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Coronavirus Is Hitting Russia on More than the Economy

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The coronavirus pandemic began to affect Russia later than the western European states and the US, but has the potential to completely unravel the country’s already precarious economic stability. It is not yet possible to reliably estimate the Russian economy’s expected losses, but forecasts range from near zero annual GDP growth to a best-case scenario of 0.5%. Some Russian economists fear that the economy could shrink by up to 9% overall by the end of 2020.

In 2020, Russia’s economic stability in the wake of the crisis is its top priority. That statement can of course be applied to every state affected by the coronavirus, but the worry is particularly acute in the case of Russia, as it has been hit in recent years by decreasing incomes and rising inflation. If the pandemic results in a major blow to the economy, the shock could precipitate an irreversible undermining of the stability of the ruling elites.

The Russian political elite’s mandate for continuous rule does not derive from the people. In contrast to the western norm, power in Russia comes from institutions ranging from the military to the security agencies. The popularity of Russian politicians is less important than many analysts in the West often believe. What counts is a stable internal economic situation.

This was the recipe for stability and continuity throughout 2000-20 and is even more true today. Putin and his allied elite political groups intend to stay in power beyond 2024. Their success in achieving that goal depends on the social pact they made with the people to provide and maintain a relatively stable economic situation. The havoc the coronavirus could wreak on the Russian economy has the potential to destroy that compact, and with it Putin’s chances of extending his power beyond 2024.

The impact of the coronavirus crisis on Russia is not only economic. The outbreak and the government’s response to it could have been an opportunity to display Russia’s preparedness and the effectiveness of its political system. Instead, it revealed that the top leadership was unprepared for a challenge of this type or magnitude.

The pandemic in Russia, in striking contrast with China and even Western states where death rates are still high but contained, is no longer under control. Though it had been argued that the vast spaces separating Russia’s population centers would limit the spread of the virus, geography does not appear to have stemmed its progress. It has been confirmed that Russia’s hinterland—i.e., distant regions with small concentrations of people per square kilometer—has been hit by the pandemic along with all the major population centers. What should have served as a geographic benefit is in fact working against the central government, as the country’s inadequate transportation links and lack of sufficient medical resources make it very difficult for Moscow to control the pandemic in far-flung regions.

The epidemic also revealed another problem that is receiving little attention: regions and republics within Russia are implementing responses to the coronavirus without any coordination with Moscow. This pattern exposes the perennial problem of precarious relations between the center and the federal regions. During the crisis, some regions—the restive North Caucasus, for example—have taken disproportionate measures and even explicitly disregarded orders from Moscow.

This trend highlights a largely forgotten problem with federalization: in times of crisis, it is extremely difficult to control distant territories. This is not only because of the huge geographic distances involved, but also because of the desire of local leaders to serve their own interests, which do not necessarily comport with those of Moscow. This is especially true if the regions in question are populated primarily by non-Russians.

The coronavirus pandemic could thus shake the entire premise upon which the Russian ruling elites’ power has rested thus far. What makes 2020 even more troublesome for the Russian leadership are other major developments that were initiated by Moscow itself.

Only a few months ago, Russia’s political system seemed fairly stable. This perception was altered when the top leadership proposed several waves of constitutional changes that would ultimately end in Putin’s being allowed to continue as president in 2024, if he decides to participate in the elections. Even the trusted elite, which one might expect to be content with Putin’s extension of his power, is showing signs of concern about the possible long-term results of this radical development.

Moreover, there is an increasing belief among the broader Russian population that though the changes fit into overall constitutional trends in Russia and in many Eurasian states, they nevertheless undermine the Russian people’s belief in the primacy of the state constitution. Many now believe the proposed constitutional changes are a long-planned show designed to extend the incumbent president’s rule well into 2036. In essence, the top Russian leadership has undermined the foundation of its own power: the stability and preeminence of the state constitution.

Russia’s economy and influence have been affected not only by the ongoing coronavirus crisis but also by the oil price war with Saudi Arabia that immediately preceded it. Putin made Russia into a dominant player in global energy politics with the partial object of driving a wedge between Washington and its crucial ally in Riyadh. Just prior to the coronavirus outbreak, Moscow refused to meet Saudi demands to double output cuts, prompting a price war with the kingdom that involved exponentially increasing oil output and driving global demand down. The Russian leadership ultimately agreed to cuts at four times the level suggested in early March, and at a higher level than what Riyadh agreed to cut from its output.

Three interlocking long-term developments will thus trouble Russia throughout 2020 and beyond: the coronavirus pandemic is testing the country’s social contract to its very foundation; Russia’s internal political stability is being called into question by Putin’s proposed constitutional changes; and the oil price agreement with the Saudis is largely disadvantageous.

