Russia after the Global Financial Crisis

Two prominent American specialists on the Russian economy present a fundamental analysis of basic economic factors explaining how the global financial crisis has played out in Russia and its implications for the country's future. More specifically, the authors examine the consequences of Russia's dependence on and addiction to resource (oil and gas) rents and of the management system put in place under Vladimir Putin to maintain, secure, and distribute these rents. They then investigate how each of these factors has emerged from the crisis and how it might evolve in the years ahead. Focusing on the distinction between rent dependence and addiction, the authors question the conventional wisdom that diversification of Russia's economy (away from oil and gas) is a desirable objective that will render it less vulnerable to external shocks. Journal of Economic Literature, Classification Numbers: E020, F020, G010, O130. 15 figures, 44 references.     

The Impact of Global Financial Crisis on the Mechanism of Economic Growth in Russia

A noted specialist on the Russian economy presents an assessment of the impact of the global financial crisis on the mechanism of the country's economic growth. Focusing on the demand side of the economic ledger, the author explores the question of whether Russia will be able to re-attain the high economic growth rates of the period from 2000 to 2007 after recovering from the crisis. The paper analyzes the sharp drop in production in 2008 and the first quarter of 2009, attributing most of the damage to liquidity problems and declines in the price of oil. Empirical evidence is based primarily on data collected by the author from the Central Bank of Russia and the country's federal bureau of statistics (Rosstat). Journal of Economic Literature, Classification Numbers: E010, E200, E660, F210, G010. 11 figures, 3 tables, 29 references.     

The future of NATO enlargement after the Ukraine crisis

Russian President Vladimir Putin claims that his country's annexation of Crimea in March 2014 was partly in response to NATO enlargement. NATO leaders counter that eastern enlargement is not a cause of the Ukraine crisis, and they argue that enlargement does not threaten Russia, but rather it creates stability for all of Europe. This article examines the history of NATO–Russian tensions over enlargement, considers how NATO's enlargement policy factored into the Ukraine crisis, and reviews options for the future of enlargement. Drawing on diplomatic history and geopolitical theory, the article explains Russia's persistent hostility towards NATO's policy of eastward expansion and highlights NATO's failure to convert Russia to its liberal world‐view. The alliance's norm‐driven enlargement policy has hindered the creation of an enduring NATO–Russia cooperative relationship and helped fuel the outbreak of conflict in Georgia and Ukraine. In light of this, NATO should alter its current enlargement policy by infusing it with geopolitical rationales. This means downgrading the transformative and democratization elements of enlargement and, instead, focusing on how candidate countries add to NATO capabilities and impact overall alliance security. A geopolitically‐driven enlargement policy would prioritize countries in the Balkan and Scandinavian regions for membership and openly exclude Georgia and Ukraine from membership. Ultimately, this policy would have the effect of strengthening NATO while giving it more flexibility in dealing with Russia.     

‘New Cold War’ or twenty years’ crisis? Russia and international politics

President Vladimir Putin's foreign policy can be characterized as a ‘new realism’, repudiating some of the exaggerated ambitions of Yevgeny Primakov's tenure as foreign minister in the late 1990s while asserting Russia's distinctive identity in world politics. Rather than acting as a classic ‘balancing’ power prescribed by classic realist theory as the response to the hegemonic power of a single state, Russia under Putin tended to ‘bandwagon’ and the country has been a vigorous ‘joiner’. Putin insisted that Russia retains its ‘autonomy’ in international politics while moving away from earlier ideas that Russia could constitute the kernel of an alternative power bloc. However, the opportunity to integrate Russia into the hegemonic international order may have been missed because of what is seen in Moscow as the resolute hostility of groups in the West who continue to pursue Cold War aims of isolating and containing Russia. The Cold War was transcended in an asymmetrical manner, and this has given rise to four major failures: political, strategic, intellectual and cultural. The world faces the danger of the onset of a new era of great power bloc politics, thus restoring a Cold War structure to the international system. With none of the major strategic issues facing the international community at the end of the Cold War yet resolved, we may be facing a new twenty years’ crisis.     

Putin's Russia: slowing the pendulum without stopping the clock

Vladimir Putin has been president of Russia for eighteen months, sufficienttime for some judgement about his style of leadership and achievements to have been made. He set out to restore order to a Russia that was fragmenting in Yeltsin's latter years and to revive Russians' pride in their country. Nonetheless, he remains committed to a liberal market economy integrated with the world economy. He encouraged force to bring order to Chechnya, but has not really tackled the problem of reconstruction. He has brought the regions under greater control by the centre, but has been prepared to compromise to avoid confrontation. His most tangible achievement to date has been in championing legislation, most of it long overdue, to establish the legal basis of a market economy. He has been able to exploit a working majority in the parliament, which Yeltsin never enjoyed. The success of this enterprise will depend to some degree on its political context. Persistent efforts by Putin and his team to exert control over the political process and the media will be counterproductive if they concentrate power with the president but leave him without broadly based, independent political support. Putin is likely to remain in power until 2008, however, so he has time on his side.     

