RUSSIAN FOREIGN POLICY IN ANNO DOMINI 2006 AND PROSPECTS FOR 2007

RUSSIAN FOREIGN POLICY IN ANNO DOMINI 2006 AND PROSPECTS FOR 2007

"The past year was a watershed period for Russia. For the first time, Russia chaired the Group of Eight (G8) most industrialized nations --a presidency that significantly raised Moscow’s international standing. Economically, 2006 also brought important breakthroughs, including mounting energy profits and the signing of a landmark deal with the United States paving the way for World Trade Organization membership. Russia’s quest for global status, however, was marred by a number of bruising diplomatic rows and controversies -- most notably its ruthless dispute with Georgia and the high-profile killing of journalist Anna Politkovskaya. These events and others have fueled concerns that Moscow’s growing confidence is emboldening Russian leaders to treat critics with increasing brutality."
Claire Bigg [of Radio Free Europe / Radio Liberty] in "Russia -- A Year of Muscle and Missteps", 31 December 2006
www.eurasianet.org.

"Russia -- 2007 will see America’s (and, to a lesser extent, Europe’s) relations with Russia deteriorate faster than those with any other major state. President Putin presides over a government--and a public--which feel humiliated by a decade and a half of perceived western-imposed economic and political injuries. Economically, the cash-starved Yeltsin government cut sweetheart deals with multinational energy firms like BP, Shell, and ExxonMobil to exploit Russian resources. Politically, US and European-led NATO advances encroached on former Soviet territory-- over furious Russian objections. The creation of the Baku-Ceyhan pipeline, which conspicuously bypasses Russian territory, and a series of revolutions and near-revolutions along Russia’s soft underbelly have upped the ante. With American power stretched thin by the war in Iraq and the proliferation conflicts with Iran and North Korea, and Russian power heightened by both Putin’s consolidation of domestic political power within the Kremlin and high commodities prices, the Russian government has never felt stronger. The Kremlin is in strong position to press its advantage--and knows it.

All this means that 2007 will generate increasing risks as the Russian government asserts ever tighter economic control over strategic sectors (squeezing out foreign companies when desired) and political control of the “near abroad” (especially in Ukraine, Belarus, the Caucasus, and others areas the Russian government considers within the country’s traditional sphere of influence). Also, Russia will aggressively approach energy sales to Europe and elsewhere, demanding acquisition of refining and distribution assets abroad and provoking resistance and recrimination from some countries. Finally, the presidential succession (elections in March 2008) will lead to some market instability this year. Russian oligarchs--both in government and the private sector--will seek to consolidate control of assets before the political landscape changes. Their actions could affect foreign firms.

Keeping Russia from a higher spot on the risk list (say, above Turkey), a growing Russian middle class will create still stronger consumer markets for high-end services, white goods, and a construction boom, making Russia one of the world’s most appealing retail markets (with the important caveat of entrenched corruption). And no internal threats to Putin’s political control mean the run-up to elections should not spark capital flight, irrespective of oligarch consolidation. Fixed income markets should remain strong. But for multinational companies investing in strategic sectors, 2007 will be even less pleasant than last year>."
Ian Bremmer in www.washingtonrealist.blogspot.com

