It became clear as early as May-June 2002 that Russia was starting to prepare itself for the season of parliamentary (December 2003) and presidential (March 2004) elections, even though the elections were, then, more than a year and a half away.

The election campaign got off to a brisk start against a backdrop of nervous expectation of American strikes on Iraq, a dramatic deterioration of Russia’s relations with Georgia and uncertainty in its relations with Belarus and Ukraine.

The coming elections arouse little interest in the West: the presidential election is still a long way off and contains no element of suspense since Vladimir Putin’s popularity is sky-high. Stability remains the main feature of the political situation in the country. However, accents have been placed and trends are emerging more clearly in domestic and foreign policy as the interconnection between the two is becoming ever more pronounced. This reveals itself more clearly if one takes a closer look at the dynamics of Russian policy. For what makes the forthcoming elections special is the fact that it is precisely now that the foundations of the Russian strategy for 2004-2008 are being laid in the economy, as well as in home affairs and foreign policy, with the latter playing a more critical role in the development of Russia than ever before. There is a kind of review taking place of political blocs and parties, of political alignments and public sentiments and of the attitude of the mass media; an agenda for the presidential campaign, a program for 2004-2008, is taking shape.

So, the current election campaign is less about preparing for the coming elections, as for the next four-year cycle, and this accounts for its early start and the differences from the previous campaigns. In the next year and a half a crucial role will probably be played not by political technologies and tactics, but by the development of a future strategy and the preparing of the political, social and economic stage for getting it implemented.

The Electoral Battlefield

The parliamentary elections, though regarded as something largely instrumental for the Kremlin, are nevertheless of fundamental importance in ensuring continued support for its decisions. Many of the reforms (economic, legal and military) being elaborated and implemented require the corresponding legislation to be passed and depend, for their success, on greater cooperation and integration with the West. So, foreign policy becomes a key element in the 2003 and 2004 elections and, therefore, a key element determining Russian domestic policy.

The Kremlin has chosen foreign policy as a key instrument of consolidation. The spate of summits in the spring (Russia-U.S., Russia-EU, Russia-NATO and G-8) gave a strong impetus to the Russian elite and public opinion, indicating as it did that Russia’s intention to become integrated into Western society is serious and long-term, and giving a final answer to the question “Who is Mr. Putin?” by demonstrating that he is a politician in the Western mold and that Russian foreign policy has been fully elaborated.

By defining the key function of foreign policy as “creating a favorable external environment for internal development,” the authorities are at the same time trying to complete the long-drawn-out process of post-Soviet self-identification, and to resolve what are still considerable differences over:

— the model of internal development;

— the choice of policy with regard to the external world;

— the choice of a modernization strategy and definition of industrial policy in the context of integration into the increasingly globalized economy.

There has been a substantial shift in terms of assessing the model of internal development. More and more analysts feel that the question of what type of regime we have is secondary, while the effectiveness of the powers that be in reforming the country in the short and medium term is crucial, and that includes the reforms commonly described as democratic and legal, that is, tending to restrain arbitrary rule.

It is a paradox noted by both experts and journalists that in democratic Russia there is more room for opposition to Putin, a man who is firmly committed to cooperation with the West.

The shifts in assessments are partly due to the changes in the wake of the September 11 terrorist acts in the U.S. As Russian observers have noted, the fall-out of the tragedy has included a “streamlining” of judicial procedures in America, and a growing role of the special services elsewhere. Irrational fear of terror leads people to vote for an administration that can strike back and protect them by all means available.

U.S. foreign policy, apparently placing its stake on military force, and with a disdain for international treaties, is now forced to restrict democracy and practise double standards. It has shaken the traditional understanding of liberalism and democracy by putting expediency first. This all poses dangers for societies with weak democratic traditions, unsettled democratic institutions and practices, and Russia at the moment fits into such a category.

And yet the most solid guarantee of democratic development still remains integration with Western democracies and institutions. This is what Vladimir Putin is doing as he struggles to overcome differences with a significant body of the political elite over the choice of foreign policy. In this Russia differs dramatically from the transforming countries of Central Europe, where, despite no little controversy over social and economic issues (especially in connection with the forthcoming admission to the European Union), the political elite is surprisingly consolidated on the foreign policy agenda.

