Russia Analytical Report, March 22-29, 2021
This Week’s Highlights
- The best vehicle for promoting stability in the twenty-first century is a global concert of major powers, argue the Council on Foreign Relations’ Richard N. Haass and Charles A. Kupchan. There will be two peer competitors—the United States and China, while the EU, Russia and India will likely play the two superpowers off each other in that concert. By establishing a forum in which its members can make transparent their core security interests and strategic “redlines,” write Haass and Kupchan, a global concert also makes it less likely that Russia or China would become implacably aggressive states. Some might question the inclusion of Russia, they add, but the Kremlin deserves a seat at the table, according to Haas and Kupchan.
- Barring unexpected changes in the distribution of power or regime change within rising authoritarian states, defenders of international political liberalism should not expect more than intermittent success in holding the line, write professors Alexander Cooley and Daniel H. Nexon. Comprehensive engagement should become the standard way for liberal states to interact with groups such as the SCO, the CSTO and the Eurasian Economic Union, according to Cooley and Nexon.
- The Belfer Center’s Paul Kolbe asks how the U.S. should respond to the SolarWinds hack. His answer is that retaliation is neither the most urgent nor the most important task at hand. Kolbe argues that our most critical mission is to relentlessly and comprehensively improve our cyber defense.
- The Biden administration should direct its resources toward preparing for a world in which Nord Stream 2 becomes a reality, write the Council on Foreign Relations’ Joseph Haberman and Thomas Graham. That means continuing to help Europe diversify its sources of gas and accelerating cooperation with Europe in the development of renewable sources of energy. And with regard to Ukraine, write Haberman and Graham, it entails preparing in coordination with European partners an economic package to cover the inevitable budget shortfall.
- By the time the Soviet Union was disbanded in the early 1990s, its central planning system of exchange was judged a failure, writes Marcel Fafchamps, a senior fellow at the Freeman Spogli Institute for International Studies. Spin the clock forward another 30 years, and we are now in a world where Western countries have begun to use sophisticated algorithms for central planning purposes, with a view toward appropriating economic surplus. The question then is: How can we protect civil liberties in the face of these enormous challenges while continuing to enjoy the benefits that all these algorithms generate?
- Financial Times columnist John Dizard writes that while Biden makes the public sounds of a hardliner, he will probably be cautious about imposing financial sanctions on Russia that go much beyond a few unattractive oligarchs and lower-level officials. Today Russia is less vulnerable to outside pressure than in 2014, writes Ruchir Sharma, chief global strategist for Morgan Stanley Investment Management. Seven years of sanctions have already hardened the Kremlin against outside pressure. That means it will take more than just ratcheting up targeted sanctions to dent the walls of fortress Russia, according to Sharma.
I. U.S. and Russian priorities for the bilateral agenda
- No significant developments.
North Korea’s nuclear and missile programs:
- No significant developments.
Iran and its nuclear program:
- No significant developments.
Great Power rivalry/New Cold War/saber rattling:
“The New Concert of Powers. How to Prevent Catastrophe and Promote Stability in a Multipolar World,” Richard N. Haass and Charles A. Kupchan, Foreign Affairs, 03.23.21. The authors, president of the Council on Foreign Relations and a professor of international affairs at Georgetown University, write:
- “The best vehicle for promoting stability in the twenty-first century is a global concert of major powers. … Concerts have two characteristics that make them well suited to the emerging global landscape: political inclusivity and procedural informality … A global concert would be a consultative, not a decision-making, body. … [It] would have six members: China, the European Union, India, Japan, Russia and the United States.”
- “Democracies and nondemocracies would have equal standing, and inclusion would be a function of power and influence, not values or regime type. … A global concert would give its members wide leeway when it comes to domestic governance. … But the concert would also work toward a shared understanding of what constitutes unacceptable interference in other countries’ domestic affairs and, as a result, are to be avoided.”
- “There will be two peer competitors—the United States and China. … A global concert, like the Concert of Europe, is well suited to promoting stability amid multipolarity. … A U.S.-Chinese condominium smacks of a world of spheres of influence … Pax Sinica is also a nonstarter. … [N]either Russia nor China has yet to become an implacably aggressive state committed to wholesale territorial expansion. A global concert also makes that outcome less likely by establishing a forum in which its members can make transparent their core security interests and strategic ‘redlines.’”
- “Some might question the inclusion of Russia … But Russia is a major nuclear power and punches well above its weight on the global stage. Russia’s relationships with China, its EU neighbors and the United States will have a major impact on twenty-first-century geopolitics. Moscow has also begun reasserting its influence in the Middle East and Africa. The Kremlin deserves a seat at the table.”
- “Establishing a global concert would not be a panacea. Bringing the world’s heavyweights to the table hardly ensures a consensus among them. … Nonetheless, a global concert offers the best and most realistic way to advance great-power coordination, maintain international stability and promote a rules-based order.”
“America's Back—Against a Wall,” Walter Russell Mead, Wall Street Journal, 03.23.21. The author, a columnist for the news outlet, writes:
- “Anyone who thought international politics would calm down once Donald Trump left center stage has had a rude awakening. After the Alaska confrontation between top U.S. and Chinese officials and the slanging match between Presidents Biden and Vladimir Putin, the world is as fraught as ever. … Relations with allies are also bumpy.”
- “Bad relations with China and Russia and the troubled state of the world can't be blamed on the Biden team, but the ideas driving this administration's foreign policy are heading for severe and serious tests. Central to the Biden approach is the belief that the path to global stability involves reinvigoration of American leadership in the service of the ‘rules-based international order,’ sometimes called Rubio.”
