Russia in the International System

Conference Report
1 June 2001

The views expressed in this conference summary are those of individuals and do not represent official US intelligence or policy positions. The NIC routinely sponsors such unclassified conferences with outside experts to gain knowledge and insight to sharpen the level of debate on critical issues.

CR 2001-02
All photographs were provided by NIMA Ground Photography.

Contents

Introduction

Executive Summary

Panel I - Russia's Evolution

Panel II - Russia's Foreign and Security Policy

Luncheon Roundtable: Impressions from Russia's Regions

Panel III - Russia Viewed From the Outside

Panel IV - Russia Viewed From the Outside (Continued.)

Panel V - Russia in the Global Context

Panel VI - Concluding Session: Highlights and Implications
for the United States

This conference report consists of the précis of each speaker's on-the-record presentation, which were provided by the speakers, and a summary of the ensuing not-for-attribution discussions. The report is intended to capture the salient points and original arguments of the proceedings. During the panel discussions, no attempt was made to ascertain the general view of the panel or audience. Many of the points highlighted in this report were noted because they were thought-provoking or outside the conventional wisdom. They illustrate the richness of the discussion, but they do not necessarily reflect accepted or prevailing views at the conference.

Russia's Foreign Policy
Russian foreign policy in the coming years will be characterized by weakness; frustration--primarily with the United States as the world's preeminent power--over Russia's diminished status; generally cautious international behavior; and a drive to resubjugate, though not reintegrate, the other former Soviet states.

The international situation affords Russia time to concentrate on domestic reforms because, for the first time in its history, it does not face significant external threats. But rather than use the breathing space for domestic reforms, Putin is as much--if not more--focused on restoring Russia's self-defined rightful role abroad and seeking to mold the CIS into a counterweight to NATO and the European Union.

The Outside World's Views of Russia
Russia does not have any genuine allies. Some countries are interested in good relations with Russia, but only as a means to another end. For example, China sees Russia as a counterweight to the United States but values more highly its ties with the United States. Some countries see Russia as a vital arms supplier but resent Russia also selling arms to their rivals (China-India, Iran-Iraq). Pro-Russia business lobbies exist in Germany, Italy, Turkey, and Israel (one-fifth of whose population now consists of Soviet émigres), but they do not single-handedly determine national policies.

Europe is the only region that would like to integrate Russia into a security system, but it is divided over national priorities and institutional arrangements as well as put off by some Russian behavior.

Most CIS governments do not trust their colossal neighbor, which continues to show an unsettling readiness to intervene in their internal affairs, though they know Russia well and are to a considerable degree comfortable in dealing with it.

Turkey has developed an improved dialogue and an unprecedented number of economic ties with Russia during the post-Cold War period, but this more positive pattern of relations has not fully taken root, and Ankara remains suspicious of Moscow's intentions.

Since the collapse of the Soviet Union, Moscow's role in the Middle East has been reduced, but Israel, Syria, Egypt, Libya, and Iraq all favor good relations with Russia. Mutual interests also override disagreements in Russian-Iranian relations, but Tehran is wary of Russian behavior, particularly toward Saddam Hussein.

India still trusts Russia--a sentiment that is perhaps a residue of the genuine friendship of Cold War days--but clearly not in the same way it once did, and New Delhi fears that weakness will propel Russia into doing things that could drive India further away.

In East Asia, the most substantial breakthrough has been the resurrected relationship between Russia and China, one that entails significant longer-term risk for Russia. Other countries in the region value their links with Moscow as a means to balance a more powerful China, or as a useful component of their larger political and economic strategies, but Russia's role in East Asia--as elsewhere--remains constrained by the decline in its political, military, and economic power over the last decade.

Russia's Weakness
Russia's weakness stems from long-term secular trends and from its domestic structure. In essence, the old nomenklatura and a few newcomers have transformed power into property on the basis of personal networks and created an equilibrium resting on insider dealings. These insiders may jockey for position but have a vested interest in preserving the system. The public does not like the system but is resigned to it and gives priority to the preservation of order. As for the economy, it is divided into a profitable, internationally integrated sector run by oligarchs and a much larger, insulated, low-productivity, old-style paternalistic sector that locks Russia into low growth.

No solace will be forthcoming from the international business and energy worlds. They do not expect the poor commercial climate to improve greatly and will not increase investments much beyond current levels until it does.

Militarily, Russia will also remain weak. Its nuclear arsenal is of little utility, and Moscow has neither the will nor the means to reform and strengthen its conventional forces.

Hope for the Future?
The best hope for change in Russia lies with the younger generation. Several participants reported that under-25 Russians have much more in common with their US counterparts, including use of the Internet, than with older Soviet generations. But there was some question over whether the new generation would change the system or adapt to it.

Others placed some hope in international institutions, for instance the World Trade Organization, eventually forcing Russia to adapt to the modern world.

Dissenting Views
Some participants dissented from the overall forecast of depressing continuity.

The keynote speaker, James Billington, stated that Russia would not be forever weak and that the current confusion would end in a few years either through the adoption of authoritarian nationalism or federated democracy.