Society – for the time being – stands aside from the president-elite paradigm. Quite in line with the popular Russian misconception (“a kind czar surrounded by evil boyars”), it trusts the former and detests the latter.

Putin has not yet managed to consolidate the elite and society, and the foreign policy dimension seems to be more of an obstacle than an aid to such consolidation. In the opinion of the most authoritative club of the Russian elite, the Council on Foreign and Defense Policy, or CFDP, Russia cannot afford to pursue an excessively active foreign policy that diverts the leadership and the elite from the immediate tasks of national revival. That is to say, choosing foreign policy as the key campaign issue is fraught, first, with the difficulty of securing public support for the President’s pro-Western line and, second, though less probable, with the possibility of deviations from that line arising from internal political exigencies. Differences over foreign policy may turn out to be one of the main clashes and bones of contention during the coming political season in Russia, a season that promises to last almost a year and a half.

Internal policy and the economic model of development are, in many ways, prompted by the external environment and this is the main catch for the elite, for business, for society and for the Kremlin. The President seems to be aware of it and he has opted for cooperation with the West as an instrument to “coerce” Russia into the market and towards the law-governed state.

Other important reasons why the Kremlin – at least at the current stage – is leaning towards foreign policy as the main election theme are, first, a dearth of “success stories,” breakthroughs in the social and economic sphere; or rather the fact that stabilization and a certain progress with reforms are impossible to “sell” to the public as achievements. And, second, there are the abiding problems of Chechnya and military reform, among others.

These topics were widely discussed last fall in the Russian print and electronic media, most particularly in connection with the crisis in Russia-Georgia relations.

Government, Business and Politics

The business community plays the key role in the process of selecting a modernization strategy and industrial policy in the context of integrating into the increasingly global economy. Although analysts still, as of old, base their projections on the links of the Kremlin and the government with the “family” and the main business groups, serious changes have been taking place in that segment of the Russian political scene. While traditionally trying to put “their own people” in the executive power and resorting to direct lobbying, this time business groups are struggling not so much over being “close to the president’s ear,” as over issues that directly affect their own interests. Not least of these issues is the question of Russia’s entry into the WTO. In reality such an approach is shared by those Russian entrepreneurs who have vested interests in certain branches of industry and who see Russia’s opening up to Western competition and standarts as posing a threat to their own businesses, and often “gray” business practises.

Many observers note that the business community has shifted the whole character of the discussion on Russia’s membership of the WTO. Although many government officials and businessmen still see entry into the WTO as an end in itself, to be ardently supported or fiercely opposed as the case may be, common sense is beginning to prevail as the question increasingly focuses on what we stand to gain from becoming a member of that organization. It is not until the third discussion of the report of the task force on the WTO, due by the end of 2002-early 2003, that it will be possible to determine the distance that Russia still has to cover to become a WTO member.

The Kremlin, for its part, has so far managed to stick largely to Vladimir Putin’s proclaimed principle of all businessmen being “equidistant” from the authorities.

Economic interest, effectiveness and practicability have been adopted as the main criteria of Russian foreign policy by the majority of foreign policy experts, and even by the traditionally critical media. A well known economist, Alexander Nekipelov, who does not belong to the radical reformist camp, thinks that at the current and future stages, which will be transitional, the most important thing is “not to look for a cure-all but to create effective mechanisms for forming mutually acceptable compromises on key issues of world economy, interaction of states, groups of states, transnational and national structures and, finally, citizens of different countries, i.e. mechanisms to achieve the greatest degree of harmony of their interests.”

The media are practically unanimous in refusing to see Moscow’s position on the possible military operation in Iraq as supportive of the regime of Saddam Hussein. “Moscow is fighting not for Saddam but for its economic interests in Iraq and for a new relationship of genuine partnership with the U.S..” The price tag attached to the problem is the $2-3 billion a year Russian companies have been getting from trade under the UN’s “Oil for Food” program. Even more important are the oil fields which Russian companies got from the current government. If and when oil starts flowing, it could bring up to $1 billion only in tax revenues. Guarantees of Russian participation in the economic rebuildng of Iraq - by providing goods, developing oilfields, etc. &mdash are of key importance, too.

