Russia Straddles the Euro-Atlantic Divide between Europe and the USA

By: Dr. Sam Vaknin

Also published by United Press International (UPI)

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February 13, 2003

Updated April 2008

I. NATO's Bucharest summit

The United States had two strategic goals as it faced its reluctant allies in NATO in the April 2008 Bucharest Summit:

1. To seal NATO's commitment to encompass and extend its security guarantees to Southeast Europe (the western Balkans, notably Macedonia, Albania, and Croatia, aka the Adriatic Charter Group) and, thus, to completely surround a belligerent Serbia, peeved as it is by Kosovo's unilateral declaration of independence.

2. To cement NATO's drive into Russia's borders (by inviting Ukraine and other former Soviet satellites to join the alliance's much vaunted "Partnership for Peace") and thus to preempt (or, more likely, herald) a Second Cold War.

It failed in both tasks. Macedonia was not invited to join the Alliance and NATO would not hear of baiting the Russian bear. Macedonia was rejected by NATO because it could not succumb to Greek intransigence: Greece insisted that Macedonia should change its constitutional name to cater to Greek domestic political sensitivities.

Thus, Serbia (and its ally, Russia) are left with access to a corridor, through non-NATO Macedonia to anti-American Greece and to the sea.

High-placed diplomatic sources in Washington told the Chronicle that the USA will now pressure Macedonia into changing its constitutional name in a way that will be acceptable to Greece and the powerful Greek lobbies in the USA. Should "friendly" persuasion fail, the USA will bare its fangs and may even threaten mild sanctions (the suspension of several military agreements).

Macedonia doesn't stand a chance of resisting such an onslaught. It will be forced into a humiliating retreat. An invitation to join NATO will promptly follow, in time for its ratification by all the member countries of the moribund Alliance.

The tiny, landlocked country faces ill-advised early elections in June, 2008. The governing coalition hopes against hope to increase its majority in the country's "Sobranie". Instead, the right-wing VMRO-DPMNE may yet have to join forces with DUI, the political incarnation of erstwhile Albanian insurgents in the northwest of Macedonia, hitherto an anathema as far as Gruevski, the incumbent Prime Minister, was concerned.

Hopping to bed with DUI will likely restrain the future government's freedom of action. Every concession to Greece will be portrayed by nationalists in Macedonia as capitulation and the consequence of blackmail by the Albanian parties. To the great consternation of the Macedonians, Albania, Macedonia's neighbor, has been invited to join NATO. The restive Albanians of Macedonia would like to accede to the Alliance as soon as practicable and at all costs. Understandably, they are less attached to the country's constitutional name than the non-Albanian majority.

The "name issue" involves a protracted dispute over the last 17 years between the two Balkan polities over Macedonia's right to use its constitutional name, "The Republic of Macedonia". The Greeks claim that Macedonia is a region in Greece and that, therefore, the country Macedonia has no right to monopolize the name and its derivatives ("Macedonian").

Moreover, the Greeks feel that Macedonians have designs on the part of Greece that borders the tiny, landlocked country and that the use of Macedonia's constitutional name internationally will only serve to enhance irredentist and secessionist tendencies, thus adversely affecting the entire region's stability.

Macedonia retorts that it has publicly renounced any claims to any territory of any of its neighbors. Greece is Macedonia's second largest foreign investor. The disparities in size, military power and geopolitical and economic prowess between the two countries make Greek "fears" appear to be ridiculous. Macedonians have a right to decide how they are to be called, say exasperated Macedonian officials.

The Greek demands are without precedent either in history or in international law. Many countries bear variants of the same name (Yemen, Korea, Germany until 1990, Russia and Byelorussia, Mongolia). Others share their name with a region in another country (Brittany in France and Great Britain across the channel, for instance).

II. Russia's Role in the Iraq War

Russian President Vladimir Putin warned in 2003, in an interview he granted to TF1, a French television channel, that unilateral American-British military action against Iraq would be a "grave mistake" and an "unreasonable use of force". Russia might veto it in the Security Council, he averred. In a joint declaration with France and Germany, issued the same day, he called to enhance the number of arms inspectors in Iraq as an alternative to war.