One scholar felt the Chechen war was feeding ethnic discord in other areas of the Federation to which Moscow would respond with increased authoritarianism, not necessarily successfully.

Finally, a historian observed that the patience of Russians is legendary but not infinite, meaning that we should not be overly deterministic.

The comparison of post-Soviet Russia with Weimar Germany is often made, and there are good reasons for it. But there are two overriding reasons why, overall, it fails to convince:

In Germany, national feeling long preceded the formation of a German state; Germany was a country of super-saturated national identity with positive attitudes toward the state. In Russia, on the contrary, the state long preceded the nation--if a nation can be said to exist, even now. As a result, most Russians distrust their state, or at least identify weakly with it.

Most Russians are not interested in joining political parties. They do not feel that their problems are best solved through the organization or program of a party, let alone through paramilitary squads such as those that disfigured the late years of Weimar Germany.

For historical reasons, Russia has built up its state system not through institutions and laws, but through persons. Owing to its over-stretched and vulnerable geopolitical position, from the sixteenth century onwards Russia's rulers have had to improvise the mobilization of resources in situations of emergency, and they have done so by using whatever means lay at hand, usually the power of local strongmen, rather than through institutions and laws. This is what I call the statization of personal power.

In tsarist Russia, the networks of personal power ran from the court outwards through landed nobles, provincial governors and police chiefs; in Soviet Russia, the networks ran through the nomenklatura appointments system controlled by local party committees and were directed from the top by the Central Committee of the Communist Party. At each level of political and professional life every employee depended greatly on the personal power and patronage of his superior or employer, not just for pay and conditions of work, but also for housing, food supplies, education, medical care and other basic facilities necessary to everyday life. The Soviet Union was not, as planned, an egalitarian society of abundance, but rather an unequal and shortage-ridden society whose hierarchy was determined by the devices needed to get around the shortages.

The political history of the Soviet Union is the story of the attempts of its various rulers to combat the excesses of the nomenklatura system that they themselves had created. As a result, certain restraints did operate: the NKVD, Gosplan, the party hierarchy itself. Under Gorbachev and Yeltsin, however, those restraints were finally removed. Nomenklatura appointees, especially those at the mid- and lower levels, were able to use their position to turn administrative control into personal possession and to exploit the resources of Soviet society to make considerable personal fortunes. In the process, they allied themselves with operatives from the old underground extra-legal "black" economy, an alliance which helps to explain the widespread criminality that characterizes the post-Soviet economy.

So the contours of post-Soviet society are, literally, post-Soviet. The economy is grouped around large corporate conglomerates, led by individual "oligarchs," who typically have a stake in industry, commerce, finance, and the media. The political system revolves around loose and fluctuating coalitions of activists, each led by an individual, rather than around political parties. In the provinces, the elected governor becomes his own oligarch in both the economy and politics. Society is fragmented and poorly organized to respond to or resist initiatives coming from above.

This political and economic system has now become rather stable, and it may be time to talk of the end of the "transition." Russia has a democracy and a market economy of sorts, even if we in the West do not approve of many of its features.

If that were all there was to say, then one would have to be pessimistic about the future. But there is another side to developments in Russia. That is that Russia is becoming a nation, which it has never been before. Wholly contrary to the intentions of its leaders, the Soviet Union did a great deal to advance the cause of the national consciousness of its constituent peoples, both Russian and non-Russian.

Its education system gave the great majority of the population the elements of literacy in their own
language, subordinated to an overall Russian concept of culture, history and social evolution.

The social security system gave the population the sense of having certain entitlements which they had never had before--to education, health, housing, pensions, and so on. Even if the expectations were only imperfectly fulfilled, nevertheless a kind of passive citizenship was thereby established.

Victory in the Second World War gave many of the nationalities, and above all the Russians, a sense of their own historical destiny.

However, the sense of nationhood thereby generated is still incomplete. Few Russians regard the present Russian Federation as constituting what they understand as Russia, and some of the gains of the Soviet period in education and social security have been jeopardized.

Nevertheless, there is now for the first time a state called Russia--not the Russian Empire or USSR--with its own boundaries, its own flag and its own national anthem.

Russia's leaders and politicians are now democratically elected, even if doubts remain about the full legitimacy and fairness of the elections.

A lively mass media exists, even though it is increasingly under pressure from the oligarchs who own it and from the state, which regards information as part of national security.

Putin would like to strengthen this new Russian state and give it a firmer identity, but the methods he has chosen are contradictory, as will come out later in this conference.

There are dangers in the growth of Russian national feeling. In the past it has tended to be imperialist rather than national. However, I believe there are good reasons for believing this is not necessarily the case right now.

The Economic Transition
Pekka Sutela
Institute for Economies in Transition, Bank of Finland

It was always known that Russia's economic transformation would be more arduous than that of countries outside the former USSR. Historical, mental, geographical and economic "distance" from a market economy was longer. Contrary to other countries, socialism was endogenous: it had been established, developed and defended by the Russians themselves. What is more, in many respects the Soviet Union was the proudest achievement of Russia. Its geographical expansion, military might and global position were stronger than ever before. Even more importantly, contrary to the Central European countries, there was no widely shared understanding of the systemic goal to be adopted.