Ukraine's Financial Crisis, 2009

A prominent specialist in the economic affairs of the former Soviet Union relates and analyzes the state of Ukraine's economy in light of a series of discussions and interviews with the country's Prime Minister and leading economic officials in Kyiv in 2008 and April 2009. The author, a former economic advisor to the country's government and co-chair of the UN's Blue Ribbon Commission for Ukraine, devotes this paper to a penetrating analysis of the impact of the global financial crisis of 2008-2009 on Ukraine's budget, banks, exchange rates, money supply, industrial sectors (particularly energy and steel), GDP, and inflationary pressures. Due attention is given to economic relations with the EU and Russia as well as to financial assistance from the IMF.Journal of Economic Literature, Classification Numbers: E500, E600, O520, P200. 1 table, 4 figures, 38 references.     

China's Nuclear Energy in Light of the Disaster in Japan

An American specialist on Russian agriculture examines that country's agrarian policy, as well as the agricultural sector more generally, one year into the presidency of Dmitriy Medvedev. Focusing on the three key policy issues—state financial support, state intervention in the grain market, and international food trade policy—he assesses the extent to which current policy represents a continuation of that prevailing during the presidency of Vladimir Putin. The author discusses the appointment of a new Agriculture Minister in 2009, which may signal a different approach to the management of the sector, and concludes with an assessment of the impact of the global financial crisis. Journal of Economic Literature, Classification Numbers: F130, Q100, Q170, Q180. 2 tables, 63 references.     

Russia's Energy Policy: A Framing Comment

A prominent specialist on the Russian economy provides a framing comment on two preceding papers entitled "Russia's Energy Policy" (by Vladimir Milov, Leonard Coburn, and Igor Danchenko) and "Russia's Energy Policy: A Divergent View" (by Matthew J. Sagers). The author argues that Russia's current energy policy should be viewed as an outcome of competition between three overlapping programs. In this context, he identifies three policy models—the old Soviet, the liberal or oligarchic, and the most recent state capitalist. The latter is currently supported by President Putin, who prioritizes diversification of the country's economy at the expense of diminished investments in the oil and gas sector. Journal of Economic Literature, Classification Numbers: L71, O13, Q40, Q48. 2 tables, 2 figures, 22 references.     

Debating Belarus: An Economy in Comparative Perspective

A U.S.-based geographer and Belarusian political scientist assess the current economic crisis in Belarus. Although the country's financial situation is serious in the short term, they argue that analysis of basic social and economic indicators provides some evidence of underlying strength and stability, recently bolstered by a number of trade agreements concluded with Russia in late 2011. The authors argue that the most natural and meaningful basis for ascertaining the health of the country's economy is to compare it with those of its two Slavic neighbors, Russia and Ukraine. That comparison reveals that although Belarus ranks lower on most indices of economic reform, it has outperformed them during the post-Soviet period in several important categories (GDP growth, income equality, agricultural productivity, expenditures on education and health care, life expectancy, and per capita agricultural output) and occupied an intermediate position (below Russia but above Ukraine) in others (e.g., GDP per capita, wages and pensions, and labor productivity). The paper's final section discusses the nature of the relationship between Belarus and Russia (dependence vs. complementarity) and that between the Lukashenka regime and the Belarusian people.     

Russia's European policy under Medvedev: how sustainable is a new compromise?

This article argues that Dmitry Medvedev's term in office, despite the continuity in Russia's foreign policy objectives, brought about a certain change in Russia's relations with the European Union and the countries of the Common Neighbourhood. The western perceptions of Russia as a resurgent power able to use energy as leverage vis‐à‐vis the EU were challenged by the global economic crisis, the emergence of a buyer's market in Europe's gas trade, Russia's inability to start internal reforms, and the growing gap in the development of Russia on the one hand and China on the other. As a result, the balance of self‐confidence shifted in the still essentially stagnant EU–Russian relationship. As before, Moscow is ready to use all available opportunities to tighten its grip on the post‐Soviet space, but it is less keen to go into an open conflict when important interests of EU member states may be affected. The realization is slowly emerging also inside Russia that it is less able either to intimidate or attract European actors, even though it can still appeal to their so‐called ‘pragmatic interests’, both transparent and non‐transparent. At the same time, whereas the new modus operandi may be suboptimal from the point of view of those in the country who would want Russia's policy to be aimed at the restoration of global power status, it is the one that the Kremlin can live with—also after the expected return of Vladimir Putin as Russia's president. Under the current scheme, the West—and the EU in particular—does little to challenge Russia's internal order and leaves it enough space to conduct its chosen course in the former Soviet Union.     