During the 1990s, Russia was written off as a satellite of the United States. This newfound assertiveness has confounded analysts and experts everywhere. Yet, appearances aside, it did not signal a fundamental shift in Russian policy or worldview.

Russia could not resist the temptation of playing once more the Leninist game of "inter-imperialist contradictions". It had long masterfully exploited chinks in NATO's armor to further its own economic, if not geopolitical, goals. Its convenient geographic sprawl - part Europe, part Asia - allows it to pose as both a continental power and a global one with interests akin to those of the United States. Hence the verve with which it delved into the war against terrorism, recasting internal oppression and meddling abroad as its elements.

As Vladimir Lukin, deputy speaker of the Duma observed, Britain having swerved too far towards America - Russia may yet become an intermediary between a bitterly disenchanted USA and an irked Europe and between the rich, industrialized West and developing countries in Asia. Publicly, the USA has only mildly disagreed with Russia's reluctance to countenance a military endgame in Iraq - while showering France and Germany with vitriol for saying, essentially, the same things.

The United States knew that Russia would not jeopardize the relevance of the Security Council - one of the few remaining hallmarks of past Soviet grandeur - by vetoing an American-sponsored resolution. But Russia could not be seen to be abandoning a traditional ally and a major customer (Iraq) and newfound friends (France and Germany) too expediently.

Nor could Putin risk further antagonizing Moscow hardliners who already regarded his perceived "Gorbachev-like" obsequiousness and far reaching concessions to the USA as treasonous. The scrapping of the Anti Ballistic Missile treaty, the expansion of NATO to Russia's borders, America's presence in central Asia and the Caucasus, Russia's "near abroad" are traumatic reversals of fortune.

An agreed consultative procedure with the crumbling NATO hardly qualifies as ample compensation. There are troubling rumblings of discontent in the army. In late 2002, a Russian general in Chechnya refused Putin's orders publicly and with impunity. Additionally, according to numerous opinion polls, the vast majority of Russians opposed an Iraqi campaign.

By aligning itself with the fickle France and the brooding and somnolent Germany, Russia had warned the USA that it should not be taken for granted and that there is a price to pay for its allegiance and good services. But Putin is not Boris Yeltsin, his inebriated predecessor who over-played his hand in opposing NATO's operation in Kosovo in 1999 - only to be sidelined, ignored and humiliated in the postwar arrangements.

Russia wants a free hand in Chechnya and to be heard on international issues. It aspires to secure its oil contracts in Iraq - worth tens of billions of dollars - and the repayment of $9 billion in old debts by the postbellum government. It seeks pledges that the oil market will not be flooded by a penurious Iraq. It desires a free hand in Ukraine, Armenia and Uzbekistan, among others. Russia wants to continue to sell $4 billion a year in arms to China, India, Iran, Syria and other pariahs unhindered.

Only the United States, the sole superpower, can guarantee that these demands are met. Moreover, with a major oil producer such as Iraq as a US protectorate, Russia becomes a hostage to American goodwill. Yet, hitherto, all Russia received were expression of sympathy, claimed Valeri Fyodorov, director of Political Friends, an independent Russian think-tank, in an interview in the Canadian daily, National Post.

These are not trivial concerns. Russia's is a primitive economy, based on commodities - especially energy products - and an over-developed weapons industry. Its fortunes fluctuate with the price of oil, of agricultural produce and with the need for arms, driven by regional conflicts.

Should the price of oil collapse, Russia may again be forced to resort to multilateral financing, a virtual monopoly of the long arms of US foreign policy, such as the International Monetary Fund (IMF). The USA also has a decisive voice in the World Trade Organization (WTO), membership thereof being a Russian strategic goal.

It was the United States which sponsored Russia's seat at table of the G8 - the Group of Eight industrialized states - a much coveted reassertion of the Russian Federation's global weight. According to Rossiiskaya Gazeta, a Russian paper, the USA already announced a week ago that it is considering cutting Russia off American financial aid - probably to remind the former empire who is holding the purse strings.

But siding with America risks alienating the all-important core of Europe: Germany and France. Europe - especially Germany - is Russia's largest export destination and foreign investor. Russia is not oblivious to that. It would like to be compensated generously by the United States for assuming such a hazard.