For the Central Europeans, the overarching goal of "returning to Europe" meant joining the European Union, NATO, the OECD and the rest of the Euro-Atlantic alphabet soup as soon as possible. Joining these clubs with their sometimes hugely detailed membership requirements--the EU Acquis run to some hundred thousand pages--sets a strict conditionality upon the institution-building and policies of the applicant countries. This conditionality may not be the best imaginable, but it has a degree of consistency and proven applicability in other countries. Therefore, though governments and other decisionmakers have changed, the Central European countries have had a high degree of policy consistency, which may have made the most important single contribution to their unexpectedly positive economic and social progress.

Such conditionality was not available to Russia and the rest of the USSR. The European nations have--perhaps unwisely, at least after the status of Turkey as a potential member has been reasserted--denied Russia the prospect of eventual EU membership, usually giving the size of Russia as the reason. By doing this, the incentives of the only unifying goal that Russia might have had were abolished. Most Russians, on the other hand, have been keen to emphasize that Russia has never been and never will be a "normal European country." But like earlier in history, they have been unable to provide the nation with any other consistent and well-defined goal. And like the Cheshire Cat taught Alice in Wonderland, if one does not know where to go, any road will take one there. The conditionality of the international financial institutions has been almost the only one available. Even under the best of circumstances, it will be narrow and technical. In Russia's case, the circumstances were not the best ones, as the IFI's have been under much unfortunate political pressure to use money.

This is probably the single most important explanation for the divergence of Russia's economic performance from that of the Central European countries. The lack of a well-defined and widely accepted goal has tended to shorten decisionmaking horizons and has facilitated the frequent capture of policies by established interests. On one hand, the state has been weak in the sense of lacking a strategy and being unable to act in a consistent way. On the other, it has remained the major route toward power and privilege, disposing of even the seemingly most entrenched persons and groups when their services are no longer needed. Still, Russia has not chosen "any road." The return to the previous regime was never an alternative seriously supported by a major political force. Russia was always in a transition to something new, but it remained unclear what this "something new" would be. Also, the Russian elites have been able to learn from their mistakes. It was possible to argue in the early 1990ís that large budget deficits and high inflation were a means to provide jobs and welfare. Such arguments have lost all credibility. This was shown by the chasm between the rhetoric and actual policies of the Primakov-Maslyukov government. The set of possible policies has shrunk over time. Most talk of some specific Eurasian system has died away. There is a wide consensus on basic macroeconomic policies, but a clear-cut model of institutions and legislation is still missing.

Clearly, this is not a situation where piecemeal social engineering should be attempted. But quite as clearly, arguments about the weakness of the Russian state have been used to justify the lack of consistency and comprehensiveness. This still remains the case. The attempt to combine economic market orientation and political authoritarianism, together with the actual weakness of the presidency hidden behind rhetoric and symbolism, produce hesitancy, a lack of decisions, and a tendency to balance conflicting interests. Equaling the restoration of Russia's might with an unchallenged prestige of the president adds the dimension of attempted "verticalization" of the society, with little room left for an independent society and media. In the economic sphere, the outcome is an almost complete lack of meaningful structural reform.

Russia has become a market economy, but a market economy that is unique in many respects.

The Russian large-scale privatization was based on two explicit considerations. First, it was (probably wrongly, given that a return to the past was not an alternative) asserted that there was a need to secure irreversibility by creating a wide class of property owners. Second, there was need for political compromise with the Duma. These considerations combined to produce Option Two of the privatization program, in fact making wide insider ownership inevitable. As some two-thirds of Russian industry was privatized, in about two-thirds of the cases about two-thirds of the stock ended up being owned by insiders--that is, managers and employees. The dilution of insider ownership has since been much less than expected by the optimists, and in many cases the presumed outsiders are acting for the managers.

Most Russian enterprises are manager-dominated, with employees still an important though usually silent group of owners. Managers often claim to speak for the "work collective" and take a very cautious view of outside investors or even bank credit, as those are deemed to limit their power. Investment, structural change and growth suffer. Economic theory suggests that an insider-dominated economy fails to reach the dynamism connected with more usual distributions of property rights.

Insider privatization partly explains the low degree of monetization of the economy. Meager financial intermediation and the relative lack of financial institutions--including proper banks--are also due to a history of high and variable inflation and the policy mistakes leading to the financial crisis of 1998. Though the role of money as a means of exchange strengthened much in 1999-2000, about a fifth of industrial production is still based on barter, and there is little evidence of financial deepening. Modern growth theory argues that financial depth is a major contributor to growth and welfare. Financial sector reform seems to have little priority in Russian policymaking. Real investment grew strongly in 2000 from a low level, but as most of it is financed from retained earnings, the investment pattern tends to strengthen the inherited structure of production. New enterprises, in particular, remain constrained by the availability of finance.

