mean the end of the war between Russia and Ukraine that Putin has started.
      The greatest books to understand that are the ones by Gogol, Bulgakov , ... And today Timothy Snyder

    3. CommentedPatrick Lietz

      Everybody, including Mr. Nye, seems to overlook Russia's major trump card:

      It has oil, gas and other essential resources in abundance, and it can defend those with its nuclear armed military as well as its very low debt to gdp ratio.

      The decline of the West, due to the crash in 2008, coupled with the economic ascendency of Russia, China, the other BRICS and other energy-starved Asian countries, means that Russia can allow itself to become less compliant with regard to Western demands. As simple as that. For the foreseeable future, ie 20 years, Russia will continue to grow, because cheap oil is becoming scarce, and they can deliver.

      In addition, Russia has Europe in an energy trap. No other supplier can offer Europe oil and gas as cheaply as Russia. And everybody knows it. In this case the suppliers hands are considerably stronger than those of their customers. Cheap oil is becoming scarce and alternative, reliable suppliers are nowhere in sight.

      That's the gist. So no amount of huffing and puffing by the West will change the situation on the ground. Even if they cut their nose to spite their face, Russia will grow in importance and the West, Europe first and foremost, will suffer for their meddling in Ukraine

        CommentedDavid Morgan

        eighty percent of all fossil fuels need to remain in the ground if we have any chance of combating uncontrollable climate change. So Vladamir the lying murderer will loose his trump card. Russia might have the fossil fuel, but it does not have the technology to get at most of it.

    4. Commentedhari naidu

      It's more a factor of American-centered intellectual thinking to talk about Russia's decline - not US. As a matter of fact, current thinking in Berlin is the opposite: decline of Russia is not in interest of Berlin. German companies have heavily invested in Russia (+600 DAX enterprises!) and they're not ready to leave Russia.
      Imagine if Putin can somehow convince or get Berlin to move closer to BRICs - what then?

    5. CommentedCarl Marsh

      .. Declining Russia has become a mantra of the US and western democracties, which unfortunately traps Joseph Nye as a bartitone in the usual chorus line. He does, however, make the point that the end goal of isolating Russian completely should not be a goal. On which ears will such advice fall, particularly when Russia bashing is in fashion in Washington and Brussels?

      It is regrettable that Washington first and foremost response to anything Russian is to trot out a "schoolmarmish foreign policy" to berate the former and put it in a corner with the usual insults for having been naughty. No a word from Nye mentions Washington's meddling in Ukraine to actively support the overthrow of its elected government, which directly stirred unease in the East and South East parts of the country. Somehow Russiaa, a regional power, should sit down and watch that mess unfolds on its borders and to allow the prize of the Black Sea port being seized by the US and NATO. Putin and whoever else at the helm of the Kremlin would have been derelict in doing nothing.

      Unfortunately, to see western reliance on the regime in Kiev looks so unsound' its troops could not even defeat the rebels, but they did show how to main and kill the civilian population and wreak devastation on the infrastructure. How can the rebel regions remain part of a continguous Ukraine after such a tragedy that could have been avoided had cooler heads prevailed?

      This development should have sent a clear signal to those meeting at this week's NATO powwow in Wales that what is needed is a more robust plan, nuanced enough to get its message sternly across to the Kremlin, but, at the same time, show some measured understanding of the latter's concern. Instead, these Heads of States behaved like arms dealers, which, according to their nature is to ramp up defence spending. Their's is further isolation of Russia, creation of spareheads for rapid deployment accompanied by threats and bluster, all stuffed into a package for delivery to the Kremlin.

      Just as the Vietnam war was financially calamitous for the US, threatned its position as a global power, and forced Nixon to abandon the gold standard, Ukraine is but another war -- after Iraq, Afghanistan, Syria, Libya. Right now, it may look like a western piès de résistance, but may turn out to be the achilles heel that plays right into Russia's hand. It should not be lost on anyone that Russia and the BRICS are already opting out of the Petrodollar System on which Washington depends to fund its fiat currency. The Fed's round-the-clock running of the printing press of trillions of dollars to prop up Washington's influence in world trade is a Ponzi scheme that will have its day of reckoning and global consequences. Russia knows it and the NATO isolation message could not have been more helpful in prosecuting their asymmetrical effort to weaken the US. Against conventional wisdom, the EU, which is still in an economic crisis is busy imposing economic sanctions against the Kremlin at Washington's behest. Clearly, the EU is, wittingly or unwittingly, facilitating the demise of the Euro, which would remove a challenge to the Fed's printing press continuing to prop up its Ponzi scheme.

      Finally, Russia and Ukraine have been neighbours who have lived, loved and fought with and against each other for thousands of years. It's simply schoolmarmish of young Washington to be giving them lessons on good neighborliness. Let's hope cooler heads prevail!

        CommentedMargarete Rolle

        It is rare to come accross intelligent and un-biased perspectives on the Ukrainian crisis. Unfortunately the mob-mentality of the Western leaders
        and their spread of influence on the mainstream Western media prevails.
        Why are not more people questioning what is NOT being said?