Still, Europe is a captive of geography and history. It has few feasible alternatives to Russian gas, for instance. As the recent $7 billion investment by British Petroleum proves, Russia - and, by extension, central and east Europe - is Europe's growth zone and natural economic hinterland.

Yet, it is America that captures the imagination of Russian oligarchs and lesser businesses.

Russia aims to become the world's largest oil producer within the decade. With this in mind, it is retooling its infrastructure and investing in new pipelines and ports. The United States is aggressively courted by Russian officials and "oiligarchs" - the energy tycoons. With the Gulf states cast in the role of anti-American Islamic militants, Russia emerges as a sane and safe - i.e., rationally driven by self-interest - alternative supplier and a useful counterweight to an increasingly assertive and federated Europe.

Russia's affinity with the United States runs deeper that the confluence of commercial interests.

Russian capitalism is far more "Anglo-Saxon" than Old Europe's. The Federation has an educated but cheap and abundant labor force, a patchy welfare state, exportable natural endowments, a low tax burden and a pressing need for unhindered inflows of foreign investment.

Russia's only hope of steady economic growth is the expansion of its energy behemoths abroad. Last year it has become a net foreign direct investor. It has a vested interest in globalization and world order which coincide with America's. China, for instance, is as much Russia's potential adversary as it is the United State's.

Russia welcomed the demise of the Taliban and is content with regime changes in Iraq and North Korea - all American exploits. It can - and does - contribute to America's global priorities. Collaboration between the two countries' intelligence services has never been closer. Hence also the thaw in Russia's relations with its erstwhile foe, Israel.

Russia's population is hungry and abrasively materialistic. Its robber barons are more American in spirit than any British or French entrepreneur. Russia's business ethos is reminiscent of 19th century frontier America, not of 20th century staid Germany.

Russia is driven by kaleidoscopically shifting coalitions within a narrow elite, not by its masses - and the elite wants money, a lot of it and now. In Russia's unbreakable cycle,  money yields power which leads to more money. The country is a functioning democracy but elections there do not revolve around the economy. Most taxes are evaded by most taxpayers and half the gross national product is anyhow underground. Ordinary people crave law and order - or, at least a semblance thereof.

Hence Putin's rock idol popularity. He caters to the needs of the elite by cozying up to the West and, in particular, to America - even as he provides the lower classes with a sense of direction and security they lacked since 1985. But Putin is a serendipitous president. He enjoys the aftereffects of a sharply devalued, export-enhancing, imports-depressing ruble and the vertiginous tripling of oil prices, Russia's main foreign exchange generator.

The last years of Yeltsin have been so traumatic that the bickering cogs and wheels of Russia's establishment united behind the only vote-getter they could lay their hands on: Putin, an obscure politician and former KGB officer. To a large extent, he proved to be an agreeable puppet, concerned mostly with self-preservation and the imaginary projection of illusory power.

Putin's great asset is his pragmatism and realistic assessment of the shambles that Russia has become and of his own limitations. He has turned himself into a kind of benevolent and enlightened arbiter among feuding interests - and as the merciless and diligent executioner of the decisions of the inner cabals of power.

Hitherto he kept everyone satisfied. But Iraq is his first real test. Everyone demands commitments backed by actions. Both the Europeans and the Americans want him to put his vote at the Security Council where his mouth is. The armed services want him to oppose war in Iraq. The intelligence services are divided. The Moslem population inside Russia - and surrounding it on all sides - is restive and virulently anti-American.

The oil industry is terrified of America' domination of the world's second largest proven reserves - but also craves to do business in the United States. Intellectuals and Russian diplomats worry about America's apparent disregard for the world order spawned by the horrors of World War II. The average Russian regards the Iraqi stalemate as an internal American affair. "It is not our war", is a common refrain, growing commoner.

Putin has played it admirably nimbly. Whether he ultimately succeeds in this impossible act of balancing remains to be seen. The smart money says he would. But if the last three years have taught us anything it is that the smart money is often disastrously wrong.