The relative lack of new private activities separates Russia (and other states of the former Soviet Union) from the Central European countries. The number of legally registered enterprises has not grown for several years; nor is there evidence of an ever-growing share of the second economy. New activities are not only hindered by the lack of finance, but also by the neglect or hostility of local authorities. On the average, Russian regions are small entities, often dominated by a single plant or a few large plants, usually in alliance with the authorities. Quite often, such powers see new entrepreneurs either as a milking cow or as an alien element to be suppressed. If Putin's campaign to cut the regional barons down to size indeed brings about a more unified economic space with a more level playing field for entrepreneurs, it should be welcomed on economic grounds. So far, Russian regionalization has tended more to worsen economic behavior than to make room for local initiative.

The border between legal and not legal has remained fuzzy. This is another defining feature of Russia's economic environment. Putin's regime promises political stability and greater clarity of rules across the country. There are also the well-known cases of political misuse of the legal system. The poor performance of Russia's capital markets shows that the investors do not trust Putin to deliver a working combination of political authoritarianism and economic liberalism.

GDP growth since 1999 has been fueled by a stiff undervaluation of the ruble, responsible macroeconomic policies, the adaptation of many enterprises, and by high commodity prices that have not been fully reflected in domestic markets, thus generating a huge implicit subsidy to domestic users. Following a tremendous export surplus, the economy has been partly monetized, fiscal revenue has ballooned and the greatly improved enterprise profitability has translated into investment, settling of arrears and higher wages and consumption. Net exports are bound to diminish, but still the economy should be able to grow for a year or two more. After that, growth depends much more on necessary structural reform. This need is generally recognized, but in 2000 only tax reform had some success.

In spite of the currency undervaluation, Russia has no new export commodities. Most growth has been in import substitution. Only traditional Soviet goods are exported. This suggests the probability of a traditional dual economy in Russia. Most export revenue would be earned by selling resources and other basic commodities abroad, primarily to the European markets. Most employment would be generated by home market industries producing low quality commodities for poor consumers. Such an economy would be sustained either by currency undervaluation or other restrictions of trade. The lack of market-based policy instruments makes the latter alternative more probable.

These peculiarities of the Russian market economy may well be systemic and not just the unfortunate consequences of the macroeconomic circumstances of 1985-1998. They do seem to characterize an economic system of some consistency and, therefore, staying power, but one that is badly suited for efficiency, equity, growth and welfare. If so, Russia would tend to remain what it is today: an economy the size of a smallish European nation; a factor in the global economy much weaker than, say, Sweden; and a country of large welfare gaps and little dynamism. It would sustain itself by exporting basic commodities and by subsisting on goods and jobs created by protected home market industries. The outward capital flow might well continue to dwarf the inward flow, as is the case now. There would be links between domestic and world financial systems, also some necessary inward productive investment, but as a whole Russia's economic marginalization would continue. Only the most optimistic spokesperson of globalization would argue that this is an impossible outcome. A nation can still step aside from the great change underway.

This is an outcome that the Russian authorities fear. Economic marginalization cannot support great power ambitions. Vladimir Putin has been very explicit on this, but the track record of 2000 tells of an inability to make and implement the needed reforms. The Russian economy may in a sense be less virtual than a couple of years ago, but Russian economic policies remain very much so. The Putin regime had in 2000 a great chance to create the foundations of Russia's future growth. After 2001, that chance may not come again.

The final downside of Russia's economic transition is the inability to address the underlying trends that have been there for so long. The list of these ills is all too long and well-known. Current forecasts for medium-term growth are coming down to three percent annually. If at best the economy will grow quite modestly, the struggle over the meager additions to available resources will to a great extent determine Russian politics in the coming years and decades. As the increase available will in any case be insufficient to cover all urgent needs and there is little reason to expect highly rational decisionmaking and implementation, the probability of ruptures, disconnects and fissures increases alarmingly. The international community has already learned that the possibilities of making a crucial difference in Russia's development do not exist. If the arguments outlined above have any value, then the question will increasingly become one of damage control and limitation.

Ethnic Nationalism and Russia's Republics
Graphic

Even in a strictly military sense, there is little probability of a victory for Moscow in Chechnya, and there is even less probability of an economic victory there. The history of colonial wars in the 20th century shows that when a war drags on for a long time the intervening party will not win for the following reasons:

The army cannot be located for long--more than
5-7 years--in a hostile occupied territory before it will begin to become demoralized.

As the war drags on, a larger part of the home country population becomes dissatisfied with it.

The economic burdens of the war increase.

Perhaps most importantly, the rebels stop being afraid of an army that for a long time has failed to achieve victory--in this case encouraging not only the Chechens but other nationalities. The loss of the army's ability to induce fear could be a factor in accelerating the breakup of Russia.

The changing ethnic composition of the population is the biggest challenge facing Russia. In almost all of the republics of the North Caucasus, Russians are already in the minority. In the Far East and in Siberia, Russians are in the minority only in Tuva, but they will soon become the minority in Buryatiya and Yakutiya. According to some projections, within 10-15 years, there will be about 10 million Chinese living in Siberia and Russia's Far East. This would make them the predominant nationality in this--the largest--area of the federation. But the main danger lies in the Povolzh regions, where Russians already are in the minority in Chuvashiya and soon will be in the minority in Tatarstan and Bashkortostan. The Tartars and Bashkirs increasingly speak of uniting to create one federation. If they were to form such a federation--in the very middle of the country--Russia could split into two poorly connected pieces.

