Moscow overplays its hand, triggering Cold War II
Low growth at home fuels Putin’s expansionist tendencies, which may help soothe Russia’s domestic woes, but could trigger a chain reaction.
- Monday, 30 April 2018
The last four to five years have seen a sharp increase in Russian interference in foreign countries, starting with the military involvement in Syria and Ukraine and, more recently, including the meddling in the democratic processes in Europe and the US. Recent years have also seen the mysterious deaths, or assassination attempts, in the UK on a reported 14 Russian nationals with previous links to the Kremlin.
Following a series of relatively broadbased sanctions and a tit-for-tat expulsion of diplomats, the US announced in early April the toughest sanctions on Russia so far, hitting people and companies very close to President Putin.
In his statement explaining these latest sanctions, US Treasury Secretary Steven Mnuchin implied that the US has had enough: “The Russian government engages in a range of malign activity around the globe, including continuing to occupy Crimea and instigate violence in eastern Ukraine, supplying the Assad regime with material and weaponry as they bomb their own civilians, attempting to subvert Western democracies, and malicious cyber activities”.
With that, it’s difficult to escape the conclusion that ‘Cold War II’ has broken out. Each side has its own narrative on how relations deteriorated so abruptly, but to understand it properly, the following four distinct periods following the collapse of the Soviet Union in 1991 need to be considered.
First, 1991-1999 can best be characterized by a complete collapse of the Russian economy as its hopeless structure was exposed to market forces. The social and economic pain associated with this shock must not be underestimated. It explains to a considerable degree today’s profound desire in big parts of the population for any political or economic regime so long as it prevents a return to such economic devastation. Yet, these years were also characterized by an incredible embracement by the new Russian elite and big parts of society of virtually everything American (not Western, not European, but American) economically, socially and culturally.
The second period (2000-2004) started with the arrival of Putin. In terms of political leadership, Putin’s arrival at the Kremlin was impeccably timed. Oil prices had bottomed out at about USD 10 per barrel and proceeded to increase tenfold within eight years. Russia’s newfound income did wonders for people’s income and thereby for Putin’s popularity.
Putin quickly set about consolidating his power. Companies, wealth and access to the leadership were redistributed from Yeltsin’s oligarchs to Putin’s own loyalists, a process widely applauded, not least as the original oligarchs had gained their astronomical wealth through a questionable privatization process. Putin’s heavy-handed methods were not widely questioned until the 2003 arrest and imprisonment of Mikhail Khordorkovsky. While questions about Putin’s definition of rule of law started to emerge, Central Europe and the Baltics (now released from Soviet dominance) were pushing hard to be enrolled in Western organizations from the EU to NATO. But without a doubt, Russia saw NATO expansion in 2004 to include these countries as a major provocation.
The third period, 2005-2011, started poorly but ended rather well. Clearly frustrated with NATO’s eastern expansion, Russia felt increasingly encircled and Putin’s rhetoric got increasingly more aggressive. In 2008, reacting to Georgia’s push for NATO membership, war flared up in South Ossetia and Abkhazia between Russian-backed regional troops and Georgian troops. Few doubt today that the conflict in Georgia was Russia drawing the line for NATO expansion. It was a message broadly understood and accepted in the West. When Barack Obama became US president in 2009, one of the first acts of his secretary of state, Hillary Clinton, was the symbolic offer to “reset” relations with Russia. Things then calmed down, but not for long.
The fourth post-Soviet period started around 2012. After having served two terms as president and one as prime minister, Putin returned to the presidency but faced unexpectedly large protests across the country against what was seen as a breach of the spirit of the constitution. At the same time, Putin’s economic luck had run out. Oil prices had dropped back and real incomes had begun to stagnate. There is a stunning (negative) correlation between absolute rulers’ ability to generate domestic growth and their attempt to gain foreign glory. Hence, it wasn’t surprising to see Putin step up Russia’s military adventures from around 2012, including in Syria and Ukraine, where he even went as far as annexing Crimea.
Seeing the reaction to these foreign adventures, Russia concluded that the US and Europe would not accept what was seen by the Kremlin not only as a necessary foreign policy for the stability of Putin’s regime but also as Russia’s rightful dominance of a certain sphere. Putin’s nationalist rhetoric was dialled up several notches and more systematic arrangements were made to destabilize Western democracies by supporting antiestablishment parties, policies and personalities. The examples came fast and furious, from financial support for nationalist parties, e.g. the Front National in France, to cyberbased information support leading up to the Brexit vote, to the multiple-channelled support for Donald Trump.
Where it’ll take us remains unclear, but both the West and Russia will surely begin to allocate additional resources towards national defence, not least in cyber-space. This will require more public spending in these areas, although of a very different type (and probably smaller scale) than during the first Cold War. Unless oil prices move a lot higher on a sustained basis, Russia will struggle to finance such a race while delivering any of the social and educational promises made by Putin in the same speech in March.
For the private sector in the West, regulation of parts of the tech sector will almost certainly be tightened, and probably significantly so for areas where politically sensitive personal information is stored. In addition, legislation will likely be introduced to make social media platforms responsible for content within some parameters.