Russia Analytical Report, June 4-11, 2018

This Week’s Highlights:

  • If there is a lesson to be learned from the Reykjavik summit of 1986 for Trump and Kim ahead of their Singapore summit, then it is that “unexpected things can happen,” especially given the lack of preparations on the part of the U.S. leader, according to Financial Times columnist Gideon Rachman. Another summit between Soviet and Western leaders, the Yalta summit in 1945, also imparts a lesson: “If you are not at the negotiating table, you should be worried that your interests might be traded away,” Rachman writes.
  • It is time for Moscow to acknowledge that Ukraine has now completely severed its geopolitical ties to Russia, effectively becoming a military and political partner of the United States and an economic responsibility of the EU, according to Dmitri Trenin, director of the Carnegie Moscow Center. Now, it is up to Russia to exclude Ukraine from its orbit and treat it as a full-fledged foreign state, he writes. Rather than keep strongholds along Russia’s periphery, the Kremlin should seek to attract Russia-sympathizing people in areas of lingering conflict and encourage them to resettle in Russia, according to Trenin.
  • Putin is toning down his foreign policy simply because so many of his key objectives have been accomplished that his best option now is to consolidate his gains, writes foreign affairs professor Walter Russell Mead. A divided and confused West has given up its dream of pushing eastward, and both the EU and NATO are less confident and less effective than they were a decade ago. However, Mead argues that Putin is no Stalin; he seeks to weaken the West rather than destroy it.
  • Bloomberg columnist Leonid Bershidsky imagines a democratic Russia that has taken advantage of Trump’s anti-European policies and allied with Europe. This new superpower could compete in economic terms with U.S. hegemony, Bershidsky writes, as the EU plus Russia would control about 27 percent of the G-20’s combined GDP, while the U.S. would command 28 percent.
  • Unless the U.S. is convinced that the INF Treaty and New START are unsalvageable, the agreements that by and large have worked for the two states holding more than 90 percent of the world’s nuclear weapons should not be allowed to fall apart, argues Ohio governor John Kasich.

I. U.S. and Russian priorities for the bilateral agenda

Nuclear security:

  • No significant commentary.

North Korea’s nuclear and missile programs:

“Four Summits and Their Lessons for Trump and Kim: Top-level meetings have a distinctly patchy record of making the world safer,” Gideon Rachman, Financial Times, 06.09.18: The author, chief foreign affairs columnist for the Financial Times, writes that the Munich summit in 1938, now seen as “the high point of the failed policy of appeasement of Nazism. … at the time … was regarded as a triumph by many in the U.K. … Lesson: History’s verdict may be very different from the verdict the day after the summit. … [At the] Yalta summit … Roosevelt agreed to Soviet demands to keep hold of the Polish territory that the USSR had annexed in 1939. … Lesson: If you are not at the negotiating table, you should be worried that your interests might be traded away. … Richard Nixon’s meeting with Mao Zedong [in 1972] was one of the most dramatic moments of the Cold War … By 1974, Nixon was out office and, by 1976, Mao was dead. … Lesson: Sometimes the meeting is the message. … The Reykjavik meeting [between Ronald Reagan and Mikhail Gorbachev] illustrated that … Once two leaders are locked together in a negotiating room, unexpected things can happen. The chances that something unpredictable will happen at the Sentosa summit are heightened by the extreme lack of preparation in the Trump White House.”

Iran and its nuclear program:

  • No significant commentary.

New Cold War/Sabre Rattling:

  • No significant commentary.

NATO-Russia relations:

  • No significant commentary.

Missile defense:

  • No significant commentary.

