A New Entente

16 november 2008

Sergei Dubinin is a Professor and has a Doctoral Degree in Economics.

Resume: The time has come to discuss methods of international regulation. From an objective point of view, the United States, in crisis conditions, should not be interested in stepping up military-political competition in the world arena, but in productive cooperation, including with Russia.

The smoke and ashes of burnt Caucasian towns and villages have settled, and peace is settling in the conflict area. Russia has recognized the independence of South Ossetia and Abkhazia, and has signed accords with them on economic and military assistance.

Everybody understands that the significance of the clash in the Caucasus goes far beyond its boundaries. The Russian public has been focused all this time not so much on the problems with South Ossetia, Abkhazia or Georgia, as on the impact these events have had on relations with the United States and the European Union. A sharp escalation in rhetoric has made many speak of the beginning of a new confrontation. Yet if one ignores emotional outbursts, it will become clear that the objective need for a rapprochement with the West, as close as a binding union, has only increased.

THE PROBLEM OF “GUARANTEED DESTRUCTION”

Pavel Zolotarev, a Russian expert on international security, wrote in the pages of this magazine: “The basic factor of mutual distrust between the two countries is the increased readiness of their strategic nuclear potentials in line with the task of mutual nuclear deterrence. Both countries have become hostages of Cold War weapons, above all ground-based intercontinental ballistic missiles (ICBM), which cannot be placed in a reduced launch readiness status without violating the normal mode of operation.” (Russia in Global Affairs, No. 3, July-September 2008, p. 71).

The key problem – I would even call it existential – that creates a rift between Russia and the U.S. are attempts by Washington to deprive Moscow of the missile-nuclear parity inherited from the Soviet era.

This is easy to explain: Russia is the only country in the world capable of destroying the United States in the full sense of the word. And although nobody is thinking about starting a nuclear war, the very existence of this possibility has a tremendous influence on the political situation and mutual perception. It is this parity that helped Russia keep its permanent membership in the UN Security Council and become an equal member of the G8 even in a period of an economic downturn.

Simultaneously, this factor played the decisive role in NATO’s eastward expansion policy and the U.S. decision to deploy missile defense facilities in close proximity to Russian borders. Now that Russia commands more authority in the world, the United States is trying in effect to drag Moscow into a new arms race which it will never be able to win, as the Soviet Union could not.

After discussions at a NATO summit and at a Russia-NATO summit in Bucharest in April 2008, Russian President Dmitry Medvedev and Prime Minister Vladimir Putin spoke to the effect that it would be expedient for NATO to look for an accord with Moscow instead of forging ahead with enlargement by admitting Ukraine and Georgia. However, this proposal, though quite sound, was left unheeded – just like many other Russian proposals before. Washington has rejected all initiatives to jointly deploy and control missile defense forces.

I dare to assume that this has happened because Russian proposals include the necessary condition of keeping missile-nuclear parity with the United States. In the current decade, the Bush administration selected another strategy – to exhaust Moscow in confrontation in the field of strategic armaments and in endless clashes along the perimeters of Russian borders. Apparently, the idea is to secure a heavy toll on Russia’s budget and intellectual and human resources.

Keeping this in mind, the United States walked out of the ABM treaty. The START-1 agreement expires in 2009. Next in line are agreements limiting the number of nuclear warheads (currently at 1,700-2,200) and delivery vehicles. The deployment of missile defense facilities in the Czech Republic and Poland puts even more pressure on Moscow, as they can control the activity of Russian strategic forces in the entire European part of Russia and in the White, Barents and Kara Seas.

There are no grounds to hope that the next U.S. administration will reverse U.S. policy in 2009. The suspension of NATO-Russian cooperation and the general worsening of relations with Washington because of the conflict in South Ossetia imply that any bilateral missile defense talks have been shelved for a long time.

We will see in the next ten to 15 years if the Americans can achieve the breakthrough in missile defense and space armaments that they have planned. There is a high probability that the means of destroying booster rockets at active stages of flight and warheads at passive stages will have been designed, tested and deployed by that time. Several years after that, Russia is likely to lose its missile parity with the U.S.

Of course, Russia will continue to remain a strong nuclear power capable of delivering and setting off several nuclear charges in the territory of any opponent. But it will become just one of many such countries. In the meantime the United States may develop a dangerous illusion of security and impunity in case it strikes first.

Moscow, aware that it is impossible to maintain nuclear parity with the United States for long, will not have many options to choose from:

First, it may strike “while there is still time.” Hopefully, God will not let the Russian leadership lose their minds and this will not happen.

