Russia’s European Home

by Vladislav Inozemtsev

Vladislav Inozemtsev is Professor of Economics at Moscow’s Higher School of Economics and Director of the Center for Post-Industrial Studies.
MOSCOW – Last spring, after Russia annexed Crimea and began intervening in eastern Ukraine, the United States and the European Union introduced sanctions against Russian individuals and businesses. But if sanctions are to be an effective tool in countering Vladimir Putin’s ambitions – a topic of ongoing debate in the West – they must combine a firm hand toward Russia’s president with an open one toward its people.

To understand the role that sanctions can play in managing the Kremlin, one need only consider the importance of money to its occupant. From the beginning of the century until very recently, Russia was flooded with petrodollars; as the flow of money increased, so did Putin’s audacity and aggression.

In 1999, oil and gas revenues contributed $40.5 billion to Russia’s GDP. As prices rose and production increased, this contribution increased substantially, averaging $73.5 billion annually from 2001 to 2004. Russia’s growing wealth emboldened Putin, a change exemplified in his decision to arrest and imprison Mikhail Khodorkovsky, the owner of oil giant Yukos, in 2003.

And the trend continued. From 2005-2008, annual hydrocarbon revenues were $223.6 billion higher than in 1999; at the end of this period, Russia invaded Georgia. In 2011-2013, Russia’s annual oil and gas income peaked at $394 billion above 1999 levels, setting the stage for the Kremlin’s interventions in Ukraine. In all of these cases, Putin acted on the conviction that Russia’s oil wealth meant that rules – even international laws – did not apply to him.

But with the introduction of sanctions, financial markets are closed, for the most part, to Russian businesses. Oil prices are plummeting; Russia’s finance minister estimates that the country’s losses since last spring have surpassed $140 billion. Russia’s strategic currency reserves are being pulled apart by Putin’s friends and may be exhausted by the end of the year. Moreover, the ruble has lost close to 50% of its value over the last six months.

But, though the sanctions clearly are starting to bite, it will be some time before the bulk of the Russian public actually feels their impact. So the West needs to wait.

There is little point in engaging in a search for diplomatic solutions. They simply do not exist. Putin has chosen to act without regard for territorial integrity. He has declared himself a defender not only of Russian citizens, but of all ethnic Russians, Russophones, and even Orthodox Christians. He believes that he possesses the right to intervene in his neighbors’ affairs, because, as he put it, “the Soviet Union was the same Russia, just called by another name.” In other words, Ukraine is merely a breakaway region of historical Russia.

The Russian people, however, are modern enough to question these policies. The “Putin consensus” was built on the promise of rising prosperity – a promise that is quickly evaporating under the heat of sanctions. Most Russian elites think and act like businesspeople, not like romantic nationalists: As the economy sinks into prolonged recession, scrutiny and criticism of Putin’s policies will increase.

The goal of Western sanctions should be to detach Russia’s pre-modern rulers from its modern population. This strategy may be of little use in tightly controlled societies like Iran or North Korea; but Russia is essentially European. Instead of wasting time trying to negotiate, the West should focus on elaborating and publicizing a post-Putin agenda.

For starters, the West should explicitly deny any Russian claim to a right to interfere in the affairs of the EU and NATO. Ukraine should be embraced – even if Crimea and Donbas are lost. A “new Marshall plan” should be rolled out, one that can transform Ukraine into a free, prosperous country that can join the EU and NATO, should it so desire.

Even more important, the West should make it clear that it extends its definition of Europe not just to Russia’s borders, but across them. Russia should be acknowledged as an integral and natural part of Europe – a country that might eventually join the EU. The grand strategy for the coming decades should be centered on a simple idea: Though Russia can never be allowed to influence Europe from outside, it will be welcome to gain a place of influence from within, if it accepts Europe’s rules and norms.

Russians should be made to understand that they can choose one of two paths. They can follow Putin into isolation, probably ending up under Chinese influence (indeed, from China’s perspective, its claim to Siberia all the way to Lake Baikal is even stronger than Russia’s claim to Crimea). Or they can decide to move toward Europe, perhaps in the distant future joining the EU as its largest – and perhaps most influential – member.

The West’s biggest mistake regarding Russia and Ukraine was to choose the path of indifference after the end of the Cold War. That led to the creation of the Commonwealth of Independent States in 1991 and the Budapest Memorandum on Security Assurances in 1994. If, instead, Russia and Ukraine had been encouraged to work toward joining the European Economic Community and were invited to join NATO, the arc of history would have been bent in a much more peaceful direction.

