In 2012, Russia’s foreign relations were dominated by economics. In August, it completed its 18-year journey to become a member of the World Trade Organization. During the process, the Russian government fought hard to secure the terms most favourable to Russian domestic producers, even though Russia’s main exports - energy products and arms - are not covered by the WTO rules. With Russia now in the WTO, its relations with its principal trading partner, the European Union, and also with the United States, have already acquired a new dimension: disputes over the implementation of WTO rules. According to Vice Prime Minister Arkady Dvorkovich, this is the new ‘routine’.
In 2012, the Russian-led Customs Union, to which Kazakhstan and Belarus also belong, formed a Single Economic Space, with the goal of establishing by 2015 a Eurasian economic union. Moscow has been also working hard to bring Ukraine and two small Central Asian states, Kyrgyzstan and Tajikistan, into the process of post-Soviet economic integration. This process, reinvigorated in 2009, in the midst of the global crisis, signifies a major shift in Russian government’s priorities: away from integrating Russia with the European Union and towards creating a fully-fledged Eurasian Union which would deal with the EU as an equal.
'Having overtaken Germany as Russia’s number 1 trading partner a few years ago, China has now established itself as a country whose strategic importance to Russia is virtually second to none.'
In September 2012 Russia held the summit of the Asia-Pacific Economic Cooperation (APEC) in Vladivostok, highlighting Moscow’s ‘pivot’ to Asia and the Pacific. With Russia’s future no longer ‘anchored’ in Europe, and Eurasian integration being of important, but economically limited, value, Moscow is paying more attention to its struggling easternmost regions where Russia physically abuts the world’s most dynamic and some of its most powerful economies. Having overtaken Germany as Russia’s number 1 trading partner a few years ago, China has now established itself as a country whose strategic importance to Russia is virtually second to none.
Following on the conclusion of her role in APEC, Russia will assume the presidency of the G-20, welcoming the group’s leaders to St Petersburg in September 2013. This year President Putin visited the G-20 meeting in Las Cabos, Mexico – in contrast to the G-8 at Camp David, which he spectacularly skipped – but in reality Russia has yet to show its real interest in the G-20 agenda and to demonstrate its capability to contribute to it. The political reality, however, is that G-20 appears a more comfortable setting for the Russian leaders than the Western-dominated G-8, which looks increasingly like the G-7 plus (or minus, as the case may be) Russia.
On the face of it, Russia’s economic relations with Europe were strengthened as the second North Stream gas pipeline became operational in mid-2012 and the South Stream project was formally inaugurated toward the end of it – both are pet projects of Mr. Putin. Yet, the European Union’s investigation of Gazprom’s activities in Central and Eastern Europe tells a different story. The situation in the gas market – as a result of the moves undertaken by the EU and of the shale gas revolution in - is becoming more complicated for the Russian gas monopoly.
Historical issues continue to impair Russia's political relations with the West, but the prospect of deeper economic integration looks promising. Picture: Voice of Russia (c)
On the oil front, the Kremlin-brokered partnership between Rosneft and two Western oil majors, ExxonMobil and BP, has consolidated in 2012 not only through joint projects, but also by means of asset swaps. This is the essence of what Mr. Putin had in mind when he called, in his decree signed on Inauguration Day, a ‘qualitatively new relationship’ with the United States. The idea was that mutual economic interests need to be expanded in order to serve as a stabilizer for the larger bilateral relationship. So far, the bag has been rather mixed: the restrictive Jackson-Vanik amendment, a Cold War holdover, was indeed repealed by U.S. Congress after Russia’s accession to the WTO, but the new permanent normal trade relationship between the two countries has become saddled with the Magnitsky Act.
This move in Congress is illustrative of the deteriorating atmosphere in the political relations between the West and Russia. Vladimir Putin’s formal return to the Kremlin was one reason for this; the mass demonstrations in Moscow and elsewhere against Putin were another; the Russian government’s reaction to the protests in the form of harsher legislation and the jailing of some protestors has added to the list. The Magnitsky Act has been received by the Kremlin as a hostile act against the whole of Russian officialdom. Berlin’s frostier attitude toward the Kremlin came as a sign that a period of cooling down has now set in with Germany, Russia’s long-time advocate in Europe.
'The Magnitsky Act has been received by the Kremlin as a hostile act; while Berlin’s frostier attitude came as a sign that a period of cooling down has now set in with Russia’s long-time advocate in Europe.'
Meanwhile, Russian government attitudes toward Europe have evolved. For the first time in decades, the European Union, which is struggling with probably the most serious crisis in its history, is not viewed by the Kremlin as either a model to emulate or a magnet for integration. Europe’s contemporary values are being sneered at, or dismissed by, Russian officialdom as overly socialistic, excessively tolerant and lacking a clear sense of national or collective identity. Thus, Europe is losing its unique position as the notional ‘spiritual home’ for Moscow and is becoming just another part of the wider world, alongside the United States, Asia-Pacific, et al.
In the Middle East, Russia has sharply differed from both America and Europe on the ways of dealing with the Syrian crisis. Moscow’s concept of world order, which underlies the Kremlin’s approach, eschews both foreign military intervention and forcible regime change from the outside, and it sees the Assad regime as party to an eventual resolution of the crisis. Moreover, Russians regard the uprising in Syria as empowering Islamist radicals whom it does not want to take over one of the region’s key countries. In the eyes of the Western publics, Russia has been branded an ally of Syria’s brutal regime, in the unholy company of Iran’s mullahs.
Outlook for 2013
As far as Western-Russian relations are concerned, the outlook for 2013 is far bleaker than it was four years ago. Then, the first Obama Administration was working on its now-famous reset. Now, Secretary of State Hillary Clinton, probably with an eye to the next election, is vowing to prevent Moscow from recreating a new version of the Soviet Union through the process of Eurasian integration. Then, there were issues on the White House agenda that Obama hoped would be resolved through U.S.-Russian collaboration; today, there is a lot of irritation and few ideas how to proceed. In Russia itself, the levels of official anti-Americanism are almost as high as ever.
An infamous spelling mistake on Hillary Clinton's "reset" button suggested instead an "overload" in US-Russia relations. Many would agree that the word better describes the current state of relations.
'A strategic relationship with Moscow could bring much to the Americans and the Europeans – and there is much to be lost if the relationship fails to materialise.'
This is not a healthy situation for either party. Russia and the West need to ‘rediscover’ each other as far as their national or collective agendas are concerned. Russia is not, and is not going to become, a new USSR. However, a strategic relationship with Moscow could bring much to the Americans and the Europeans – and there is much to be lost if the relationship fails to materialise.
Conversely, Russia’s most important national goals of modernizing its economy and society can only be met in cooperation with the world’s most advanced economies and societies, and not by acting against them. If Russian-Western relations in 2013 are just a continuation of the year which is about to end, we are headed for more trouble. A new departure is needed, to begin with fitting the partner into, respectively, one’s global or national strategy, and then comparing notes.
The reset is history. What is needed is new software.