The threat of the disintegration of the country could lead the Russian government to adopt one of two fundamentally different political doctrines. The first is consolidation based on a multicultural society. Unfortunately, I can say that the idea of a multicultural society is absolutely foreign to the present Russian authorities. For this reason, the government probably will use the second doctrine--consolidation based on the growth of Russian nationalism. The last gubernatorial elections left no doubt that the Kremlin is exploiting Russian nostalgia for the Soviet Union and nationalist sentiments in hopes of receiving support in the regions from former Soviet officials and generals.

Current trends in the development of Russia's economy--in particular, the protection of national industry, overdependence on oil and gas, and the arms trade--will also lead to the strengthening of nationalism and imperialist sentiments. These trends, especially in the arms trade and arms production, increase the role of social groups that are the main carriers of the Soviet imperialist mentality and foster a confrontational attitude toward the West. These sources of economic development are unstable, and Moscow may be tempted to explain away a worsening of the economic situation as interference by external enemies, thereby inflaming Russian nationalism to support the consolidation of society.

This is the current situation in Russia: xenophobia, suspicion toward the West, and imperialist sentiments are growing. Therefore, for nationalist consolidation there needs to be an image of an external enemy--"worldwide Islamic terrorism" or "world imperialism."

If nationalism and imperialist militarism become firmly established in Russia, it could be catastrophic for the country. Moreover, past examples of doomed regimes suggest that such a Russia could present a serious threat to the surrounding states.

Russian Society: The View From Below
Vladimir Shlapentokh
Michigan State University

Before the collapse of the USSR, there was a consensus among Soviet sociologists about the opinions of the masses. Over the last decade, the situation has changed significantly. Today, there is a broad range of views among Russian politicians and intellectuals about public attitudes. These images are determined to a great extent by two questions. First, in view of the success of democratic reforms in the Baltic states, who is to blame for Russia's failure to build a new democratic society--the masses, or the ruling elite? Second, considering the character of these actors, what are the prospects for Russian democracy and liberal capitalism in the future?

There are at least three very different models for describing the Russian masses. Each is based on at least some empirical data.

The first--the "eclectic model"--suggests that post-Soviet Russians have an extremely eclectic mind, bordering on schizophrenia. Its most eloquent advocate is Boris Grushin, a famous Russian sociologist. According to various polls, it is true that the Russians maintain opinions that seem, to some degree, contradictory. They reject the Western model of life, but do not want to lose their political and economic freedoms. They accept the idea of having a market economy, yet they favor regulations on prices and upper income levels. They see America as an enemy, but they "like" Americans. They look to the Communist past as a Golden Age, but do not advocate its return. No more than 25 percent of the population votes for the Communists. Almost all Russians despise Yeltsin, yet they support Putin, who was Yeltsin's chosen successor. Furthermore, while they approve of Putin's first year in power, they complain about the rise in prices and the persistent problems of crime and corruption.

The second model--the "uncivilized model"--was developed by Lev Gudkov, a sociologist from the All Russian Center of Public Opinion Studies (VTsIOM) polling firm. This model describes the Russians as uncivilized people who are unable to live under democracy and whose opinions have no value for those who are trying to build a normal society. The masses are said to be lazy drunkards and thieves, who refuse to work hard and honestly but constantly complain about their salaries. They are seen as passive individuals, weary of change, unaccustomed to lofty motives, and prone only to deviant and deeply individualistic actions. Their vision of themselves borders on fantasy. They believe, for instance, that sobornost (collectivism) plays a central role in the life of the people. They suppose, without grounds, that the Russian people are highly spiritual, hospitable, and ready to make sacrifices for others.

Most of the data used to support these two models cannot be disputed, but the interpretation of this information is problematic. A third model is needed to better describe Russian public opinion. Labeling it the "rational model," I suggest that in general the behavior of the masses has been rational in view of the given historical context.

There is no doubt that Russians live in troubled times. Their country is faced with a deeply corrupt and immoral ruling class, to an extent unprecedented in its history. All levels of the bureaucracy--from the Kremlin to the local police--regularly ignore the law. The economy is said to be a free market, when in fact it is dictated by monopolists and criminal structures. The political system allows the Kremlin to prearrange, or even fake, the results of elections. It also allows local authorities to wield arbitrary power. What is more, considering the historical memory of most Russians, they are not prepared to counteract these forces. They see major political protests, such as riots and revolutions, as acts that will only make matters worse.

Under these conditions, the hierarchy of values in the Russian mind looks quite rational. It is only normal for people to value, first and foremost, order in society (in the Hobbesian sense). It is no less rational to sacrifice democracy for this end, especially when the country faces chaos and disintegration (at the same time, most Russians want both order and freedom). According to a VTsIOM survey conducted in 2000, the vast majority of Russians--80 percent--were ready to make such a sacrifice. The yearning for order explains why the people support Putin, even though he is the heir of despised former President Yeltsin. Russians are more concerned about a smooth transition of power and the avoidance of crisis than the leadership's adherence to democratic procedures. This is also why Putin has become known as the "Teflon" president. Any weakening of his authority generates political instability and heightened fear in society, which prompt the reinforcement of his power.

