Tuesday, October 21, 2014
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Russia’s Eurasian Vision

NEW YORK – The escalating conflict in Ukraine between the Western-backed government and Russian-backed separatists has focused attention on a fundamental question: What are the Kremlin’s long-term objectives? Though Russian President Vladimir Putin’s immediate goal may have been limited to regaining control of Crimea and retaining some influence in Ukrainian affairs, his longer-term ambition is much bolder.

That ambition is not difficult to discern. Putin once famously observed that the Soviet Union’s collapse was the greatest catastrophe of the twentieth century. Thus, his long-term objective has been to rebuild it in some form, perhaps as a supra-national union of member states like the European Union.

This goal is not surprising: declining or not, Russia has always seen itself as a great power that should be surrounded by buffer states. Under the Czars, Imperial Russia extended its reach over time. Under the Bolsheviks, Russia built the Soviet Union and a sphere of influence that encompassed most of Central and Eastern Europe. And now, under Putin’s similarly autocratic regime, Russia plans to create, over time, a vast Eurasian Union.

While the EAU is still only a customs union, the European Union’s experience suggests that a successful free-trade area leads over time to broader economic, monetary, and eventually political integration. Russia’s goal is not to create another North American Free Trade Agreement; it is to create another EU, with the Kremlin holding all of the real levers of power. The plan has been clear: Start with a customs union – initially Russia, Belarus, and Kazakhstan – and add most of the other former Soviet republics. Indeed, now Armenia and Kyrgyzstan are in play.

Once a broad customs union is established, trade, financial, and investment links within it grow to the point that its members stabilize their exchange rates vis-à-vis one another. Then, perhaps a couple of decades after the customs union is formed, its members consider creating a true monetary union with a common currency (the Eurasian ruble?) that can be used as a unit of account, means of payment, and store of value.

As the eurozone experience proves, sustaining a monetary union requires banking, fiscal, and full economic union. And, once members give up their sovereignty over fiscal, banking, and economic affairs, they may eventually need a partial political union to ensure democratic legitimacy.

Realizing such a plan may require overcoming serious challenges and the commitment of large financial resources over a period of many decades. But the first step is a customs union, and, in the case of the Eurasian Union, it had to include Ukraine, Russia’s largest neighbor to the west. That is why Putin put so much pressure on former President Viktor Yanukovych to abandon an association agreement with the EU. It is also why Putin reacted to the ouster of Yanukovych’s government by taking over Crimea and destabilizing eastern Ukraine.

Recent events have further weakened market-oriented, Western-leaning factions in Russia and strengthened the state-capitalist, nationalist factions, who are now pushing for faster establishment of the EAU. In particular, the tension with Europe and the United States over Ukraine will shift Russia’s energy and raw-material exports – and the related pipelines – toward Asia and China.

Likewise, Russia and its BRICS partners (Brazil, India, China, and South Africa) are creating a development bank that is to serve as an alternative to the Western-controlled International Monetary Fund and the World Bank. Revelations of electronic surveillance by the US may lead Russia – and other illiberal states – to restrict Internet access and create their own nationally controlled data networks. There is even talk of Russia and China creating an alternative international payment system to replace the SWIFT system, which the US and Europe can use to impose financial sanctions against Russia.

Creating a full EAU – one that is gradually less tied to the West by trade, financial, economic, payments, communications, and political links – may be a pipe dream. Russia’s lack of reform and adverse demographic trends imply low potential growth and insufficient financial resources to create the fiscal and transfer union that is needed to bring other countries in.

But Putin is ambitious, and – like other autocrats in Central Asian nations – he may remain in power for decades to come. And, like it or not, even a Russia that lacks the dynamism needed to succeed in manufacturing and the industries of the future will remain a commodity-producing superpower.

Revisionist powers like Russia, China, and Iran appear ready to confront the global economic and political order that the US and the West built after the collapse of the Soviet Union. But now one of these revisionists powers – Russia – is pushing ahead aggressively to recreate a near-empire and a sphere of influence.

Unfortunately, the sanctions that the US and Europe are imposing on Russia, though necessary, may merely reinforce the conviction among Putin and his nationalist Slavophile advisers that Russia’s future lies not in the West, but in a separate integration project in the East. US President Barack Obama says that this is not the beginning of a new Cold War; current trends may soon suggest otherwise.