- “There are three big problems with this strategy, and the administration needs to brace for even more turmoil. … The first is that Russia and China are convinced that the U.S. has sunk into irreversible decline. … What this means in practical terms is that both countries will take a lot of convincing that ‘America is back.’”
- “The second problem is Europe. Washington's Asian allies are for the most part so worried about China that they welcome all the American leadership they can get. Europe is a different matter. China is far away, and Russia poses little direct threat to countries like Germany, France, Italy and Spain. … The third problem is trade. The part of the Rubio that most foreign countries care most about is access to U.S. markets.”
- “The outlook is not all bad. China's capacity for self-sabotage in foreign policy is unmatched since Wilhelm II. Russia's continuing economic stagnation limits Mr. Putin's reach. America possesses an array of assets that no rival can match. But even if Mr. Biden's goal of restoring global stability through renewed U.S. leadership is not a mission impossible, achieving it will require a mix of strategic insight, steely will and ideological flexibility that no president has brought to the table since the end of the Cold War.”
“The Illiberal Tide. Why the International Order Is Tilting Toward Autocracy,” Alexander Cooley and Daniel H. Nexon, Foreign Affairs, 03.26.21. The authors, the Claire Tow Professor of Political Science at Barnard College and a professor in the department of government at Georgetown University, write:
- “The ‘liberal international order’ is under severe strain … [E]mboldened illiberal powers seek to make the world safe for authoritarianism, in the process undermining key elements of liberal order. China and Russia, in particular, have exercised diplomatic, economic and even military power to put forward alternative visions.”
- “The last 20 years have seen a striking increase in the number of regional organizations, although not in the way that liberal triumphalists envisioned. … Led by China and Russia, they mimic the form of Western counterparts but embody illiberal and autocratic norms and promote their authoritarian founders’ regional agendas. … Why has political liberalism come under such sustained challenge? In retrospect, analysts should not underestimate the role of systemic backlash to the ‘color revolutions’ in Eurasia … and the Arab Spring movements … These revolutions, along with the Iraq war, helped recast the United States as a hegemonic power determined to overthrow authoritarian regimes.”
- “Emerging powers also sought to promote new norms to counter the appeal of political liberalism. One of these, ‘civilizational diversity,’ frequently informs China’s bilateral relations and engagement with international and regional organizations. The concept’s emphasis on cultural relativism, sovereign noninterference, and respect for civilizational differences aims to undercut political liberalism. A different set of “counternorms,” most often championed by Russia, emphasizes “traditional values.” These update the venerable tradition of associating liberalism with decadence and decline.”
- “[D]efenders of international political liberalism should not expect more than intermittent success in holding the line. One important step, though, would be a coordinated effort by major democracies to engage with new regional organizations on common issues and norms and values … Comprehensive engagement should become the standard way for liberal states to interact with groups such as the SCO, the CSTO and the Eurasian Economic Union.”
- “Policymakers interested in resisting challenges to liberalism need to prioritize its political dimensions, both at home and in intergovernmental settings. This means defending political liberalism in word and deed. It also means affirming, rather than undermining, its current normative foundation.”
“A second cold war is tracking the first. US-led western alliance is once again squaring up to Russia and China,” Gideon Rachman, Financial Times, 03.29.21. The author, chief foreign affairs columnist for the news outlet, writes:
- “To me, the parallels between today’s events and the early years of the Cold War look increasingly convincing, even eerie. … Once again you have a Russia-China axis arrayed against a Western alliance, led from Washington. … The tensions between the two sides are heightening.”
- “Until recently, it seemed that western Europe might try to remain nonaligned in a new cold war. The EU’s decision to sign a trade and investment deal with China suggested that Beijing had succeeded in prizing open a gap between Washington and Brussels. But China’s imposition of sanctions on leading members of the European parliament makes it increasingly unlikely that the EU will ratify the China trade deal. … European efforts to secure a rapprochement with Russia, pushed hard by President Emmanuel Macron of France, have also gone nowhere.”
- “In this second cold war—as in the first—there are regional flashpoints where the conflict could heat up. In Asia, some of these are actually unresolved issues left over from the first cold war, namely the status of the Korean peninsula and of Taiwan. In Europe, the front lines have moved east. It is now Ukraine, rather than Berlin, that is the focus of tensions between Moscow and the West. … With the advent of the Biden administration ... ideological competition is back.”
- “Technological rivalries are once again at the heart of superpower rivalry. ... But the technological clash is taking place in a different context. Forty years of globalization have ensured the deep integration of the economies of China and the West. Whether that integration can survive the intensification of great-power rivalries is the biggest open question about the new cold war.”
“Biden's Trumanesque foreign policy,” George F. Will, The Washington Post, 03.24.21. The author, a columnist for the news outlet, writes:
- “China's prickliness about U.S. ‘condescension’ looks, as does its harping on its ‘century of humiliation’ (from the First Opium War to the Communists' 1949 victory in the civil war), symptomatic of gnawing insecurity. This might intensify if Biden and Blinken successfully cultivate ‘the Quad’—the United States, India, Japan and Australia—as a counterweight to China. The four have combined populations of 1.85 billion and combined GDPs of $30.8 trillion, compared with China's 1.4 billion and $14.3 trillion. The Quad might be the beginning of something analogous to the Soviet containment measures Truman announced to a joint session of Congress 22 months after his admirably testy meeting with Molotov.”
- No significant developments.
- No significant developments.
