Putin Backs a Major Thaw in Russian Foreign Policy

Just three years ago, Vladimir Putin was raving about America trying to become "the one single master" of the world and blasted NATO for "creeping up to Russia's borders." He also commissioned a rewrite of Russian-history textbooks to glorify the role of Stalin, alarming the world with the suggestion that a rehabilitation of the Soviet dictator was imminent. Now the tone of Russia's top leader could not be more different. Rather than railing against the West, Prime Minister Putin talks of business deals with Europe and America, of trade zones and loans. And instead of glorifying Stalin, early last month

Putin bluntly admitted the brutality of Stalin's "totalitarian regime" as he stood side by side with Poland's prime minister at Katyn, where Soviet troops executed 20,000 Polish officers in 1940. Putin's biggest project this year has been drawing up a grand new partnership agreement with the European Union that covers everything from trade to visa-free travel. And a new Kremlin foreign-policy doctrine, months in the making, sets out detailed plans to create a world in which Russia will be "mutually dependent" on other big powers, naming the European Union and the U.S. as the most desirable partners.

Putin's new softness of tone does not reflect any softening of his basic aim: to restore Russia's status as a great power. According to those who know him, Putin remains at heart "a typical silovik," shorthand for a group of hawkish former spies who still dominate Russia's elite. "You are mistaken thinking that Putin would ever allow Russia to grow weak," says Yury Krupnov, director of Moscow's Institute of Demography, Migration, and Regional Development, who is close to Putin. What's changed is that for the first time in a decade, the world is finally going Putin's way, and he can finally afford to relax a bit. In his term as president, from 2000 to 2008, Putin fought to defend what he regarded as Russia's rightful sphere of influence, along the length of what used to be Soviet territory. Poland was seeking to become a base for U.S. antimissile defenses. Ukraine was determined to join NATO and so was Georgia, which also sought to throw Russian troops out of its breakaway republics of Abkhazia and South Ossetia. Now the Obama administration has backed off plans to station missile-defense batteries in Poland and the Czech Republic; NATO membership is off the table in Ukraine thanks to the victory of a pro-Moscow president; and Russia has effectively annexed the northern territories of Georgia as a result of its 2008 invasion. NATO has even offered to include Russia in European missile-defense plans. And last month Putin signed a deal extending Russia's lease on its naval base in Sevastopol, Ukraine, long the home of Russia's controversial Black Sea fleet. Putin has also strengthened Russia's energy dominance of Europe, signing a series of deals on the South Stream pipeline, which delivers Russian gas directly to Bulgaria and Central Europe.

America no longer looks so threatening to Russian interests, either. Though Putin and George W. Bush got off to a good start when the U.S. president claimed to have seen into Putin's soul in 2001, relations quickly soured over Russian suspicions that America was instigating the "color revolutions" that toppled Putin-friendly regimes in Georgia, Ukraine, Serbia, and Kyrgyzstan. Now that Bush and his freedom agenda are gone, Putin can afford to accept President Barack Obama's offer to "reset" relations. Obama, in the words of Dmitry Rogozin, Russia's ambassador to NATO, is "a young, modern thinker" who has worked to defuse Russian fears that the U.S. wants to woo away Russia's oldest allies. With that geopolitical tug of war in the past, Putin is free to reach out to the West as he did in the early days of his presidency, when Russia backed Bush's war on Afghanistan.

At its most basic, Putin's attempt to repair relations with the West reflects the fact that Russia badly needs foreign cash. Russia's Putin-era boom was founded on oil money, sure. But most Russian companies actually grew on cheap capital borrowed from the West to the tune of $450 billion. That has now dried up. Earlier this year Russia's Ministry of Economic Development calculated that between now and 2013 Russia will require about $1 trillion in order to implement ambitious plans to restore crumbling Soviet infrastructure such as railways, schools, and hospitals—and the budget can cover no more than a third of that sum. A $150 billion stabilization fund set up during the fat years will be gone by the end of 2011. The bottom line is that the Kremlin has run the numbers and realized that Russia can't modernize—or even survive—without foreign investment, and lots of it. "The crisis has shown that Russia will not be able to develop independently—it is necessary to cozy up to someone," says one senior Foreign Ministry source.

So Putin's new friendliness is driven by Russia's own needs. The oil-fired swagger that propelled Putin's most aggressive moods back in 2008—when the price of oil hit $146 a barrel, double today's levels, and the Kremlin was inundated with windfall cash—is now over. "The economic crisis has eliminated the hubris that marked the end of the Putin presidency," says Dmitri Trenin of the Moscow Carnegie Center. "If you accept that unless you modernize, you are marginalized, and if you accept that you can't modernize on your own … then your foreign policy is quite clear. You need to reach out to developed countries that can become resources for your modernization." Putin certainly appears to have taken the modernization message on board, devoting much of his time to drumming up foreign investment and talking up Russia's new "innovation city" at Skolkovo near Moscow. Or, as Duma Deputy Sergei Markov, a close member of Putin's team for more than a decade, puts it, "Nothing has changed in Putin—he was always extremely Westernized," at least compared with more-nationalist siloviki. What is different is that the U.S. no longer "treats Russia like a fool," says Markov, adding that "90 percent of Putin's démarche to the West is because Russia cannot modernize without Western specialists and technologies." The other 10 percent is driven by the fact that "Putin needs the West to fight the threat of radical Islam that Russia is facing" both inside its own borders in the form of ongoing insurgencies in the North Caucasus and Islamist radicals in Central Asia.