    6. CommentedYoshimichi Moriyama

      I would like to add a little to my first comment below.

      Kennan did not mean, when he said the West made the biggest mistake, that Eastern European countries should stay in the Russian orbit as they had as a member of the Warsaw Treaty Organization.
      What he meant was that "an Eastern European country not militarily armed in NATO" could be allowed free exchanges of goods, services, culture and people with Wester Europe without incurring suspision from Russia; Russia could accept that.

      If Russia did not feel militarily threatened, we could have more willingness on the Russian part for international cooperation in solving many pressing problems. The West and Russian do not have any interests to fight, as once they did in the First World War, over a Serbia or a Ukraine.

        CommentedYoshimichi Moriyama

        The West sowed the seed of the Crimean turnip by falling back on its dichotomizing habit of exclusively catering to pro-Western groups, and the turnip grew big on the manure of estrangement, and though I did not ask Putin and do not know, perhaps he had no other choice but to pull it out.

    7. CommentedDragan Nenadovic

      I suggest to author that next time he writes about Russian population decline, first checks the facts about it. Russian population is INCREASING lately, last few years, and it is the fact that everyone can easily check on internet. Whats more, western countries demography is in free fall, and the only reason it is not visible in numbers is because they import enormous number of people every year. That way, any country can have increase in population, Russia included if needed.
      As for economic decline, just looking at abnormal external debt of western countries, compared to almost no debt in Russian case, tells any sane person enough of who is going to decline economically.
      As for freedom, only birds are free in western countries. I like to say, that real freedom of the world will not be accomplished, until after we, the rest of the world, led mainly by Russia free poor, enslaved, people of North America from their regimes' elite and American oligarchs that keep them brainwashed from the very beginning of their lives.

    8. CommentedYoshimichi Moriyama

      I agree with the generalized problems oulined here by Prof. Nye.
      George F. Kennan said, amidst everyone else's triumphant euphoria, it was the biggest mistake that the West had made since the collapse of the Soviet Union when it admitted a few Eastern European countries into NATO. Kennan showed wisdom as a Russian expert and a veteran diplomat.

      As for Ukraine, the West again entrapped itself in its habit of dichotomizing which Ukrainian President was pro-Western and anti-Russian, and which one was anti-Western and pro-Russian.

      I am a little ashamed to be repeating what I already said, but Russia is culturally European, though a bit queer, in spite of its Slavophilic mentality. In spite of its Slavophile it does not have arrogance such as "Deutschland uber Alles in der Welt." In spite of its Slavophile it suffers from a very strong inferiority complex with the West.

      Kennan had an interview with the magazine Encounter (The Encounter?) some thirty years ago before the demise of the Soviet Union. He said that Russian had a much better chance for turning democratic in the last years of the Romanov Dynasty than now (thirty years ago.) Bolshevism was a Great Leap Backward; the intellectual and educational level of the Russian people is pretty high, but they do not have social and political institutions which can turn it into economic prosperity and political freedom.

    9. Commentedj. von Hettlingen

      Mr. Joseph Nye is right about the point that while the West condemns Putin's aggression, it shouldn't burn its bridges with Russia. The West has still "overlapping interests" with Moscow "concerning nuclear security, non-proliferation, anti-terrorism, the Arctic, and regional issues like Iran and Afghanistan". It has to work out a strategy that serves to teach a lesson, without spoiling the cooperation with Russia. Indeed, "reconciling these objectives is not easy, and neither side would gain from a new Cold War".
      Mr. Nye offers a grim assessment of Russia's future, seeing it as a "country in decline". It faces the challenges of a shrinking population, due to low birth-rates and low life expectancy; an economy that lacks diversification and a judiciary, that doesn't stick to the rule of law. In the absence of freedom and security, Russia is not a vibrant country that particularly draws investors and talents like the US or Britain. Dmitry Medvedev was teemed with enthusiasm when he became president. He had plans to reform Russia but had to give up his goals not long after.
      Yet a weaker Russia doesn't necessary imply the end of cronyism and oligarchy. Russia's future lies very much in the hands of Putin and those in his inner circle. Putin has his vision of Russia - the restoration of Novorossiya. Yet he is also a gambler and is prepared to risk blowback. Still he "lacks a strategy for Russia’s long-term recovery". So he plays by ear and "reacts opportunistically", to whatever comes up and capitalises on "domestic insecurity, perceived external threats, and the weakness of his neighbors" to make gains. Putin will continue to take advantage of the EU, which is rule-rich but cash-poor, to advance his interests in Europe. It is an important region as more than 80% of Russians live in the European part of Russia.
      Just as the issue is not what sort of strategy the West should have for Russia, but whether the West has the resolve to stand up for its basic values and to have the strategic acumen to deal with Putin's revisionist ambition. To what extent can the West still have a normal working relationship with Russia under Putin, who wouldn't hesistate to use "Russia’s nuclear weapons, oil and gas, skills in cyber technology" etc to "cause problems for the West and the international system"?

