September 2007
Russia on the Eve of Elections: Continuity or Change?
With the upcoming Duma elections this December and the presidential contest in March 2008, the Kremlin appears to be both confident and worried. President Vladimir Putin continues to enjoy high approval ratings and faces no genuine political rivals, yet authoritarian tendencies have risen sharply. Political groups failing to adhere to the party line continue to be harassed, marginalized, and prevented from political registration.
Although Russia currently enjoys stable economic growth and increasing foreign investment, Western-owned companies in the energy sector face stern pressure from the Kremlin to relinquish their assets to state-owned companies. In foreign policy, though the Kremlin claims the role of peacemaker in both Iran and Palestine, Russia continues to utilize energy supplies as a tool of diplomatic pressure against its former republics. It has threatened to target Europe in protest of missile defense installations in Eastern Europe, blocked the resolution of Kosovo's independence bid, and repeatedly shielded a nuclear bomb-bound Iran.
Can the Russian opposition mount a successful challenge to the Kremlin during the Duma and presidential elections? Will Putin's model of "sovereign democracy"--the centralization of political and economic powers--retain broad popular support? Will it prove compatible with economic growth or will it begin to impede it? Is a new Cold War inevitable between Russia and the West? On September 18, 2007 AEI hosted leading scholars and policymakers from the United States and Russia to discuss these and other questions. Topics included Russia's domestic policy, economic prospects, and foreign affairs.
Keynote Address
John R. Bolton
AEI
In 2001, President George W. Bush wanted to create a new U.S.-Russian partnership in three areas: strategic offense, strategic defense, and nonproliferation. After negotiating with Moscow, in 2001 we gave notice to withdraw from the Anti-Ballistic Missile Treaty of 1972. It limited both countries in the face of contemporary nuclear threats from rogue states, and Moscow knew that U.S. withdrawal was not a threat to Russia. In May 2002, Bush and Putin signed the Treaty of Moscow, agreeing to reduce operationally deployed strategic nuclear warheads from 6,000 to between 1,700 and 2,200 over ten years. Because Putin needed the treaty for domestic reasons, Bush agreed to formalize it. At the same time, we had excellent cooperation fighting the Taliban in Afghanistan.
In 2002 and 2003, the main focuses of the U.S.-Russian relationship were Iran and the nonproliferation of weapons of mass destruction. Despite our concerns, Russia's views on Iran seemed to be similar to ours and we made good progress. Then, in 2003 and 2004, our vision of the threat changed, as did the Russian interest in partnering with us. Now Russia plays a passive but uncooperative role in nonproliferation. We would have gotten a better reaction from Russia about North Korea in 2002 and 2003. Now Russia has become Iran's principal defender. This policy is not in Russia's strategic interests, but it is perhaps in Russia's economic interests.
Russia has legitimate security concerns: exclusion from western security groups and vulnerability to Islamic terrorism. While the United States should push Russia on conflicts in the "near abroad," Russia's interests there do not directly impact the United States. They are political posturing for domestic consumption. Russia deserves much credit for its stance on Serbia and Kosovo. We should not force Kosovar independence. Negotiations need to continue between Serbia and Kosovo. As Russia noted, dividing nations is not the Security Council's role. U.S. policy for the past ten years has been anti-Serbian. It may have been appropriate under Milosevic, but is no longer appropriate for an emerging democracy.
U.S.-Russian relations have not been smooth for the past six years. We missed opportunities for cooperation, but the divergence between us is not unbridgeable. Whatever the outcome of the 2008 elections in the United States and Russia, we should pursue our common interests. The relationship may be shaped by the course of politics in Russia; if Russia becomes a semi-authoritarian state with continued human rights violations, it will be difficult for the United States to work with it.
Panel I: Domestic Politics
Georgy Bovt
journalist and commentator
Putin's main goal is to preserve the framework of the regime he has created. In selecting a successor, he seeks someone like himself. He wants the next Russian president to be popular and electable. For this reason, he has not yet decided about his future or his successor. He seeks to keep his people in politics, maintaining the same degree of power and influence.
There is no precedent in Russian history to keep promises of continuation and the nearest future cannot meet Putin's expectations. The Russian political system simply does not have a position for the outgoing president in which he could maintain power. Whether his successor is a personal friend, like Sergei Ivanov, or Viktor Zubkov, the outcome will be the same: Putin will not achieve his goals. Putin's recent behavior has been motivated by these uncertainties, forcing him to maintain an image of control until the elections. Because Putin cannot maintain his influence, continuation is on the shoulders of his successor.
Andrei Kortunov
New Eurasia Foundation
Russia is entering a new political cycle quite different from the current one. This will begin with the Duma elections on December 2, 2007. Political discourse within the political establishment will change, altering the essence of Russian politics. Politics will focus more on local and social issues, especially education, medical care, and pensions.
While the Duma elections may yield expected results (United Russia [UR] winning most of the votes, followed by Just Russia), we should watch closely for indicators that will outline the trajectory of Russian politics. First, the specific level of support for UR will indicate whether Russia will be characterized by a two-party system or a consolidation around UR. Second, the number of parties and the composition of the Duma will define the base of Russian politics. Third, Putin's participation in the elections will demonstrate his support for certain political forces.
The next political cycle will unavoidably move Russia to greater political fluidity. We may see a more pluralistic system, diverse politics, a budding system of checks and balances, and judicial responsibility.
Lilia Shevtsova
Carnegie Center, Moscow
The change of the Russian political regime is the means for and a key factor in the system's survival. The system is resilient and requires a change of personnel to survive. Putin has done his job in ensuring regime survival and created his own problem. Now he does not know what to do. Putin's legacy is strong. For the first time since Stalin's rule, he has a national consensus and 70 percent approval ratings. The Russian people, fearing a Yeltsin repetition and happy to stay out of politics, would like to prolong this consensus.