Nuclear arms control:
“Building on George Shultz's Vision of a World Without Nukes,” William J. Perry, Henry A. Kissinger and Sam Nunn, Wall Street Journal, 03.24.21. The authors, former U.S. officials, write:
- “For the past 15 years, the three of us and a distinguished group of American and international former officials and experts have been deftly and passionately led by our late friend and colleague, George Shultz. Our mission: reversing the world's reliance on nuclear weapons, to prevent their proliferation into potentially dangerous hands, and ultimately ending them as a threat to the world.”
- “Characteristically, George's approach was not to be discouraged, but instead to get back to work. In that spirit, we offer five points. … First is the need for a bold policy to walk back from these increased perils. This will require a united effort from Washington and U.S. allies on a policy that reduces nuclear danger while maintaining our values and protecting our vital interests.”
- “Second, for many decades, memories of a smoldering Hiroshima and Nagasaki, and the fear generated by the Cuban missile crisis, informed and drove nuclear policy. As George told Congress three years ago, ‘I fear people have lost that sense of dread.’ … Third, we must take action on practical steps that will reduce the risk of nuclear use today while making the vision possible. Here, there are signs of progress. A few weeks ago, Presidents Biden and Vladimir Putin agreed to extend the New START Treaty for five years … There is much more work to be done, including securing nuclear materials to prevent catastrophic terrorism.”
- “Fourth, nuclear-weapon states should commit to conduct their own internal reviews of their nuclear command-and-control and early warning systems. These ‘fail-safe’ reviews would identify steps to strengthen protections against cyber threats and unauthorized, inadvertent or accidental use of a nuclear weapon. These reviews should also include options for establishing agreements between nuclear powers precluding cyberattacks on nuclear command-and-control or early-warning assets.”
- “Fifth, creating robust and accepted methods to maximize decision time during heightened tensions and extreme situations … could be a common conceptual goal that connects both immediate and longer-term steps for managing instability and building mutual security.”
“Reconsidering Arms Control Orthodoxy,” Naomi Egel and Jane Vaynman, War on the Rocks, 03.26.21. The authors, a Ph.D. candidate in government at Cornell University and an assistant professor of political science at Temple University, write:
- “The recent extension of New START brought with it a collective sigh of relief, bolstering optimism and leading some to extol arms control’s far-reaching potential to improve security conditions. But with optimism comes pessimism. Other analysts proclaim an imminent crisis and herald the demise of arms control. Both camps are falling prey to flawed assumptions.”
- “In order to set the path to sound policy, we challenge several trends in the current discussion on the future of arms control. We identify five problematic arguments: first, that arms control is only possible during good relations; second, that a lack of mutual interest is the key impediment to creating agreements; third, that past cheating is an obstacle that needs to be addressed before future cooperation; fourth, that only bilateral (or conversely, only multilateral) approaches will be fruitful in the current security environment; and fifth, that issues that are non-starters for the United States should be avoided, while parity and symmetry should be preserved.”
- “Arms control is not dead and the goals of arms control remain as important as ever. Arms control is a policy tool, not an end in itself—it may be appropriate in some cases and less applicable in others. Future progress requires a careful assessment of the consequences of technological and political developments and a more creative, expansive understanding of what arms control involves.”
- No significant developments.
Conflict in Syria:
- No significant developments.
“US Response to SolarWinds Cyber Penetrations: A Good Defense Is the Best Offense,” Paul Kolbe, Russia Matters, 03.25.21. The author, director of the Intelligence Project at Harvard’s Belfer Center and formerly of the CIA’s Directorate of Operations, writes:
- “According to U.S. officials, Russia is the likely perpetrator of the SolarWinds cyber compromise of federal agencies, private sector firms, NGOs and academic institutions … So how should the U.S. respond?”
- “A natural inclination will be to strike back in order to modify future Russian behavior and to introduce stronger cyber deterrence for other potential actors. Responses might include declaring Russian intelligence personnel persona non grata, indictment of perpetrators, targeted sanctions and execution of similar operations against select Russian systems. The aim would not just be punishment, but to change the risk-gain calculation for Russia, and others, when considering new cyber operations. But frankly, all of these actions have been tried in the past and have not slowed the cyber onslaught.”
- “Retaliation is neither the most urgent nor the most important task at hand. Our most critical mission is to relentlessly and comprehensively improve our cyber defense … How might we better address our systemic national cyber vulnerability?”
- “First, government efforts to bolster defense should focus on the private sector, which builds, owns, runs and is responsible for most of our cyber infrastructure. Better incentives are needed to improve security practices and culture. Also needed are disincentives that extract a cost for putting others at risk. Some elements in this regard might include: Federal security standards … Tort law … Intelligence sharing.”
- “We are in a new ‘Long War,’ an ambient cyber conflict that will play out over decades against multiple adversaries. This is a conflict where the best offense may be a good defense. Limiting the potential harm adversaries can impose on us, while retaining the ability to inflict asymmetric damage, offers the best hope of bolstering U.S. national security and creating a world of cyber deterrence and restraint. Hopefully, SolarWinds marks the inflection point of a pivot to a more effective defense-based national cyber strategy.”
“Covert Action, Espionage, and the Intelligence Contest in Cyberspace,” Michael Poznansky, War on the Rocks, 03.23.21. The author, an assistant professor at the University Pittsburgh, writes:
- “In recent months, the world learned that China carried out an indiscriminate hack against Microsoft Exchange, while Russia hacked U.S. information technology firm SolarWinds and used cyber capabilities in an attempt to influence the 2020 U.S. presidential election. The attacks raise important questions about how best to characterize these and other kinds of disruptive cyber events. One perspective that has gained considerable traction is that cyberspace is not primarily a warfighting domain … but rather an intelligence contest centered on spies and spycraft.”