Nuclear arms control:

“Reclaiming Global Leadership: The right way to put America first,” John Kasich, Foreign Affairs, 06.06.18The author, the governor of Ohio, writes: “We have a choice between two options: shut the blinds and withdraw from the world or engage with allies old and new to jump-start a new era of opportunity and security. … We now must contend with not just the familiar conventional and nuclear threats from Russia but also those posed by China, Iran and North Korea; threats in space and cyberspace; and threats from nonstate actors. The new environment demands leaner, more agile coalitions to solve such problems swiftly. … No threat holds greater consequences for all of humanity than that of the accidental or deliberate use of nuclear weapons. Containing that risk has to remain our top priority. … With New START expiring in 2021 and the INF Treaty on the verge of being fatally undermined by Russia’s noncompliance, we need to think long and hard about walking away from them. Unless we are convinced that they are unsalvageable, agreements that by and large have worked for the two states holding more than 90 percent of the world’s nuclear weapons should not be allowed to fall apart. … we will have to work with Russia on arms control, because with around 7,000 warheads, the country remains the world’s largest nuclear power. Where we have common interests, we should cooperate … Where we cannot cooperate, we must hold Moscow at arm’s length until there is either a change in behavior or a change in leadership.”


  • No significant commentary.

Conflict in Syria:

  • No significant commentary.

Cyber security:

  • No significant commentary.

Elections interference:

  • No significant commentary.

Energy exports from CIS:

  • No significant commentary.

U.S.-Russian economic ties:

“US Sanctions Stymie Russian Corporate Progress,” Harvey Sawikin, Financial Times, 06.06.18The author, co-founder of an emerging markets investor with a focus on the former Soviet Union, writes that the April sanctions imposed on Russian oligarchs by the U.S. “are already having severe consequences in a dollar-dominated global economy. …  making SOEs toxic to U.S. investors … would retard the important progress of reform in Russia … U.S. investors in Russian SOEs has in several cases contributed to a positive loop in which improved corporate governance designed to meet western expectations leads to higher stock and bond prices … As SOEs and large private companies begin to operate efficiently and eliminate theft as routine practice, this ripples through the economy and business culture. … So in addition to the reasons cited—that toxic treatment for, say, Sberbank would harm the Russian people without an equivalent deterrent effect, and that our European allies have business with and even depend on companies such as Gazprom—it would be a mistake to impede U.S. and other foreign participation in the Russian economy that plays such a constructive role.”

U.S.-Russian relations in general:

“How Trump Helps Putin,” Susan E. Rice, New York Times, 06.08.18The author, the national security adviser during President Barack Obama’s second term, writes: “Mr. Putin’s objectives are plain: to restore Russia to global greatness at the expense of the United States and to divide Europe by weakening NATO and the European Union. … If Mr. Putin were calling the shots, he would ensure that America’s reliability is doubted, its commitments broken, its values debased and its image tarnished. He would advise the new president to … First, withdraw from the Trans-Pacific Partnership. … Second, criticize NATO and cast doubt on America’s willingness to defend its allies on the grounds that they haven’t paid their bills. … Third … start a trade war with our closest allies. … Finally … Mr. Putin might encourage the president to ensure that countries large and small revile America’s leadership … With the sum of these actions, President Trump has deeply angered our closest allies and offended almost every member of the international community, except Israel, Saudi Arabia, the United Arab Emirates—and Russia. … after the Ukraine invasion, the United States led the charge to throw Russia out of the G-8. … In reality, it’s [now] the ‘G-7 minus one,’ since President Trump has so alienated the United States from its core partners that we have effectively absented ourselves. America stands alone, weakened and distrusted. … There is no evidence that Mr. Putin is dictating American policy. But it’s hard to imagine how he could do much better, even if he were.”

“Donald Trump Goes Rogue at the G7,” Editorial Board, Financial Times, 06.10.18The news outlet’s editorial board writes: “By isolating himself so thoroughly, Mr. Trump has firmly decided to make the G-7 a G-6 plus one. … Trump clearly has no regard for the G-7 as a club of advanced economy democracies. Instead, he broke with the consensus after the annexation of Crimea, and wanted to invite Russia back into the grouping. In effect, America under Mr. Trump has gone rogue. … This weekend showed a world in disarray, where America has abdicated its responsibilities. The rest of the globe should draw consequences.”

