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How the ‘Crimea virus’ is eating away at the country’s foreign and domestic ambitions.by Andreas Umland 25 May 2015
In the understanding of too many Western journalists, diplomats, and politicians, the “Ukraine crisis” may have dire consequences for Ukrainians, Crimean Tatars, anti-imperialist Russians, and other Eastern Europeans. It is also admitted as an obvious embarrassment for the EU and NATO. Yet some seem to assume that Ukraine’s “crisis” will have few significant repercussions beyond Eastern Europe. At most, it is considered yet another territorial European issue difficult to solve. It is hoped, however, that it can be “frozen,” within some peculiarly post-Soviet failed-state equilibrium, resembling those already in place in Moldova and the southern Caucasus.
Some ramifications of Russia’s annexation of Crimea and covert intervention in the Donets Basin, however, go beyond Eastern Europe and are creating major deadlocks in northern Eurasia, threatening the foundations of Europe’s or even the world’s security system. Above all, they are triggering internal aftershocks in humanity’s largest country, permanent UN Security Council member, and second nuclear power, Russia – with global political implications.
END OF THE RUSSIAN ECONOMIC MIRACLE
Russia has entered a path of protracted decline. The World Bank’s recent forecast of a 3.8 percent decline in Russia’s GDP this year might still be too optimistic, as it does not account for the potential cumulative effects of increasing international tensions and the economy’s structural defects. While the growing aggravation and unpredictability of Russia’s economic calamity is a result not just of the “Ukraine crisis,” Russia’s military intervention in Ukraine and its effects on other spheres of Russia’s foreign and domestic affairs have been a catalyst. They are magnifying the salience of earlier unresolved problems in areas including state administration, regional development, industrial structure, immigration and emigration, demography, technological innovation, business management, public health, as well as higher education.
A sober evaluation of Moscow’s economic, political, diplomatic, and cultural challenges and failures makes for a pessimistic view of the country’s near future. The tireless bluffing of the Russian leadership and its “information warriors” should not distract from the fact that a prolonged Russian social crisis may count as a best-case scenario and that the current recession may turn into a depression. Even a chaotic dissolution of the Russian Federation, in case of domestic political strife, is no longer an unrealistic worst-case scenario.
Reasons for such pessimism are not hard to find, whatever the Kremlin’s hype to the contrary.
Above all, over the last 15 years of favorable world economic conditions, Russia has not managed to tackle its peculiarly post-Soviet version of “Dutch disease.” It will presumably also not be able to do so under current difficult circumstances and will be stuck with its dysfunctional economic structure for years. During the past period of high energy prices and close economic cooperation with the EU, Russia had the chance to establish the rule of law, create a functioning bureaucracy, and diversify its economy. In 1999-2013, the enormous income generated by energy exports, relative socio-political stability, and Western readiness to engage with Russia’s leadership, companies, and regions (in spite of abuses in Chechnya and its sponsorship of the breakaway Transdniester region in Moldova as well as Abkhazia and South Ossetia in Georgia) gave the Kremlin a window of opportunity to modernize the country. In 2008, Berlin even closed its eyes to Russia’s abrogation of its EU-brokered peace treaty with Georgia and started an official Modernization Partnership with Moscow that served as a template for Russian agreements with other EU countries. Yet the Russian economy became not less, but more, dependent on raw material exports during the last two decades. State corruption did not fall, but skyrocketed under Putin’s alleged “dictatorship of law,” a main slogan of his first presidency.
This fundamental defect was worrisome, but of only limited political consequence, as long as world-market energy prices were rising and the West was ready to invest heavily in and trade with Russia. The Kremlin had enough cash to distribute to its many servants and – to a lesser degree – among pensioners, students, and other dependent citizens. That situation drastically changed in 2014, in the wake of new OPEC export policies. The oil price may never return to its previous peaks – with far-reaching consequences for Russia’s economy and political system. Lowering tensions between Iran and the West, technological advances in the extraction, transportation, and use of fossil energy, as well as the rise of non-fossil sources will continue to cut the market share and to limit the profitability of Russia’s intense energy trade.