- “The variety of Russian operations against the United States in recent months clearly illustrates the need for a more refined framework. The hack against SolarWinds … appears to be a work of espionage. Their continued efforts to sow disinformation during U.S. elections … was a work of covert action. While both are intelligence activities, the U.S. response should be tailored.”
- “Cyberspace was firmly established as a warfighting domain … a little over a decade ago. In a recent article in War on the Rocks, however, Josh Rovner argues that cyber is really more of an intelligence contest. Making this conceptual shift has significant implications for how we understand this space. … In practice, the lines between espionage and covert action may be somewhat blurry.”
- “Cyberspace may be an intelligence contest among rivals, but all intelligence operations are not created equal. While cyber-enabled espionage and covert cyber operations both qualify as intelligence activities given their reliance on secrecy, and are therefore distinct from conventional warfare or diplomacy, they are also distinct in key ways from one another.”
- “Going forward, appreciating this nuance will be important for several reasons. … First, … having a clear sense of how to think about the variety of operations in cyberspace is critical. In many cases, cyber activity approximates an intelligence contest in which states jockey for information and influence. … Second, assessing the wisdom of the previous administration’s decision to give Cyber Command more latitude in conducting operations … requires clear metrics of what has worked and what has not. Covert cyber operations may provide a more useful benchmark than espionage operations.”
- “Russian information efforts are recycling U.S. partisanship at scale. … Russia identifies who dislikes whom within the United States and then floods the information space with content to amplify these cleavages.”
- “Most participants in focus groups and interviews mistakenly assumed that Russian content was sourced by Americans.”
- “Most of these participants held a positive view of a PSA (public service announcement) on foreign election interference that provided a nonpartisan, general warning created by an authoritative source: the Federal Bureau of Investigations and the Department of Homeland Security's Cybersecurity and Infrastructure Security Agency.”
- “After interviewers told participants that the content they viewed was from Russia, the PSA appeared to be particularly relevant to them.”
Energy exports from CIS:
“Nord Stream 2: Don’t Make a Bad Deal Worse,” Joseph Haberman and Thomas Graham, The National Interest, 03.26.21. The authors, a research associate for Russia Studies at the Council on Foreign Relations and a distinguished fellow at the Council on Foreign Relations, write
- “The Biden administration faces an urgent decision on the controversial Nord Stream 2 gas pipeline project … For the past two years, the United States has escalated sanctions against Russian and European firms in an effort to stop the project, which is over 90 percent complete, on the grounds that it poses an unacceptable threat to European energy security and Ukraine’s independence. Congress is pressing hard for more sanctions.”
- “Although President Joe Biden has declared Nord Stream 2 a ‘bad deal,’ he would be wise to resist this congressional pressure. Not only is the danger posed by the pipeline overblown, but sanctions also risk gratuitously straining U.S. ties with Europe … There is a better approach: Instead of levying new sanctions, Washington should work with its European partners to pursue a more proactive strategy to ensure Europe’s long-term energy security.”
- “The Biden administration should direct its resources toward preparing for a world in which Nord Stream 2 becomes a reality. That means continuing to help Europe diversify its sources of gas and enhancing its competitiveness against Russian supplies. It also means accelerating cooperation with Europe in the development of renewable sources of energy.”
- “And with regard to Ukraine, it entails preparing in coordination with European partners an economic package to cover the inevitable budget shortfall Ukraine will face once its contract with Gazprom expires and help it move beyond its pipeline dependency. The details will need to be worked out, but one element could take the form of a joint U.S.-EU-backed loan whose repayment could be offset by substantive progress in Kyiv’s anti-corruption reforms.”
- “The Biden administration is now engaged with Germany in negotiations to find a mutually acceptable compromise on the Nord Stream 2 project. These negotiations should look beyond the narrow priorities of current U.S. policy toward a more proactive solution that is actually capable of advancing the administration’s strategic goals of Transatlantic unity, European energy security and Ukrainian independence.”
“Nord Stream 2 impasse threatens transatlantic ties,” Constanze Stelzenmüller, Financial Times, 03.23.21. The author, Fritz Stern chair at the Brookings Institution, writes:
- “Berlin’s mulish inflexibility could alienate the most Europe-friendly American administration it is likely to see in a generation. If Washington remains intransigent, it risks humiliating Germany, a key ally, ahead of a potentially game-changing national election in September. Even more importantly, neither America nor Europe can hope to deter and contain their aggressive challengers alone.”
- “Given what is at stake, the incentives for a muscular compromise are compelling. U.S. sanctions legislation permits waivers if ‘appropriate safeguards have been put in place.’ Those safeguards should be specific, quantifiable and immediately applicable. They should include a moratorium after the pipeline’s completion; a ‘snapback mechanism’ to prevent Russian manipulation of the gas supply; energy security assurances for eastern European countries and for Ukraine; support for Ukraine’s economic and democratic transformation; ensuring the full application of EU energy regulations; and investments in eastern European connectivity and in the transition away from fossil fuels. All these should be addressed in close co-ordination with the EU, central and eastern European capitals and Kyiv.”
- “When Biden recently called for a new transatlantic engagement at an online security conference, Merkel answered that Germany stood ready. The alliance’s foreign ministers are meeting in Brussels this week for in-person consultations. Resolving the Nord Stream 2 problem should be at the top of their list.”
