Russia Becoming Cautious?
Vladimir Putin, President of the Russian Federation, aboard battle cruiser Pyotr Velikiy, flagship of the Russian Northern Fleet
Photo courtesy of www.kremlin.ru
Many who lived through the decay and fall of the Union of Soviet Socialist Republics believe in the following causes for its fall. Ronald Reagan as President of the United States and Margaret Thatcher as Prime Minister of the United Kingdom, together with the assistance of Pope John Paul II, put a great deal of moral, economic and military pressure on the Soviet Union. John Paul II, born Karol Wojtyla in Poland, was perhaps the most anti-communist of all popes, and did much to inspire the rise of the Polish Solidarity labor movement. See also this Wikipedia article on Solidarity. From Poland, the anti-communist ideas of Solidarity spread throughout communist controlled Eastern Europe to weaken their Soviet controlled governments. Meanwhile Thatcher and Reagan cooperated to strengthen NATO and to limit the Soviet threat. In particular, Reagan’s defense build-up and his Strategic Defense Initiative (SDI) helped stress an already decaying Soviet economy. Not being able to reform their economy under Gorbachev to answer the Western challenge as well as to answer internal dissension, the Soviet empire fell apart.
Not surprisingly, there are many variations of this basic story to match the multiplicity of peoples’ ideologies. Some give very little weight to Western economic pressure as a cause of the Soviet Union’s fall, preferring to emphasize internal Soviet dissension. It is quite possible the masters of the Soviet Union, in light of the economic and military competition with the West, simply ceased to believe in the efficacy of Communism. Nevertheless, very few indeed would contest that the economic demands of building a military to stand up to the West helped hollow out the economies of the Soviet bloc. This is an important, particular example of what I wrote about in Achilles Heel of Autocrats: Their Economy.
These events have been given particular prominence recently by three posts: Putin’s Outrageous Defense Spending Puts Russia Back in the USSR in TheFiscalTimes.com, As Russia’s economy shrinks, Vladimir Putin softens his tone in The Economist, and Russia’s Economy Slows Amid Investment Woes by Sergei Alexashenko in the Moscow Times. The bottom line of these three articles is Russia is again traveling the route of hollowing out their economy in order to strengthen their armed forces. Motivated by Vladimir Putin’s twin ambitions of recovering the European portions of the Soviet empire lost on its dissolution, and of the dissolution of the NATO treaty as a roadblock to Putin’s ambitions, Russia has gone on a spending spree to strengthen their armed forces.
Photo: Wikimedia Commons/Соколрус
As Alexashenko writes in his article , “It is well known that only the upsurge in military production is keeping Russian industry afloat, even while it wastes precious resources needed for moving the economy forward.” All of this military expansion is occurring while the Russian economy is being hard hit with the multiple blows of lack of investment in the private sector, Western economic sanctions, the huge drop in world oil prices, and the global economic crisis. For Alexashenko, the most discouraging economic result of 2015 is a continuing decline of private sector investment. He attributes this primarily to the lack of property rights protection. He writes,
The situation in Russia is not just bad, but downright ugly. The main reason for the poor state of the Russian economy is the lack of an effective system for protecting property rights. The gradual dismantling of state institutions led first to a decline in investments, then to a sharp drop beginning in 2013, and finally to massive capital flight, with economic growth slowing to a halt by mid-2014.
As Putin himself pointed out in his recent speech, of the 200,000 businesspeople against whom the authorities brought criminal charges in 2014, 83 percent lost their businesses. More proof of how dire the threat to property rights has become in Russia is the country competitiveness rankings compiled by the World Economic Forum: of the 140 countries listed, Russia ranks 120th for property rights protection, 116th for minority shareholder protection and 108th for judicial independence.
The crony capitalism that has taken the place of communism apparently is hazardous to the independence and financial health of all companies in Russia, particularly foreign ones. This makes the condition of the Russian economy all the more precarious. With all of its problems, to continue or exacerbate a military confrontation with NATO would greatly worsen the chances of Russia pulling out of its economic death-spiral.
These pressures may be forcing Putin to pull in his horns somewhat, and to seek some ways of de-escallating his confrontation with the West, particularly the United States. In As Russia’s economy shrinks, Vladimir Putin softens his tone in The Economist, we read of a yearly presidential address by Putin that, according to Andrei Kolesnikov of the Carnegie Moscow Center, is a “set of coded ideological guidelines for the Russian elite.” Putin started off in a customary tone about the United States being to blame for “decid(ing) to oust the unwanted regimes (in the Middle East) and brutally impose their own rules”, and thereby being to blame for the Syrian civil war. He also attacked Turkey as a new foe due to Turkey’s shoot-down of a Russian fighter-bomber recently. He threatened further measures would follow already imposed trade sanctions on Turkey. If Putin makes good on that threat with military retaliation, we would be placed in as great a quandary as we would if Russia attacked the Baltic states (Latvia, Estonia, and Lithuania). Just like the Baltic states, Turkey is a NATO member, and we would be obligated under article 5 of the NATO treaty to come to Turkey’s defense.
After that unpromising beginning, Putin’s speech became considerably more nonbelligerent to the West. The Economist post reported the remainder of the speech was focused on the Russian economy with anti-Americanism nearly absent. There was no mention of the Ukraine and the Crimea was barely mentioned. It may well be that the problems of autocratic rulers with their economies about which I have written may temper Putin’s ambitions of expansion to the Baltic Sea and into Eastern Europe. We can only hope.
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