“The price of the issue” is something of a key phrase among experts and journalists. The price of the issue is how much, if anything, Russia will lose if the U.S. launches a war on Iraq; how much oil prices will fall, if at all. Estimates vary. Some do not think prices can fall below $18-20 per barrel because low prices are not in the interests of the oil business in the U.S. itself. Others, including the head of the Yukos company, Mikhail Khodorkovsky, an ardent champion of broader cooperation with the U.S., think that prices may drop to 14 dollars per barrel. That would mean a collapse of the 2003 Russian budget which assumes that the oil price will be $21.50 per barrel; the re-emergence of the all-but-solved “problem of 2003,” that is the peak of Russia’s payment of interest on foreign debts and destabilization of the economy in the election year – with all the internal and external political consequences that entails. Few politicians and experts believe that the U.S. will take Russia’s interests into account. Businessmen are already looking for ways to avoid losses.

Now and in the foreseeable future the business community is just about the main internal platform on which the Kremlin can rely in the pursuit of its foreign policy because the strongest support for Putin’s policy of integration with the West comes from the most successful and prosperous economic and financial circles, in particular oil and gas companies which have a vital stake in the development of the declared energy partnership with the U.S. and the EU. Putin also has the backing of the members of the Cabinet responsible for economic matters and the part of the Russian bureaucracy that has links with business. This was highlighted during the Putin-Bush summit in May and the Houston Russian-American energy forum in September. Another group of support for policies of rapprochement with the West is Russia’s educated youth.

Changes on the International Scene

In late summer and early fall Russian foreign policy acquired a focus. The bilateral and multilateral summits with Western leaders that established “frameworks” and areas of interaction with the Western community confirmed active re-engagement of Russia in international affairs and the West’s view of Russia as a serious long-term partner. Thereafter the Kremlin could afford to concentrate on its relations with its close neighbors and on dealing with outstanding problems (the Kremlin, by the way, has realized that its geostrategic position gave it some strong foreign policy trump cards). The shift of focus is quite logical: to pursue an effective policy in the CIS countries, Russia should be secured against Western accusations of neo-imperialism.

At the same time the Kremlin seems to have given up attempts to preserve the CIS in its initial shape, and this corresponds to public sentiments. Opinion polls indicate that only 12 percent of respondents think the CIS has proved a viable idea. Only 16 percent believe it is possible to revive the former USSR. But 76 percent think it is necessary to “look for some new forms of commonwealth with the former Soviet Republics.”

Moscow’s search for new forms began with a tough demand to its closest neighbor, Belarus, to “make up its mind.” It is symbolic that Putin’s position was backed by the media, by the expert community, and not only by the political right. The President has to give up the misguided and false game of unification,” “and has started to calling a spade a spade.” He accused Alexander Lukashenko of seeking to create something resembling the USSR (the Belarussian leader actually shuns the prospect of integration). At the August meeting, described by journalists as the most scandalous ever, the Russian President proposed that Belarus join Russia not as a single whole, but as eight regions. The unification schedule was to be as follows: a referendum in May 2003, elections to a common parliament in December, and election of a single president in March 2004. Mr. Putin also proposed another version similar to integration within the framework of the EU. By presenting Lukashenko with such a hard choice, Putin hardly expected him to jump at the offer. But, the i’s were dotted. Experts think that Putin’s tough stand was partly prompted by the complaints of Russian industrialists who, against all promises, were denied access to the privatization of Belarussian industry. Comment in the Russian media concentrated on economic issues and few people think that there will be any real integration as long as Lukashenko is in power – be it within a single state or along EU lines. But the decisive issue in the integration process would be Belarus entering the ruble zone, something which it does not oppose. It is another matter whether the final product will be a union, a federation or a confederation, or what role Lukashenko will play in it.

Another serious problem for Moscow is shortage of political levers, because in recent years Alexander Lukashenko has been seen as the Kremlin’s only political ally.

Russia may find itself in a similar situation in its relations with Ukraine if the authorities refuse to engage in a reasonable dialog with the opposition (which has now sought a meeting with Vladimir Putin). The scale of the problems will be much larger, however. Leonid Kuchma’s positions are growing weaker not only inside the country, but in the West, too. Kuchma’s presidency runs out in 2004 and it is necessary to establish contacts with his potential successors, especially since not only Vladimir Putin, but also the current model of the Russian political regime are rather popular in Ukraine. Worried over the problem of the transfer of power, Ukrainian political scientists view Kuchma’s declared intention to reintroduce a parliamentary-presidential republic as a step backwards. They stress that, to implement reform, strong power rather than more debate is required.