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  1. CommentedJohn Gallagher

    Kissinger has brilliantly written that Ukraine's future is as a bridge between East and West, specifically now between the EU and Russia, or tearing itself apart (www.washingtonpost.com/opinions/henry-kissinger-to-settle-the-ukraine-crisis-start-at-the-end/2014/03/05/46dad868-a496-11e3-8466-d34c451760b9_story.html). Tragically to now, the latter alternative is what obtains.

    The respective alternative logics of integration or disintegration will flow right across the Eurasian continent. China and the Silk Route also need to be worked into this grand equation.

    These alternative logics are derived from two things in particular. One is the hard-learned lessons of European war and peace that took centuries to learn before eventually resulting in the EU. The second is an understanding the integrative potentials of new computing and communications technologies.

    Yes, harmonious, win-win Eurasian flows will require many issues to be brought out and addressed.

    However, addressing them and creating participatory fora from local communities upwards in which to do so, is the only way to get a peaceful, productive Eurasian Continent - and world.

    The Eurasian issue is bigger than just Russia, or Mr Putin - or Mr Roubini for that matter. I am disappointed with the way he has in this article bought into and further disseminated the logic of disintegration. He is capable of much better. Again, the issue of Ukraine is ultimately about working to develop total continental harmonious, participation-based integration - or disintegration.

  2. CommentedJudith Shapiro

    The main error made here by almost all commentators is to model the Russian state as if it were one decision maker, which we call 'Putin'. If that was wrong even for Stalin it is profoundly a poor model now.

    'Putin' has a mind of his own but his decisions MUST for good forecasting also be understood by us as the resultant of powerful vectors, only one of which is his aspirations

    To do otherwise is to miss serious turning points. Clearly there is a growing division between the section of the elite whose major aspirations are economic, especially those who want to grow a modern prosperous Russia in which they both benefit and can sleep at night when they aren't in Belgrqvia or Courcheval and the forces who want a new military state in which a capitalist calculus doesn't particularly make sense

    For the first group war is hell, even Cold War for the second heaven as everywhere

    Who will win? Which fraction will triumph if, say, the section who would actively welcome war win or are just acting on their own and, say on Friday 15 August the tanks roll across in to the Donbass? Claiming either humanitarian aid or hot pursuit

    I don't know. Neither actually does anyone. I think our job is more to work out whether sanctions or other measures strengthen the fraction of the elite we prefer. It's a bit dfficult for the US military who deliberately provoked the Iranian government in 1988 by shooting down a civilian plane to take the high moral ground But maybe we can have a lab game where they play the Russian military

    What do others here think about this modest proposal ?

  3. CommentedF. W. Croft

    If Putin's goal is to rebuild the Soviet Union he will fail. The Soviet Union (and other centralized autocratic economies) failed because they try to ignore information theory. They pump command "signals" into their economic circuit which (because they don't get feedback and adjust to it) move their state-managed economy further and further from fundamentals. (In information theory terms, this is adding more "noise" to the circuit.) That never works. Eventually, the economic "circuit" becomes all noise and no signal; it then collapses. This is what we saw with the original Soviet Union. If Putin's going down this path, Russia will pay a far bigger price than any impact of Ukrainian sanctions. The EU and the US need to think about how to cope with Russia if it becomes a failed state.

      CommentedJohn Gallagher

      In your terms, my own comment on this article was about the project of creating circuits for economic - and social - information signals to flow through unimpeded by divisions and conflicts within or between East and West.

      A consensus around this vision could be much better achieved and progressed if first there was more clarity and support for it, and less interference, from outside Ukraine.

  4. CommentedJohn Gavin

    The fact that there is widespread corruption in the business dealings of Russia means that nothing happens at a fair market price. This developed during the Soviet era and the forces needed to eradicate it have failed to develop. This low-level corruption will have to be eliminated with fair and free market practices before we can hope to see a powerful Russian economy competing effectively on the global scale. Who, other than nations needing critical resource imports would want to trade with a government that threatens to take over its foreign-based enterprises. Competitive growth in such a nation is highly unlikely to occur and create the desired level of prosperity that spreads wealth throughout the populace.

