EurasiaNet Eurasia Insight - Russia: Economic Crash Could Fuel Aggressive Behavior by the Kremlin

EURASIA INSIGHT

RUSSIA: ECONOMIC CRASH COULD FUEL AGGRESSIVE BEHAVIOR BY THE KREMLIN
12/18/08
A EurasiaNet Commentary by Stephen Blank

In late August, immediately following the Russian army’s blitz on Georgia, Russian President Dmitry Medvedev proclaimed that Moscow had "privileged interests" in countries "with which we share special historical relations." The vague terminology of Medvedev’s pronouncement indicated that the Kremlin wanted to establish a sphere of influence that extended beyond the traditional boundaries of the Commonwealth of Independent States.

These days, it’s doubtful that the Kremlin has the money to back up its bluster. But the lack of means might actually make Russia more inclined to make geopolitical mischief than back when state coffers were brimming over.

In recent months, the Russian economy has tanked like no other. The Central Bank is hemorrhaging foreign currency reserves at an alarming rate, industrial production is crashing and officials announced on December 16 the second devaluation of the ruble inside a week. In addition, Russia’s all-important energy industry is feeling severely squeezed by the rapid decline of energy prices. [For background see the Eurasia Insight archive].

It should be noted that even before the global economic crisis torpedoed the Russian economy, Russia lacked the influence to enforce its geopolitical will. This fact was quite visibly demonstrated during the Shanghai Cooperation Organization summit in late August. [For background see the Eurasia Insight archive]. SCO members flat out refused to ratify the dismemberment of Georgia, and effectively rejected the notion that Russia enjoyed a right to intervene in other states where "Russian" citizens lived in order to defend their interests. Given this rejection, Medvedev’s sphere-of-influence pronouncement could be interpreted as a reflection of Russia’s lack of trusted friends.

But the Western allies should take little comfort from the fact that Russia doesn’t have outside support for its aggressive behavior. Moscow has repeatedly demonstrated that it is quite capable on its own of making trouble - whether it is violating its own ceasefire agreement in Georgia, or making nuclear threats to Central European states.

Such actions are hallmarks of a regime out of control. It is clear that Prime Minister Vladimir Putin’s political machine, having grown accustomed to unquestioned obedience at home, wanted Moscow to be able to operate without any constraints in what it considered to be its "near-abroad." What the Kremlin didn’t realize was that the hubris that accompanied the successful invasion of Georgia clouded sound judgment. To quote a Georgian who was once master of the Kremlin: Putin became "dizzy with success."

The costs of Moscow’s over-ambition were mounting even before the economic crisis started draining the treasury. How Russia will climb out of its fiscal hole is anybody’s guess, especially if energy prices remain at current levels, or decline further. Urals crude is now trading at $44 per barrel, while the government’s budget projections were based on a $70 barrel of oil. Meanwhile, the debt ratings agency Standard & Poor’s has lowered Russia’s rating for the first time in a decade, and double digit inflation is fast putting many Russian families in a bind. Indeed, Putin’s legacy as the great builder of Russian prosperity is rapidly coming unraveled.

Hardship may not chasten Putin’s Kremlin, however. As Russia’s crisis widens, the Kremlin may be increasingly tempted to prove its worth by indulging in a new form of Great Power-wannabe bullying. One of the less noticed lessons of the August war was that it yet again exhibited the arbitrary nature of Russia’s decision-making apparatus, and how the dependence on an authoritarian leadership structure encourages aggressive action.

Since Medvedev is on record as saying Russia neither fears a Cold War, nor a rupture in ties with NATO, it is not clear whether the Kremlin can dispassionately evaluate the risks it might face in any future crisis. For this reason, the Kremlin’s sphere-of-influence attitude raises the likelihood of a future crisis in its neighborhood. Russia’s economic difficulties are bound to call into question its regional leadership status. No doubt Russia will be tempted to crack the whip in the CIS to show that it remains the regional boss.

Editor's Note: Stephen Blank is a professor at the US Army War College. The views expressed this article do not in any way represent the views of the US Army, Defense Department or the US Government.

The Central Eurasia Project aims, through its website, meetings, papers, and grants, to foster a more informed debate about the social, political and economic developments of the Caucasus and Central Asia. It is a program of the Open Society Institute-New York. The Open Society Institute-New York is a private operating and grantmaking foundation that promotes the development of open societies around the world by supporting educational, social, and legal reform, and by encouraging alternative approaches to complex and controversial issues.

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