13.02.2016
A “Militant Russia”
№1 2016 January/March
Silvana Malle

Professor Emeritus and Senior Honorary Research Fellow at University of Birmingham, UK; Director of the Center for International Studies, Department of Economic Science at Verona University.

Shaping New Priorities under Security Concerns

Ostracism from the advanced international community pursued through a number of measures from early 2014 is largely responsible for the rise of a “militant Russia” whose features mirror patriotic sentiments and attachment to the country’s own values, interests and goals. Resentment over the diminished status of Russia and the will to restore the image of a great nation are shared by a large majority in society. Support for the leadership is considerable, though not blind, as suggested by occasional shifts in ratings. The nation withstands external and internal disruptions, changes in foreign policy and economic uncertainties with remarkable endurance and cohesiveness.

MR shows assertiveness and determination to fight isolation by proudly upholding traditional values against perceived amorality, indecisiveness or indifference in mature democracies, on the one hand, and by strengthening economic and military security, on the other. “Militant Russia” portrays a nation that a) does not accept a subordinate role among regional powers; b) aims at independent statehood, c) empowers movements that adhere to traditional sets of values; d) fights ostracism by threading new partnerships with distant countries and arcane cultures. Turned away from Europe of which it believed itself to be an integral part, resentful MR searches for a new identity while striving not to become a loser in the new geopolitical turbulence. Russia has been labelled as totalitarian, authoritarian or neo-authoritarian and even as a dictatorship. Formal democratic institutions are weak. The justice system and law enforcement are definitely below the standards of functioning democracies.  But the fact that there are few effectively working democracies in the world including within the club of OECD countries is often neglected. Compared to the institutional developments from the early 1990s to date, most of which aspired, at least ideally, to international best practices, and in the light of a number of utterly undemocratic countries with which the advanced international community maintains friendly relations, the negative definitions applied to Russia sound either preposterous or inadequate, and certainly less heuristic than “militant Russia,” particularly if examined through the lenses of present developments.

“Militant Russia” evokes a process permeated by pride in national heritage that links people to their leaders. MR embodies a vision of social cohesiveness, commonalities of values and aspirations. Contrary to the Soviet Union where internationalism was a value and, at least ideally, played an important role in framing alliances and establishing durable links with opposition movements in democratic countries, MR stands for its own interests and goals while trying fiercely to forge an extra-European identity for the nation.

In this vision patriotism, together with enhanced military and economic security, plays a primary role. Patriotism upholds the vision of modernization directed towards self-sufficiency in a number of areas pertaining to defense, energy and foodstuffs. The aim is to make development less dependent on Western countries’ trade and investment, while domestic efforts and policies should make it sustainable. But MR is also open to interaction with the friendly abroad. While the divide between patriotism and nationalism is often blurred by shared perceptions of threats and/or enmities, Russian developments to date suggest that a red line between the two is still being firmly held, preventing hard-core nationalists from twisting decision-making in their favor, while watching that their virulent proposals and  criticism of government policies and personnel do not trespass unwritten rules. 

Nonetheless, militancy is nurtured as a symbol and a practice of national unity should mobilization against aggression eventually become necessary. Organizations such as the All-Russia People’s Front (ONF) with its capillary regional structures help in shaping people’s militancy and directing other organizations’ and individual efforts  to achieve government priorities. At the same time the ONF watches that people in charge of state structures and production entities perform in the interests of the country rather than looking after themselves, as they are so often charged with.

Security and Economic Strategies

The ways Russia is structuring its economic strategy give better insights on security and defense than either the description of the country as a paper tiger or, vice versa, the exaggeration of its strength and threat potentials.

After tensions related to Ukrainian developments, increasing geopolitical unrest and dangers of instability at its borders, Russia has put in place new policies and institutions with the aim of enhancing self-sufficiency while maintaining trade openness, as President Putin stressed in front of businessmen in St. Petersburg in June 2015, noting that technological transfer needs learning from the more advanced. Russia is, indeed, a largely open economy with a volume of trade to GDP much higher than that of a mature economy like the United States. But World Bank average data on trade openness from 2010 onwards show that Russia (with a trade turnover of more than 50 percent of GDP) fares even better than Brazil and China and about as well as other large emerging market economies. A logical inference is that Russia will resist isolationist policies, whether they are forced from abroad or urged from nationalist lobbies, and fight against such pressures. Indeed MR has refrained from autarky that some circles would welcome, although the probability of higher barriers to trade cannot be dismissed.

