Putin on the Offensive

November 12, 2003
By Janusz Bugajski and Dimitri Trenin

Bugajski:

Two dramatic events have highlighted President Vladimir Putin’s foreign policy ambitions: the crackdown on independent-minded big business and the assault on Ukraine’s territorial integrity.  Putin views the mammoth energy industries as valuable tools to expand Moscow’s foreign policy influence. While Yeltsin used the oligarchs to guarantee his own power, Putin is determined to control the oligarchs to expand Russian state interests. YUKOS CEO Mikhail Khodorkovsky not only crossed the line in his domestic political ambitions, but also increasingly contradicted the Kremlin’s external goals. A telling Pravda editorial on 7 November expressed outrage over the outcry in the west at Khodorkovsky's arrest. According to the editors, Putin is putting Russia back into the hands of the authorities after a “decade of lunacy under Boris Yeltsin” and is “placing a damper on the assault on Russia's resources by U.S. companies.” In recent weeks, Exxon Mobil and Chevron Texaco were vying to acquire a large part of Yukos' shares and this seriously disturbed Moscow.

Meanwhile, Russia’s growing assertiveness toward its neighbors was on display when workers constructed a causeway across the Kerch Strait that links the Black and Azov seas between Russia's Taman Peninsula and Ukraine's Tuzla islet. Ukraine’s Foreign Ministry warned Moscow that the construction violated his country’s territorial integrity. The Kremlin is applying strong pressure on Kyiv in demanding shared sovereignty over the navigable parts of the Kerch Strait that legally belong to Ukraine, and it wants to turn the Azov sea into an “internal water” of the two states despite Ukraine’s substantially longer coastline. The incident demonstrates how Moscow has unilaterally assumed the role of a guarantor or violator of its neighbors’ security. The Kerch provocation is intended to gain territorial concessions from Kyiv and to test the international response. Putin has openly challenged the legitimacy of an existing CIS border and the muted Western response will simply encourage bolder moves in the future.

Trenin:

Russia’s foreign relations will be significantly informed by how the Kremlin responds to domestic challenges. For the foreseeable future, Russia is likely to remain semi-authoritarian, for the simple lack of a demos. Thus, for a long time, the central question will not be so much the quality of Russian democracy as the nature of its emerging capitalism. If the oligarchic system built during the 1990s is succeeded by a “vertical” of stifling bureaucratic controls, Putin’s modernization effort will be ditched and doomed. If uncertainties about property rights persist or even increase there will be no investment, only capital flight. If the legal system and the law enforcement agencies routinely continue to be used by the authorities as weapons in policy or business disputes, there will be no trust in society and all hope will evaporate. The cumulative international effect of these developments will be Russia’s failure to integrate with the more advanced sections of the world system and Russia will tend toward progressive stagnation, degradation and marginalization. 

The Khodorkovsky affair has put Putin’s record on the spot. The Russian government’s stated commitment to economic reform will be more severely tested than ever. To pass the test, more than soothing words will be required. The issue of property rights will need to be tackled as first priority. Small and medium-sized businesses ought to be given a powerful boost by reducing, as much and as quickly as possible, corruption-breeding red tape. Structural reforms, such as in the banking sector, should be aggressively promoted. One can only expect that in several decades’ time a more civilized version of capitalism and a firming rule of law would provide a foundation for Russian-style democracy and help narrow the values gap between Russia and the West.

It is true that the outside world has little direct influence on Russian domestic developments, which is as it should be. Russia will be put right, or not, by Russians themselves. Still, serious Western advice, when delivered frankly - and privately, matters and can be helpful. America and Europe will continue to figure prominently on the Russian modernization agenda. By contrast, calls for Russia’s excommunication, whether from the Council of Europe (over Chechnya) or from the G-8 (over YUKOS) may be emotionally satisfying, but are sterile and/or counter-productive. Russian membership in either body, after all, is not a democracy certificate, but essentially a mutual security assurance. One may hope for more, but one must not pretend that it’s there now.

Janusz Bugajski is Director of the East European Project at the Center for Strategic and International Studies. Dmitri Trenin is a Senior Associate, Carnegie Endowment for International Peace, and Director of Studies at the Carnegie Moscow Center.