Who identifies with the “Russian World”? Geopolitical attitudes in southeastern Ukraine,Crimea, Abkhazia,South Ossetia,and Transnistria

Abstract

The concept of the Russian world (Russkii mir) re-entered geopolitical discourse after the end of the Soviet Union. Though it has long historical roots, the practical definition and geopolitical framing of the term has been debated and refined in Russian political and cultural circles during the years of the Putin presidency. Having both linguistic-cultural and geopolitical meanings, the concept of the Russian world remains controversial, and outside Russia it is often associated with Russian foreign policy actions. Examination of official texts from Vladimir Putin and articles from three Russian newspapers indicate complicated and multifaceted views of the significance and usage of the Russkii mir concept. Surveys in December 2014 in five sites on the fringes of Russia – in southeastern Ukraine, Crimea, and three Russian-supported de facto states (Abkhazia, South Ossetia, and Transnistria) – show significant differences between the Ukrainian sample points and the other locations about whether respondents believe that they live in the Russian world. In Ukraine, nationality (Russian vs. Ukrainian) is aligned with the answers, while overall, attitudes toward Russian foreign policy, level of trust in the Russian president, trust of Vladimir Putin, and liking Russians are positively related to beliefs about living in the Russian world. In Ukraine, the negative reactions to geopolitical speech acts and suspicions about Russian government actions overlap with and confuse historical linguistic-cultural linkages with Russia, but in the other settings, close security and economic ties reinforce a sense of being in the Russian “world.”     

Russia's Economic Transformation under Putin

A prominent specialist on the Russian economy presents a systematic account and analysis of Russia's economic transformation under President Vladimir Putin. The study covers the period from the financial crash of August 1998 through the years of spectacular growth leading to August 2004. The discussion encompasses the financial stabilization in the aftermath of the crash, the work of Putin's first economic team, the tax reform, tightened budgetary control, deregulation, land and judicial reforms, trade policies, the economic agenda for Putin's second term, and prospects for further economic reform. Journal of Economic Literature, Classification Numbers: E60, E63, F13, H20, H60, P21. 1 figure, 2 tables, 57 references.     

The triumph of Russian national security policy? Russia’s rapid rebound

Russia’s return to prominence in international affairs has been in many respects surprising. Russia’s easy seizure of Crimea, its role in Syria and its ambitious pivot eastward have emboldened Moscow at a time of crisis for the liberal order. This article characterises Russian national security policy as a deliberate ‘rebound’ strategy, designed to deliver a rapid return to power and status. The author defines rebounding in respect to four characteristics: a relatively short timeline for the rebounding state to achieve its goals; a strategic (re-)emphasis on territory and hard power; the construction of alternative networks of influence via institutions; and active efforts to undermine existing normative and legal orthodoxies. The author then assesses these in terms of specific Russian national security policy objectives, including in the key domain of information operations. The article concludes that Vladimir Putin has skilfully employed conventional material capabilities and geopolitics, combined with the exploitation of contemporary information networks for instrumental purposes. Paradoxically, though, those same factors will constrain Russian national security objectives in the future.     

The vertikal: power and authority in Russia

Power and authority in Russia are traditionally seen to reside with the president. Such an understanding was emphasized during the eight years of Vladimir Putin's presidency, from 2000 to 2008, as he sought to centralize power, strengthen the state and establish a strong vertical of power to implement policy. This article examines the nature of this power and authority in the light of the tandem, the ruling arrangement between current President Dmitry Medvedev and Prime Minister Putin. While acknowledging the central importance of Vladimir Putin in Russian political life, the article argues that emphasis on his role draws too much attention away from the leadership team that he has shaped with Medvedev. This team takes shape in formal institutional structures such as the Security Council, which has become an increasingly important group as a reservoir of experience and authority. It also takes shape in an informal network that stretches across state and business boundaries. Although there are some tensions in the network, this team ensures broad policy continuity. Furthermore, the article questions Putin's success in establishing a vertical of power, and the authority of both President Medvedev and Prime Minister Putin. The analysis explores evidence that suggests that, despite the appointment of loyal personnel in this vertical of power, presidential instructions, orders and personnel commands often remain incompletely and tardily carried out or even unfulfilled. In essence, therefore, although many have suggested a split within the leadership, particularly between Medvedev and Putin, the article suggests that the more important splits are horizontal ones between different layers of authority. Thus, a process of direct control is necessary, whereby the most senior officials are obliged personally to oversee the implementation of their instructions. The article concludes by suggesting a reconsideration of our terms of reference for Russian politics, replacing the tandem with the team, and introducing ‘manual control’.     

