Russia’s future is still tethered to Europe

Russia, Winston Churchill famously said, “is a riddle wrapped in a mystery inside an enigma”

Afshin Molavi

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Russia, Winston Churchill famously said, “is a riddle wrapped in a mystery inside an enigma.” This oft-repeated quote has been trotted out by many a commentator over the decades to help explain (or not) the policies of Russian or Soviet leaders. Today, we are confronted once again with a mystery inside an enigma: What is Vladimir Putin thinking?

In late February, the Russian president sent in troops to annex Crimea from Ukraine. Inevitably, Putin invoked history, declared himself a savior of Russian peoples, and a referendum was willed as the smoke from guns still circled the air. With more than 95% of the vote, Crimea’s majority ethnic Russian population rejoined “mother” Russia.

China will not be Russia’s savior, nor would Moscow even want that

Afshin Molavi

Perfunctory Western sanctions ensued, but the deed was done, and Russia’s most powerful Western patron, Germany, seemed eager to mollify and move on. But Putin pressed onward into eastern Ukraine where ethnic Russians crowded the streets, waved Russian flags, and demanded secession.

The first law of politics, however, should be to be wary the mirage of street theater. Eastern Ukraine’s demographics represent an entirely different and more complex story than Crimea, and the simplistic maps that describe eastern Ukraine as “mostly Russian speakers” fail to capture the multiple identities and allegiances of those Russian speakers, not to mention the inevitable negative reactions of western Ukrainians and Ukrainians living in the East to a secession attempt.

Potent force

Ukrainian nationalism is a potent force, as Russian gunmen have found in pitched battles across eastern Ukraine.

In Eastern Ukraine, Putin overshot, and thus shot himself in the foot. A deadly stalemate plays out on the ground, while diplomacy has been a game of frustrating inches and numerous false starts. Putin has played the grievance card, complaining of dark conspiracies from the West. Meanwhile, new rounds of Western sanctions coupled with a dramatic fall in oil prices have battered Russia’s economy. Russia, it must be remembered, remains a petro-state.

The rouble has taken a beating, falling more than 40% this year. Russia is headed for recession in 2015. Russia’s sovereign bond rating is on the verge of being downgraded to junk status. The Central Bank has burned through some $90 billion in cash reserves. Western banks are shying away from new debt servicing agreements on Russian banks and state-owned companies that owe some $600 billion in debt. Putin himself has noted soberly that it will take two years under the best conditions to restore Russia’s economy.

More than a snappy soundbite

Here is where we might consider returning to the famous Winston Churchill remark about Russia as “a mystery inside an enigma.” Churchill made the remarks in an October 1939 broadcast on the BBC. The full remark, however, is usually lost amid the snappy soundbite.

This is what he said:

“I cannot forecast to you the action of Russia. It is a riddle wrapped in a mystery inside an enigma; but perhaps there is a key. That key is Russian national interest. It cannot be in accordance with the interest of the safety of Russia that Germany should plant itself upon the shores of the Black Sea, or that it should overrun the Balkan States and subjugate the Slavonic peoples of south eastern Europe, that would be contrary to the historic life-interests of Russia.”

Putin is a keen amateur historian. He understands that Russia’s future and its “historic life-interests” lie with the West, particularly Europe, but also the United States. There is no “Look East” policy that could save Russia from its economic bind.

China will not be Russia’s savior, nor would Moscow even want that. Ever since the time of Peter the Great and Catherine the Great in the 17th and 18th centuries, Russia’s political and economic lodestars were European. Catherine the Great corresponded with Voltaire and presided over a Europe-inspired Russian enlightenment. Indeed, even Soviet Communism that divided Europe was a European movement of European intellectuals and Russian exiles who spent their formative years in Europe responding to the Industrial Revolution.

Russia’s ties to Europe

Russia’s ties to Europe remain even more important today. The European Union accounts for nearly half of all of Russia’s trade - when you add Ukraine, Turkey, and Switzerland, the number approaches 60%. No rational leader would choose to “bypass” a continent that accounts for nearly 60% of its trade, but Putin’s geopolitical moves are now hampering its geo-commercial ones.

Today, young Russian people searching for jobs turn up in London and Paris and Copenhagen, not Beijing and Shanghai and Seoul. Meanwhile, Russia’s business elite buy European soccer clubs and European newspaper groups and London penthouses.

Vladimir Putin will make the occasional headline with energy deals with China, but the second law of international politics should be: Be wary of the ribbon-cutting MOU deal. Putin personally signed a large natural gas supply deal alongside Chinese President Xi Jinping on the sidelines of the Apec summit in Beijing in November. The deal is the second major gas deal signed between Russia and China last May, in Shanghai, Putin signed a separate deal worth a whopping $400 billion that he described as an “epochal event.”

Putin would have been pleased with the headlines that emerged from those deals. The Financial Times headline noted: “Putin snubs Europe with Siberian gas deal that bolsters ties to China.” The Globe and Mail of Canada’s headline said: “Russia reaches out to China to bypass European impasse.” Most news coverage of the deal put it in geopolitical terms: Russia looking East to bypass the West, for example.

Snubbing himself

The reality is that Putin is snubbing himself. Putin’s strategy is neither clever nor astute. It is desperate, and it represents the flailing of a leader that has lost his bearings and is increasingly doubling down on bad policies. China will not – cannot – replace Europe as Russia’s economic center of gravity, nor can Asia. The ties with Europe are too deep, economically and culturally and socially

The devil, as with all of these kinds of deals signed by heads of state, is in the details. Writing in the business publication Quartz, energy journalist Steve Levine notes of the latest deal: “the hoopla may be premature—it’s highly preliminary, and the two countries still appear not to have worked out the kinks from the last enormous deal they signed.”

Levine writes further: “Even though crucial details such as price haven’t been decided, Putin already has conceded a prize to China—a 10% stake in Vankor, a 3.6-billion-barrel oilfield that already produces 440,000 barrels a day.” Levine goes on to write: “it is stunning—and highly uncharacteristic—for Putin to offer up a gem like Vankor as an opening move, and begs the question of what China will force him to surrender in the usually harder, final stages of negotiation.”

Russia’s ship has long sailed toward Europe. There will be a window of opportunity, in 2015, to support a face-saving solution for Putin on Ukraine. Even if a deal is secured, Putin will still nervously be watching the oil price – a commodity that has become a new “historic life interest” for Putin’s Russia.


Afshin Molavi is a senior fellow and director of the Global Emerging and Growth Markets Initiative at the Foreign Policy Institute of the Johns Hopkins University School of Advanced International Studies (SAIS) and a senior research fellow at the New America Foundation, a Washington DC-based think tank.

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