“Biden Must Follow the Law and Sanction Nord Stream Now,” Michael McCaul and Jim Risch, Foreign Policy, 03.29.21. The authors, the ranking members on the House Foreign Affairs Committee and on the Senate Committee on Foreign Relations, write:
- “Nord Stream 2 is not just a pipeline project to bring Russian natural gas to Germany and on to Western Europe via the Baltic Sea—it is a malign Russian influence project that poses a significant national security risk to the United States and to our European allies and partners. It threatens to deepen Europe’s energy dependence on Moscow and hand Russian President Vladimir Putin another tool to exert political pressure on Europe, particularly Ukraine. Russia has weaponized its gas supply before, cutting off deliveries to Ukraine—and thus much of Europe—in 2006 and 2009.”
- “Biden’s flawed decision to agree to an extension of the New START treaty has already handed Putin a major victory. Putin’s No. 1 request of the United States was a full five-year extension with no strings attached; granting that request surrendered U.S. leverage to address structural flaws in the treaty. Nord Stream 2 is Putin’s next major goal. Biden recently said he believes Putin is ‘a killer.’ If that is true, why is he not doing more to stop Putin from accomplishing one of his biggest priorities?”
- “The time for action is now. We urge Biden to stop dragging his feet on this issue and implement, without delay, the mandatory U.S. sanctions on all vessels and companies currently working to complete the Nord Stream 2 pipeline.”
U.S.-Russian economic ties:
“Was the Soviet Union an idea ahead of its time?” Marcel Fafchamps, The Boston Globe, 03.24.21. The author, a Belgian economist and senior fellow at the Freeman Spogli Institute for International Studies, writes:
- “By the time the Soviet Union was disbanded in the early 1990s, its central planning system of exchange was judged a failure, and it was rapidly replaced with a decentralized market system. … Spin the clock forward another 30 years, and we are now in a world where a large and increasing fraction of economic exchange is run, quite successfully, by algorithms.”
- “Amazon and Alibaba perform essentially the same tasks as the Soviet central planners: They collect information on items available for sale and, by doing so repeatedly over short time intervals, effectively track productive capacity. They collect day-to-day information on consumers' requests for various goods and services, thereby tracking the evolution of demand over time. They match supply and demand in real time. And they organize the dispatch and delivery of these items to consumers across the globe. … If the Soviet Union had had such tools at its disposal, it would no doubt have used it to run its economic exchange system.”
- “As a matter of fact, the United States and other Western countries have begun to use sophisticated algorithms for central planning purposes, with a view toward appropriating economic surplus. The best example is the auction sale of bands of the airwaves for mobile-phone and other communications services.”
- “But such algorithms now do much more than simply matching individuals or firms based on their stated preferences: They also forecast demand. … This is achieved by collecting vast amounts of individual data, often without anyone being aware of how revealing this data is … Not even the East German Stasi or the Romanian Securitate could have dreamed that such information would be surrendered without resistance.”
- “We are at a crossroads. The technology necessary to put in place a centrally planned police state is now a reality. … The question then is: How can we protect civil liberties in the face of these enormous challenges while continuing to enjoy the benefits that all these algorithms generate? This is the biggest question facing us today.”
Impact of Western sanctions:
“Fresh sanctions may barely dent Fortress Russia. Past measures have arguably only helped Putin strengthen the country’s financial barricades,” Ruchir Sharma, Financial Times, 03.28.21. The author, Morgan Stanley Investment Management’s chief global strategist, writes:
- “The clamor is growing to ramp up sanctions against Russia, which stands accused of deploying hackers, assassins and other provocateurs abroad, and of repressing dissent at home. But it is worth pausing … to consider that in one crucial respect sanctions have made Russia stronger.”
- “The story begins back in 2014, when Russia suffered the twin shock of falling oil prices and Western sanctions levelled in response to the invasion of Crimea … Putin has long been relatively careful on macroeconomic policy. After 2014, he turned even more defensive, and focused on turning Russia into a financial fortress invulnerable to external pressure, including sanctions. To a surprising extent, he has succeeded.”
- “The pillars of fortress Russia lie in how the Kremlin manages its budget and the ruble. … Seven years of hawkish monetary policy to control inflation had left the central bank with room to cut rates. … Yet its leaders continued to move deliberately. In 2020 its central bank and government stimulus was moderate compared with other big emerging economies. So too was the resulting downturn; a contraction of around 3.5 percent.
- “Today Russia is less vulnerable to outside pressure than in 2014. … The debt its government and private borrowers owe to foreigners is low. And the resources they have to cover those debts … is high. … Russia is also less beholden to the global oil market. The government stores excess profits when prices are high, and spends them when prices are low, stabilizing the economy and the ruble. … The flaw in the fortress strategy is that it is all defense and no offense. Putin talks of boosting economic growth … but offers no real plan to make it happen.”
- “As it happens, fortress Russia is well-built to survive a post-pandemic world of greater deglobalization and local digitization. … Seven years of sanctions have already hardened the Kremlin against outside pressure. That means it will take more than just ratcheting up targeted sanctions to dent the walls of fortress Russia.”
“Russia sanctions—easy to announce, hard to implement,” John Dizard, Financial Times, 03.25.21. The author, a columnist for the news outlet, writes:
- “The Biden administration has until June 2 to decide what financial sanctions or export restrictions it will impose on Russia. … There are two loosely grouped factions contending for Biden’s support on sanctions … Hardliners want to use sanctions to punish President Vladimir Putin and his supporters for Russia’s use of nerve agents, its likely involvement in the Solar Winds mass cyber attack, its alleged interference in U.S. elections and its imprisonment of Alexei Navalny. … The most visible of the hardliners is Victoria Nuland, who has been nominated to be under-secretary of state for policy.”