  5. CommentedNathan Weatherdon

    Why would neighbouring states want to chalk themselves into explicitly peripheral roles? Is it really such an amazing thing to be friends with Russia?

    My guess is heavy on the stick and light on the carrot. But entrenched interests in neighbouring countries presumably know a lot better how to benefit from close ties with Russia than from close ties with other countries.

  6. CommentedSharon Sanders

    The question for me is this: why are we propping up the Ukrainian side of this battle, that we incited, at least from what I've read, particularly with all the neo-nazi groups embedded in the new government? Putin's no angel, but why do we have to stick our nose in everyone's business--is it oil and other natural resources, is it fervent anti-communism on the part of neo-liberals, neo-cons, and New Dems? Since when are fascists any better than communists--extremism is evil from either side--of course, fascists allow ownership of gas and oil resources by mega-corporations, whereas communists take them over for themselves.

  7. CommentedChristopher Goodwin

    Kremlin's long term objectives? Survival. Medium term ? Survive the economic collapse of the US Dollar swindle economy. Short term ? Aha, now "Kremlin's" becomes "Putin's". He's got the Krimea. Can take eastern Ukraine any time he wants. Probably will taker the western Ukraine as well. Then offer a quid pro quo - I will leave Ukraine just as soon as NATO pulls out of the eastern states it agreed never to enter.
    Could be a long drwan out face off. Max humiliation for the White House.

  8. CommentedYoshimichi Moriyama

    If the West went on punishing Putin, would he throw up Crimea? I do not think he would.
    Could the West afford to castigate him indefinately, particularly when one thinks that Russia does not aim at hegemony in Europe?
    Perhaps Russian may have some part and some roles to play for solving some important problems of the world, for instance denuclearization of Iran and peace in Syria.
    As Mr. Paul Myers said, Ukraine cannot be said to be a democratic country free from corruption. If the West goes on adding countries like that into the list of Eu or NATO, there would be a risk of lacking in policy or military unity. Of course I admit my comment here is the case of what happens when someone writes about a subject that someone knows little about.
    Russia is anyway part of Europe both geographically and culturally though a bit queer.

      CommentedJohn Gallagher

      Some sensible and perceptive observations well worth pondering, in my opinion.

  9. CommentedJohn Kornblum

    Agree with Mr. Piel This column is an example of what happens when a well known analyst feels it necessary to write about a subject he knows little about. Comparing prospects of the EAU to experience of the EU is like comparing junior high football to the NFL. The basic elements of relations between Russia and its neighbors and the nations of the EU could not be more different. Russia is a former imperial power trying to regain control. EU members enter the organization with equal rights and are seeking to build a union among each other. This is only the most fundamental of a long list of differences. For that reason, the article cannot be taken as a seirous discussion of PUtin's future strategy.

      CommentedJudith Shapiro

      I agree that all of should be aware of the limits of our expertise, all the more so when we have been as accurate as Nouriel Roubini and have earned enormous credibility. When he announced in despair 'Marx was right' during dithering over the euro, the unhappy consequences were heard round the world (see Intellignce Squared debate last year)

      A tip-off something is amiss is that the diagnosis of goal of a USSR lite whch.I agree is Putin's, slips into conflating Russia with Putin during the article, and finally attributing to Putin powers that Roubini surely knows. Putin does not have, even with the terrible retrogression of freedoms . There is a reason to distinguish an autocratic regime from a totalitarian one. If anyone wants me to expand n this, I will, with evidence
      (I I don't consider myself an expert on the mind of Putin despite, or maybe becausr, and I have spent some 35 years focused on the region and know key players, the language, and have lived in both Russia and then Soviet Ukraine and have multiple working relationships both sides of the border)

      But is Kornblum suggesting Piel is better???

      I say irresponsible because this is as potential dangerous as Cold War reenactment as the people with mental health issues who are in the leadership of constructions like the Republc of Donetsk , some of whom now get to do war reenactment games with real bullets and.even some missiles. It's all as if unreal. Obama makes a speech with major out of date information on RUssian demographics -- was Rory McFarquhar on vacation? -This only helps the Kremlin to feel smug, Worse he uses this not constructiveky but to jeer at them, as he was oddly advised to do a few months ago in dismissing them as a regional powrt

      This is not even megaphone diplomacy which might make sense frm time to time.