Author’s note: first published in BESA Center

Emil Avdaliani specializes on former Soviet space and wider Eurasia with particular focus on Russia's internal and foreign policy, relations with Iran, China, the EU and the US. He teaches history and international relations at Tbilisi State University and Ilia State University (Georgia).

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Relegating the “Russia Problem” to Turkey

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Image credit: Prezident.Az

Turkey’s foreign policy is at a crossroads. Its Eurasianist twist is gaining momentum and looking east is becoming a new norm. Expanding its reach into Central Asia, in the hope of forming an alliance of sorts with the Turkic-speaking countries — Kazakhstan, Uzbekistan, Kyrgyzstan, and Turkmenistan — is beginning to look more realistic. In the north, the north-east, in Ukraine, Georgia, and Azerbaijan, there is an identifiable geopolitical arc where Turkey is increasingly able to puncture Russia’s underbelly.

Take Azerbaijan’s victory in Second Karabakh War. It is rarely noticed that the military triumph has also transformed the country into a springboard for Turkey’s energy, cultural and geopolitical interests in the Caspian Sea region of Central Asia. Just two months after the November ceasefire in Nagorno-Karabakh, Turkey signed a new trade deal with Azerbaijan. Turkey also sees benefits from January’s Azerbaijan-Turkmenistan agreement which aims to jointly develop the Dostluk (Friendship) gas field under the Caspian Sea, and it recently hosted a trilateral meeting with the Azerbaijani and Turkmen foreign ministers. The progress around Dostlug removes a significant roadblock on the implementation of the much-touted Trans-Caspian Pipeline (TCP) which would allow gas to flow through the South Caucasus to Europe. Neither Russia nor Iran welcome this — both oppose Turkey’s ambitions of becoming an energy hub and finding new sources of energy.

Official visits followed. On March 6-9, Turkish Foreign Minister Mevlüt Çavuşoğlu visited Uzbekistan, Turkmenistan, and Kyrgyzstan. Defense cooperation, preferential trade deals, and a free trade agreement were discussed in Tashkent. Turkey also resurrected a regional trade agreement during a March 4 virtual meeting of the so-called Economic Cooperation Organization which was formed in 1985 to facilitate trade between Turkey, Iran, and Pakistan. Though it has been largely moribund, the timing of its re-emergence is important as it is designed to be a piece in the new Turkish jigsaw.

Turkey is slowly trying to build an economic and cultural basis for cooperation based on the Turkish Cooperation and Coordination Agency founded in 1991 and the Turkic Council in 2009. Although Turkey’s economic presence in the region remains overshadowed by China and Russia, there is a potential to exploit. Regional dependence on Russia and China is not always welcome and Central Asian states looking for alternatives to re-balance see Turkey as a good candidate. Furthermore, states such as Kyrgyzstan and Turkmenistan are also cash-strapped, which increases the potential for Turkish involvement.

There is also another dimension to the eastward push. Turkey increasingly views Ukraine, Georgia, and Azerbaijan as parts of an emerging geopolitical area that can help it balance Russia’s growing military presence in the Black Sea and in the South Caucasus. With this in mind, Turkey is stepping up its military cooperation not only with Azerbaijan, but also with Georgia and Ukraine. The recent visit of Ukraine’s President Volodymyr Zelenskyy to Turkey highlighted the defense and economic spheres. This builds upon ongoing work of joint drone production, increasing arms trade, and naval cooperation between the two Black Sea states.

The trilateral Azerbaijan-Georgia-Turkey partnership works in support of Georgia’s push to join NATO. Joint military drills are also taking place involving scenarios of repelling enemy attacks targeting the regional infrastructure.

Even though Turkey and Russia have shown that they are able to cooperate in different theaters, notably in Syria, they nonetheless remain geopolitical competitors with diverging visions. There is an emerging two-pronged strategy Turkey is now pursuing to address what President Recep Tayyip Erdoğan sees as a geopolitical imbalance. Cooperate with Vladimir Putin where possible, but cooperate with regional powers hostile to Russia where necessary.

There is one final theme for Turkey to exploit. The West knows its limits. The Caspian Sea is too far, while an over-close relationship with Ukraine and Georgia seems too risky. This creates a potential for cooperation between Turkey and the collective West. Delegating the “Russia problem” to Turkey could be beneficial, though it cannot change the balance of power overnight and there will be setbacks down the road.

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The Future of the Arctic

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The harsh ecological conditions of the Arctic in the past have sustained economic activity in the region. Climate change, new technologies and innovations open new perspectives for the development of these territories. The Arctic has turned into one of the hotspots of geopolitics: global and regional players are striving to expand their borders. Watching the Arctic is a complex problem, so the solution can only be secured by integrating the forces of all parties in the Arctic.

