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The state of the world in 2015: Russia

Written By | Dec 30, 2014

WASHINGTON, December 29, 2014 – While no one at CDN owns a functioning crystal ball, some events in 2014 point to broad changes political, social and economic changes in the world that will reverberate through 2015 and beyond.

First let’s focus on Russia. Russia has returned to an aggressive, revanchist foreign policy. That policy has been marked by a return to heavy military spending, an attempt to assert itself in strategic hotspots around the world, and an attempt to return the former Soviet empire firmly to Moscow’s sphere of influence.

During President Vladimir Putin’s first two terms in office, the Russian economy grew at an annual rate of about 7 percent. His popularity was solid due to the popular perception of constant economic improvement, an improvement that allowed Putin to distribute spoils to his supporters.

This system of “patrimonial authoritarianism” has been a fixture in Russian life from the time of the tsars and through the Soviet period, creating a vertical power structure in which wealth depends on political position, and all loyalties are directed upward to the man at the top.

Russian economic prospects began to look worse in the winter of 2011-12, which saw a series of protests against Putin’s United Russia Party and fraudulent Duma elections. After his election in May, 2012, Putin could have chosen to address the concerns of the middle class, working to enact reforms to put the Russian economy on more solid foundations and reform the country’s corrupt and decrepit political culture.

Instead, he continued down the traditional, Russian, authoritarian path. He pursued policies designed to solidify the hold of his cronies on the nation’s wealth, and to cement his own hold on power by reinforcing the dedication of his loyalists in that patrimonial authoritarian structure.

That path has traded chances of general prosperity for the same kind of punting that Leonid Brezhnev used during the stagnant years of his regime. The high price of oil would paper over difficulties as Putin tried to pay-off segments of Russian society while catering to his loyalists, but the Russian economy stagnated in 2013 even with high oil prices.

The collapse of global oil prices put Putin in a bind. His choice now was to run the huge political risks of reform, or to find another basis of support than economic growth and prosperity. He chose the latter path. He made Russian nationalism and traditional Russian values the new basis for his regime’s legitimacy.

Russians have always considered themselves a special nation, the third Rome, the people whose sufferings under invaders from Mongols to Nazis allowed Europe and the West to regroup and survive. Western Europe got to have its Renaissance while Russians groaned under a foreign yoke. America could grow rich and powerful during WWII as the “arsenal of democracy” while Russians died in their millions to tie down the bulk of German military power.

Under that view of the world, the West has always prospered at Russia’s expense. Russia has been poor and backward because it has been great, a national martyr for the world.

Putin has stoked Russian nationalism and concentrated Russian minds on national prestige. Russian nationalists don’t perceive that prestige in terms of international alliances and genuine respect, but in terms of raw power and fear.

After Russia annexed Crimea, Putin delivered a speech to the Russian Assembly in which he presented a view of the world that doesn’t see the 1991 borders as sacrosanct. Russia was no longer just a nation within set borders, but a nationality that exists where Russians exist. Novorossiya, which includes now-independent states in Eastern Europe is legitimately Russian, in Putin’s new – and very old – brand of nationalism.

For Putin and his supporters, respect doesn’t mean winning friends and thus expanding influence; it means showing that you’re strong enough to punch anyone you like in the face. It means asserting national power to claim the nation’s due.

Because nationalist feeling is running so high, blame for the failure of the Russian economy will not be put on Putin in the near term. It is being put on the United States. It’s the fault of President Obama — that black “boy,” “Maximka” — and his inept nation of undereducated boobs.

Putin and his supporters argue that the economy is deteriorating because of American malice. The only response that maintains respect is to push back against the West.

A Levada Center poll reported by Russia’s RBK channel show’s Putin’s approval ratings for December at 85 percent. That is down only 2 percent from his approval ratings in August when the Ukraine crisis was heating up, and only down 3 percent since October and the start of the currency crisis.

As the ruble has collapsed, the response of regular Russians has been anger directed at the U.S.; 74 percent view the U.S. negatively, and 76 percent hate President Obama. In 2009, only 12 percent of Russians hated Obama, and in the 1990s, Russian approval of the U.S. was even stronger than the current disapproval.

Russian revanchism carries dangers for all the former Soviet republics. The vote of Ukraine’s Verkhovna Rada (parliament) to end the country’s non-aligned status is a possible first step to an alliance with NATO, a step that Putin can’t ignore. As Russia’s economic situation grows more serious, he will feel pressure to move more strongly against the other republics, and the military buildup will get first priority in the Russian budget.

The former Soviet republics, for their part, face new uncertainty about how closely they can pursue economic ties to the West. They may feel more pressure to join Russia’s Eurasian Union, as former Ukrainian President Yanukovich did before he was ousted by popular protests.

On the other hand, their resentment and dislike of Moscow have certainly increased.

The Russian economy will continue to contract, and Putin will be forced to further redistribute wealth to his loyalists. Western sanctions are aiding him in his narrative that blames economic decline on the West, and they will aid him in his redistributive efforts as well. Western investors and Western banks no longer have any say in what happens in the Russian economy.

Opposition to Putin within Russia, especially in the economic sphere, will continue to be ruthlessly suppressed. The destruction of Yukos in 2003 was a first and extremely important taste of the redistribution of the economy to Putin loyalists, as was the imprisonment of Mikhail Khodorkovsky.

We can predict that 2015 will see a more aggressive Russia in the Russian near abroad, continued Russian attempts to assert influence in the Middle East, and a redistribution of the Russian economic pie to put more of it under the direct control of Putin’s closest supporters. What we will see is nothing new, but rather something old and very Russian.

But it can’t go on forever. A collapsing economy brought down the Soviet system, and it can bring down Putin. In addition, developments on Russia’s borders have the potential to put Putin in a severe bind. These include the voracious demand for resources from China, which will be looking for them in Russia’s far east, and the potential economic alliance between China and India.

In China, Putin faces a leader as tough and authoritarian as he is, heading a country with more than eight-times Russia’s population and a vastly larger – and growing – economy. And so later we will turn a crystal ball, if we can find one, to China.


Jim Picht

James Picht is the Senior Editor for Communities Politics. He teaches economics and Russian at the Louisiana Scholars' College in Natchitoches, La. After earning his doctorate in economics, he spent several years doing economic development work in Moscow and the new independent states of the former Soviet Union for the U.S. government, the Asian Development Bank, and as a private contractor. He has also worked in Latin America, the former USSR and the Balkans as an educator, teaching courses in economics and law at universities in Ukraine and at finance ministries throughout the region. He has been writing at the Communities since 2009.