- “The other faction … agree in principle, but are more concerned about the difficulties of making sanctions work, staying aligned with allies and avoiding adverse effects on the U.S.’s own economy and financial institutions.”
- “And while Russia has a stagnant economy, it has a strong external financial position, with about $590 billion in gross reserves compared with $465 billion of total external debt. … For now, the practical issues involved in drawing up and implementing U.S. sanctions are being dealt with by Elizabeth Rosenberg, counsellor to the deputy secretary of the Treasury, and Peter Harrell, a senior director at the National Security Council. It seems that Rosenberg has particular responsibility for the U.S. response to the Solar Winds cyber attack, which will also apparently be announced by June 2.”
- “While Biden makes the public sounds of a hardliner, he will probably be cautious about imposing financial sanctions that go much beyond a few unattractive oligarchs and lower-level officials. One of his problems is that U.S. laws make it easy to impose sanctions, but difficult to remove them in response to improved behavior. … Sanctions for the most part have a lot of immediate ‘announcement value’ but an uncertain long-term utility for behavior modification. … Even so, the Russia hardliners will get at least some of the travel bans and asset freezes they’re asking for. But Putin is too necessary as a negotiating partner to be targeted directly.”
“Just how bad can it get: US mull sanctions on Russian debt,” Maximilian Head, bne IntelliNews, 03.26.21. The author, the head of political risk at Hawthorn Advisors in London, writes:
- “Sovereign debt sanctions targeting Russia's ability to issue foreign currency debts are once again in the news, with the Biden administration and Boris Johnson’s U.K. both said to be considering the move. … Much has changed since Tom Tugendhat MP … first suggested barring Moscow from Western debt markets in March 2018.”
- “Moscow had already begun to improve its reserves-to-debt ratio in 2015 … By January 2019, Russia’s reserves exceeded its external debts. … This effort involved not managing the amount of Russian foreign currency debt issued, but also in updating the wording of the contracts underpinning them.”
- “Western investors so far have been rather sanguine about the risk of such sovereign debt sanctions—there is no meaningful premium to the yield on the bonds containing the ruble ‘alternate currency payment event’ trigger versus those that do not. Indeed, Russia sold a 750 million euro seven-year Eurobond in November 2020 at a yield of 1.125%, a record low for Moscow, despite U.S. banks being barred by the U.S. Treasury from dealing in the primary market Russian government debt issuances in August of 2019.”
- “Leading voices in Russia have called for calm over the risk of such sovereign debt sanctions as well, with Vladislav Inozemtsev recently writing that ‘A total ban on transactions involving the Russian foreign debt and the extension of that ban to the U.S. allies will only result in serious losses for the Western financial institutions following the sell-out of this type of assets, and the Russian authorities will restructure their liabilities, making considerable savings on debt servicing.’”
- “Whether he is correct on the Russian authorities’ ability to smoothly manage being frozen out of Western capital markets remains to be seen, but he is certainly correct that Western holders of Russia sovereign Eurobonds face a risk of incurring serious losses if the West does institute a sovereign debt ban.”
U.S.-Russian relations in general:
“Why Labeling Putin a Killer Creates New Problems for Joe Biden,” Julie Newton, The National Interest, 03.26.21. The author, director of the University Consortium, writes:
- “By agreeing that Russian President Vladimir Putin is a ‘killer,’ President Joe Biden has unnecessarily complicated chances of cooperating with Russia on vital issues of U.S. national interests and global security. This includes nuclear arms control, climate change, cyber warfare and Iran, for starters.”
- “Never has a U.S. president gone so far as to personally denigrate any Russian or Soviet leader. … Such a direct insult of Russia’s head of state, even if followed up by proactive U.S. outreach for pragmatic engagement, could hinder progress on the many aspects of Biden’s foreign policy agenda that require Russian cooperation.”
- “Moscow’s angry reaction to this event, no matter how calibrated it may be, will add to the accumulation of U.S.-Russian divisions and clashes over three decades—clashes that matter for four reasons to be considered together.”
- “First, these clashes matter because Russia matters. … Second, seen in historical context from a broader Russian perspective, Biden’s unprecedented rebuke fits into a longer pattern of perceived slights that form part of the bedrock underlying the current Russia-West confrontation. … These latent dynamics will likely render Russia even less inclined to support U.S. and EU endeavors to manage global threats—the third reason. … Fourth, although Biden’s comment parallels legitimate U.S. concerns about Russia’s deteriorating human rights record and its worsening authoritarian repression, historical evidence shows that the most effective way to steer authoritarian regimes towards better human rights behavior and political freedom is not through public rebuke or coercive containment. Rather, engagement and reduced levels of confrontation, in combination with deterrence, has proved to be a more effective recipe.”
- “Taken together, these four issues suggest that the Biden administration’s actions towards Putin’s Russia—encapsulated in Biden’s ‘killer’ comment—are rooted in flawed assumptions about what constitutes effective policy towards Moscow. Those assumptions must be rethought, and our strategies revised to avoid the president’s interview becoming a killer moment for key issues in the administration’s broader foreign policy agenda that require Russia’s consistent cooperation.”
