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Weakness in the midst of Russia's strength
Moscow is far from re-establishing itself as a superpower.
- By Stefan Wagstyl, Financial Times
- Published: 23:23 August 5, 2008
- Image Credit: Illustration: Luis Vazquez/Gulf News
Ten years ago this month, the Russian financial crisis hit world markets. A decade later, everything appears to have changed. Russia is booming, its debts repaid, its foreign currency reserves climbing and its hotels full of Western business people.
President Dmitry Medvedev and Prime Minister Vladimir Putin strut their stuff at summits proclaiming that Russia is back at the world's top table.
The reality is not so straightforward. While Russia has transformed itself since 1998, it is still wrecked by serious weaknesses. While it has recovered some international influence it is far from re-establishing itself as a superpower.
As Medvedev says: "Russia today is a global player." But, even a decade after 1998, Russia is not as strong as its rulers think. Only in the past year has economic output recovered to 1989 levels. Millions live in poverty, dragging average annual income per head down to $14,700 in purchasing power parity terms, compared, for example, with $16,300 in Poland.
With poverty go huge deficits in education and healthcare. The 143m population is declining so fast that demographic recovery is a national priority. While Russia's position is similar to Western Europe's, it is less open to immigration and even more scared of the consequences, especially in sparsely populated Siberia, with 1.3 billion Chinese across the border.
Also, despite its diversification policies, Russia remains dependent on oil and gas, which account for around 20 per cent of economic output and over 60 per cent of exports. The dream of a knowledge-based economy based on an army of well-trained scientists remains a dream. To be fair, Russia is managing its windfall better than many oil-rich states. But that is a low standard for a nation that wants to compete for influence with the US.
Limited
The Kremlin's ability to project power beyond Russia's borders are limited. Despite increases, military spending is 5 per cent of the US's, and the armed forces need modernisation. Even Russia's nuclear superpower status is in question as it struggles to replace ageing Soviet-era missiles.
Russia's strongest card is its role as an energy supplier, notably to the European Union. But energy is a double-edged sword. The EU relies on Russia for over 25 per cent of its gas, but Russia depends on the EU for over 60 per cent of its gas revenues. Poor east European countries without suppliers are vulnerable, but not the EU as a whole.
Even in its backyard, Moscow faces challenges. Much has been made of Russia's sabre-rattling in the former Soviet Union, including interruptions to energy supplies to the Baltic states, Ukraine and Georgia and meddling in their domestic politics.
But the Kremlin has not gained much from all this activity. By contrast, the West has made big advances. Since 1998, Nato has been enlarged twice, with three ex-Soviet republics, Estonia, Latvia and Lithuania, among the new members.
Further afield, Russia's capacity to project its power is even more limited. With the Cold War over, there is no East-West ideological conflict through which Moscow can gather client states opposed to the US. With China rising and India emerging, competition for influence is growing.
While there are opportunities to make life difficult for the US and the EU, notably in Iran, the Middle East and Kosovo, there are few prospects of solid political gains. In Africa, declining Western influence has opened the way for China, not Russia.
So, the Kremlin is left in the frustrating position of being far more powerful than it could have expected a decade ago - but not nearly as powerful as it would like to be.
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