Russians understand that life under the Communist regime was better for most of them, but they realize that a return to the old system is impossible and that any attempt to do so would make life much worse. What is more, they appreciate and are fearful of losing the freedoms that came when the old system collapsed. In the same way, the Russians bemoan the collapse of the Soviet empire, but believe that it belongs only to the past and are against any attempt to use force to control Ukraine and other republics.

Russian attitudes toward the present economic system are quite rational. The majority of the people subscribe to the social-democratic ideals that hold sway in Western Europe and, to some extent, in the United States. They want both economic freedoms and state intervention. They favor a moderate level of inequality as long as there are social guarantees for those who are less successful.

At the same time, Russians would deem it utopian to believe that their society can develop along the same lines as the West. For this reason, they hope it is still possible to maintain some political and economic freedoms, combined with strong authoritarian power. They see this combination as "the Russian road to the future."

Of course, Russians are exposed to the official propaganda. As developments during the Yugoslavian crisis in March-April 1999 showed, anti-Americanism increased dramatically under the influence of this propaganda. However, a few months later the Russians returned to their semi-friendly, semi-hostile attitudes toward America, which are almost mirror reflections of American attitudes toward Russia.

There is no question that the process of desocialization--the rejection of social norms--is taking place in the country. Alcoholism is a growing problem, particularly in the countryside, as are drug abuse and the decline of morals. However, these problems are strongly exaggerated by the ruling elite, who try to shift the blame for their failures onto the masses. Putin is regarded by the people as a strong and reasonable leader, which sharply distinguishes him from the former president. Barring an economic or technological disaster, he should feel confident that the masses will remain eager to preserve order in society, and having no alternative (he and his retinue are sure to quash all competitors), they will support his reelection in 2004--this being the primary goal of the Putin regime.

Highlights From the Discussion

Stability
Putin is popular because of the perception that he has brought stability. This may be, however, a false sense of stability. Putin has been in power for only one year, and while he is enjoying widespread support at present, Yeltsin became a hated figure after three years in power.

The economic constraints and growing geopolitical threats to Russia may be indications of future instability. The conditions are ripe for the emergence of an authoritarian regime. Not even a dictator, however, can fix Russia's domestic situation, make Russia more attractive to foreign investors, and attract the massive investment needed for real economic growth.

Elites and Masses
The level of patience among the Russian people is extraordinarily high. In general, Russians do not protest. They understand the reality of their situation but fear that any action to ameliorate it could result in worsening it. To them, it is not worth the risk.

The masses do not have leaders, per se. They allow the elite to rule, even though the masses are aware of their corruption. At the same time, the masses are dependent upon the elites to keep what little order Russia currently has--they have no one else to turn to.

Economy
Progress toward a market economy in Russia seems to be at an impasse. The economy could improve if Russia were to attract massive foreign investment. Though it is difficult to imagine Russia accomplishing significant improvement to attract the necessary foreign investment, one can imagine a peaceful society. Living in the post-Cold War era has lent some air of stability--a peace dividend--to life in Russia. This may have a positive effect on the development of the economy and democratic institutions.

Russia missed the technological revolution, and, as such, has missed the opportunity to join the global economy. It has few finished goods to offer commercial markets, leaving only raw materials for export. Russia's natural resources and raw materials are currently the only incentive Russia can offer for foreign investment, but they may not be enough. Foreign investors are also looking for stability, rule of law, protection of property rights, and a predictable tax system--all of which Russia is lacking.

This panel examined the factors affecting Russia's foreign and security policy as well as the possible progression of Russian policy in the next three to five years and implications for the West.

Stephen Maddalena (Chairman)
Defense Intelligence Officer for Russia and Eurasia

Russia's Current Trajectory
James Sherr
Conflict Studies Research Centre, Royal Military Academy Sandhurst

If we seek to influence Russia's foreign policy trajectory, then changes in our thinking as well as our priorities are unavoidable. The collapse of the world system of socialism might have delegitimized geopolitical thinking in the West, but the scale of the process and the traumas engendered by it have relegitimized it in Russia. If the mnogogolosiye (multi-voicedness) of the Yeltsin era camouflaged this fact, it should now be apparent. The new leadership is acutely conscious of power relations, extremely conscious of Russian weakness, but determined to use Russian power where it exists and use it toughly.

In two other respects Putin is challenging patterns to which we have grown accustomed and comfortable. During the Gorbachev era and the first half of the Yeltsin era (when a Yeltsin policy was plainly discernible), Russia sought to create the international conditions necessary, in former Soviet Foreign Minister Shevardnadze's words, "to bring about change inside the country." Putin has reverted to a much older pattern established by Stalin and, with modifications, continued by Khrushchev. By means of change inside the country--by addressing internal weaknesses and restoring "the vertical of power"--Putin would restore Russia to its rightful position as a "great power." Internal change (not least of all Chechnya) is now "Russia's business." And our joint business, foreign policy, is not Putin's main priority.