From Ostpolitik to ‘frostpolitik’? Merkel,Putin and German foreign policy towards Russia

Germany's relationship with Russia has historically been one of the most crucial in shaping Europe's fate. Despite radical transformation in the nature of European Great Power politics, it continues to be pertinent from the perspective of today's world. Germany's willingness to establish good relations with the Soviet Union in the late 1960s—its emphasis on economic relations and cooperation instead of political disagreements—prepared the ground for the end of the Cold War and German unification twenty years later. Germany's basic policy towards Russia remained broadly unchanged despite German unification and changes in the domestic political coalitions and leadership, sometimes against political expectations. In the European context, Germany's attitude towards Russia created the backbone of EU–Russia relations. During 2012–13, however, the continuity in Germany's policy towards Russia was seen as having come to an end. Political twists came to the fore and the atmosphere was loaded with tensions, made worse by the Ukrainian crisis. This article reviews the recent, alleged changes in Germany's policy towards Russia during the Merkel era. It asks two basic questions: first, whether Germany's policy really has changed and if it has, what are the theoretical tools that give us the best potential understanding of these changes? The article argues that the policy has changed, but not as dramatically as made out by some headlines. Moreover, the article suggests that a key element in analysing the degree of change in Germany's policy towards Russia is neither the external power relations nor domestic politics and related changes in the prevailing interpretation of national interest, though these are important too, but the interaction between the leaders and foreign policy elites.     

Developments in Russian Gas Production Since 1998: Russia's Evolving Gas Supply Strategy

An American geographer and prominent authority on the oil and natural gas industries and resources of Russia and other former republics of the Soviet Union reports on overall trends in Russia's natural gas production in the years following the country's ruble devaluation and financial crisis. The account—based on systematic in-country observations, discussions/interviews with industry executives, and a review of industry sources—focuses on factors affecting domestic supply and demand as well as export capacity (will Russia have enough gas to meet rising domestic demand while fulfilling its export obligations?), regional patterns of production (and performance of Gazprom regional production enterprises), obstacles to the use of associated gas derived from crude oil extraction, and major pipeline construction projects in West Siberia and the Russian Far East. The paper concludes by outlining CERA's forecast for Russian gas production to 2020, also disaggregated by region. Journal of Economic Literature, Classification Numbers: L71, O13, Q40, Q48. 7 figures, 8 tables, 51 references.     

Asia's role in twenty‐first‐century global economic governance

The basic foundations of today's framework for global economic governance were laid in the years following the Second World War. Reflecting the balance of economic power at the time, Asia did not play a major role in either designing the institutional architecture or setting the agenda for global economic governance. In more recent decades the centre of gravity of the global economy has shifted towards Asia, and this trend is likely to continue in the decades to come. Asia's growing economic weight enhances its potential to play a much stronger role in shaping twenty‐first‐century global economic governance. Realization of that potential will, however, depend upon how successfully Asia addresses five key challenges: rebalancing sources of growth; strengthening national governance; institutionalizing regional integration; providing political leadership; and adopting the global lingua franca—English. While the Asian policy‐makers' ambition to play a bigger role in global economic governance is growing, their appetite for addressing the necessary policy challenges is not necessarily keeping pace with that growing ambition. This gap between ambition and action will need to be gradually closed—only then can Asia help itself in playing a bigger role in global economic governance.     

Perspectives on the Potential of Russian Oil

A prominent American specialist on the economy of the former USSR comments on Russian oil in light of a preceding paper on the subject. Noting the congruence of Russia's economic growth with world oil prices, the author points out that the country's growth is endangered by sharp declines in those prices. He also recalls how an oil windfall shaped Russian thinking in the 1970s, questions how long Russia can pump oil at its maximum level by invoking the American experience from 1859 through the peak in 1970 until the present, analyzes the two corporate models in the Russian oil sector, and briefly outlines Putin's new approach to foreign investment in the sector. Journal of Economic Literature, Classification Numbers: L71, O13, O18. 3 figures, 8 references.     

Do We Need a GCC Bank to Facilitate the Economic Turnaround of the GCC Region?

Amidst the ongoing crisis of plummeting oil prices, the GCC (Gulf Cooperation Council) terrain has become a haunt of economists and financial analysts to tackle the ongoing challenges in the region. GCC constituents are gearing themselves with a robust political will that they hope could result in a turnaround of their economy by adopting a policy of economic diversification in nonoil‐based sectors. With this background supported by extensive qualitative scan of literature pertaining to the reforms proposed by the six members of the GCC to drive the economy forward amidst ongoing economic crisis, this article seeks to underscore the prospect of a shared initiative by the GCC constituents in institutionalizing a GCC bank as a potent innovative solution which may serve to provide an edifice for pushing forth the region's economy in nonhydrocarbon segments contingent upon the individual needs of the GCC constituents. As an exploratory study, this paper sheds light on these issues besides discussing the fundamental functions of the GCC bank.