THE DETERIORATING IMAGE OF PUTIN’S RULE
The deep structural defects of the Russian economy are being compounded not only by rapidly shrinking export revenues for Russia’s energy companies and state budget but also by a steep drop in worldwide confidence in the sanity of the Russian leadership, the capacity of the Russian Rechtsstaat, the prospects of the Russian market, and the potential of the Russian economy itself. Especially in the European Union, Russia’s most important trading partner and foreign investor, the mood is darkening by the month. To be sure, there was already growing mistrust of Russia before 2014, due to Vladimir Putin’s increasingly manifest authoritarianism, the Russian economy’s dive during the 2008-2010 world recession, and the Kremlin’s ever more dubious conduct of foreign affairs. Russia’s lasting occupation of Abkhazia and South Ossetia, or calculated support of Syria’s Bashar al-Assad were among dozens of earlier points of disagreements with the West. Until the “Ukraine crisis,” the problematic issues in Russian-Western relations were, however, mitigated by the influence of pro-Russian political factions and business interests in the West. They were also partly discounted by the assumed improvement in the West’s relations with Russia that would come from Russia’s allegedly ongoing modernization.
Today neither the previously influential partners of, nor the formerly optimistic outlook on, Russia plays much role in the formation of Western opinions and policies toward Moscow. In view of the Kremlin’s shocking actions in Ukraine, the historical meaning and political interpretation of the entire period of Putin’s rule since 1999 is changing. Most Putinversteher (“Putin-understanders”) in Germany are now, at best, ignored or, at worst, laughed at, if not despised, for their misrepresentation of Russia’s recent history and leadership during the last year. To be sure, Russia still has considerable sympathy in politically or economically underperforming countries such as Greece, Hungary, or Cyprus. The Kremlin is also flirting with radicals on the European right and left and still commands some sympathy from various political pensioners in Germany. Yet Moscow’s very old and completely new favorites in the West only underline, in the eyes of the mainstream European public, how desperate, unattractive, and cynical the current Russian leadership is.
That disenchantment is a healthy development. The West has today a more realistic picture of the nature of Russian politics under Putin than it had before 2013. The Kremlin, in turn, may claim that the “Ukraine crisis” has made clear who is a friend and who is a foe of the Russian nation. Behind this clarification, however, looms the worrisome paradox that Russia’s major trading partner and foreign investor, and formerly strategic ally, the EU, has become its main political critic and geopolitical competitor in Eastern Europe (as the U.S. turns its attention to the Pacific region). While the union’s member countries too will suffer from the economic effects of this curious contradiction, Russian industry and society will be hit far harder than the EU’s as a result of the growing disillusionment and distrust of Russia among Western businesspeople, politicians, diplomats, journalists, and experts.
Thus, the current tensions between Russia and the West will have repercussions that cannot be easily overcome, even if a new détente materializes soon. The Russian leadership is lying when it says it does not need the West, that current Western sanctions do not seriously affect Russia, that the Kremlin has other options, and so forth. The role that EU clients, companies, universities, research institutes, and joint projects in many fields played in Russia’s relatively impressive resurgence until 2008 was significant. As the world-economic conditions for energy exporters worsen and the West fundamentally changes its attitude to Russia, the Russian economy will be left in limbo. Russia’s elite clans will clash ever more openly for a share of a rapidly shrinking pie.
Russian society is entering a state of permanent crisis. The full range of international ramifications of this destabilization are difficult to foresee. They constitute risks, above all, for Ukraine and other Western-leaning post-Soviet republics, yet will also affect countries beyond this area, from Central Asia and Western Europe to North America. Not only the EU, but all neighbors, partners, and competitors of Russia will have to pay more attention to, and may be affected more deeply by, Russia’s increasingly chaotic domestic and foreign affairs than hitherto. At least, in Northern Eurasia, crisis-ridden Russia will for years remain a headache for decision-makers in its neighborhood.
NO ‘COMMON EUROPEAN HOME’
Some nurture the illusion that the West could prevent or at least soften Russia’s ongoing fall. They believe that the West would be able to re-incorporate Russia swiftly into its system of concentric integration circles, given a friendly signal from the Kremlin or a leadership change in Moscow. While such calculations provide some hope, they may have already become unrealistic. As long as Crimea remains annexed, an instant reset of Russian-Western relations will remain difficult, if not impossible.
Only somewhat more than one year ago, Russia seemed to be slowly but steadily integrating with the West, and thereby gradually implementing Mikhail Gorbachev’s once pronounced vision of a “common European home.” Under Boris Yeltsin’s presidency, Russia entered the Council of Europe and the G8. The CSCE transformed into the OSCE. Russia signed a Foundation Act with NATO and concluded a cooperation agreement with the EU. Under Putin’s first two presidencies and Dmitry Medvedev’s pseudo presidency, the Kremlin’s course changed, to be sure, in substance. Yet the Kremlin’s official pro-European line continued and briefly became Medvedev’s semi-official doctrine. Under Putin, Russia entered a joint Council with NATO. Moscow identified four Common Spaces of cooperation with the European Union. It announced Strategic and Modernization Partnerships with the EU and its member states and started negotiations for a so-called New Agreement. The Russian Federation recently became a member of the World Trade Organization. The next steps could have been Russia’s entry into the OECD and, later, the signing of an enhanced Russia-EU cooperation or even association treaty.