The role of the West in Russian domestic policy is not crucial. The West created a stimulating international environment in which Putin could implement his "imitation democracy." Furthermore, the West misunderstands what goes on in Russia and readily accepts Putin's attempts at cooption. The current system has potential to grow, which would lead to a degradation of the Russian political development.
Michael McFaul
Stanford University
Russia is currently an autocracy. In the long run, this regime is not economically sustainable. Causes of Russian economic growth are independent of Putin's regime. In fact, Russia is performing well below its potential. The political situation, property rights risks and other factors deter foreign investment. Compared to other CIS countries, Russian economic development is average.
In the long run, economic development will push democratization. Russians are educated, European, and favorable to democracy, although it is not a top priority right now. The important question is how long the long run will be.
Panel II: The Russian Economy
Anders Aslund
Peterson Institute for International Economics
In the past years, Russia has shown great economic gains. Since 1999, the national GDP has increased by 500 percent from $200 billion to $1 trillion. Investment bankers predict that if Russia stays on the same track, its long-term growth will total 131 percent. Today, the Russian economy is driven by remonetization, high university attendance, and GDP growth. Investment does not play a large role, but the capital investment rate is close to the rate in the United States.
With GDP growth of 6.7 percent per year, Russia's economic future seems positive. But the country's political uncertainty negatively impacts the economy. Confiscations and nationalization in the energy sector cause underinvestment and create potential for longer-term problems associated with energy politics. In addition, the appointment of Zubkov, an old-style businessman, may lead to more renationalization, industrial policy, resource nationalism, and corruption. Unless the government creates a more favorable environment for business, Russia may go in the wrong direction.
Padma Desai
Columbia University
Russia is operating in an energy-dominated sector and its economic performance is positive. The big question is whether it will be likely to continue? In the next five years, Russia should not expect a slump, even if energy prices fall.
Although the government has nationalized Gazprom and other parts of the energy sector, it allows great room for foreign participation in the banking, automobile, and retail consumer goods sectors. Nationalization of the energy sector contributes to high prices and the achievement of Russia's geopolitical goals. These goals are the greatest constraints in the emergence of a liberal order. Even in the midst of political tensions, however, economic growth will continue.
Jonathan Schiffer
Moody's Investors Services
Since 2000, Russia has capitalized on a favorable global environment: low interest rates, high growing commodity prices, cheap energy, and the cheap Russian ruble. Today, Russia faces a much more difficult global environment, which causes discomfort among some officials. Many worry about energy supplies and shortages. The Russian energy sector is driven by price rather than volume. The Soviet growth model has taken over, which could lead to potential problems.
Russia should focus on creating a banking system, in which banks would act as financial intermediaries. It should bypass the price caps and arguments in the Duma. Some sort of stabilization fund could help Russia in periods of uncertainty and aid the transition from old-style economic policies to new policies. Finally, Russia needs to consider banking, reserve, and investment reforms.
Panel III: Russian Foreign Policy and U.S.-Russian Relations
Fyodor Lukyanov
Russia in Global Affairs
Putin's foreign policy can be divided into two periods: 2000 to late 2006, and late 2006 to the present. In the former period, the central aim was integration with the West. Russia opposed the West on the majority of international issues, but ultimately reached compromises, usually to save face. The second period is characterized by a consolidation of ideas and a strategic breakthrough. Today, Putin makes few compromises.
Putin believes the West weakened itself through moral obligations. The United States contributes to international instability, and there should be a universal demand to check U.S. policies. However, Putin's main objective is not to contain the United States but rather to create a base for a new ideology using U.S. unpopularity as an instrument.
To continue, the present model requires an adequate leader. Although Putin hopes to carry out his policies behind the scenes, a division of power is impossible and will lead to failures. The next leader will have to be a peacemaker and bargain for advantageous positions. Putin's policy will remain in place in the short term, but we should expect changes in the next decade.
Mikhail Margelov
Committee on Foreign Affairs, Federation Council
The drive in Russian foreign policy is crystal–clear: national interest. In the early 1990s, Russia was a weak and unpredictable nation and it could not call the shots. Today, Russia is stronger and more determined.
Despite criticism of its foreign policy, Russia has accomplished many things during Putin's presidency. It settled its border disputes while pursuing a non-imperialist policy. Driven by its business goals, Russia entered new markets and gained access to new supplies. Today, Russia participates in numerous organizations and groups, including counterterrorist groups and proliferation security groups. Russia is not ideologically driven, but rather creates ties based on its geopolitical implications and economic opportunities.
Rajan Menon
New America Foundation; Lehigh University
Russia and the United States are far from another cold war. In dealing with Russia, the United States must pursue its own interests while at the same time outlining the countries' common interests.
Democracy should not be high on the policy objective list. Russia is skeptical about grand American social experiments. The United States should recognize that it holds Russia to a standard it does not apply to other nations. Making democracy the driving force in the foreign policy toward Russia could be a mistake. The United States will not bring democratization to Russia.
Dmitri Trenin
Carnegie Endowment, Moscow
Russia is a strategic loner and avoids entangling alliances. It views international relations as a competitive game. While it has no consistent policy in opposing the United States, it does not hesitate to remind Washington that it is not the only nation with strategic forces. Putin's Munich speech expressed personal frustration of the growing sense of "America fatigue" in the Russian government. Washington is too distracted to pay attention. Putin tried in vain to reach Washington through a friendly policy. When that failed, he adopted a more hostile policy. Russia has established new terms: accept us as we are and treat us as equals.
AEI intern Sasha Prokhorova prepared this summary.
