Russia is crumbling amid the economic crisis, but for its leaders there is a geopolitical upside. For years they have talked of creating "a new European architecture" in which Moscow would maintain hegemony over its near abroad, principally the now independent countries of the former Soviet Union. Now the Kremlin is seizing opportunities to bring that dream closer to reality. Still relatively better off than many in Eastern Europe—the Russian economy is set to shrink by 2 percent, compared with a hit of up to 10 percent in Ukraine—Moscow is moving fast to push that advantage, lending money and offering loans to old allies abroad.
That policy is starting to bear fruit. For the first time in a generation, Russia is starting to regain influence in the region. Last month Belarussian President Alexander Lukashenko signed an agreement to allow Moscow to station antimissile defenses in his country, after signing up for a $2 billion loan from the Kremlin. Also last month, after Russia offered $2 billion in loans, Kyrgyzstan announced it would be kicking the United States out of the Manas Air Base, a key supply point for NATO troops in Afghanistan. The Kremlin has also floated the idea of setting up a development bank for former Soviet states, largely funded by Moscow. And in January President Dmitry Medvedev launched plans to revive the old Commonwealth of Independent States by creating a military rapid-reaction force.
The European Union is pushing back with its own strategy. After Russia invaded the Georgian territory of South Ossetia in August, Brussels created the Eastern Partnership Program, designed to counter Russian expansionism. Its goal was to engage with the neighbor states of Armenia, Azerbaijan, Georgia, Moldova and Ukraine by easing travel and trade. Last week the EU announced it would include Belarus in the partnership, and Javier Solana, the EU's representative for foreign and security policy, visited Minsk to offer Lukashenko €350 million in aid, as well as an offer to ease visa restrictions.
No one is asking the Eastern Partnership members to choose sides; indeed, none can afford to cut off either Russia or the EU. But several are gravitating more toward Russia, if only because Europe may already have enough on its plate saving the melting economies of its own member nations. Last week Moldovan President Vladimir Voronin refused to join the partnership, calling it "a plot to surround Russia."
Belarus's Lukashenko, even more than the others, is straddling the fence. He has so far resisted Kremlin demands to recognize the independence of South Ossetia and Abkhazia, and at the EU's prompting, met with opposition groups and has allowed the main group, the For Freedom movement, to legally register. "Solana gave us this hope," says Alyksandr Milinkevich, the movement's leader. But Russian money and saber-rattling may talk louder than EU diplomacy. Belarus's economy is heavily dependent on cheap Russian gas, and the country owes Russia more than $15 billion. Moreover, after the Russian invasion of Georgia, "every Belarussian, including the president, felt the possibility of Russian tanks rolling into Minsk one day," says Andrei Sannikov, of the Minsk human-rights group Charter97. "The only option for Lukashenko is to listen to what Europe says but pretend he is still loyal to Russia."
Ukraine is in a particularly tough spot. It is close to bankrupt, and its national gas monopoly is on the edge of defaulting on payments to Russian energy giant Gazprom. Western institutions are reluctantly chipping in—but Kiev needs at least $5 billion more to plug its financing gap. Last month Moscow offered to pick up the tab, but the majority of its citizens want Ukraine to one day join the European Union and look unkindly upon Russian meddling. So far Ukraine's leaders have held out against Moscow's siren song. But with the Ukraine economy on the brink, and little help forthcoming from Europe, the temptation may grow too great.
Still, Moscow's ambitious strategy depends on Russia's solvency. For now, oil profits set aside in a $150 billion stabilization fund are set to cover a 2009 budget deficit. But what happens when the money runs out? Given the amount of time and energy the Kremlin has put into developing ties with its neighbors, its ambitions aren't likely to go away. One frightening possibility: if Russia has a hard time buying influence, it may have to resort to fighting for it.