It could indeed be argued that the year 2006 was the year in which Russian Foreign policy made, on several occasions, shockwaves around the world. From the G-8 Summit, to the standoff with Kiev over gas pricing, to the conflict with Georgia, to its role in the crises with North Korea and Persia, to the meeting with the new Hamas government, Russia presented the image of a Great Power, with vital interest and concerns in various crises and places on the planet. Something which was true for the first time, since perhaps 1989-1990. Which raises the question if this will prove to be a one time thing, or is it an indication that going forward, Moskva will increasingly throw its weight on the scales of International Relations. How dependent is such a role, on the current high prices for energy commodities? What will be the effect of the fact that 2007 is also the year that Parliamentary elections takes place, and, the year in which Putin may anoint his successor? Will following from the latter, Anno Domini 2007 be a sort of interregnum in foreign policy? Will the ultra-competent, Sergei Lavrov, finally emerge as an independent force in Russian policymaking circles, or remain merely 'his master's voice'? Is Russian foreign policy separable from the state-controlled, energy giant Gazprom's own policies? What will Russia's policies be towards its neighbors in the 'near abroad'? In the Kavkaz region? What attitude will Russia take towards the twin crises of North Korea and Persia? What will relations with the EU and the USA be like given all these developments? Can talk of a new 'Russian Imperialism' be regarded as silly neo-conservative blather or does it need to be taken serously? All of these topics and more are touched up, in an experts roundtable, by the online journal, Russian Profile (www.Russianprofile.org). We present it to our readership for their enjoyment and edification.

Russia Profile Experts Panel: 2006 in Russia’s Foreign Policy

Introduced by Vladimir Frolov of Russia Profile


Contributors: Edward Lozansky, Andrei Zagorski, Ethan S.Burger, Andrei Seregin

"As the year of 2006 draws to a close, we take stock of what Russia has achieved on the international stage and what lessons Moscow needs to learn to correct some obvious mistakes and exploit the new opportunities that have emerged in 2006.

The year started miserably for Russia as it had to deal with the uproar in the West over the cut off of gas supplies to Ukraine and Europe. This was the first time Russia used the energy weapon to achieve both economic and political objectives and although it got what it wanted with regard to Ukraine, it seriously damaged its image in the West as an energy supplier.

It is perhaps an irony of sorts that Russia chose “energy security” as the principal issue for its first chairmanship of the G8 and it became the mantra of Russia’s foreign policy throughout the year. Russia has had some success with promoting its vision of energy security that includes the right of the supplier to invest in national distribution networks and negotiate long-term contracts. But it met resistance, particularly from German Chancellor Angela Merkel and the leaders of Poland and the Baltic states, when Moscow tried to secure Russia’s long-term dominance on the European energy markets.

Russia hosted a relatively successful G8 summit, but failed to secure all of its objectives on energy security and other issues. Calls in the West to boycott the G8 summit in St.Petersburg because Russia was not a democracy, were ignored.

The energy security story took a new turn in the fall as Russia put pressure on Shell and its Japanese partners in the Sakhalin-2 PSA project threatening at some point to revoke environmental licenses for the project. It took the divestiture of Shell and the Japanese companies, giving Gazprom a controlling stake in Sakhalin -2, to settle the row, with Putin playing the deal-maker.

The relationship with the EU has been stagnating, at best. Russia and the EU failed to launch negotiations on a new strategic agreement to replace the PCA (Poland acted as a spoiler). The relationship with Britain went from bad to worse, as the Litvinenko affair degenerated into a nasty media campaign against Russia. Germany’s Angela Merkel proved to be a much more difficult partner than Gerhard Schroeder and Putin has had a difficult time adjusting to her style and priorities.

On the US front Russia scored an important success as the protocol on Russia’s accession to the WTO was finally signed in mid-November after years of arduous and frustrating negotiations. But the general tone of the relationship has been deteriorating and mutual trust dissipated as Moscow and Washington found themselves on different sides of many international issues from Iran and North Korea to Belarus and Georgia.

In the former Soviet Union Russia managed to bring about positive change in its relationship with Ukraine (thanks to Yanukovich’s big win in parliamentary elections in March) and with Moldova (there President Voronin saw the folly of his ways and recanted after Russia imposed a sweeping sanitary ban on imports of Moldovan wine and threatened to raise gas prices). But Russia almost went to the brink of war with Georgia and imposed tough economic sanctions in response to Saakashvili’s anti-Russian policies.

On Iran, Russia bargained hard over the details of the new UNSC resolution to soften its terms but so far this has not brought any changes for the better in Iran’s behavior on the nuclear issue.