      Maybe this is. Just because its now August silly season. Please think twice

  10. CommentedJean-Louis Piel

    Eurasia Union under Russian umbrella with never happen for three simple reasons.
    The first one that almost everyone seems to forget is that China has her own Eurasian Union project . They consider that the Russian one is in direct competition with their. What is the Chinese one ? It is a much more ambitious, refined, intelligent than the Russian one : it is the Union - in the Chinese way - of the interests between European Union and China through the rebuilding of the bound through Central Asia. What they name their New Silk Road. Russia is excluded of their vision. All their investments in Central Asia, in Turkey, in a Ukraine, in European Union countries are going to this goal. Kazakstan will never accept to be dependent of Russia but is accepting to be part of this a Union of Interests with China. For the Chinese Russia is just as few other countries a provider of raw materials - like the Middke East countries or the African or the South American or South East Asian countries. China has had a terrible experience to be an ally with Russia -Soviet a Union. Tens of millions of Chinese have died because of that. They don't forget that their prosperity has come since 1972-1982 when they have Ben open to World through an US partnership . China hates this Russia and gives a nickname to Putin - the mad dog .
    Second Ukrainians will never accept to be part if Eurasian a Union with Russia. Their fight for independence, their will to be de colonized from Russia is irresistible as all the past century decolonization processes have shown us. At the end it will the same for Georgia, Moldova, and later surely Belarus. Ukraine will become member of EU and of NATO.

    Third the G7 countries plus Turkey will never accept that Putin puts in danger the peace and stability and security of Europe and of a Central Asia ( Georgia, Azerbaijan, etc ) at risk. Step by step they will have no other choice than to fight a war against this Russia .

    Putin is in the verge to lose power. Why? Because he has lost Ukraine. Of course he could invade tomorrow and win the East plus Kiev and Odessa. But for how long ? the resistance from the Ukrainians will be so high -46 millions- who will be armed and helped by the West that I don't see how 110 millions of Ethnic Russians could survive to this resistance. To the massacres . With the fact that they will have no allies - not even Kazakstan or Belarus.

    Read for example Andrei Illarionov's articles - he has been the Sherpa of Putin from 2000 to 2005 at the G8 - or the writer Vladimir Sorokin , these two Russians have a precise vision of what Russia in few years or one decade : a Chinese controlled area. The Chinese have centuries of experience of that : sometimes with less of 1% Chinese they control the economy of a country - Indonesia, Philipines, etc,

    We in the West need to have consciousness that our goal is to destroy this Russian Federation as it is today , to give back the Far East to the Chinese to whom it belongs, to help for the independence of Islamist republics inside the Russian Federation, to cut these Ethnic Russians totally from the Ukrainians and from the West as it has been during the Cold War. So many empires have disappeared during the last five centuries why not this Russian one ? Last time they have been in war it was in Afghanistan . They lose in a much deeper way than NATO today.

    Nouriel Roubini , you know perfectly that a revolution happens today in the production of energy - it is one of the reasons the price of the Brent is stable even with these events. The importance of Russia as producer of gas and oil even important is relatively much less important . Any new technological revolutions produced by the West in this area of energy could make Russia totally useless . The fact will sale all her oil and gas to China is a very good thing for Europe . First it will take at least up to thirty years, second so many things could happen during this period.

    Last I suppose that to write to please some of your Russian clients . Nobody is perfect.

      CommentedNathan Weatherdon

      I don't see why the Shanghai Cooperation Zone and any Eurasia project would have to be mutually exclusive. Some countries would presumably prefer to participate in both.

