Russia’s Comeuppance

Given the difficulties that have marked Russia's relations with the United States and Europe over the past few years, a desire to dial down tension--and spending--is understandable. But it does not exhaust the impact of the global economic crisis on Russian foreign policy. Russia's leaders have said repeatedly they see the crisis as part of a large shift in the international balance of power. The emerging economies, especially in Asia, will have to "assume the task to unravel the world economic crisis," Medvedev said in remarks published ahead of the late November 2008 summit of the Asia-Pacific Economic Cooperation forum in Peru. These economies will, he says, "become leaders in the post-crisis period." Russia wants to be on the winning side of this transformation.

It is one thing, of course, to want to be a member of the group of rising powers, and another to be treated like one. Russia has discovered that reaching agreement with China can be just as difficult as with the West. Russian businessmen and policymakers, hoping that access to Chinese capital could ease their own economic problems, recently launched discussions with China for a $25 billion loan to facilitate pipeline construction and enable Rosneft, the state oil company, to pay debts coming due this year. The talks were suspended when the Chinese raised what one Russian participant called "quite absurd lending conditions," including access to one of Russia's largest Far Eastern oil fields.

Unlike most other countries, Russia can always use its arms exports as a means of sweetening commercial deals. At a time when Russian economic needs are especially great, however, its customers are likely to press their advantage-seeking more advanced equipment than they have been offered in the recent past. China, whose own military purchases from Russia have slowed recently, is one Russian client likely to push for such upgrades. Iran and Venezuela are two others of special interest to the United States. It is widely thought that Russia, while steadily increasing its arms sales to Iran, has declined to sell Tehran its most advanced air-defense systems. A protracted economic crisis will surely inspire many inside the Russian defense industry--and probably within the government as well--to call for a review of this policy.

All of these strategic adjustments--in defense spending, arms control, pipeline construction, weapons exports--represent matters of high policy for Russia's leadership. Yet, all politics being local, some of the most consequential issues created by the economic crisis may prove to be those that would ordinarily be considered matters of low policy. When production falls and unemployment rises in Russia, many of the Gastarbeiter, or guest workers, that have been needed to fuel the boom are usually sent home. For countries of the Caucasus and Central Asia, which have provided most of this enormous transient labor force (some estimate more than one million workers in Moscow alone), this will be a huge jolt. Quickly, Russia will go from being an important safety valve for socioeconomic discontent to a source of it. In the short term, Russia's neighbors will doubtless see this reflux of their own citizens as a reason to maintain good relations with Moscow, in hopes of winning coordinated management of a potentially dangerous problem. In the longer term, however, they may consider it a measure of their continuing and unwelcome vulnerability to fluctuations in the Russian economy--and of the need to reduce that vulnerability if they can.

Before the current crisis hit, Russia's leaders believed rapid economic growth was shifting the global power balance in their favor. The crisis, they fear, may have an even more dramatic effect on the international pecking order--and deny them the ground they have gained in this decade.

© 2008