The results of this rethinking have been dramatic. According to a draft of Russia's new doctrine recently leaked to NEWSWEEK RUSSIA, the basis of Russia's foreign policy is going to be the creation of a world where there are no friends or enemies, only interests. In place of confrontation with Georgia and talk of threats from NATO and from U.S. missile-defense plans is a new emphasis on "integrating Russia's economy and culture" with neighbors like the EU and China. The symbolism of the new spirit was clearest on Red Square during the May 9 Victory Day celebrations, when, for the first time ever, troops from the U.S., U.K., France, and Poland marched alongside Russian soldiers and Russian nuclear missiles. Just days before, NATO's secretary-general, Anders Fogh Rasmussen, offered to consult with Russia on its latest plans for missile defense in Europe. Earlier this year Russia also signed a long-awaited START treaty on strategic arms with the U.S. There's even talk of the U.S. pushing Russian entry into the World Trade Organization (WTO), a carrot the West has been dangling in front of Russia since 1993. "I could not have dreamed about such a thaw when I arrived in Brussels," says Rogozin, an abrasive former nationalist politician who was sent as Russia's ambassador to NATO two years ago. Rogozin once called the alliance a "blinded rhino." Now Rogozin says that "a window of opportunity has opened up for us … We are making an effort to clean up all the garbage which lies in the path" of better relations.

Some of this peace dividend has been helped by fortune. Commodities prices have held much higher than doomsayers predicted in the wake of the 2008 financial collapse. That, along with Russia's now-dwindling oil stabilization fund, has been crucial in helping Putin keep control of the country by throwing money at pockets of industrial unrest. Pro-Western politicians in Ukraine squabbled so much that they left the way open for the pro-Moscow man, Viktor Yanukovych, to win power. A dramatic improvement in relations with Poland came after Polish President Lech Kaczynski's death in a plane crash en route to a joint Polish-Russian commemoration of the Katyn massacre. Not only did Russia move fast to investigate the crash, but Putin also bluntly admitted that the Katyn victims had been "burnt in the fire of the Stalinist repression." Katyn has always been a key barometer of Russia's willingness to deal honestly the world; Mikhail Gorbachev's 1990 admission that the massacre was committed by the Soviets, not the Nazis, helped inspire many voices in Eastern Europe to begin telling the truth about the Soviet era.

But much more of the new thaw has come about by design. Both Putin and President Dmitry Medvedev have been devoting much of their energies to acting as high-profile trade reps for Russia. Already the list of joint EU-Russian projects in the pipeline is impressively long: with Germany alone, Putin has signed deals for Russian participation in the design and production of the new Airbus A350, a deal with Deutsche Bahn and Siemens to develop high-speed railways, and a project to open factories to assemble Volkswagens, Daimlers, and BMWs in Russia—not to mention the actual Nord Stream gas pipeline under the Baltic Sea. Earlier this month Medvedev visited Denmark and Norway to drum up Scandinavian investment. He also signed accords on sharing the resources of the Barents Sea, joint projects on Arctic shipbuilding, energy conservation, nanotechnologies, and communications—and he also agreed to end a long-running border dispute with Norway. Russia, according to Medvedev, "must stop frowning at the world and start smiling."

Unhappily for Russia's reformers, the new thaw doesn't extend to home territory. Though Medvedev is making liberal noises about granting more space to opposition parties, the Kremlin is cracking down hard on actual opposition parties, accusing one of "terrorism," and pushing a law that would give the Federal Security Service the power to take people into custody without trial. The Kremlin is scared of real reform because it runs "a corrupt system that will be destroyed by liberalization," says former deputy prime minister Boris Nemtsov, now an opposition leader. Yet no government in the West wants to jeopardize the thaw by criticizing the Kremlin on human-rights abuses. "The Kremlin is enjoying the absence of criticism from the West," says Masha Lipman of the Moscow Carnegie Center. "Meanwhile, Russian internal politics stay just as authoritarian as ever—worse, even."

Russian democracy may remain frozen in deepest ice, but Putin's journey from an anti-U.S. firebrand to a friendly sales rep for Russian business is as welcome as it is remarkable. One key test of the thaw will be WTO membership, one of the ongoing obstacles to Western investment and trade in Russia. Last June Putin surprised the world by pulling out of WTO talks and floating the idea of a customs union with Belarus and Kazakhstan. That union is now floundering, and Russia is due to resume negotiations with the WTO in June after a summit with the EU and a planned meeting between Obama and Medvedev. Another bellwether is the possible revival of a deal with the U.S. on commercial nuclear trade, scrapped in August 2008 in the aftermath of Russia's war with Georgia, which would allow Russia to reprocess American nuclear fuel and pursue joint nuclear-research projects. These are good deals for the West, because they make a return of Putin's old aggressiveness less likely.

With Konstantin Gaaze and Mikhail Zygar in Moscow