  11. CommentedJean-Louis Piel

    I admire and love Nouriel Roubini as a person and for all his articles, researches , interviews , speaks and book. Except this one.
    Putin is like Hitler on many points : he is a frustrated bureaucrat - a low grade KGB officer , a failed one. It is because he was considered as a crook and incidentally a murderer - prosecuted for it - that he has been chosen by Berezovski in 1999 and proposed to Eltsin. His culture, his vision is nothing more than the one of low grade KGB officer - he is a street guy . His associated have the same level as himself . Hitler has had almost the same type of low level educated background and his allies were at the same level of Putin's ones. Essentially criminals.
    You could eventually change Hitler with Stalin .
    Of course Putin has not at all the stature of Hitler or Staline. The circumstances are radically different.
    Putin has no vision. He is an opportunist . He changes his speech each time he has another people in front of him. It is a basic KGB technic.
    What I just wrote has been written many times in different books about Putin - some if them by people who have worked with him during years,.
    Russia is weak and it is near collapse. How 110 millions Ethnic Russians , with an around 2% of the World GDP , could have any influence in a World of 7,5 billions human beings ?
    Eurasia Union will never happen for three simple reasons

  12. CommentedMarc Fleischman

    Dr Roubini raises very interesting questions and the comments have been equally insightful. All the analysis assumes the Cold War was won by the West and is over. I disagree. I think the Cold War was not won and is not over. While communism vas vanquished as a valid system, the Cold War continues to be fought and Crimea is just one of many unfortunate battlefields in the conflict. Assuming one agrees with this view, Russia should be treated as what it is, an enemy with non-aligned values and goals and allies. We should never expect Putin to act within the framework of Western democratic values and respect for international law because he rightly views the West as Russia's enemy and one he seeks to embarrass and harass at every instance. As for his long term goals, I'd suggest he just achieved one by securing Sebastopol and it's deep water naval port. Beyond this goal I'd say Putin's vision is a work in progress that will cost many more lives and destruction of property. The West will continue to lose the battles unless it acknowledges this reality. Strategies of containment need some revising but worked well since the end of WWII. Perhaps a new version should be implemented and tougher sanctions would be a good start.

  13. CommentedHarmohan Singh

    To His Excellency, Dr. Roubini.
    Thank you for sharing your thoughts, which I found helpful. With your permission, I offer the following comments :

    1. Agreed - Russia is Nationalist as opposed to Internationalist in character. This is a defensive mechanism, in light of Western political, economic and military domination in the world. And nationalists tend to win elections at home. Russia's ruling elite has their eye on domestic politics.

    2. Russia, via the Soviet Union, at a time was a superpower.
    Having experienced global power in the past, it is quite possible Russia finds it difficult to adapt to the new world order.

    3. The sanctions against Russia by the Western Alliance, including Japan are in keeping with standard statecraft - American-led global alliance must be taken seriously. An alternative political or economic system cannot be allowed to gain strength as it invariably will be at the expense of the former.
    4. Russia's determination for re-create a multi-polar system, viz. support for Syria, Iran, elements in Ukraine, etc. was bound to generate strong responses from the Western Alliance. Similarly Nato's expansion eastwards was looked upon with suspicion by Russia, and this possibly led to the civil war in Ukraine.

    5. The economic sanctions will bite especially In Russian banking, energy and arms exports - the 3 pillars of the Russian economy.
    6. The choice available to Russia is one of two - acquiesce to Western hegemony and become a junior partner, ie. be a part of the international economic framework. Or look East. Develop strategic and long term economic and political ties with the new China. For now at least, Russia appears to be moving East. Lets not forget she is a technological nation and by increasing trade with China, a major product for sale will quite certainly be Russian tech.

    7. Longer term, all parties need to agree to terms which foster a win-win. As the global leader, America will have to show the way. Mr Putin does not strike me as an unreasonable leader.

    Thank you.
    Best wishes
    Harmohan Singh
    Singapore

      CommentedDaryl stevens


      Dear Mr. Singh:

      Some very good points, but to add and disagree....

      Russia – Nationalism – Neo-Imeprialism – Switch Basis to Russia’s Grand Imperial past to delink from failure of Communism, and re-establish a longer more successful legacy, but much of his actions, often detrimental to Russia’s long-term viability, stability and development are for internal actors, it can not be forgotten that the Commanding Heights of the Russian Economy were taken by former Intellignence Officals and Black marketeers, who foten cooperated during the time of the Soviet Union, and were the only ones with what used to be termed “hard” currency. So Putin’s “Greatest Tragedy” is often pandering to the ruling elite, Silovki, who often hail from both organized crime and the former intelligence services, while his firm action also appeals to the Great War, Cult of Stalin, demographic which would have been, and remains a high point in Soviet history for older demographics.