Second, Moscow may conclude a union with its U.S. adversaries in order to share the expenses to create an “anti-missile defense.” But this will hardly be an effective response to the concerted efforts of all NATO countries put together; such a move will be very expensive and fraught with a new Cold War. However, there will most likely be people both in Russia and in the United States who would seek a new arms race.

And finally, Moscow may begin talks with Washington over a new modus vivendi – but the negotiating positions in the future will be much weaker than today. Also, both Russia and the U.S. will have spent tremendous funds on their military programs by then.

The problems do not end here because Russia will justifiably be wary of U.S. aggression as long as it is tagged as “a potential enemy.” After achieving domination in the sphere of strategic offensive armaments and missile defense after an exhausting arms race, how will the U.S. exploit it?

After NATO planes bombed Belgrade, it is difficult to convince anyone in Russia that Moscow or St. Petersburg are immune from similar attacks. We need reliable protection from such threats. What kind of protection would that be?

There are two possible answers to this challenge.

The first is an escalation of military-political confrontation, including in the nuclear sphere. It requires concentrating all forces on military construction, which is what the Soviet Union did after World War II. Involvement in this confrontation means putting oneself under military threat without any hope of success, and dooming Russia to the squandering of material resources, badly needed for resolving socio-economic problems.

Yet there is another way. I suggest calling it a ‘New Entente,’ because it suggests a military-political union with those who are traditionally viewed as historical opponents. In the late 19th–early 20th century, the Russian Empire chose a union with France, and later with Britain, believing it to be more promising than an alliance with its old “pal” – the German Kaiser. A decision for the long-term today would be a union with the United States. It is most reasonable to start talks immediately.

WHY A UNION WITH AMERICA?

The one-polar system dominated by the U.S. no longer exists. However, a multi-polar system is not a strategic victory for Russia, but a new strategic challenge, fraught with many risks and “sorrows.” The world is beginning to revise old dogmas, regroup existing unions and form new alliances. Not only economic, but also military-political blocs are being overhauled. In these conditions, Russia needs strong allies to ensure its security. As recent events have shown, there are no such allies at present. Oddly, Moscow appeared surprised to see unpleasant proof of its inability to secure support for its interests in the international arena.

In the recent past, experts and foreign policy theorists believed that a lack of clear-cut and mutually binding relations with this or that state was a conscious choice and an obvious advantage for the Russian position. Coalitions allegedly could be “flexibly” rearranged as the situation required. Thus, countries in the Commonwealth of Independent States, the Shanghai Cooperation Organization (SCO), the Collective Security Treaty Organization (CSTO) and even part of the declared Union State with Russia – Belarus – quite flexibly refused their support. Moscow earned “understanding” at best.

The hostilities in the South Caucasus in August 2008 dramatically complicated the choice for Russia in favor of a New Entente. It is very difficult to understand and accept the position of the United States and its European allies with respect to the conflict in South Ossetia. Yet Medvedev and the Russian government have to demonstrate a strategic vision extending for not just one election cycle, but for a 25- to 30-year perspective. It is in this light that Moscow should evaluate the pros and cons of this alternative and the consequences of rejecting it.

The incumbent Russian authorities are not ready to pay any considerable price for joining the West. As of now, we are ready to cooperate with the West on our terms. But Russian political leaders are still unable to formulate the rules of such cooperation which would be beneficial for Russia. The task of adhering to the declared approaches appears even more difficult. Voluntarism and ad hoc revision of earlier decisions are destructive for any alliance.

After the illusion of the unipolar world – in which one great power, the United States, determines the course of international events – has completely faded, we will all face the reality of chaos. In a number of volatile regions in the world we are already seeing fierce competition between two or three regional “superpowers,” which one-by-one are beginning to stockpile weapons, including nuclear weapons.

A majority of countries that are members of the nuclear non-proliferation treaty are increasingly mistrustful of the position of the leading nuclear states. They see that the declared goals of reduction and the complete elimination of weapons of mass destruction are being discarded. The number of countries seeking to possess nuclear weapons will keep growing.

Russia already has neighbors with nuclear capability – China, India, Pakistan, North Korea and potentially Iran. Is Russia ready for a nuclear arms race with all these countries simultaneously? Can we afford a competition with Western nuclear states at the same time?

After two decades of armed conflicts in the South with Islamic extremism (Afghanistan, Tajikistan and Chechnya) we are still preparing for war, but in the wrong place and against the wrong enemy. The real enemy has fallen back, still undefeated. Tomorrow Islamists may launch an offensive, say, on the Fergana Valley; but once the United States has admitted its defeat in Iraq and pulled out its troops, extremists will attempt to gain control over nuclear weapons and missile equipment in Pakistan or Iran.

