Not a Resurgent Russia

Not a Resurgent Russia
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The conventional wisdom is that Russia is a resurgent power on a global scale. However, the facts show that Russia is actually suffering a severe long-term threat to its global position on a number of different fronts, and history shows us that declining powers are often the most prone to the kind of violent outbursts we’ve seen recently in Georgia and Ukraine. By focusing on the big picture and refraining from overreaction, the West will succeed in the long run.

Of all factors involved, perhaps the most important is the projected coming decline in Russian oil production, which comes on top of the recent dramatic drop in oil prices. Oil and gas proceeds account for over half of Russia’s federal budget revenues. In normal times, the drop in Russian oil production would likely coincide with an increase in the price of oil that would offset the decline, but the rest of the world is simultaneously experiencing a shale oil and gas boom. Any decline in oil production or prices is a serious threat to Russian government’s ability to properly equip its large military and project power in any meaningful way.

Relatedly, over the past 10 years of high oil prices, the Russian government has failed to use fossil energy revenues to adequately diversify the Russian economy in a way that prepares the country for the inevitable day that peak oil would come to Moscow. The most obvious sign of this reality is the continuing weakness of the Russian banking sector, which accounts for only about three percent of total investment in the national economy. Russian citizens simply do not trust the banking sector, and any fan of Chelsea soccer or the Brooklyn Nets can tell you where Russian oligarchs park their money.

Russia is also experiencing an historic decline in population. Currently, the birth rate in Russia stands about equal to replacement rates, and the loss of population over the long-term will have negative consequences for the government’s ability to produce revenue, care for an aging population, grow its industrial base or supply the large number of men needed for an army in a country the size of Russia.

All of these indicators show a Russia that is withering from the inside out, but also one that is swiftly losing the global battle of ideas. Over the past 20 years, Eastern Europe has chosen to align itself within NATO instead of an increasingly undemocratic Russia, thereby extending the alliance to the borders of Russian territory itself. At nearly every opportunity, these countries have also chosen to intertwine themselves with the diversified economies of Western Europe rather than the commodity-drive economy of Russia.

Combining these economic, demographic, military and ideological challenges with the ultra-nationalist rhetoric from Vladimir Putin about regaining the glory of Russia’s past is a toxic mix. Given the long-term negatives that it is facing, the Putin regime faces a sort of “use it or lose it” conundrum. Russia will perhaps never again possess the power to regain portions of Ukraine that were lost in the fall of the Soviet Empire.

Looking at an internal decline on several fronts, as well as a growing and encroaching foe, he has little choice but to act now or never. Putin has thrived politically through his ability to project an image of Russian strength to the people, and a loss of prestige or power undermines his very legitimacy as a leader. Therefore, the current situation is not much of a choice for him at all. He will act now. 

How do we know that the Russian reaction is not a sign of strength rather than weakness? Violence is a tool of the shortsighted. Those with a long-term advantage have the ability to play the long game with patient carrots and sticks, as Angela Merkel has shown in Germany. Putin has none of these tools. The tools that he has are high current popularity at home, the peak of his ability to use oil revenue to project power, the height of Russia’s military preparedness and the lack of an ironclad Western commitment to Ukraine.

In the absence of a sudden change of fortunes in Russia’s future, the country is in a troubling set of circumstances. Without the long-range tools to build a stable economy and a sphere of influence equal to Putin’s rhetoric and Russia’s past, the only option left to the current Russian government is a short-term one to use force. Western policy-makers need to consider this fact when calibrating a response, and make sure not to overreact. A patient approach that continues to use the West’s long-term advantages will keep the risks of greater conflict at a minimum. It will also be more effective.  



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