      Putin has worked to re-emerge Modern Russia on its imperial roots, under a national Neo-Imperialism, which is a regionally expansive nationalism, where Russia/USSR/Tsardom had always sought internal security by pushing frontiers outward from its sovereign territory along its prone underbelly due to vast territory, unmanageable borders and far flung population centers (weaknesses).

      Alternative economic and political systems; uhmmmm....there is no such thing.

      Many have become so confused by notions related to globalization, global governance, rise of corporations versus the state dialogues, that they are larger over-assumptive of what the current system portends, thus largely incorrect as to what alterations, rising powers, and new projects could obtain in world that has only managed to construct a weak, multi-lateral system, since WWII.

      Long will countries be fighting the compulsions of their half considered rationalizations as material difficulties within their environments (Demographic, Political, Economic, Social, Technological, Etc) challenge their rise to provide stable productive societies in which their citizens can flourish; absent such, they will be at the mercy of humans and their emotional and intellectual whims. Notions of alternative economic and political systems are merely the playthings of politicians, the tools of autocrats, elites and idealists who need satiate some thing or another (internal to themselves, or external in another human form). The system as it has evolved is a slowly evolving beast of moderate
      Coordination due to the degree to which sovereign Westphalian prerogative still obtains globally over most territory, and the largely consensus or voluntary nature of many systems institutions. Notions that posit a new system, fail to see that retro-grade, or slow progress are likely the only choices. Russia, as others, has much work domestically, and there is little rationale, if much discussion, for altering, the system that has enabled many to rise, especially insofar, as the nature of its loose shifting confederation of sovereign agencies, in a world so complex, that only such as designed, could ensure to optimize participation. So notions of junior partner and similar are nothing but strategic tactics of politicians and political powers to build soft power, or to influence dialogues as trends do show the waxing and waning of different sovereigns within the loose global system that currently obtains. (While so many discuss the fall of the USd as a reserve currency, assuming it useful for the US economy, which it is not, contemplate how to get multiple powers to cooperate on something like an SDR, when they cannot even agree on carbon emissions, as 90-95% of all nations currencies, are weaker against the USD then they were in the 1990’s, as global discussion is of a weakening dollar, and currency manipulation and financial repression are tools of industrialization, that countries are reluctant to forgive, after they transit stages in their development, as all continue to seek to attach external demand, to their national domestic production, ad infinitum. A better question is what if the US rescinds the use of the dollar, and how could an alternative system evolve under such an occurrence, let alone while it is still in place, especially considering the current sovereign policies that obtain, while the global public good is being provided).

      Russia might be speaking as if it intends to create a multi-polar world, which assumes one has not always existed, but again this is likely poor evaluation, or merely pandering to internal parties, and seeking linkages that can strengthen Russia’s regional position for internal stability.

      It is likely that both Russia (geographic challenges) and China (access to required resources) have likely imperiled their own security via continued blocking of Western action (through UN on Syria, which is nothing but a strategy that both have practiced since the late 1990’s). This continued strategy will likely have just gone too far, I believe history will show in the case of Syria, and Iraq, although the repercussions may only be able to be surmised, as history has already taken place.

      Russia looking East. Russia has vast resources that it need dispose of, others will continue to acquire them. Russia will look in each direction to do so. While needing to secure its borders by engaging politically on each of these in as balanced a fashion as possible, due to population centers, Russia is, and has always been from re-conquest against the Mongols, a European power.

      As to American leadership, many ideas abound, but the world due to advances in the material capabilities of nations, states and individuals ever-more trends into difficult terrain, more people need to think about how they should assist in supporting the provision of global public goods, rather than run their heads around notions of rise and fall, beauty contest winners, and post-modern Hegelian and Kantian exercises that synthesize the wrong perspectives around the wrong ideals.





  14. CommentedVelko Simeonov

    Perhaps mister Roubini should shy away from analyzing things he does not understand, there is much more than numbers, economics and game theory behind Putin's vision and Russia's immediate and long term plans. History (and I am not just referring to the past 100 or so years) is the key to the future not economics. But then again a man with a hammer in his hand only sees nails that must be nailed.