Russia’s Tanking Economy: Sanctions Begin to Bite? (Brussels Morning)


A mere four months into 2023 and Russia’s entire forecast annual budget deficit is used up, conceded its beleaguered Ministry of Finance on May 10. The target of 2% of GDP in terms of shortfall looks like a pipedream.


Federal revenues shrank by a whopping 22% compared to the same period in 2022. The government’s intake amounted to slightly less than 12 billion USD per month, according to Moscow Times.


Compared to the same timeframe last year, the energy (oil and gas) sector endured a devastating plunge of 52% in its revenues during these months, to less than a total of 30 billion USD.


The meager 5.5% increase in income from the other, non-energy, sectors of the economy – a paltry 72 billion USD - could not offset this precipitous drop.


In the meantime, Moscow spent a mind-numbing 145 billion USD in the first four months of this year.


The ineluctable result: a budget deficit of 45 billion USD, one of the largest ever in the history of the country.


Russians would be surprised to learn that the economy is in trouble. Military manufacturing and explosive state spending camouflage the true dismal state of affairs.


Nor did inflation rear its ugly head yet. But the central bank’s ability to cut rates will now be severely hampered, confronted as it is by this fiscal hemorrhaging.


But the situation is bound to get much worse if energy prices remain depressed. The government’s attempts to rein in spending are laughable in the face of the military debacle in Ukraine.


Sanctions are beginning to bite as well.


Consider the agricultural sector: Russian Agricultural Bank (Russkolkhozbank) was booted from the SWIFT system; there is a ban on exports of agricultural machinery and spares to Russia; insurance of Russian ships and cargo is restricted as is access to many ports; the pipeline pumping ammonia from the Russian city of Togliatti to the Ukrainian port of Odesa is turned off; and the accounts of Russian fertilizer companies are frozen.


So, the two pillars of Russia’s defiant response to Western sanctions are crumbling: surging public spending and spiking oil revenues.


When the USA and the EU imposed a price cap of 60 USD per barrel of Russian oil, Putin laughed it off. He is laughing no more. It proved to be surprisingly efficacious in cutting into Russia’s proceeds.


Calling a halt to the war in Ukraine might actually make matters worse as military-industrial production winds down and soldiers are demobilized and rejoin the civilian workforce.


The only way out of this conundrum is a sharp rise in the prices of energy products in Eurasia’s markets.


Fears of a global recession, struggling sectors of the economy in China (real estate) and in the West (banking), as well as a still stubborn inflation all portend ill as far as this scenario is concerned.


But, ironically, the aforementioned price cap, coupled with OPEC+ (including Russian) production cuts can deliver this salvation by the end of this year.


The adversaries of the Russian kleptocracy should not celebrate yet, though. Putin’s incentive to hang on to power via repression at home and military aggression abroad would be only buttressed as he is cornered into a nosediving, solipsistic economy.


Regrettably, for numerous reasons, regime change should be ruled out as a strategic goal at this stage: both the West and Russia are not ready for it.


But there is call for innovative solutions to this quagmire, incentivizing prosocial behaviors rather than penalizing antisocial ones.




Western buyers can put aside the differential between the cap on Russian oil and its market price. This fund will be released to Russia only when the war ends and the regime changes. It will be used to defray the costs of demobilization and disarmament.


Unraveling the sanctions regime must be tied to a roadmap of improving behavior on the part of Russia.


Sanctions must be surgically waived on opposition figures, locales, and activities and, as gestures of goodwill, in response acts of defiance by oligarchs and siloviki who are targeted right now.


Similarly, grace periods on sovereign bond repayments and concessions on foreign direct investment (FDI) in Russia should comprise a carrot at least as substantial as the sanctions stick.


The conflict in Ukraine may well constitute a proxy war between the West and Russia. But it is also a veritable morality play, a clash of values and civilizations, and a defining moment as to the shape of things to come. A Russian meltdown is in no one’s interest.


Also Read:

The Janus Look

Russia's Second Empire

Russian Roulette - The Security Apparatus

Russia as a Creditor

Let My People Go - The Jackson-Vanik Controversy

The Chechen Theatre Ticket

Russia's Israeli Oil Bond

Russia's Idled Spies

Russia in 2003

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