RUSSIA AND THE US: TWO WORLD SUPERPOWERS

Similarly to the EU, also the US represent an important regional power, able to deeply influence the balance of the international scenario. In particular:

-     The United States have a large domestic market with an average population of 317.8 million (according to Census Bureau Population clock), making it the third-most populous country in the world and a geographic surface of 9,629,091 sq km.

-     According to the World Bank’s most recent ranking, in 2012 US’ economy (nominal GDP) stands as the 1^st  largest economy in the world, with a GDP equalling $16,244,600million.

-     The US are also a developed trading power. In particular, in 2012, total US trade with foreign countries was $4.9 trillion of which around $2.2 trillion in exports and $2.7 trillion in imports of both goods  and services. In particular, more than two-thirds of US exports are material goods ($1.547 trillion) such as capital goods and industrial supplies, whilst the remaining third of exports are services ($632 billion) such as travel passenger services and Government and military contracts. On the contrary, more than 80% of US imports are goods ($2.275 trillion) of which a largest category is industrial machinery and equipment, whilst the remaining 20% are services ($437 billion) such as miscellaneous and primarily financial services. That said, figures confirm that in 2012 the US are the world's third largest exporter, after the EU and China, and the world's second largest importer, after the EU.

Unfortunately, the spirit of the US-Russian strategic partnership of the early 1990s has been replaced by an increasing tension and a mutual recrimination during the succeeding decades. In particular, there are a number of international issues on which the two countries have different ideas and are causing a number of different disagreements such as: 1. the Syrian conflict; 2. the Magnitsky Affair; 3. the NATO’s missile shield project in Europe and 4. the Snowden’s asylum dossier.Nevertheless, the two countries continue to cooperate on a number of fronts. In particular, the first Obama Administration focused on a new “re-start” with Russia, by signing - in April 2009 - joint statements on “opening nuclear weapons talks” and on a “to deal as equals” relation, and more recently - on June 2013 - a joint statement on “countering terrorism” which pledged both sides to strengthen cooperation. Anyhow, US-Russia relations appeared to sharply deteriorate following Russia’s deployment of military forces to Crimea with President Obama cancelling plans to attend a G-8 meeting in Sochi in June 2014, halting some bilateral trade talks and suspending planned military-to-military contacts as well as exploring sanctions against Russia.

Put it simply, trade ties between the US and Russia are not that consistent. Indeed, Russia is currently the US 23rd largest goods trading partner with $38.1 billion in total (two way) goods trade during 2013, with goods exports totalling $11.2 billion and goods imports totaling $27 billion. The US goods trade deficit with Russia was $15.8 billion in 2013, a 15.4% decrease ($2.9 billion) over 2012 whilst goods deficit accounted for 2.3% of the overall US goods trade deficit in 2013. In particular:

-     US exports to Russia. Russia was the US 28th largest goods export market in 2013. In particular, US goods exports to Russia in 2013 were $11.2 billion, up 4.3% ($465 million) from 2012. The top export categories in 2013 were the machinery’s and transport’s sectors (58% of total exports) with: 1. Machinery ($2.3 billion); 2. Vehicles ($2.0 billion), 3. Aircraft ($2.0 billion), Electrical Machinery ($674 million), and Optic and Medical Instruments ($660 million). Moreover, US second largest category of exports to Russia was the food and agriculture one (19% of total exports) which totaled $1.2 billion in 2013. Leading categories included: 1. poultry meat ($310 million), 2. tree nuts ($172 million), 3. soybeans ($157 million), and 4. live animals ($149 million).

-     US imports from Russia.Russia was the US 18th largest supplier of goods imports in 2013. US goods imports from Russia totaled $27 billion in 2013, a 8.2% decrease ($2.4 billion) from 2012 and accounted for 1.2% of total US imports in 2013. In particular, the five largest import categories in 2013 were: 1. Mineral Fuel – oil - ($19.4 billion); 2. Iron and Steel ($1.6 billion); 3. Inorganic Chemical - enriched uranium - ($1.4 billion); 4. Fertilizers ($815 million) and 5. Precious Stones – platinum - ($813 million). Moreover, US imports of agricultural products from Russia totaled $40 million in 2013.

-     Foreign Direct Investments. US foreign direct investment (FDI) in Russia (stock) was $14.1 billion in 2012, up 20.7% from 2011. Reported US FDI in Russia is led by the manufacturing, banking, and mining sectors. On the other hand, Russian FDI in the US was $6.3 billion in 2012, down 3.0% from 2011.

-     Energy sector. The US is slowly overtaking Russia as the world's largest producer of oil and natural gas. Indeed, the US produced the equivalent of about 22 million barrels a day of oil, natural gas and related fuels in July 2013 (according to figures from the EIA and the International Energy Agency). In particular, US imports of natural gas and crude oil have fallen 32% and 15%, respectively from 2008, narrowing the US trade deficit. Moreover, since the US are such a big consumer of energy, the shift to producing more of its own oil and gas has left substantial fuel supplies available for other buyers. 