Alternative take on G7:

“Trump’s Leadership Isn’t Just About Tantrums: His inconvenient tactics at the G-7 and beyond are not necessarily irrational,” Leonid Bershidsky, Bloomberg, 06.11.18The author, a columnist and veteran Russia watcher, writes: “No matter how tempting it is to write off President Trump’s G-7 antics as the capricious acting out of a big, petulant baby, that’s not going to do the world any good as long as he runs the U.S. … One could also argue that Trump … acted to bring into the open the allies’ dependence on the U.S. and remind them they shouldn’t take U.S. support for granted. … As Henry Kissinger wrote …  ‘The essence of such upheavals is that … their overriding thrust is psychological. … The natural inclination, particularly of leaders from pluralistic societies, is to engage with the representatives of the revolution, expecting that what they really want is to negotiate in good faith on the premises of the existing order and arrive at a reasonable solution.’ That’s what U.S. allies have been trying to do with Trump; … They appear to believe they can negotiate better outcomes or wait Trump out … Unlike previous U.S. leaders, he provides some clear answers to questions Kissinger asked of the U.S. … Trump’s answers are simple. The U.S. will seek an economic advantage no matter who’s at the other side of the table, it will stretch the rules as much as it can to get it and no kind of pressure will divert it from its pursuit of the advantage. These answers, in turn, lead to a question the G-6 leaders and all U.S. allies need to answer: Do they want to be led on these terms or do they have the guts to present an alternative? Leaving this question unanswered is an option, but only if one believes the U.S. will not re-elect Trump or ever elect another Trump.”

II. Russia’s relations with other countries

Russia’s general foreign policy and relations with “far abroad” countries:

“Putin's Success Masks Russian Weakness,” Walter Russell Mead, The Wall Street Journal, 06.05.18The author, a columnist and professor of foreign affairs at Bard College, writes: “As U.S. policy has become more frenetic under President Trump, Russian foreign policy has become more restrained. … Mr. Putin hasn't had a change of heart or decided to mend fences with the West. He is toning down his foreign policy simply because so many of his key objectives have been accomplished that his best option now is to consolidate his gains. … A divided and confused West has given up its dream of pushing eastward, and both the EU and NATO are less confident and less effective than they were a decade ago. The West no longer endangers Russia. The real question is how much Russia endangers the West. Mr. Putin is no Stalin; he seeks to weaken the West rather than destroy it. … In the Middle East, Russia would profit similarly from a period of relative inaction. Mr. Putin cannot realistically expect to make Russia a hegemonic power there, but he hopes to replace the U.S. as the region's primary balancer and diplomatic power broker. … Despite Mr. Putin's successes, Russia remains weak, and its leverage over other nations is limited. … developments at home counsel restraint as well. … Russia's sclerotic economy and corrupt social order ensure that the foundations of his [Putin’s] power remain weak.”

“Russia and Germany: From Estranged Partners to Good Neighbors,” Dmitri Trenin, Carnegie Moscow Center, 06.06.18The author, director of the Carnegie Moscow Center, writes: “Russia’s ties with Germany—its most important European partner—have grown increasingly strained over the past few years. … Yet, while past illusions of integration [into a Greater Europe] cannot and should not be revived, Russian-German relations can be made more productive. … Good starting points would be for the Kremlin to find ways to roll back its involvement in several lingering and frozen conflicts across Europe, and to seek to attract Russia-sympathizing people who live in these places to resettle in Russia rather than sustain strongholds along Russia’s periphery. … It is time for Moscow to acknowledge that Ukraine has now completely severed its geopolitical ties to Russia, effectively becoming a military and political partner of the United States and an economic responsibility of the EU. Ukraine no longer shares the same political, economic, humanitarian and intellectual conditions as Russia. Now, it is up to Russia to exclude Ukraine from its orbit and treat it as a full-fledged foreign state.  … [Moldova’s] hypothetical NATO membership or the prospect of eventual unification with Romania (a NATO member) does not pose a significant additional threat to Russia in the context of a de facto partnership between Ukraine and the United States. … Russian efforts to improve relations with the EU’s premier economy should be seen as a key element in a wider strategy of repairing Russia’s strained ties with Europe. … The only things observers can be confident about are that Russia will continue to exist no matter what happens, and that Moscow’s relations with Germany and the EU in general will be important factors for Russia’s development and maintaining a stable geopolitical equilibrium in the world of the mid-twenty-first century, during which the United States and China are poised to play the leading roles.”