  15. Commentedj. von Hettlingen

    Mr. Nouriel Roubini asks, "what are the Kremlin's long-term objectives"? Well, Putin's "Eurasian vision" is one of them. In October 2011 after announcing that he would return to the presidency the following year, he laid out a grand vision to bring former Soviet satellites back into the fold. At that time his move could haven been a sign of frustration with Russia's aspiration to join the World Trade Organisation. A regional customs union might have been Putin's response to years of fruitless negotiations. In August 2012 Russia did finally gain global integration after 18 years of effort.
    The "Eurasian union" could be an equivalent of the European Union and help boost Russia's influence on the global stage. Putin's proposal raised the spectre of revisionist designs - to re-form the Soviet Union, whose catastrophic demise he never fails to deplore.
    "We are not going to stop there, and are setting an ambitious goal before ourselves – to get to the next, even higher, level of integration – to a Eurasian union," he said, adding that Tajikistan and Kyrgyzstan were also expected to join. He dismissed the idea of recreating USSR, but insisted on a close integration based on "new values and a political and economic foundation". Needless to say under Russian leadership!
    Putin takes advantage of the legacy, which still remains after the collapse of USSR. There are traces of combined industrial resources and know-how; Russian is widely spoken. What he has to do is to rekindle old "friendships" and to evoke nostalgia. He has to act fast. There's a risk that the legacy may disappear in a decade or two.
    During his first years in power Putin had formed groupings aimed at regaining the power that Russia lost with the collapse of USSR. He focused on economic integration in his backyard and pushed for an adoption of the rouble as a regional currency. In 2009 a customs union with Belarus and Kazakhstan was formed, but the Eurasian union would take one step further. He saw "a model of powerful, supranational union, capable of becoming one of the poles of the modern world".
    More importantly "it had to include Ukraine"! It enrages Putin that Kiev has continued to seek closer ties with Brussels than with Moscow. He had tried to convince Ukrainians that his Eurasian union was going to be build on "universal principles of integration as an integral part of greater Europe, united by common values of freedom, democracy and market laws." But Ukrainians rejected his offer, which led to crucial events in recent months.
    Mr. Roubini thinks that "creating a full EAU... may be a pipe dream". Indeed, it will be an uphill struggle for Russia. With a combined GDP of over 16 trillion, the EU is the worlrd's largest economy. So the EAU will hardly outdo the EU. To what extent the sanctions will affect Russia's growth remains to be seen. Nevertheless "Putin and his nationalist Slavophile advisers" want to believe that "Russia’s future lies not in the West, but in a separate integration project in the East". If this is "the beginning of a new Cold War", there will be loads of hot politics!

  16. Commentedjose oscategui

    It is funny to read Roubini, he appears to believe that to understand something you only need to see one side. Should he try the same analysis he applied to Russia but now to the US he will have to use many of the same arguments but this time referring to the US.
    Would the US nomenkatura permit to lose Ukraine? Doesn't it mean that the US wants to expand its already almost global empire? It seems that to Roubini the US represents the Good and Russia the Bad. Reasoning like that makes easier to say something about the world, but not to understand it.
    Mr Roubini shoud answer why the US wants to take hold of Ukraine....or it does not?

  17. CommentedJohn Doe

    Yes, that would be a new cold war. The difference though, is that the Russian population has a base for comparison this time round- they would know what they are missing on, so it's likely to be very short.
    That is - if the Russian government fails to create a value-adding economy. And the only way that they can avoid failure is to Westernize Russia (rule of law, good entrepreneurial climate etc.)

    So this is actually not a bad direction for things to go - it limits the economic ability of the RF to wage war in the shorter run, and sets the stage for a change of heart in (in one way or another) in the longer run.