A real breakthrough is needed in determining the national strategy. Russia must make its choice already today with which community of nuclear states it has to strike a deal, launch military cooperation and enter into unions. I am sure common sense will prevail and the Russian leadership will opt for rapprochement with the strongest group which is called the West. As a Russian patriot, I am convinced that this country needs a political and military-defensive union with the United States. Not NATO membership, but a direct agreement on joint defense and military-technical cooperation with the United States.

An obvious advantage of an alliance with the U.S. is the opportunity to use funds and resources to upgrade the Russian armed forces and prepare them for confrontations where the biggest threat lies. A union with the United States will enable Russia to save tremendous funds in one strategic direction, yet it does not guarantee that Moscow will not have to build a powerful armed group with the participation of its allies. Would it not be easier to accomplish this together with the U.S. than without it?

Of course, there is the deeply-rooted mistrust between the diplomatic and military elites of the two countries. The Cold War heritage still exists, and the post-Cold War period did not contribute to mutual understanding. The authorities of our countries will have to reassess many values within the next few years. It is time to assess current, not yesterday’s, problems. Russia and the United States have far more common interests in the international arena than disputed issues. They also have the same potential opponent. Dissent and uncertainties in the multi-polar world will be gaining momentum. Russia and the United States will need each other. The military conflict in the Caucasus showed to the whole world that the Russian armed forces can be a valuable ally.

Of course, it is not easy to ensure for Russia an acceptable alliance treaty. The main condition would be mutual guarantees in the event of an attack by a third country: by striking back and defeating the aggressor together. This condition should work in case of both nuclear and non-nuclear act of aggression. The treaty should contain such confidence measures that would ensure preparations for joint actions and rule out the very possibility of using nuclear missiles against each other.

It would be prudent for the two signatories to offer similar guarantees to allies; i.e. European countries – NATO members and former Soviet republics, on the condition that such guarantees would be welcome.

It would be difficult to anticipate the manner and procedure of an allied response to terrorist attacks where it is impossible to identify the aggressor country. It appears one would have to convene urgent consultations and act depending on the situation, as is the case today.

The very possibility of concluding such a treaty would be determined by a Russian-U.S. agreement on strategic armaments. A withdrawal from the confrontation should be thoroughly planned and timed with the creation of a collectively controlled missile defense system. It would combine national elements, be run with the participation of military experts from allied states, and include data exchange centers for the participants, tracking stations and ground-based and spaceborne interceptor missiles, deployed at optimal points.

THE RUSSIAN RESPONSE

The Entente at the beginning of the 20th century won the war on the European continent, but Russia was not among the victors. Due to its internal weaknesses, it was unable to withstand the test of war, plunging instead into the ever worse troubles of social revolutions and the Civil War of 1917-1922. Russia was “a weak link.” It has to be a powerful modern country with a sound core if it wants the New Entente to bring it success.

In theory, Russia has two options to respond to what is happening in the world, including the financial-economic crisis.

The first option is to withdraw into isolation. This will play into the hands of Russia’s direct opponents, and make various anti-Russian actions easier for them. There are supporters of this stance in Russia as well, who are making their case loudly in public discussions. They assume that they will have an opportunity to repeat the Stalin-era industrialization in conditions of a country cut off from the rest of the world. “Isolationists” prefer to forget that the “effective” Stalinist management was based on the exploitation of free labor at collective farms and penal labor camps. Once the Soviet leadership gave up this resource, the state planning system became conspicuously ineffective. Maybe the “isolationists” will honestly tell us who they will name to “be rubbed into camp dust?”

The second option is active participation in the global economy. World financial developments have far-reaching consequences for any national economy. During economic growth, the term ‘globalization’ was mostly used in a positive context. It seemed any large and effective investment project could be financed by mobilizing resources on the world market. Investors swept up shares in Russian companies through IPOs. Gazprom, together with Italian energy giant ENI, succeeded in raising money to build Blue Stream, a gas pipeline along the floor of the Black Sea. There was no doubt that resources would be found to build the Nord and South Streams. Many Russian companies raised loans under good terms, cementing the deals by using their shares as collateral. Broadly speaking, all the economic successes of the past decade were based on the international division of labor and economic growth in an open economy, thanks to Russia joining the world financial market.

The financial crisis has demonstrated the negative sides of the global economy. It has become obvious that joining the international commodity and money flows requires maturity and strength from the national financial-economic system. It turned out Russia was not fully ready for such tests.