“Putin Is Costing Russia an Opportunity in Europe. Trump’s retrenchment creates a vacuum that could have been filled by the EU’s neighbor to the east,” Leonid Bershidsky, Bloomberg, 06.06.18The author, a columnist and veteran Russia watcher, writes: “President Donald Trump’s contemptuous treatment of the U.S.’s European allies has created a unique opportunity for warmer relations between the European Union and Russia. There’s just one very big obstacle: Vladimir Putin. … Imagine … that Russia was a democratic nation run by a liberal government committed to the same deals as Europe, such as the Iran denuclearization agreement and WTO trade rule … This Russia would still be a fearsome military power, but it would have a fast-growing, competitive economy that has turned its natural-resource wealth into a surge of innovation. This fantastical Russia—which, of course, wouldn’t have invaded any neighboring countries—would naturally offer itself as a more reliable partner to Europe than the U.S. … The new superpower could compete in economic terms (the EU plus Russia would control about 27 percent of the combined GDP of the G-20, while the U.S. would command 28 percent), military might, resource wealth and technological talent … Russia would be a much more logical partner for the EU than China … Russia and Europe are natural allies for a multitude of geographic, economic, cultural and military reasons. … Of all the misdeeds history will lay at Putin’s door, this one will probably be judged the most profoundly damaging to Russia’s true national interests. Even if Russia changes course after he’s gone, an opportunity for a union with Europe like the opening provided by Trump’s anti-European policies may not present itself again for a long time.”


“China-Russia Relations: Same Bed, Different Dreams? Why Converging Interests Are Unlikely to Lead to a Full-Fledged Alliance,” Simon Saradzhyan and Ali Wyne, Russia Matters, June 2018The authors, the director of the Russia Matters project and a nonresident senior fellow with the Atlantic Council’s Brent Scowcroft Center on International Security, write that despite a “convergence of interests, China-Russia relations may epitomize the Chinese proverb ‘same bed, different dreams’: Putin’s ambition is to retain Russia’s positions in the bilateral relationship even as Russia continues to grow weaker relative to China; the rising China, in contrast, is looking to expand its clout … Chinese leaders regard Russia as a power in decline vis-à-vis their own country and with good reason. … four different models for measuring national power place China above Russia in absolute terms, while three … show Chinese power growing much more rapidly than Russia’s in the 21st century. … [One forecast] says the share of Russia’s economy in global economic output will decline by 22 percent in 2016-2050, while China’s will grow by 13 percent … a U.N. forecast shows Russia’s population as a share of the world’s declining by 18 percent in 2016-2050, while … China’s … [would] decline by just under 11 percent. … The disparities … make the emergence of a full-blown military-political alliance between Russia and China unlikely in the near future. Russia … will not agree to become a ‘big sister’ in such an alliance, as some Chinese have referred to it (clearly meaning the lesser of two siblings). … Though unlikely, such a full-blown, formal alliance is possible if two conditions emerge. The first condition would be Russia’s consent to accept the role of a junior partner in such an alliance. … The second condition is that China would change its current position, which holds that such alliances should not be entered. … according to … one of China’s leading experts on national power, time has come for China to abandon its principle of not entering alliances … and enter such an alliance with Russia.”