That story, until recently particularly popular in Germany, is now over and will probably not resume soon. In 2014, Russia was excluded from the G8 and stripped from its voting rights by the Council of Europe’s Parliamentary Assembly. The negotiations about Russian membership in the OECD and New Agreement with the EU are suspended. The Strategic and Modernization Partnerships with the EU exist only on paper. The Foundation Act and NATO-Russia Council are dead and may never be resurrected. Russia’s expansion into Moldova, Georgia, and Ukraine, and especially its formal annexation of Crimea, have shattered the foundations of the 1975 Helsinki Accords and the 1990 Paris Charter of the CSCE. During the past months, Russia has been undermining the reputation of the OSCE by its covert boycotting of the organization’s monitoring mission in eastern Ukraine and selective implementation of the Minsk accords. Moscow is also subverting a core function of the UN by using its Security Council veto power to defend territorial gains. This is done, moreover, at the expense of a founding member of the UN (the Ukrainian Soviet Republic had, unlike the Russian Federal Soviet Republic, its own seat in the UN, in 1945-1991).
Russia thus has not only violated numerous treaties, especially with Ukraine. It has also devalued important networks and organizations it had been integrating or cooperating with for years, if not decades. While most of these international institutional links are formally still in place, it is unlikely that Russia will become a fully functioning part of them anytime soon. A good-case scenario would be that the Donbas conflict becomes “frozen” and that the so-called Luhansk and Donetsk “republics” develop into more or less peaceful Russian protectorates resembling Transdniester, Abkhazia, and South Ossetia – something the West could, perhaps, live with. However, the issue of Crimea’s annexation will remain open and may persist as a matter of contention for decades. While Western states and international organizations have been willing to put up with Russia’s territorial diversions in Moldova and Georgia, they cannot accept an official territorial seizure by military force.
MORE PROBLEMS TO COME
The idea of a common security and trade area “from Vladivostok to Lisbon” (not to mention Vancouver) will remain an illusion as long as Crimea is annexed to Russia. Given the Kremlin’s determined incorporation of Crimea’s public administration, juridical institutions, local economy, educational system, and cultural life into Russia’s sociopolitical system, the Crimean issue may have already passed the point of no return. At the same time, information leaks, investigate journalism, eyewitness testimonies, and scholarly research are documenting ever more clearly the aggressiveness and illegality of Russia’s behavior toward Ukraine since February 2014, if not before. As more people in the West and elsewhere become aware of Crimea’s Soviet and pre-Soviet past, the dubiousness of the Russian Federation’s historical claims to the faraway exclave will become better understood across the world (Crimea never belonged to the current Russian state as such but, since 1783, to the Czarist and later Soviet empires of which Ukraine was also a part. Moscow would, in view of its rationale for Crimea’s annexation, also be entitled to capture much of the territory of mainland Ukraine and other post-Soviet states.)
In addition, the horrendous past and difficult present of the peninsula’s indigenous people, the Crimean Tatars, is becoming an increasingly well-known and salient issue in international debates about the “Ukraine crisis.” This too will have unpredictable diplomatic as well as political consequences and could complicate, for instance, Russian-Turkish relations. The Turks are ethnically close to Crimea’s Tatars, and Turkey hosts a large and politically influential Crimean Tatar immigrant community. The case of Turkey’s interest in Crimea, and the country’s growing importance for the Kremlin in connection with a new Black Sea gas pipeline project, is an illustration of how the “Crimea virus” will infect many of Russia’s foreign affairs. Moreover, there are various logistical and infrastructure-related complications as well as high costs of the remote peninsula’s inclusion into the Russian economy. The “Crimea virus” may soon start to also weaken the Putin system from within. Crimea is a not only thorny but also in some regards poisonous issue to Russia’s international relations and domestic life.
Given the magnitude of international and domestic problems that Russia will encounter during the next years, one can only hope for sanity in Moscow. Sooner rather than later, Russia’s elite needs to soberly reassess the events of 2014, their repercussions for Russia’s future, and the feasibility of alternatives to Russia’s integration into Europe. Once the mood in Moscow changes in principle, Ukraine, the West, and Russia may have a chance to get out of the current deadlock.