It is impossible to discuss the development of the Arctic from the standpoint “whether we are going to exploit it or not”, as the industrial development of the Arctic started about 100 years ago. Today 10 million people live around Arctic, only about 10% of them are indigenous peoples. The main question is how we can make this development responsible and sustainable to ensure all three aspects – economic, social and environmental – in the long term and who should be a stakeholder in this activity.

Scientists from Russia, Norway and Iceland, despite the difficulties and deteriorating relations between Russia and the West, are conducting an active dialogue on the future of the Arctic. They call for enhanced cooperation and joint development of the Arctic for the benefit of humanity, not for geopolitical confrontation, because “Together we are stronger.” Scientists have also called for attracting the capabilities of space satellites to conquer the Arctic and solve various tasks and problems. They hope to strengthen public and private investment in human capital, for better education, to attract more talented people, to create high-paying  jobs for young people, to create and develop smart cities. The Arctic is an excellent opportunity for a clean and green economy, for Industry 4.0 and for the creation of new industries.

As part of the High North Dialogue Arctic 2050: Mapping the future, a panel discussion was held on April 23, 2021. The umbrella theme of all Arctic 2050 presentations: Mapping The Future of the Arctic and exhibitors tried to give their views on development and change in the Arctic over the next few decades from the standpoint of economy, trade and maritime transport, energy, ecology and social trends. During the panel Russian scientists from the Skolkovo School of Management, one of the leading research centers in Russia and their Norwegian colleagues discussed possible scenarios for the development of the Arctic in the next 30 years

Although almost all exhibitors were wary of more accurate predictions given the many factors that potentially determine the course of events in this area, the general impression that could be gained from different presentations is that greater importance is expected in this area in world economic and traffic flows. Development opportunities in mining, energy and maritime transport are great, but there are also great unknowns and potential temptations regarding the mutual rivalry of countries in this area, regulating legal and policy frameworks for the implementation of development policies and finally regarding climate change and risk environment.

The ability to think long-term, and to maintain a balance between all three dimensions, is what is called a ‘sustainable mindset’ and this is exactly what the Arctic needs from leaders now and in the future. A new leadership agenda emerges in each and every sector, reflecting the paradigm shift: policymakers will have to work towards creating an enabling environment, incentivizing more responsible investment in the Arctic, instead of trying to find a balance between economic activity and environmental footprint business needs to turn away from the cost reduction imperative and concentrate on creating innovation in technology and business models that together will make it possible to do business in the Arctic sustainably, which means both at the new level of productivity as well as in an environmentally and socially responsible manner. NGOs must concentrate on facilitating multi-stakeholder dialogs aimed at finding a balance of interests, rather than lobbying for limiting policies and challenging business activity in the region.  What is more important, is that, just as with the triple bottom line, these paradigm shifts should be synchronized and synergetic. The sustainable future of the Arctic tarts with the sustainable thinking of the leaders of today.

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Disagreements between States Should Be Resolved in a Peaceful Manner Based on International Law

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Russian Foreign Minister Sergey Lavrov has appreciated the role of Pakistan in the peace process of Afghanistan. He said that Russia expects that the meeting of the extended ‘Troika’ will give a necessary impetus to the Intra-Afghan negotiation and active role of Pakistan in the preparation of this event is appreciable.

Visiting Russian Foreign Minister Lavrov expressed these views during in an interview and its important points are shared below:

Q1.: Recently, another round of consultations took place in Moscow as part of the extended “Troika” on Afghanistan, which will likely to be followed by a session of talks in Doha. What are the prospects for an intra-Afghan dialogue given that the government of President Ashraf Ghani avoids such negotiations? How will peace and security in South Asia be affected by India’s unilateral actions in Kashmir, its active participation in the “Quad” (USA-India-Japan-Australia) and its dispute over the border areas with China?

Answer: We expect that the meeting of the extended “Troika” of March 18, 2021 will give a necessary impetus to the intra-Afghan negotiations. We note the active role of the Pakistani side in the preparation of this event. Moscow also hosted separate meetings between the Afghan delegation (headed by the Chairman of the High Council for National Reconciliation Abdullah Abdullah) and representatives of the Taliban. We consider it important that both sides speak in favour of intensifying the intra-Afghan negotiation process.

As for New Delhi’s participation in the “Quad”, we proceed from the fact that India as a responsible world power determines its foreign policy priorities by itself. At the same time we are convinced that disagreements between states in any region of the world including, of course, South Asia, should be resolved in a peaceful, civilized manner based on international law. Russia as a permanent member of the UN Security Council is ready to assist this in every possible way.

In principle we do not support the creation of divisive geopolitical structures in the spirit of the cold war. In modern conditions there is demand for such multilateral associations, initiatives and concepts which are based on the principles of inclusiveness, collegiality and equality. It is this philosophy that underlies the activities of the Shanghai Cooperation Organization, of which Moscow, Islamabad and New Delhi are members, he said.