The third discomfiting change is that the area of foreign policy that does have priority is the area closest to internal policy: relations with the "near abroad."

The "Near Abroad:" Antecedents and New Departures
The principle that Russia must be the leader of stability and security on the entire territory of the former USSR is not a new principle, and on more than one occasion it has been applied by means of force. Nevertheless, during the Yeltsin era, there was also a record of accommodation: to the emergence of normal state-to-state relations with neighbors (e.g., the May 1997 "Big Treaty" with Ukraine), to the right of these neighbors to draw closer to NATO (but not join it), and to the appropriateness (on a limited basis) of involving external powers and bodies in regional security arrangements (e.g., the US-Russia-Ukraine Trilateral Agreement, OSCE missions in Moldova, Armenia, etc).

The emergence of a tougher, more active and more aggressive Russian policy is directed not toward integration of Russia's neighbors, but rather their subordination in three areas that the Foreign Policy Concept deems essential to Russian interests: security and combating "extremism," "joint rational use of natural resources," and the "rights and interests of Russian citizens and fellow countrymen." The means to this end are as much transnational as interstate; they also include a more intense and focused active measures component. To Russian security elites, Western conduct virtually mandates such a course:

Kosovo. In military terms, Operation Allied Force is seen as a rehearsal for more ambitious exercises in "coercive diplomacy" and, in political terms, a
testing ground for using human rights as a flag of convenience for breaking up "problematic states." This perception has greatly sharpened the geopolitical stakes for Russia in the Caucasus and in Central Asia (where US sponsorship of the Taliban's precursors is never forgotten).

NATO enlargement. If not a military threat, the Alliance is viewed as a means of excluding Russia from Europe and delegitimizing its interests.

EU enlargement. Despite strong hopes for "strategic partnership," there is now recognition that the EU is not, in essence, a counterbalance to US dominance, but a mechanism of integration. The unspoken, but widespread, perception is that Russian integration with this entity is, at best, a distant prospect.

Set against these developments, the transformation of the CIS into a bloc and an internationally recognized Russian sphere of interest is seen not only as a defensive measure but as a precondition for giving Russia equality in the international system. Determination to exclude the OSCE "east of Vienna" suggests that there even might be areas outside the former USSR--Yugoslavia, Bulgaria, Romania--where the future is deemed open.

Policy Toward the "Far Abroad"
To a significant degree, the policy emerging toward the "far abroad" supports the "near abroad" priority. Russian strategic partnership with the European Union, which many Americans fear is intended to distance Europe from the United States, also has more compelling, eastern dimensions: developing lucrative but also geopolitically driven gas and pipeline projects, which in themselves consolidate influence in the CIS; and securing European allies in keeping the former USSR off limits to further NATO expansion. The Shanghai Forum directly engages China--a state as resolutely opposed as Russia to overriding state sovereignty "on the excuse of protecting...human rights"--as co-guarantor of a brittle and repressive status quo in Central Asia. In rattling the saber against the Taliban, the intended audience is probably wayward Uzbekistan rather than this putative enemy (with whom, to judge from Russian initiatives in Pakistan, Russia might be seeking a form of accommodation).

Yet even if we exclude the self-evident, there are other issues which have saliency in their own right. It is now clear (contrary to some speculation in early 2000) that promoting "multipolarity" remains a transcendental cause. But unlike issues closer to home, Russian policy lacks the focus and sureness of touch that Primakov imparted to it. Relations with NATO (a more accurate term than "cooperation") are not a high priority. The proposition that relations between Russia, a single state, and NATO, an alliance of 19 states, should be based upon equality would be difficult for NATO to accept even if, contrary to its own undertakings, it were willing to recognize Russia as leader of the CIS. Yet in the absence of such acceptance, Russia treats the 44-member Euro-Atlantic Partnership Council as a theater of diplomatic struggle. Russia has not allowed dialogue to extend beyond platitudes, it has not permitted participation to affect mindsets, and in drawing up and implementing agreements--e.g., reopening the NATO liaison office in Moscow--it has been determined to keep the devil in the details. Determined for their part to get the relationship back on track, many NATO representatives have been more concerned about having meetings attended, programs submitted, deadlines met, and boxes ticked than using the Permanent Joint Council (PJC) and other forums to address issues of genuine substance.

An issue of high saliency to the United States and United Kingdom--the growing menu of relationships, open and concealed, between Russia and Iran and Iraq--is an example of promoting multipolarity not only outside Europe but within it, bearing in mind French opposition to, and German and Italian ambivalence about, the Anglo-American approach. But it also makes a more generic point: that in the absence of countervailing costs, enterprises that weaken US positions, disrupt Western unity, and bring commercial reward to Russia will be seen by Moscow as intrinsically worth pursuing. An issue of growing anxiety, Russo-Chinese strategic partnership--founded on joint views about the UNSC and excluding the US from "zones of interest," as well as on a vigorous inventory of defense cooperation--remains constrained by issues endemic to the Russo-Chinese relationship: Russia's primordial distrust of China and China's determination not to be shackled by Russia in its relationship with the United States. And on the key issue, Russia-US relations, one may doubt whether Putin has a policy at all.