“Ukrainians Are Getting Less Divided by Language, Not More. Here's the research: They're developing a common civic identity, to researchers' surprise,” Joshua Tucker, The Washington Post, 06.08.18The author, a professor of politics at New York University, spoke with Olga Onuch, associate professor in politics at the University of Manchester, about a special issue of the journal Post-Soviet Affairs. Onuch said: “Arguably, Russian President Vladimir Putin is the one who, in 2014, really hyped the idea that Russian speakers formed a specific political group that preferred to secede from Ukraine and needed Russia’s protection. … While there was some evidence that such identities were important in the past, political science theory predicted they will shift or harden in the face of mass protest and conflict. That hasn’t happened. … we do find that personal language preferences and ethnic or civic notions of ‘Ukrainianness’ are important in shaping political attitudes … over the last two decades we observed two phenomena: (1) a ‘shedding’ of ‘Russianness’ and (2) a simultaneous rise in people declaring their sense of nationality to be civic and not ethnic. … while civic identities have seemingly strengthened, ethnolinguistic identities have remained consistent. … class-based and regional identities centered around feelings of ‘being left behind’ have become increasingly important for those most affected by the conflict in the east. … This is similar to feelings of abandonment correlating with voting for the far-right in France, for Brexit in Britain and for Trump in the United States. … Ukrainian citizens seem to be unified by a shared sense of belonging to a civic community or homeland. However, regional socioeconomic inequalities are driving support for violent conflict and secession. … It is possible that Putin’s continued attempts to inflame ethnic or linguistic divisions may lead the conflict to spread—yet what we have seen to date suggests the opposite.”

Russia's other post-Soviet neighbors:

  • No significant commentary.

III. Russia’s domestic policies

Domestic politics, economy and energy:

“Russian Oligarchs in the Era of Sanctions,” Andrei Kolesnikov, Carnegie Moscow Center, 06.08.18The author, a senior fellow and the chair of the Russian Domestic Politics and Political Institutions Program at the Carnegie Moscow Center, writes: “After being slapped with sanctions, businessmen Oleg Deripaska and Viktor Vekselberg have turned to the government for assistance. Their logic is straightforward: since they were targeted for their proximity to the regime, surely it should lend a helping hand. Meanwhile, other oligarchs who have not yet been sanctioned are trying to prove that they are far removed from the regime. … the ‘classic’ oligarchs of the first wave have been hurt the most by a process politely known as ‘geopolitical tensions.’ Deeply integrated into international business, they don’t want to be cut off from the world outside Russia. Meanwhile, the second wave of oligarchs has neither problems nor illusions. … they are, in effect, part of the state. For the past eighteen years … these oligarchs have formed the backbone of state monopolistic capitalism. … The appointment of Dmitry Patrushev, the son of Russian Security Council Secretary Nikolai Patrushev, as Minister of Agriculture sets an important precedent. … The sons (and, more rarely, daughters) of Russia’s leading families are inheriting positions at Russia, Inc. The oligarchs are torn between their benefactors in the Kremlin, who can strip them of property and liberty, and the capitalist system of the West, which offers them business and economic opportunities.”

“The Successes and Limitations of Russia’s Economic Strategy,” International Institute for Strategic Studies, 06.07.18The IISS authors write: “The Kremlin’s basic economic strategy is to trade efficiency and growth for political control and a tight rein on Russia’s strategic sectors. Russia’s economy has faced substantial difficulties since 2013, although it is once again performing reasonably well and there is no basis for believing that sanctions will force a change in Moscow’s foreign policy. However, slow GDP growth and fiscal rectitude complicate the task of reversing a fall in living standards that could (unchecked) threaten political stability. … Overall, the Kremlin is comfortable letting the private sector improve efficiency, as long as it does not threaten the political interests of either the state or the country’s most powerful individuals. This approach enables the Kremlin to maintain its power, but creates limitations and dependencies that affect Russia’s foreign policy. The structure of Russia’s budget and the political role of the energy sector, in particular, are key to Russia’s economic strategy.”

Defense and aerospace:

  • No significant commentary.

Security, law-enforcement and justice:

  • No significant commentary.