Many Russian commentators argued over the year that Russia has finally returned to the world stage as a great power and that current anti-Russian cries in the West are nothing but the growing pains of Western elites that now need to adjust to the new reality of a strong and forceful Russia.

Is it so? Has Russia proved its new international strengths over the last year or has it demonstrated some new weaknesses? What were the most important successes of Russia’s foreign policy in 2006 and what were its biggest failures? What will be the biggest foreign policy challenges for Russia in 2007?

For this we ask Russia Profile Weekly Experts Panel.

Edward Lozansky, President, American University in Moscow :

Russia, against all odds, has definitely returned to the world stage as an important geopolitical actor, thus proving the countless number of sovietologists, kremlinologists, and even the most sophisticated western politicians wrong. Of course, who could have predicted this to the chunk of the former Soviet empire with the devastated economy, huge foreign debt, and no experience in capitalism. Nevertheless, it did happen. Russia is obviously back, and the world will have to live with this whether someone likes it or not.

Actually, the West and particularly the United States, instead of worrying about this unexpected phenomenon, should be very pleased. The latest sad state of international affairs proves that for all its hegemonic might, the United States cannot resolve all problems single handed nor with the help of European allies or NATO. It cannot “win peace” in Iraq, or maintain stability in Afghanistan, or force Iran or North Korea to abandon their nuclear programs, or settle the Israeli-Palestinian conflict.

Of course, there are many people who believe that a strong Russia is part of the problem and not part of the solution. Unfortunately, they may have a point, but let us be fair. The Western laundry list of Russia’s misbehaviors can be matched by a similar list of grievances from the Kremlin. Any unbiased observer will easily see that the list of recriminations in either case is perfectly logical and adequate.

However, let us not try to settle scores here but instead invite both Russia and the United States to make concessions on at least one of the key issues, considering that in this festive season it is customary to make New Year wishes and pledges.

For instance, Russia’s Iran policy alarms even the most loyal of its friends in the West. Only someone who can neither hear nor see can fail to realize that Iran is doing its damnedest to obtain nuclear weapons, and is likely to have its wish within a reasonably short time. It is enough to listen to pretty frank statements by the Iranian president and his entourage to see that we are dealing with fanatics here, and fanatics armed with nuclear weapons pose a very serious threat for everyone, Russia included. Unfortunately, a closer look at Russia’s policy in that part of the world suggests that it is making it easier rather than harder for Iran to join the nuclear club. Would Russia be prepared to modify its Middle East policy to prevent this from happening?

As far as the need to readjust US policies is concerned, the worst irritant for Russia there is NATO’s Eastern enlargement, in particular the involvement of Ukraine and Georgia. If this becomes a fact, US-Russian relationships will be poisoned for decades to come. At the same time, in both political and purely practical terms, it would be a lot more reasonable, instead of enlarging NATO, to replace that organization with a new and, hopefully, more efficient entity that would incorporate Russia.

As everyone knows, NATO was originally devised to counter the military threat presented by the USSR and world communism. It certainly accomplished its mission with flying colors, and many people expected it to be disbanded after the Warsaw Pact was dissolved. When it became obvious that that was not going to be the case, there was talk of Russia joining NATO. However, that accession never materialized, for various reasons, and will hardly occur in the future. Over the last fifteen years we have lived in a paradoxical situation where a mighty military structure with a vast budget had no clear-cut goals or tasks, and more, no specific adversary. At the same time NATO continued expanding inexorably, and it was not till the latest conference in Riga that the adversary – international terrorism – was finally discovered.

Considering that a successful struggle against terrorism is hardly possible without Russia actively taking part, it seems logical to suggest the following scenario: NATO announces its self-disbandment and simultaneous entry into another structure tentatively to be named the International Anti-Terrorist Organization (IATO) that would comprise countries recognizing its charter, goals and tasks and prepared to take part in large-scale global battle against terrorism. Ideally, it would merge or at any rate coordinate its actions with the Shanghai Cooperation Organization (SCO), since their goals and tasks would be very similar.