II. Russia’s domestic policies
Domestic politics, economy and energy:
“Why the Kremlin is Winning the Battle for the Average Russian,” Andrei Kolesnikov, Carnegie Moscow Center, 03.29.21. The author, chair of the Russian domestic politics and political institutions program at the Carnegie Moscow Center, writes:
- “The political messages of the opposition aren’t enough to rouse the average Russian, who still fears one thing above all: that a change in political regime might only make things worse. The average Russian is not happy with the state of affairs in their country, but that feeling of discontent doesn’t spur them to join the opposition or civil society. On the contrary … they feel annoyed when opposition leader Alexei Navalny or anyone else challenges their worldview, to the extent that passive conformism sometimes turns into an aggressive rejection of all the sections of society opposed to the government.”
- “The demographic structure of Russia’s aging population means that in the coming years, it’s the older age groups who will determine the results of elections … So far, the Kremlin is winning the battle for the average Russian, who can still be mobilized in favor of the government. The impoverished and aging population depends on the state, and is largely controllable: their political loyalty can be bought with social aid … in the run-up to the election, or at a time of economic crisis.”
- “[T]he current regime has no intention of going anywhere for another fifteen years at least, so obedient younger voters will soon be needed, too. Given that the younger cohort may be more civically and politically active, the authorities are starting the fight to win them over, including by competing with Navalny. Their primary tactic is mirroring: for example, if volunteer activists take to the streets in protest, the Kremlin starts spurring on the rival volunteer movements under its own control.”
- “The battle for the hearts and minds of Russia’s youth will not be easy: all the sociological data indicate that the younger age groups hold completely opposing views of current events—including the protests—to Russians aged fifty-five and over. This leads on to the key question of the third and final part in this sociological series: will the next generation change Russia and its political and economic priorities, or is that just wishful thinking?”
Defense and aerospace:
- No significant developments.
Security, law-enforcement and justice:
- No significant developments.
III. Russia’s relations with other countries
Russia’s general foreign policy and relations with “far abroad” countries:
Interview with Sergei Karaganov: “In this World, Russia Must Be an Impregnable Citadel,” Russia’s “Expert” magazine, 03.01.21. The interviewee, dean of the Faculty of World Economy and International Affairs at Moscow's Higher School of Economics, states:
- “Today Russia is ‘non-West;’ and this, in fact, has changed fundamentally the balance of power in the world, possibly to no smaller extent than China’s rise.”
- “We can see several [general trends in global politics] going on at the same time … The COVID-19 pandemic is just more evident than the others because it lies on the surface … Another important process is the loss of the 500-year-long superiority by the West … The third one is the collapse of the liberal economic order that emerged after World War II.”
- “Russia must be a strong, impregnable citadel. This is crucial in the present-day perilous and hectic world. The deeper we become involved in this world, which is beginning to crumble away, the more vulnerable we will get … Russian tsars and the commissars were not always right. Was Central Asia of any great use to us? Not at all! ... The way I see it, we should support the minimum level of stability there—which we do—in order to ward off the terrorist threat.”
- “Russia became great not because it controlled Ukraine right of the Dnieper River, let along Transcaucasia. It became a great power when it took over Siberia … For this reason, we should go ahead with our turn to the East, while supporting a certain level of stability in some of the former Soviet republics … Of course, we should act with great caution and advance relations with other Asian countries, be more active in our contacts with India and the ASEAN, and by no means get too much dependent on China. ... If 50 percent of our trade is with Asia and 30 percent with Europe, that will be a good and proper balance … there still are three Asian departments and six European ones in the Foreign Ministry, while it should be the other way round.”
- “Someday we will come to understand at last that we are Northern Eurasia. I like it very much that Putin has brought up this subject…There must be not a generational change, a change in the elite’s minds.”
“Turkish-Russian Adversarial Collaboration in Syria, Libya, and Nagorno-Karabakh ,” Güney Yildiz, SWP, 03.01.21. The author, a fellow at the Center for Applied Turkish Studies at the German Institute for International and Security Affairs, writes:
- “Russia prefers Turkey to other rivals because Moscow has more – and at times decisive – leverage on Ankara. The asymmetric balance of power between the two was established in the aftermath of Turkey shooting down a Russian fighter jet in November 2015 in the context of the Syrian conflict.”
- “Russia is, thus, the senior partner in this relationship. In Syria, Libya, and South Caucasus, there are various significant gains that Turkey can achieve by cooperating with Russia.”
- “Borrowed from science, the term “adversarial collaboration” denotes experiments conducted by people who disagree on an issue to resolve or reduce their differences. In the present context, it is employed to describe Russia and Turkey opting to experiment with a collaborative relationship at the expense of other actors. This is achieved after establishing an asymmetric balance of power that ensures Turkey will lose more and Russia will win less if they continue with a zero-sum game strategy.”
- “The Russian-Turkish partnership paradigm, which is, in essence, a military control model, has proven to be useful in controlling conflicts and turning them into frozen ones. Keeping conflicts frozen could be more costly and risky than bringing about reconciliation to those conflicts in a way that would allow Moscow and Ankara to maintain influence. This potential weakness is on display in the arduously slow pace of political resolution efforts in Syria … But in Libya, Moscow and Turkey may see the first big failure of their model: The UN-led process for reconciliation between the Tripoli and Benghazi governments received support from a significant portion of military leaders on the ground as well as backing from the United States, France, and increasingly Italy. The Libya example demonstrates that the Russian-Turkish model is weaker against attempts made by third parties to achieve peaceful reconciliations.”
- “Therefore, if Ankara wants to have a long-term, lasting influence in the conflict-ridden regions, aligning itself with European partners is a better option to win the peace – and not just to control the conflict.”
China-Russia: Allied or Aligned?