The focus of attention in bilateral relations is trade and economic problems, ending “trade wars” and following through the process of creating a gas pipeline consortium (with possible German participation) – this is an issue that has gained added relevance because plans to build a second gas pipeline across Belarus and Poland have been rather drawn out.

Last fall acting through bilateral negotiations, Moscow managed to make some progress on one of the most delicate strategic problems. At the end of September Vladimir Putin and Heidar Aliyev signed a document on delimiting the Caspian seabed. A separate agreement with Azerbaijan, the second after the May agreement with Kazakhstan on dividing the natural resources of the Caspian shelf, may, according to experts, cause Turkmenia and Iran to revise their positions.

Tough statements with regards to Georgia met with a guardedly negative reaction in the political elite and the media. The reasons for that are diverse. In addition to the important and very delicate factor of close cultural affinity, a negative reaction to the crisis in Russian-Georgian relations was a reflection of the fact that its real causes have little to do with the relations between the two countries. Above all, there is the “intractable” problem of Chechnya, the extreme weakness of Eduard Shevardnadze’s political regime and the fact that many in Moscow personally dislike Shevardnadze, who is blamed for the main foreign policy blunders of Mikhail Gorbachev’s presidency and of being unable to make Georgia a viable state and a reliable partner. In addition, many politicians and media felt that Putin’s threats to strike terrorist bases in Georgia were addressed not so much to Tbilisi as to the U.S., staking Russia’s claim to have the right to defend its interests in the Caucasus by the same methods as Washington defends its interests in Afghanistan. Most were extremely skeptical about the ability of our military to carry out any such operation (triggering another flare-up in the debate on military reform and the negative role of the military in political decision-making).

The aggravation of Russian-Georgian relations rekindled the interest of experts and the media in the question of third-party participation, above all in the settlement of conflicts in the post-Soviet space (in the Caucasus and Central Asia). In the broader sense, the question of U.S. participation in conflicts in Central Asia and the Caucasus, traditional Russian spheres of influence, is under discussion. Debate has become more lively again over the problem of some kind of special status for semi-recognized territories, “the post-Soviet orphans” – Abkhazia, Trans-Dniestria, Nagorny Karabakh and Chechnya.

None of the proposed solutions to the “Chechen issue” are ideal, but they all presuppose granting Chechnya broad autonomy. Some experts, including Emil Pain, maintain that Chechnya can only be stabilized if the main goal – the settlement of the conflict – is clearly separated from the goal of gaining power, which is impossible without an agreement among influential groups in Chechnya, even those with whom Moscow would have no truck. At the same time, some more realistic and better argued plans of settlement in Chechnya have been suggested (for example, the plans of former Prime minister Evgeny Primakov and prominent parliamentarian Alexey Arbatov).

Kaliningrad. For all the differences, the problems of Chechnya and Kaliningrad have much in common: there is no quick “ideal” solution; in both cases special status is an issue, there is a threat of secession and there is the problem of “internationalization,” that is, involvement of third parties. Finally, it would be hard to ensure smooth elections if these problems remain unresolved. Shifts in the positions of Moscow and Brussels indicate that a compromise suitable to both Russia and the EU will be found. The problem of visas and transit, which as late as May Moscow raised to the level of “human rights violations,” was interpreted last fall as a “technical problem”. For its part, the EU has proposed simplified transit documents and agreed in principle to help build a high-speed railway line across Lithuania.

Yet, settlement of the transit issue does not resolve the Kaliningrad problem. Observers note that radical calls by some politicians in Kaliningrad to break away from Russia may cease to be extravagant publicity stunts and become a sentiment shared by the majority of the population. A secession of the region, the formation of “a fourth Baltic republic” destabilizes the political balance not only in the Baltic region, but also in the whole of Europe, because it is easy to see that the next step of the new entity would be to ask for some form of German protectorate (a deja vu nightmare for Poland, a blow to the political ambitions of France, and so on). There are two ways to avoid such a development: to improve the social and economic situation in the Kaliningrad Region and to deepen its integration with the European Union. Neither solution is possible without active involvement of big Russian business.