Investors view Russia as a developing market with increased economic and political risks. In essence, this is how our economy has always been assessed. But the headline-grabbing public confrontation with the West during and after the war in the Caucasus only made the situation worse. Investors began to withdraw from our market faster than during the previous months of the crisis year. The crisis exposed weak points in the globalization model in general, and Russian problems in particular.

Russia needs a sweeping renewal of basic production assets and an entirely new level of human resource development. Our leaders are aware of this and openly talk about a steady course toward international cooperation and an open economy. Russia has developed a market-type, rapidly growing economy, yet it has not become effective. The transfer to a new post-industrial quality may not materialize without modern technologies. We need state-of-the-art technologies which are in the hands of foreign investors. The scope of necessary investments is such that national capital, even if backed by the state budget, will be unable to cope with these tasks.

Nor can we afford to scrap key social programs. The Russian economy is facing the task of ensuring a decent level of pensions within the next 15 years. In a not-too-distant future we will have one pensioner per employee in the economy, an unprecedented ratio in the history of Russia.

To cope with these tasks, the Russian economy needs a dramatic reduction of what is conventionally called ‘political risks.’ To put it bluntly, if we find ourselves pinned to the axis of evil, we will have to forfeit hopes for economic modernization and the competitiveness of Russian products on international markets.

Let us not ramble on about breakthroughs by Russian scientists in all fields. In the modern world no country is capable of embracing all spheres of scientific-technical progress. Instead, let us remember that our warplanes were returned from Algeria because their avionics did not meet modern standards. Let us think about what can be done with GT-110 gas turbines for electric power plants produced by the Saturn firm, whose mass production it has been trying to launch for a decade, and whose designs seem to have been sold by our Ukrainian partners and co-designers to China for a profit. China already produces equipment similar to the GT-110, and has declined to buy Russian warplanes, preferring to copy them for free at their own enterprises.

The Soviet Union was unable to create an effective economy and collapsed under the weight of the arms race it was losing. The scope of expenditures on military research and technologies was such that the country did not have enough resources for milk and meat (not even chicken) for the population. We are risking a repeat of this “achievement.” Do we really need it? We do not. President Medvedev has made it clear that Russia will not let itself be dragged into this exhausting race.

THE LIMITS OF U.S. OPPORTUNITY

But does the United States need an alliance with Russia?

Just a short while ago, flush with pride as being the only superpower in the world, the Americans scoffed at the opinion of not only their potential partners, but also the warnings of their allies, including Germany and France. Today both the Republicans and the Democrats are actively discussing the mechanisms of collective actions in the international arena.

During the crisis in the South Caucasus, not only Moscow but also Washington encountered the proof of their limited opportunities. The aspirations of U.S. political leaders were obviously broader than the scope of the ambitions of the Russian establishment. As George W. Bush took the helm, a conviction began to reign in the U.S. that it was the only superpower capable of withstanding a confrontation with any number of states and coming out the winner.

The U.S. obviously made Georgian President Mikheil Saakashvili believe its own conviction that nobody, not even Russia, would have the nerve to oppose a country that Washington publicly called a key partner. Infected with these phantom guarantees, Tbilisi attempted a reckless attack on South Ossetia. But it turned out that the U.S. had no real levers of influence to control the situation and the Russian authorities’ actions.

The need to revise U.S. positions has become particularly obvious for the country’s own political leaders amid the sweeping financial crisis that rocked the U.S. first, but which has quickly spread throughout the entire world. U.S. financial institutions currently serve global capital turnover when this capital takes a monetary, financial form. A transformation of savings in global investments is taking place under a new “globalized” formula: national savings accrue, enter world financial markets, and only after passing through this international stage are invested in a national economy.

A lack of adequate regulation over world financial markets is a general problem plaguing not just the U.S. and other countries, but the entire international market. Attempts by U.S. regulators to toughen requirements for the disclosure of information and registration of players on the U.S. market forced the participants in transactions to seek a safer haven under other jurisdictions. The development of innovative operations with derived financial instruments severed the link between financial transactions and basic real assets.

It seems that national legislation can accomplish only one thing in this sector – ban national legal entities from having certain kinds of risky assets on their consolidated balance. But then they will need to agree on how to evaluate risky assets uniformly and regulate work with them through the concerted efforts of many countries. During the transitional period, the most risky operations will continue in an offshore “Las Vegas.” Unilateral measures to overcome the crisis and to regulate the world financial sector are insufficient, even if one spends hundreds of billions of dollars on this.

The time has come to discuss methods of international regulation. From an objective point of view, the United States, in crisis conditions, should not be interested in stepping up military-political competition in the world arena, but in productive cooperation, including with Russia.

Last updated 16 november 2008, 15:40

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