History rarely offers a second chance. But this time it has. The mistakes of the 1990s should be remedied, and the starting point should be to offer those who want to join the West the opportunity to work toward doing so. If Ukraine is brought into the European fold, the Russian people will want to follow – much sooner than anyone can now imagine.


Copyright: Project Syndicate, 2015.
www.project-syndicate.org


 


This article is brought to you by Project Syndicate that is a not for profit organization.

Project Syndicate brings original, engaging, and thought-provoking commentaries by esteemed leaders and thinkers from around the world to readers everywhere. By offering incisive perspectives on our changing world from those who are shaping its economics, politics, science, and culture, Project Syndicate has created an unrivalled venue for informed public debate. Please see: www.project-syndicate.org.

Should you want to support Project Syndicate you can do it by using the PayPal icon below. Your donation is paid to Project Syndicate in full after PayPal has deducted its transaction fee. Facts & Arts neither receives information about your donation nor a commission.

 

 

Browse articles by author

More Current Affairs

Added 12.07.2018
The cabinet members who resigned this week apparently feared that politics is taking May toward a “soft Brexit,” their worst of all possible worlds........“soft Brexit,” maintains the status quo, more or less, letting Europeans freely circulate into British labor markets and allowing European firms to operate easily in the UK. The problem with “soft Brexit” is that it raises questions about why the UK is leaving at all, since it will still have the same obligations to Europe as before, it just won’t have a voice when the remaining 27 members of the European Union meet to make decisions.
Added 12.07.2018
One study on the 2010 World Cup found that there was a 37.5% rise in admission rates across 15 accident and emergency departments on England match days........Examining reports of domestic abuse in Lancashire (a county of approximately 1.5m people in Northern England), across the 2002, 2006 and 2010 World Cup tournaments, we discovered a 26% increase in reports of domestic abuse when England won or drew, and a 38% increase when England lost. Reports were also more frequent on weekends, and reached their peak when England exited the tournament.
Added 10.07.2018
If, back in the 1980s and 1990s, the US government, rather than arguing for Chinese economic opening, had prohibited any US company from investing there, China’s rise would have been significantly delayed, though not permanently prevented. Because that did not happen, China’s rise is now self-sustaining. A huge and increasingly affluent domestic market will make exports less vital to growth.
Added 10.07.2018
Comparing today’s demagogues with Adolf Hitler is almost always unwise. Such alarmism tends to trivialize the actual horrors of the Nazi regime, and distracts attention from our own political problems. But if alarmism is counterproductive, the question remains: At what point are democracies truly in danger? What was unimaginable only a few years ago – a US president insulting democratic allies and praising dictators, or calling the free press “enemies of the people,” or locking up refugees and taking away their children – has become almost normal now. When will it be too late to sound the alarm?
Added 09.07.2018
In view of such actions, expectations for Trump’s behavior at the upcoming summit have gone from prickly to dangerous. The sense of foreboding has been heightened by the announcement that, just four days after the summit ends, Trump will meet with Russian President Vladimir Putin, in Helsinki. The nightmare scenario is easy to imagine: Trump lays bare NATO’s fractures, including by questioning mutual defense, before selling his allies down the river by publicly embracing Putin. But this does not need to be the outcome.
Added 09.07.2018
After 2027 (or maybe even 2025, only 7 years from now), the number of EVs will rapidly accelerate, as virtually all new vehicles bought will be electric (an effect of rapidly falling battery and other component costs and of the fuel for electric cars being essentially free; you can power one off your rooftop solar array).
Added 03.07.2018
Most pundits interpret Trump’s outbursts as playing to his political base, or preening for the cameras, or blustering for the sake of striking future deals. We take a different view. In line with many of America’s renowned mental-health experts, we believe that Trump suffers from several psychological pathologies that render him a clear and present danger to the world.
Added 03.07.2018
In the United Kingdom, Brexit looms large, with everyone from government ministers to tabloid newspapers frothing daily about the deal that will be struck with the European Union and the effects that it will have. But the EU faces too many pressing challenges to be obsessing about Britain. The UK’s concern is understandable: evidence is mounting of the likely damage a departure from the single market and customs union will do to the UK economy. According to new research from the Centre for European Reform, the UK economy is already 2.1% smaller than it would have been had voters chosen to remain. The hit to public finances totals £440 million ($579 million) per week.
Added 26.06.2018
Nowadays, Britain’s words and actions on the world stage are so at odds with its values that one must wonder what has happened to the country. Since the June 2016 Brexit referendum, British foreign policy seems to have all but collapsed – and even to have disowned its past and its governing ideas. Worse, this has coincided with the emergence of US President Donald Trump’s erratic administration, which is pursuing goals that are completely detached from those of Britain – and of Europe generally. 
Added 26.06.2018
With each passing day, it becomes increasingly evident that US President Donald Trump’s administration cares less about economics and more about the aggressive exercise of political power. This is obviously a source of enormous frustration for those of us who practice the art and science of economics. But by now, the verdict is self-evident: Trump and his team continue to flaunt virtually every principle of conventional economics.
Added 26.06.2018
The sights and sounds of Central American children being ripped from their parents by US Border Patrol officers have, by now, spread across the globe. The experience has been traumatizing to its victims and deeply painful to watch. It has also done incalculable damage to the very idea of America. This is June when we are supposed to be celebrating "Immigrant Heritage Month". Each year, I have taken this opportunity to recall my family's immigrant story - the opportunity and freedom they sought, the hardships they endured, and the remarkable progress they made in just one generation. 
Added 24.06.2018
State terrorism comes in many forms, but one of its most cruel and revolting expressions is when it is aimed at children. Even though U.S. President Donald Trump backed down in the face of a scathing political and public outcry and ended his administration’s policy of separating migrant children from their parents, make no mistake: His actions were and remain a form of terrorism.
Added 22.06.2018
It is now clear that the twenty-first century is ushering in a new world order. As uncertainty and instability associated with that process spread around the globe, the West has responded with either timidity or nostalgia for older forms of nationalism that failed in the past and certainly will not work now. Even to the most inveterate optimist, the G7 summit in Quebec earlier this month was proof that the geopolitical West is breaking up and losing its global significance, and that the great destroyer of that American-created and American-led order is none other than the US president. To be sure, Donald Trump is more a symptom than a cause of the West’s disintegration. But he is accelerating the process dramatically.
Added 20.06.2018
Sessions quoted a line written by the apostle Paul to a small community of Christians living in Rome around 55AD to defend the Department of Justice’s approach. He said: "I would cite you to the Apostle Paul and his clear and wise command in Romans 13, to obey the laws of the government because God has ordained them for the purpose of order." Sessions used the Bible because one of the most vocal opponents of the crackdown on asylum cases has been the Catholic Church. It’s no surprise that Sessions appealed to Romans chapter 13 verse 1 in response: not only did he hope to undermine Catholic authority by using the Bible against them, he cited a statement so broad that one might use it to defend anything a government does, good or bad. Picture below St Paul writing his epistles, by Valentin de Boulogne, via Wikimedia Commons.
Added 19.06.2018
 

