16.11.2008
A New Entente
№4 2008 October/December
Sergei Dubinin

Professor and has a Doctoral Degree in Economics.

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.