Russia is interested in building up cooperation with the Pakistani, Indian and other partners in Eurasia. We have common interests, above all, ensuring security and improving the quality of life of the peoples of our countries. A unifying agenda is being promoted by the initiative of Russian President Vladimir Putin to develop Greater Eurasian Partnership. Participation in it is open to all states of the continent, including the members of the EAEU, SCO, ASEAN, as well as, in case there is such interest, the European Union. Systematic implementation of the initiative will not only strengthen positive connectivity and improve the competitiveness of all participants but will also be a solid foundation in building a common continental space of peace and stability, he said.

Q2.: Your comments on the global multilateral response to the COVID-19 pandemic and the issue of equitable distribution of coronavirus vaccines. What role could the UN and other multilateral organizations play in resolving conflicts and ensuring the rule of law in relations between states?

Answer: Despite efforts to curb the coronavirus infection, unfortunately, the international community has not fully coped with this dangerous challenge. The current crisis not only reminds of the enduring value of a human life but also shows again that sooner or later most of the problems of our time become common. To tackle them efficiently we need to unite. Therefore from the very beginning we urged our partners to take joint steps. Now it is especially important to suspend trade barriers, illegitimate sanctions and restrictions in the financial, technological and information spheres.

The epidemic has demythologized the idea of superiority of the ultra-liberal model of development. It is obvious that self-sufficient countries with clearly formulated national interests demonstrate greater stress resistance. Those who took the path of ceding their independence, part of national sovereignty to others lost. We regard WHO as the main international platform for coordinating global efforts in the fight against the pandemic. We presume that, on the whole, the Organization is coping with its functions. We will continue to provide multifaceted support to it.

Russia is one of the leaders in the field of global health care. We will continue to contribute to international efforts to combat COVID-19. We will continue to help the affected states both in bilateral formats and within multilateral structures. Our accumulated potential for countering infections allowed us to develop and launch the production of the Sputnik V vaccine in a short space of time. To date two more Russian vaccines against the new coronavirus infection have been registered.

Now the priority is vaccination of the population. Of course, the issue of an equitable distribution of coronavirus vaccines is very sensitive, especially for the poorest countries. In this regard we are ready to deliver safe and efficient Russian vaccines on a transparent basis. A lot of work is being done on this track. We have agreements on the supply of our vaccines with more than 50 states. A number of countries have launched the production of Sputnik V.

As for the second part of the question, the subjunctive mood is not entirely appropriate here. Same as 75 years ago, the UN is the “cornerstone” of the international legal architecture and its Security Council bears the primary responsibility for maintaining international peace and security.

Despite the growing challenges, the UN on the whole successfully copes with its responsibilities to resolve conflicts. As an example, I can mention more than ten peacekeeping operations currently deployed in various parts of the world. Even amid the difficulties caused by the pandemic, the Blue Helmets continue to fulfill their duty with dignity.

Russia as a founding member of the UN and a permanent member of the Security Council advocates strengthening the central role of the Organization in the world affairs. Our constant priority is to contribute to the formation of a more just and democratic, multipolar world order. It should be based on the UN Charter and not on dubious concepts such as the “rules-based order” promoted by Washington and its allies.

Q3.: How close are the views of Russia and Pakistan on the various regional and international issues such as Afghanistan, peace and prosperity in South Asia and the Middle East? What are the plans for the development of trade and economic cooperation between the two countries especially in energy and other sectors as well as in defense?

Answer: Moscow and Islamabad enjoy friendly, constructive relations which are based on the concurrence or similarity of approaches to the majority of topical issues of the international and regional agenda. Among them are the issues of strategic stability and of course Afghanistan. Suffice it to say that during the 75th session of the UN General Assembly the Pakistani partners supported all draft resolutions submitted by Russia and co-sponsored most of them. And, of course, we appreciate the contribution of Islamabad to the advancement of national reconciliation in Afghanistan, including through the mechanism of the extended “Troika” as mentioned above. I would like to note that our states are consistent proponents of settling conflicts including in the Middle East and North Africa solely by political and diplomatic means in compliance with the principles of the UN Charter.

In the area of bilateral relations our priorities are well known. These are, above all, cooperation in combatting terrorism as well as trade and economic ties. We will continue to provide assistance in strengthening the anti-terrorist potential of the Pakistani law enforcement agencies through joint exercises including “Druzhba” (Friendship) and the “Arabian Monsoon”.

In the field of practical cooperation we also have a lot to be proud of. The past year saw a record volume of bilateral trade: it grew by 46% and reached $790 million. We are making necessary efforts to start the construction of the North-South gas pipeline – the flagship project in the energy sector. We hope that all remaining technical issues will be agreed upon in the very near future. Russian companies are ready to participate in the modernization of the energy sector and the railroad system of Pakistan.

From our partner RIAC

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