Russia's fall as a superpower

By Francis Matthew, Editor at Large
Published: July 08, 2009, 22:53

How to place Russia in the new world order is one of the great questions for the next decade. It wants to be part of the G8, part of the European Union's network, and to be considered as one of the world's great powers. But the challenge for the rest of the world is how to convince Russia's leaders that they are nowhere near that status. Its economy is close to collapse, and it has a small population of 142 million (less than Pakistan, Bangladesh or Nigeria) when compared to China or India (1.3 and 1.1 billion) or the US (309 million). However Russia does have vast territory, and has two very important assets as it sits on one of the world's largest piles of arms, and huge reservoirs of oil and gas.

Illustration: Nino Jose Heredia/Gulf News


Its oil and gas are much more important than its aging weapons systems. Last year's high oil price gave the government a massive financial cushion so that it was able to fund its disastrous economic management, as the government continued to allow its state-dominated monopolies run large parts of the economy, all too often in close coordination with those close to organised crime. The false hope of the economic boom of 2005 to 2008 allowed Russia to take a very strong line in seeking a more powerful position in the world.

As Edward Lucas, the author of the latest major book on Russia, The New Cold War, puts it: "Russia's vengeful, xenophobic, and ruthless rulers have turned the sick man of Europe into a menacing bully. The rise to power of [President] Vladimir Putin and his ex-KGB colleagues coincided with a tenfold rise in world oil prices. Though its incompetent authoritarian rule is a tragic missed opportunity for the Russian people, Kremlin, Inc. has paid off the state's crippling debts and is restoring its clout at home and abroad. Inside Russia it has crushed every constraint, muzzling the media, brushing aside political opposition, castrating the courts and closing down critical pressure groups".

US President Barack Obama visited Russia this week after the economic crash, which should have forced the leadership in Russia to recognise that they do not have the power-house economy that they thought they had. But Russia has successfully blackmailed many European countries over its dominant position in supply of gas, and the furious dispute last year between Russia and Ukraine over payments for Russian gas abruptly stopped supply to many European countries, reminding everyone of Russia's ability to hold Europe to ransom. This is why last summer's war in Georgia was so important, as Lucas pointed out in August when he described Georgia's independence as "a vital Western interest. The biggest threat Russia poses to Europe is the Kremlin's monopoly on energy export routes to the West from the former Soviet Union.

"The one breach in that is the oil and gas pipeline that leads from energy-rich Azerbaijan to Turkey, across Georgia. If Georgia falls, Europe's hopes of energy independence from Russia fall too."

Just as Russia's poor economy and state-controlled political system is harming its efforts to build a better relationship with the European Union, it also has to recognise that its global ambitions are sharply reduced. In the Middle East, Russia has been given a legacy role in trying to find a way forward in the peace process in Palestine. But to little avail, since Russia has little real strategic access to the modern day Arab world.

It only had Arab allies thanks to the Cold War, when an Arab regime which found itself in dispute with the US or Britain it could always rely on getting substantial support from the USSR.

Gamal Abdul Nasser's Egypt was probably the USSR's greatest Arab ally, mainly due to the US' refusal to become involved in funding the High Dam project. Other Arab allies of the USSR included Iraq and South Yemen, but all three regimes have vanished, Iraq thanks to the American-led invasion, and the others with the impact of the end of the Cold War, and outbreak of more open global economic and political thinking which also reduced Russia's influence in any other Arab state.

For Russia to return to playing a strong international role, it will need to go through a round of profound internal reform. It is crippled by its inability to move the process of political reform forward, and that suits the plans of Vladimir Putin's supporters who are running the country. However, these plans cannot let the economy take off on its own, giving Russia a true chance to find a larger role in the world at large.

Without the necessary economic transparency that an economy needs today to flourish, Russia will remain in trouble. The government might be rescued for a while by a rise in the oil price, but that it no substitute for long-term development.

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