Russian policy since late 1999 poses opportunities and dangers. The opportunities arise because the new Russian leadership is fatigued and irritated by the pieties of "partnership," the mechanics of "cooperation," and the courtesies that in the PJC and other forums have made it difficult to raise and pursue specific issues of substance. The lesser danger arises because after a period of romanticism, Russia became a variable in Western policy rather than a focus of policy. The greater danger arises because nine years of Western platitudes have left Russians profoundly confused about the extent and limits of Western interests and about what the West wants from Russia. Both opportunity and danger are present in the possibility--whether the issue be Iraq or Ukraine--that the West will react early, toughly, and in ways that focus Russian minds. At that point, President Putin is bound to ask us, "What do you want?" Let us hope we have answers.

Moscow's Perceptions of the Outside World
Celeste Wallander
The Council on Foreign Relations

To address Russian perceptions of its external environment, I would like to begin by outlining Russia's main threat perceptions in connection with the international system. From there, I will outline how this perception will affect Moscow's actual foreign policy in the next few years and then close with an assessment of the implications for American policy.

The current Russian leadership perceives five types of threats to its interests that involve the outside world. Four of these are familiar from discussions throughout the 1990s: national economic and military weakness, American hegemony or unilateralism, exclusion from the most influential political and economic circles in the international system, and instability and regional conflicts around Russia's Eurasian borders. A fifth perceived threat has moved into the main rank only in the last year and was articulated with the government's Information Security Doctrine, signed by Putin in September 2000: information can destabilize Russia's social and political scene, undermine the government's policies, or reveal security secrets of the country.

The first three threats, though distinct, are closely related in assessing how the outside world is perceived in Russian foreign and security policy. Various official documents--including the National Security and Foreign Policy Concepts--state unambiguously that the primary threat to Russia's national interests is its internal economic situation, as well as the failure to undertake serious and responsible reform. Nonetheless, they also state clearly that opportunities to participate in international security, political, and economic forums in the international system affect whether Russia will be able to achieve its objectives for renewal and growth.

This is why, for example, Russian relations with China, India, and Iran are not merely about trading in arms-for-influence but about sustaining and modernizing its defense industry as a component of building the post-Soviet economy. International trade--even the arms trade--is an important engine for internal economic modernization and growth. Given the link between the economy, national power, and security, Russian access to the international system is a matter of security.

Therefore, the current Russian leadership views obstacles to access as at best indifference to Russian national interests and at worst a deliberate policy to undermine the country's efforts to establish a sound economy on the path to consolidating its power and place in the international system. So, for example, American pressure to limit sales to Iran is not merely about loss of a given sale but about undermining Russia's defense industries, military reform, modernization, and so on. Even Russia's emerging problems with the European Union, especially how enlargement will extend trade restrictions and visa regimes to Central and Eastern Europe, is not merely about trade but about security and national power.

In this context, it is impossible to escape the reality that one of the main features of the international system in all its dimensions--military, political, and economic--is that American unipolarity coexists with a system of multilateral institutions (such as the World Trade Organization), regimes (such as nonproliferation), and groupings (such as the G-8) that are overwhelmingly influenced, if not quite determined, by American power and preferences.

This very modern package of national interests and the elements of globalization coexist with the perceived threat of instability, primarily in Central Asia and the Caucasus, and the concrete reality of armed conflict in Tajikistan, Afghanistan, Chechnya, Abkhazia, and Nagorno-Karabakh. Without doubt, Russian policy in the 1990s contributed to these threats through the use of force and interference to maintain Russian influence and presence in the region.

That misguided policy was largely a result of the Russian leadership's inability to distinguish between two variants of the threat and to prioritize them: the threat posed by weak, underdeveloped, and even failing states in the Caucasus and Central Asia, and that posed by the erosion of Russian influence and presence that attended the breakup of the Soviet Union. Despite its liberal and reformist credentials, the Yeltsin leadership never quite repudiated the latter, although it sought to meet the perceived threat posed by the loss of its southern sphere only half-heartedly. The Putin leadership has clearly rejected disentangling the two and more firmly links this regional instability with Russian weakness.

In addition, two new dimensions to this threat perception complicate Russia's policy in the region: Islam and international terrorism. The Chechens' separatist war, in this context, is just one manifestation of Islamic radicalism with international ties and terrorist means stretching from Afghanistan to the Black Sea. It is crucial to understand how instability, Russian weakness, Islam, and international terrorism are linked in the Russian perception, precisely because it means that the policies and attitudes of the outside world are perceived as directly affecting Russian interests. So far, the Putin leadership distinguishes between the regional external influence (which it views as primarily negative because it is the source of Islamic anti-Russian sentiment and the methods by which Russia itself is attacked in the terrorist campaign) and the broader international context. On the latter, the Russian perception is that the West is a potential ally against this threat, because it too has been