    10. CommentedPhilippe Abeille

      It makes clear that far from the Western mainstream press’s narrative of Russian President Vladimir Putin being the belligerent party who is seeking to create a new Russian imperium, the crisis is actually the result of the application of two canons presently influencing the conduct of American foreign policy namely, that of the ‘Wolfowitz Doctrine’ and the ‘Brzezinski Doctrine’. The former is an amoral philosophy permitting the pursuance of American hegemony at almost any cost and the latter, is an aggressive policy resolved to prevent the rise of any other nation as a competitor to American global domination.

    11. CommentedAlex Duran

      Zsolt Hermann, I think your critiques are precisely what the column and the author are trying to address. I don't believe Nyes "only sees a declining Russia"; he specifically mentions Russia's strengths when thinking about it's potential and actual role in the international system. Moreover, his call for long-term engagement with Russia and a desire to see a recovering and rebalanced Russia attests to the state of complex interdependence in the world, and particularly in Eurasia. Nonetheless, I do think your comment on a declining global world is interesting, and marginal (not to say, absent) in Nye's analysis.

    12. Commentedhari naidu

      Let's look long term on Russian energy sector - comparative advantage in global markets likely to be challenged with EU Energy Union seeking an alternative to Gazprom (Russia).
      Iran is likely to be the suitor to satisfy EU Gas demands once Gazprom is eventually marginalized - notwithstanding Berlin's current stand.
      In terms of long term perspective, Iran and P5+1 resolution of nuclear enrichment issue (under IAEA) will inevitably take into account the potential of Iranian future energy supply to EU.
      Russia fears such a development in the global energy sector which might marginalize Russian dependence on its energy exports. That's why the long term agreement to supply gas to mainland China - pipeline construction started this past month - may impact global unit prices should sanctions be lifted on Iran.

    13. CommentedVelko Simeonov

      Interesting and balanced article, however when we speak of declining Russia, we omit the fact that the west in itself is in decline. Yes FED/ECB financial gimmicks are still able to cover the true state of our economies but that won’t last long. Printing money has never worked before and regardless of modern economic and financial theories models etc. it is not going to work now either. The Russians have a Debt to GDP ratio of 13.4% vs 101.53% for US. Add to that the extensive, expensive and aging infrastructure that the US needs to replace in the medium term, which the Russians don’t have because they never had the cash to build it. So it may turn out that, not the US/EU but Russia is the one that needs to wait a decade or so before its adversaries collapse in its sight. I am not even commenting the EU, because we have turned into a giant museum of splendid times long past, run by faceless bureaucrats, working and living in Belgian glass bubble, detached from the needs desires and fears of the ordinary men, without a single day of actual work experience.

    14. CommentedCurtis Carpenter

      Good article -- frightening comments below.
      I think Russia and President Putin have and can continue to contribute to greater balance in the global conversation -- but he and his government must want to build a constructive role going forward. And they must solve the internal problems of their country -- not simply paper them over with appeals to Russian pride and nationalism.

    15. CommentedZsolt Hermann

      I can't argue with the writer about his opinion on Russia.

      But while he seemingly only sees a "declining Russia", I see a declining global world, countries in unmanageable debt, societies tearing apart along inequality, unemployment, loss of future prospects, freedom and democracy failing even the "most free and democratic" countries, not to mention the artificially generated geo-political conflicts, environmental disasters and so on.

      There are no isolated, local or regional problems in a global, integral world.
      Thus there are no country specific, local, polarized solutions either.

      We have to acquire a completely new perception of reality, and a parallel mutually complementing global cooperation, one that fits our new global, integral system, without it we will continue our slide into completely unpredictable, barbaric times.

    16. Commentedyang guang

      To sides to every story , we in the western world only hear what the media or government would want us to hear . I got some questions about Ukraine ? One is this why did the original President leave and go to Russia . Who was under writing Ukraine when they needed money as a country ( Russia ) why did the Russia government make a 500 billion deal with Ukraine before the former president was kicked out of Ukraine . Who kicked this guy out ?

    17. CommentedDavid Morgan

      Putin needs to be treated like an upset teenager who's had his Xbox mobile and play station taken away. So like a spoilt teenager, what does he do? He throws a tantrum, a very dangerous tantrum, but a tantrum nevertheless. He needs to be dealt with by given either or choices. If you behave like a good little Russian we will let you back into some of our clubs, and if you promise to behave and stop your bullying and lying we might even give you a little respect. IF not go at Russia guns blazing (metaphorically) close the Dardanelles to all Russian shipping put severe economic sanctions on the gas and oil industries and kick him off as many international organizations as we can. That should get his attention. Teenagers eh!

        CommentedMargarete Rolle

        Your comments on Putin:
        Sanctimonious, patonising, and a reflection of the mob mentality prevailing in the Western Media.