Domestic and external policies suggest heightened concern for security together with an active search for alternative options and partnerships. The leadership is fully aware of the additional costs it will have to confront. The population may have not yet been exposed to the full effects of diminishing real incomes, but most seem to be prepared to endure the pain, provided that their empathy for “economic sovereignty,” as President Putin has labelled the current strategy, be backed by dignified restraint on the part of the well-off. Caring for social equity demands today more than ever control on individual incomes and spending by top officials or managers in charge of state agencies and entities. Obligatory income declaration may not suffice. Control on public funds seems to have been assigned to the All-Russia People’s Front that, judging by the unease shown by some power structures, may pursue the cause with excessive enthusiasm. Cases of embezzlement have been exposed by the ONF and followed with unusual firmness by the President up to dismissals of several governors “for breach of confidence.” The scandal involving the arrest for bribe of the well-known governor of Sakhalin, Alexander Khoroshavin, before his dismissal by Putin may be taken as an example of the growing influence of the ONF on law enforcement. This case may signal that the power of the ONF is growing beyond what was envisaged at its origin in 2011, when it was widely seen as Putin’s creature.  The ONF has become an arm of MR in fighting corruption also when government procurement regulations are twisted to their benefit by state companies, particularly in defense, by manipulating prices.

Economic sovereignty is pursued with policies of self-sufficiency at home and networking abroad with friendly countries, particularly in the Asia Pacific Region (APR).  Sanctions from the West have helped to endow these policies with MR’s symbolism to justify accelerated implementation. Sacrifices will be needed internally, in the pursuit of less dependence from the advanced economies, and externally, by the re-allocation of resources to backward territories and infrastructures within Russia and at its borders. Since returns are long-term and subject to economic and political uncertainties, decisions are framed into an enhanced security strategy whose influence on decision-making appears to be growing.

Internal Policies

Internally, costly economic policies are carried out in agriculture. By fixing, and financing, higher volumes of home-grown foodstuffs the government complements security in the military and energy spheres with security in agriculture. This is in contrast to liberal policies approved in preparation of Russia’s accession to the WTO in 2012.

The Russian embargo on agricultural imports was introduced in August 2014 soon after the enforcement of a large array of Western sanctions aimed at weakening the Russian economy. The impact of sanctions on Russian growth is difficult to disentangle from other factors, among which oil prices and the exchange rate play a dominant role. Regardless of doubtful costs—up to $160 billion in April 2015—Western sanctions have called for retribution from Russia. Based on the embargo of imported foodstuffs, Russia’s response looks rather contained compared to more daunting threats, whether control of air routes or a squeeze on gas supplies. The measure hit Western producers, whose small contribution to the GDP of their respective countries is on a par with their limited electoral weight and impact on decision-making. But, more interestingly from MR’s perspective, it calls for a tighter approach to security according to the Doctrine of Food Security laid down in 2009-10 in the aftermath of the financial crisis. This document is presently used as a framework for the establishment of quotas of domestic staples to be attained to assure given per-capita intake of calories and food safety irrespective of comparable advantages accruing to cheaper foreign trade flows. This is a costly strategy. But like Napoleon’s France that, out of sanctions, became the largest producer in the world of beet sugar, one should not rule out that Russia may make virtue out of necessity. Positive developments are already visible. Traditional staples and processed food could be eventually exported even to China now that low oil prices make energy exports less profitable and a weak ruble attractive for other exports. But for food products to become competitive abroad, vested interests in subsidies must be resisted and efficient foreign investors not be scared out of the market.

External Policies

Externally, stimulated by various forms of ostracism from Europe, new partnerships are being sought by Russia in the East, primarily in Central Asia and the APR with a focus on China. The turn to the East was sought earlier in the prospect that Russia would become a bridge between Europe and Asia. At the same time Russia, guided by both economic reasons and security concerns, was pursuing the creation of an economic integration space in the hope of attracting Central Asian countries and other countries in Europe, primarily Ukraine. Some observers in the West, despite lack of robust evidence, interpreted the project as an attempt to revive the Soviet Union. Sober analysis based on the time span, nature and complications of the underlying negotiations suggests on the contrary that the Eurasian integration project is neither aggressive nor immediately convenient to Russia and in perspective problematic. It is a defensive and costly project, marred by continuous blackmail from the poorest countries crucially located in areas of high instability and potentially explosive ethnic tensions.  Economic integration has been partially achieved and success is modest. At its best in 2013 trade within the three Eurasian Customs Union member countries—Belarus, Kazakhstan, Russia—had reached $66.2 billion. It started falling with the slowdown of the Russian economy and may recover later but hardly to volumes comparable with either Western or Far Eastern prospects.

Only two countries, Armenia and Kyrgyzstan, have become additional members of the Eurasian Economic Union (EAEU) established on 1st January 2015 by Belarus, Kazakhstan, and Russia, the original members of the Eurasian Customs Union, thanks to much effort, compromise and concessions mainly from Russia. The EAEU remains a supra-national entity whose decisions are based on consensus and has no military powers whatsoever. Any other step towards enlargement will be cautiously weighted against all sorts of possible dangers and geopolitical concerns.