Should Russia and the United States discuss in earnest the two aforementioned issues and agree on a solution, I am confident that they could also achieve headway in other important areas.

This is my New Year’s Eve wish whether some people agree with me or think that I am a super na?ve dreamer, to put it mildly.

Happy New Year to all authors and readers of this Experts panel.

Andrei Zagorski, Associated Professor, MGIMO-University:

Two major events lead the record of Russian foreign policy successes in 2006: returning all debts to the member states of the Paris club and reaching an agreement with the United States on the terms of WTO accession. The former completed a policy pursued for years, boosting the Russian authorities’ self-confidence, who no longer fear a repeated default. Self confidence was also boosted by Russia’s presidency of the G8 and a perfectly organized summit in St Petersburg in July, overshadowing other presidencies Moscow held in 2006 in the Council of Europe, Black Sea Economic Cooperation, and the Barents Sea / Arctic Cooperation Council.

The self confidence did not translate, however, into political successes in either Eurasia or other parts of the world. Here, Moscow is still testing how far it can go without spoiling its relations with the United States and/or overstretching its resources.

In 2006, the Moscow sponsored Single Economic Space project suffered a decisive setback. Even with the new government, Ukraine was not prepared to get too close to Moscow and dropped out. After Belarus opted out over the dispute with Russia regarding gas prices, the whole project boiled down to a further rapprochement between Russia and Kazakhstan in which Astana has no interest in taking on the role of junior partner.

Moscow failed in attempts to pursue a regime change policy with regard to Georgia. It also sent mixed signals on Abkhazia and South Ossetia. On the one hand, Moscow obviously encouraged them to put independence back on the agenda but, on the other hand, its policy remained ambiguous, at least.

Moscow continued to be part of the multilateral processes as regards the three most important issues dominating the international agenda in 2007: Middle East, nuclear proliferation (Iran, North Korea), and Kosovo. However, it failed in the former, seeking to persuade Tehran to cooperate with the international community on its nuclear dossier, and resisting any discussion of the dossier in the UN Security Council in order to avoid sanctions against Iran.

In all those cases, Moscow ended with defensive policy trying to reduce damage to its alleged interest, and remained an important part of the process mainly because it can veto decisions in the UN, not because it proved to be able to help solving the issues.

Last but not least, Moscow has managed to position itself as part of the energy security problem rather than part of the solution.

Despite impressive investment, the image of Russia suffered further, particularly in Europe and in the United States. The increased self confidence resulted however in the acknowledgement that Moscow has become a more difficult partner. At the same time, there is growing recognition that, while interest based deals with Russia are possible, it remains distinct and apart, not a genuine member of the family representing the historic core of the G8.

Ethan S. Burger, Scholar-in-Residence, School of International Service, American University Washington, D.C. & Adjunct Professor, Georgetown University Law Center, Washington, D.C.:

It is not possible to pursue several different policies simultaneously, and then after several years of hindsight determine whether the choices made were right. It may be necessary to wait until 2010 to take stock of Russia's performance in 2006 -- when the country's new political leadership will have a chance to assess the country's recent policy initiatives.

Germany in 1939 had achieved significant economic and foreign policy goals. In 1943, the situation looked quite different. Ironically, in 2006 Germany has achieved through peaceful policies what it could not accomplish by force of arms in the 20th Century.

Clearly from a macro-economic standpoint, if one compares Russia today to Russia in 1998, no one can contest that there has been an improvement in the country's balance of payment, budgetary situation, and per capita income. These factors may have allowed the Russian government to undertake some important policy initiatives (such as increasing the salaries of civil servants), but is not certain they will ensure improvements in the quality of life of Russian citizens. One can take pride in their country's growing importance in world politics, but it is not something that results in better medical care, longer life expectancies, better housing, or improved schools.