“As Russia and China Draw Closer, Europe Watches with Foreboding,” Alexander Gabuev, Carnegie Moscow Center, 03.19.21. The author, chair of the Russia in the Asia-Pacific program at the Carnegie Moscow Center, writes:
- “The emergence of the Moscow-Beijing axis will exert an ever-growing influence on European and transatlantic interests, both economically and in terms of security. Accordingly, more and more European leaders are taking an interest in halting Russia’s drift into China’s embrace.”
- “The main economic risk to Europe brought about by closer ties between Moscow and Beijing and worsening relations between Russia and the West is Russia’s gradual drift toward a Pax Sinica … [B]y the early 2030s, the Chinese presence in the Russian economy may be similar to the European influence in the 1990s, 2000s, and 2010s if the current trends persist … The emergence of a Pax Sinica including Russia could draw new dividing lines over Eurasia.”
- “Europe’s ability to engage Russia in order to distance it from China will be hampered by several internal factors. First, existing EU and U.S. sanctions against Russia will probably remain in effect … Second, Russia is gearing up for parliamentary elections in 2021 and presidential elections in 2024 … Third, a tougher stance on Russia is one of the priorities of the new U.S. administration, and, given Europe’s own concerns and problems with Russia, the transatlantic policy toward Moscow will likely become more coordinated and muscular.”
- “[T]he United States and Europe are not concerned enough about Sino-Russian relations right now to change their policy on Russia … Moscow’s room for maneuver in its relations with Beijing will narrow over time. But for now, it still exists … Russia could engage in a dialogue with the EU and the United States through various channels … Russia might choose to prioritize projects that deliver resources to China via sea routes, and where there are alternative buyers for those resources … Finally, Moscow could manage its cooperation with Beijing more effectively.”
- “These tactical moves won’t substitute for structural reforms inside Russia or make the country’s foreign policy more pragmatic. But they will allow Russia to reap more benefit from cooperation with China, and slow down the asymmetric development of bilateral relations.”
“We have no intention of fighting Russia so stop arming Ukraine for battle,” Anatol Lieven, Quincy Institute, 03.25.21. The author, a professor in Georgetown University’s School of Foreign Service, writes:
- “The Biden administration needs to make a strategy of crisis prevention its top priority in dealing with Russia. For if the frozen conflict in Ukraine again becomes an actual war, the West would not intervene, and the Ukrainians would lose — an outcome both humiliating and dangerous for the United States, which has portrayed Ukraine as an important partner.”
- “The most volatile dispute in this region may not be in Ukraine itself, but Transdniestria, the breakaway Russian-speaking region of the former Soviet republic of Moldova that has since 1992 been protected by a garrison of Russian “peacekeeping” troops … Moldova since independence has been ruled by former communists or moderate nationalists anxious to avoid new conflict.… this could change as a result of the December 2020 election of the strongly nationalist and pro-Western President Maia Sandu, who has called for the withdrawal of the Russian force from Transdniestria.”
- “There is also no evidence that Russia wants to start a new war with Ukraine … If however Ukraine imposes a blockade of Transdniestria or tries to regain the Donbas by force, then Russia will fight—as it fought when Georgia attempted to regain South Ossetia by force in August 2008. The result would be a catastrophe for Ukraine, and extremely bad for Russia, for it would lead to a definitive break with Western Europe and a lurch towards complete dependence on China. However, it would also be very bad for the United States. If another American “partner” is crushed while the United States stands aside, the damage to U.S. prestige in Asia will be enormous.
- “The Biden administration should therefore aim in the short to medium term to freeze the disputes in Ukraine and Moldova, while reassuring Russia that the United States will not press for changes that are to Russia’s disadvantage … If the challenge from China is really as great as the Washington establishment now believes, then such courage is required—because a war in Ukraine would be one of the greatest geopolitical gifts to China that Beijing could possibly dream of.”
“Returning the US-Ukraine relationship to normalcy,” John E. Herbst, Atlantic Council, 03.23.21. The author, director of the Eurasia Center at the Atlantic Council and a former U.S. ambassador to Ukraine, writes:
- “The election of Joe Biden raised the welcome prospect of a return to normalcy in the U.S.-Ukraine relationship after his predecessor Donald Trump tried to use it for political advantage. But the first two months of the Biden administration has also demonstrated that this return to the norm is proving to be complicated … Perhaps if Ukraine had not appeared as an issue in the recent U.S. presidential election, the call between presidents Biden and Zelenskiy might have already taken place. But these unusual circumstances have also yielded some good results.”
- “The Biden administration has indicated that reform and the fight against corruption are a priority. And over the past few months, partly in an effort to hasten the presidential call, the Ukrainian president has taken more reform steps than at any time since he removed his reformist prime minister, Oleksiy Honcharuk, and most of the cabinet, one year ago.”
- “Given the strength of entrenched interests in Ukraine, Zelenskiy’s strong steps have occurred in the face of major opposition and counter-steps. Even as the authorities go after senior Privatbank employees allegedly involved in fraud, a case has also been opened against Kateryna Rozhkova, First Deputy Governor of the National Bank of Ukraine, who played an important and laudatory role in the nationalization of Privatbank.”
- “Zelenskiy has consistently sought to clear the decks for a better relationship with Washington. Given the overlap of interests and values between the US and Ukraine, bilateral relations are going to get closer as the Biden administration settles in; but issues like the Rozhkova prosecution and the disposition of Privatbank assets can slow down Zelenskiy’s charm offensive. That would not serve U.S. or Ukrainian interests.”
- No significant developments.
Russia's other post-Soviet neighbors:
- No significant developments.