While the results of the processes of Eurasian integration to date are modest, the accession of Armenia and Kyrgyzstan can be considered a success for MR in an utterly unfavorable geopolitical context, as both countries, despite pressure, refused to enter  alternative alliances hostile to Russia.

Russia’s turn to the East through and beyond Central Asia is overdue from an economic point of view considering the impressive economic progress of China and other economies of the APR, but the recently voiced hope of reaching $100 billion trade with China by 2020 amidst the economic slowdown in the world economy may be impracticable. Falling oil prices in the bleak geopolitical and world economic context, however, seem to have strengthened the determination of Russia to fight isolation, diversify foreign trade and trade partnerships and concentrate on improving transport infrastructure despite tighter financial constraints and no prospects of immediate benefits. This approach makes sense for its strategic vision, elements of which could be found in the earlier idea of bridging Europe with Asia, but more so for its militant character which has been fostered by antagonist policies from Russia’s customary trade partners. Russia’s turn to the East entails enormous costs and efforts to penetrate both markets and hermetic cultures. But instincts of urgency and resolve needed to overcome fears and uncertainties seem to extract from confrontational policies with the West a certain euphoria that reverberates in sentiments of national cohesion.

Seen from this perspective, unexpected obstacles to the implementation of important deals, revision of former plans, or simply failure to achieve hoped for targets, may not have the dramatic impact on projections that one would expect from infringement of short-term projects and contracts. A case in point is the gas deal with China agreed in May 2014, the realization of which has been procrastinated owing to numerous technical and financial obstacles. The possible gas routes have been changed several times and volatility of hydrocarbons’ prices does not help. 

But from a strategic point of view, targets have not changed. China for its economic potential remains a promising partner for Russia not only for gas, but also for oil, (and possibly foodstuff from a rejuvenated Far East), although Europe will remain an important hydrocarbons’ outlet for many years. Russia, in turn, is perceived by China as a more reliable supplier than Middle Eastern countries, engulfed in probably lasting geopolitical unrest.

There are also projects related to transport infrastructure along the rediscovered Silk Road that should help China facilitate its trade with Europe. These include a high-speed railway linking with Russia, possibly through Kazakhstan. The recently created Asian Bank for Infrastructure Investment, in which the major stakeholders, apart from China with 26 percent of the votes, are Russia, India, South Korea, and Germany, may be looked for to provide financial support in addition to special funds already provided by China. Plans are only at the very early stage of working out a cost-benefit analysis of different projects. But in this field as well, strategies are unlikely to change. Modern transit with at least part of Russia should also benefit the production and trade of the EAEU. Forging new partnerships with China is difficult. Progress is slow, but exists: a number of business deals were agreed  at the September 2015 Eastern Forum in Vladivostok for an estimated value of 1.3 trillion rubles. Apart from deals concluded at the state level, there are also deals of individual companies, including SMEs.

It is likely that for many years ahead Russia will be seen as the supplier/producer of raw materials and China as a challenging, highly competitive manufacturer. This criticism was voiced after the May 2012 presidential edict on the accelerated development of the Far East. But, clearly, events from 2013 to 2015 suggest that there is no foreseeable alternative.  Russia will have to make a virtue out of necessity and try to stimulate the creation of higher value-added output in its Asian territories while still bearing the burden of a resource-based economy exposed to price shocks. This will be difficult but not impossible, provided a virtuous balance between state priorities and  dynamic private investment is put in place and made sustainable.

The development of private businesses in the Far East is, indeed, looked for. The appointments of two respected officials, Alexander Galushka, from the business association Delovaya Rossia, to the post of Minister for the Development of the Far East,  and Yury Trutnev, to the post of deputy prime minister for the Far East in the government, on the score of his lasting high-level experience at the presidential administration, provide, in principle, for effective decision-making capable of winning support from both federal economic agencies and private business circles. Territories of accelerated development providing for tax privileges and one-stop shop procedures for the establishment of businesses have been built with an eye to APR experience. Access to land for industrial use has been made easier despite hostility from some groups. Free usufruct of small land acreage to any Russian citizen willing to develop the area and acquire in time ownership rights addresses the problem of outmigration and labor shortage. The process will need time to be completed.  But it is a step in the right direction provided the authorities withstand hardline nationalists’ pressure to preserve the local identity, whatever that may be, and assist investors and newcomers with respect for the rule of law.

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Against efforts to seclude Russia from the advanced economies, the Russian nation is turning militant. Patriotism, rather than nationalism, assertiveness rather than aggressiveness, militate in favor of tighter security concerns at home and the search for new partnerships eastwards despite formidable obstacles. For economic sovereignty to last, a balance must be found between security concerns and the need to preserve competition to foster productivity and growth. Averting further antagonist policies might be the right way to make the new model sustainable.