I find it exceptionally irritating when I hear liberals worry about whether Israel will be able to remain a "Jewish and Democratic State" if it retains control of occupied Palestinian lands.

Added 18.06.2018
Daniel Wagner: "My prediction Korean War will be formally ended, the peninsula will be denuclearised, and a lasting peace will be the result."
Added 14.06.2018
Extract: PiS [ the ruling Law and Justice party] has established the most significant addition to the Polish social safety net since 1989: the Family 500+ program. Launched in 2016, Family 500+ embodies the nationalism, traditional family values, and social consciousness that the PiS seeks to promote. The program pays families 500 złoty ($144) per month to provide care for a second or subsequent child...........The program has been enormously popular. Some 2.4 million families took advantage of it in the first two years. The benefit, equivalent to 40% of the minimum wage, has almost wiped out extreme poverty for children in Poland, reducing it by an estimated 70-80%........... Liberal pro-European politicians and policymakers are not convinced. They complain that such a generous family benefit will weaken work incentives and blow up the government budget. But initial evidence suggests that Family 500+ has actually increased economic activity. It has also reversed the post-communist decline in fertility, increased wages (particularly for women), and enabled families to buy school materials, take vacations, buy more clothes for their kids, and rely less on high-priced credit for basic household needs. And, thanks to rapid economic growth, the government deficit has steadily fallen, not grown.
Added 12.06.2018
The depths of hypocrisy of the Republican Party in supporting Trump’s meeting with the North Korean dictator in Singapore are hard to plumb. This is a party whose leading members adopted the Ostrich Foreign Policy Principle for decades. If you don’t like a country’s government or political and economic system, pretend it does not exist.
Added 12.06.2018
US Defense Secretary Jim Mattis has spoken out against China’s strategy of “intimidation and coercion” in the South China Sea, including the deployment of anti-ship missiles, surface-to-air missiles, and electronic jammers, and, more recently, the landing of nuclear-capable bomber aircraft at Woody Island. There are, Mattis warned, “consequences to China ignoring the international community.” But what consequences?