-     The recent crisis in Ukraine has also had a negative impact on the bilateral economic relations between Russia and the US, especially after the US government’s decision to freeze assets and ban travel visas to all Russian officials deemed responsible for the events in Ukraine and the Crimean peninsula. Moreover, relations became even worse once Moscow has been suspended from all diplomatic events such as the G8 as well as from military and space cooperation with the US.

-     However, if the situation is to get worse, the imposition of further economic sanctions could also have a long-range negative effect on global energy security. In particular, it is worth mentioning that the EU relies on Russia for about a third of its oil and gas, and tensions with Moscow have heightened concerns among its 28 members about the security of their energy supplies. On this topic, many members of the US Congress are pressing the Obama administration to use energy as a diplomatic weapon and to speed permits for natural gas export terminals to ease Europe’s and Ukraine’s heavy reliance on Russian supplies - but the cost of getting US gas supplies to Europe and the lack of infrastructure on both sides of the Atlantic remain major obstacles. Also in this case, and given the escalating tension in Ukraine, it would be desirable to achieve a common agreement allowing all parties involved - amongst which the US - to maintain the respective trade relations. Nevertheless, recent events in south-east of Ukraine immediately aroused the reaction of Obama’s administration determined to impose further and tougher sanctions against Russia - if the latter fails to take action in favour of a peaceful resolution of the crisis.

South-East Ukraine different from Crimea.Overall, the crisis in Ukraine seems to have reached a new peak point, with the rising fear of a new potential Crimea-scenario in the south-east regions of the country. Nonetheless, it is important to understand that the Crimean “model” cannot be thoroughly applied to Eastern and Southern Ukraine as there are some consistent differencies. (1) First of all, if ethnic Russians account for about 60% of the population in Crimea (according to the latest 2001 census), the same is not true for Eastern and Southern Ukraine, where there is a consistent majority of ethnic Russians but not the absolute one, which means that their sense of allegiance and attachment to the Russian state is not as overwhelmingly shared in those regions as it was in Sevastopol. (2) Furthermore, compared to Crimea where the Black Sea Fleet was stationed there, there are no permanent Russian forces stationed in Eastern Ukraine. (3) Finally, idelogically speaking, it is believed that if President Putin never considered Crimea to be part of Ukraine - being his mission there twofold: reunifying Russia and correct two historical injustices (Nikita Khrushchev’s transfer of the peninsula to Ukraine from Russia in 1954; and the break-up of the Soviet Union in 1991, which left Crimea in now independent Ukraine) – eastern and southern Ukraine are considered differently. The Kremlin’s main objective there lies mostly in helping the country’s Russophile southeast to assert itself and create a new political balance within Ukraine, especially as for “acceptance for official use of the Russian language where it is spoken; direct election of governors, which would create regional elites accountable to their Russian-speaking constituencies and form a counterweight to the pro-western elites in Kiev; continuing economic relations with Russia, especially in the defence industrial area; and, lastly, for Ukraine to maintain a neutral relationship with Nato”. No coincidence that Russia’s main conditions in the international arena as possible solutions to the crisis are for pushing for greater federalization of Ukraine and military neutrality (for which the growing unrest in the east appears to be strengthening its bargaining position). On the other hand if until Tuesday 15 April, when Kiev began a military operation in Ukraine’s east, a Kremlin’s direct military intervention was believed to be the least-likely scenario, the deployment of Kiev’s backed “anti-terrorist” operation in the eastern regions increases the likelihood that any bloodshed resulting from attempts by the Kiev authorities to retake control of eastern Ukrainian cities could now prompt direct military intervention by Russia.

No coincidence that at the meeting of US, the EU, Russia and Ukraine Foreign Ministers on April 17 in Geneva - discussing the possible diplomatic progress in the conflict and the de-escalation of the crisis - Russian President Vladimir Putin has reiterated his readiness to deploy troops in eastern Ukraine if diplomatic efforts fail to resolve the escalating crisis there. More specifically, he underlined that he hoped for a political resolution to the crisis but warned that the campaign for Ukraine’s May 25 presidential election was “being run in an absolutely unacceptable way”. He also called on Kiev to withdraw its forces from southeastern Ukraine and engage in dialogue on the country’s future with pro-Russia protesters in the region.

Is peace still possible? Hence, when coming to the question of whether a peaceful solution is still possible, it is important to address the recent unfolding of the crisis through these lenses. Hence, to reach a sustainable peaceful solution it is of utmost importance to take into account these socio-historical factors, as well as the real reasons behind these uprisings in the east. This means that the aforementioned peaceful solution necessarily passes through two dimensions: (1) the international one – all the main actors involved, first and foremost Russia, on the one hand, and the US on the other, need to keep on dialoguing but with an approach aimed at seriously taking into consideration the fact that being Ukraine a country effectively torn between Russia and Europe, there is no need to pull the rope only on one side, as the solution lies mid-way; (2) local one, which means for the current interim government engaging, as it was already announced, in a reasonable dialogue with pro-Russian groups in the east, in order to find a sustainable compromise to meet their demands (more decentralization of power and guarantee of minority rights protection – use of the Russian language etc.). In this regard, PM Yatseniuk decision to instruct a newly-formed “constitutional commission” to swiftly draft constitional changes delegating more governing power from Kiev’s central government to regional legislatures and administrations, represents a first step in the right direction.