If one examines the Economist Intelligence Unit's Quality of Life Index or the United Nation's Human Development Index, which takes into account a large number of factors such as life expectancy, political freedom, job security, GDP per person, family life, climate and geography, political stability, gender equality, and community life, Russia's ratings are far from impressive. Granted, these measures invariably suffer from methodological flaws and time lag issues, but represent useful tools for comparative purposes.

They raise the question: are the Russian people better off today than before? One's response depends on the importance one assigns to the variables measured. Still, according to both indices, Russia ranks behind Bulgaria and Romania. There is only so much one can blame on the weather.

I think it likely that due to the high price of oil and natural gas, Russia's ranking within such indexes is higher than it would have been several years ago. At the same time, I would query whether alternative policies would have led to Russia receiving an even higher ranking.

In looking at GDP per person, we are looking at an AVERAGE. A few hundred billionaires illustrate why medians are often viewed by social scientists and economists as more important than means. This of course assumes that one values egalitarianism as a societal objective.

While Russia was a G-8 participant and host, on its way to WTO membership, this is a reflection of its economic power in the natural resource sector -- not that it has been accepted into the family of developed "western democracies." China is a member of the WTO and the human and worker rights conditions in that country are appalling.

May 2007 prove to be better for the Russian people.

Andrei Seregin, Senior Policy Analyst, National Laboratory for Foreign Policy, Moscow:

A lot of analysts on both sides of the Atlantic prefer to follow the usual line, stating that the course of events in 2006 downgraded relations between Russia and the West to its lowest point. That seems only to be half the truth - hard times dialog is still ahead.

Despite the now quite obvious drive on both towards Nixon-Brezhnev-style «realpolitik», relations between Moscow and Washington are still fairly unbalanced – in terms of both, interests and aspirations. To put it in a simple way – each side still thinks it could have got more from the other.

According to old-style «zero-sum» logic, Russia's recent success worldwide is partly due to the fact, that the West hasn't yet managed to elaborate effective means to counter Russia's energy policy. Preoccupied with Iraq, Iran and the results of recent mid-term elections, the American political establishment is obviously not ready to lead efforts either against Putin's energy policy or in regime change in Russia.

Washington’s occasional claims to counter Russia energy influence by taking institutional steps ( e.g. either through NATO authority, alternative transit pipelines or isolating «authoritarian» Russia with US-managed «world concert of democracies») are still more of a policy blueprint, than a plan of action. Yet, most blueprints and policy-memos are known to materialize sooner or later into foreign-policy actions.

The West is well aware that the main source of Russia's foreign policy weakness is the absence of consensus among its political elite at home. During the forthcoming parliamentary and presidential elections in Russia, we are going to see another diplomatic and economic offensive against the Kremlin. Through 2006 all guns were effectively on stand-by mode – the cases of Yukos, Politkovskaya, Litvinenko and the like have enough substance to be turned into political sanctions against Putin. The ideas of the West leading the world fight against corruption, NATO acting on the basis of energy resources or democratic countries undertaking anti-Russian conspiracies within the UN – are yet to materialize.

Russia's return to the world stage as a superpower will definitely come at a price. And we still have to pay for it. After Shtokman and Sakhalin, the Kremlin has yet to put some substance in the term “energy security”, generally chosen to attract the West. For 2007 that could mean making real progress on energy with Germany as the first step in securing long-term positions on European energy markets.

We also have to demonstrate the resolve to use our assets in the grand geopolitical game. The Kremlin will very soon find itself facing the real policy challenge and ideology choice – generally, either to pursue a Saudi Arabian or a Chinese model. The latter will require some dramatic foreign policy changes, making tangible progress in forming a viable union with Belarus and Kazakhstan, perhaps even at the expense of revenues for some Russian state controlled companies".