  18. CommentedDragan Nenadovic

    I am surprised that Mr. Roubini, knowledgeable person as he is, does not know that Russian demography is increasing and not decreasing as he stated. Also, Russian economy is in much better shape then any of the western countries' economies, 1/2 trillion in reserves, almost no external debt, abnormal natural resources and etc. None of that can be said for any of the western countries that are in deep debt and almost without any foreign exchange reserves. What I see here as the reason why western regimes have instigated undemocratic over through of the legitimate government of Ukraine, and later fueling killings by junta of its own peaceful citizens of the east, is the fact that Russia has decided to make move into establishment of BRIC's controlled investment fund, bank, de-dollarization of oil and gas trade, as well as getting rid of dollar in its foreign currency ( China is doing the same as fast as it can ). All of that is of mortal financial danger to western oligarchs, whose wealth is mainly kept in that worthless currency, dollar. I do not see any way for western oligarchs to win this battle, primarily because all of the rest of the world is firmly in line with Russian strategy envisioned for the future of the world. And, sooner, rather then letter, we, the rest of the world will have to join forces and crush such uncivilized, undemocratic way of running worlds affairs that western regimes are preferred on establishing.

  19. CommentedKarel Svoboda

    I agree with Paul A. Myers. Russia's strategy does not aim at spreading its influence, but at limiting the losses. Acoording to this perception, since the fall of the Soviet Union, the West has been moving towards the borders of Russia (Roubini is wrong in one thing-Putin did not speak about catastrophe itself, but about "geopolitical catastrophe"). As a result, Putin tries to do his best to prevent such a trend - he bribes the post-Soviet countries with financial support (Yanukovych, Lukashenka). Russia is losing to China in Central Asia, only Armenia remains its "friend" in Caucassus and now its losing Ukraine...

  20. CommentedPaul A. Myers

    Implicit in Roubini's analysis is a presumption that Putin's strategy is a road map to some future success. More likely it is a strategy to long-term secular decline.

    A key difference can be seen in the case of China. China is integrating into the world economy as the path to future economic growth. In service of that goal, it is concluding arrangements with Putin's Russia where Russia will be a long-term supplier of cheap energy which China will use to power its way forward in the world economy.

    Most likely Iran will not be able to conclude a nuclear deal with the West and other parties and it will continue to be a pariah state. As a pariah state, it will scratch money out of the world system by selling energy at low prices.

    In other words, international sanctions on both Russia and Iran guarantee their status as energy providers at below-market prices to the world economy.

    In a world with too much fossil fuel energy, bottling a lot of this up in pariah states blockaded behind international sanctions is good business for all the energy companies outside the sanctioned area.

    The Russian oligarchs want an expanded EAU not to power region-wide economic growth but rather to form powerful personal oligarchies for aggrandizement. Torpid is the adjective to describe the economic prospects for the region.

  21. CommentedSteven Wartofsky

    For me, the ultimate tragedy in all this is that the US, in particular, rather than trying to entice Ukraine into a trade zone in a way that shuts the door on Russia, could instead have found a process of opening and expanding trade completely inclusively. I think Russia and Putin would have been fine with that.

    Instead, the US has initiated the beginning of a tariff/trade war, thus closing doors in its own trade zone and providing impetus for rapid growth and consolidation of a BRICS trade zone.

    I fear, ultimately, given the future of the global economy and its new centers geographically, that this will only rebound negatively upon the West.

    When it could have been a tipping point for advancing and internationalizing and freeing global trade dramatically, instead.

    Our provincialism always sinks us, unfortunately, wherever we are.

      CommentedPaul A. Myers

      For 25 years the Ukraine was an economic basket case riven with corruption. Now it is a "tipping point?"

      Most likely, the Ukraine is most likely irrelevant to the development of the European and world economies. There's just not enough "there."

  22. CommentedPaul Daley

    This presents a maximalist vision of Russia's ambitions, but when you negotiate with another state, you don't worry so much about what they want than what they need. And in this case, Russia may need a good deal less than a new empire. Rather than negotiate with each of the states of the former Soviet Union individually and sequentially, the EU may want to negotiate simultaneously with all, offering common terms. That is how the EU dealt with the Visigrad Four in Central Europe, and a similar approach in Eastern Europe might assuage Russia's fears that the EU's intent is just to pick apart the former Soviet empire, dealing with it last, when its position is weakest. There's also the economic argument that simultaneous negotiations can help avoid the ill effects of trade divergence that inevitably follow from sequential negotiations. In any case, before it works itself into a frenzy over its fears of what Russia may want, it may pay for the EU to take a step back and consider what it can do, at relatively low cost, to meet Russia's needs.

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