The relations with the U.S. remain a key area of Russian foreign policy. In Russia, like everywhere else, the main topic of the foreign policy debate is the short-term and long-term consequences of the U.S. commitment to a unilateral strategy and use of military force.

The “Power — Weakness” paradigm proposed by Robert Kagan in a much-discussed article in the June issue of Policy Review has long been a watershed issue among Russian political scientists, analysts and journalists commenting on Russian foreign policy. Those who consider Russia to be weak see no other way but accelerated integration into the Western community. Those who see Russia as “still strong” believe that it would be best for Russia to pursue an independent foreign policy strategy.

That the “power — weakness” and the derivative “individualism — institutionalism” paradigms are defining ones is witnessed by the main topics of cover stories in the Russian media. Two such examples are the Profil magazine’s headline “Solo Voyage” and the Ekspert’s journal’s lead story “It Is High Time to Become Strong. Should Russia Be in a Hurry to Join WTO?”

The military factor is one of Russia’s more excruciating dilemmas. Not being able to follow its present political and economic course and maintain its current military potential, and having embarked on a scaling down of the military factor in international relations in the 1990s, Russia, as indeed, Europe, is facing a new challenge at the beginning of the century. Experts have yet to make a full assessment of the consequences, let alone the necessary actions in response to the new U.S. commitment to force and the objective revival of military force as a major factor of international relations. Most political scientists object to that shift claiming that it leads to destabilization.

Even more of a challenge to Russia than the American commitment to military force is the U.S. strategy for unilateral actions because it undermines the warp and weft of Putin’s foreign policy of integration into the Western community, the commitment to institutionalize Russia in Western structures. Unilateralism makes uncertain the role of the U.S. and the Euro-Atlantic community in the future security architecture.

In effect, Russia’s lag on reform and integration into the Western community in the 1990s resulted in the situation at the start of this century when Russia, seeking to catch up, is objectively in counter-phase to the unilateralist logic of the U.S., spurred on by the September 11 tragedy. At the same time Washington so far has proved to be a more predictable and effective partner than over-beaurocratized Brussels. That creates a serious problem for Russia which has committed itself to a policy of “Europe &mdash first” and to as close integraion with the EU as possible.

It is another matter that the motives driving Europe and Russia to integrate are different. By uniting and strengthening its institutions Europe seeks to keep a balance with the U.S., or at least to preserve its identity. For Russia integration is a way “to remain among the leaders” and an instrument for stimulating internal reform.

It is obvious that, in spite of successes in bilateral relations with the European powers, Russia would not be able to integrate into the Western community or play a strong role in it without a support from Washington.

Besides, Europe, partly because it cannot make up its mind itself, is not yet ready to see Russia as a full fledged ally. Only serious cooperation with the U.S. in fighting terrorism, the spread of weapons of mass destruction, organized crime and other threats of the 21st century, can provide Russia with credentials for military-political partnership with Europe, and even more so with the U.S.

Simultaneously, Moscow and Brussels, especially after the blitzkrieg in Afghanistan, have become aware that in the foreseeable future it is impossible to face up to new threats realistically without Washington, just as it is unrealistic to create new security structures, although the need for them is becoming ever more evident because of the deepening crisis of NATO. In practice, the Kremlin has opted for a “policy of the possible.” This was manifested in the signing in May, in the face of harsh opposition inside the country, of the treaty on strategic offensive potentials, and in the position on Iraq, where Russia, in the end, reached its goals at the UN. There was also the NATO expansion and the Russia-EU summit last fall. At the same time, there is still a need for Russia to come up with its own initiatives.

Some analysts see a new challenge for Russia presented by new American national security strategy – a “clear invitation to Russia to closer partnership” with the U.S. “which has lost confidence in its former allies and partners.”

As it enters the third year of the third millennium, Russia is presented with a unique opportunity to choose an optimal path for its internal political, economic and foreign policy development. The trends that will emerge in 2003 in the course of the parliamentary and presidential election campaigns in Russia may be crucial in determining the future role of Russia in the global world.