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Russia Profile
August 20, 2007
Eight Years in Power - Putin's International Legacy
Comment by Katya Malofeeva and Tim Brenton
Renaissance Capital

On Aug. 8, 1999, Russia's first president, Boris Yeltsin, nominated Vladimir Putin, head of Russia's Security Council, as acting prime minister; his nomination was confirmed by the Duma the following week. On Dec. 31 that year, Yeltsin resigned, calling for early presidential elections and leaving Prime Minister Putin as acting president.

Boris Yeltsin made Russia's inclusion in the G8 a major priority of his presidency, a mission he largely completed. By the end of Yeltsin's presidency, Russia's head of state was regarded as a somewhat exotic and extravagant leader, who leaned unequivocally towards the West.

Yeltsin's short-term goal was to persuade the international community that Russia represented no nuclear threat, and that the country had put the Cold War firmly behind it. Yeltsin's policy in the former Soviet republics was driven by a desire to limit the scope of Russia's responsibility for economic and military issues, an initiative that gave significant sovereignty to Russia's former Soviet partners.

In the new millennium, the situation has changed dramatically. Along with political stability, the years of Vladimir Putin's presidency have featured a movement towards increasingly centralized power in Russia and an economic boom. Additionally, Russia has become increasingly outspoken, independent and sometimes even aggressive on the international stage. This shift has become apparent in all areas of Russia's foreign policy, and this increased sense of national pride - along with some less pleasant effects of nationalism - has been a major theme of the Putin presidency. Marching to this tune has certainly contributed to Putin's domestic popularity.

Russia and the West: From cooperation in antiterrorist operations in the early 2000s to the harsh rhetoric of 2007

At the beginning of his presidency, Putin appeared willing to be associated with the leaders of the West, possibly even to a greater degree than his predecessor. Putin was much younger and more energetic than Yeltsin, spoke fluent German and was certainly a better fit among his Western counterparts at the time. Most observers then thought Putin's foreign policy objective was for Russia to become a European country and believed that one of Putin's personal aims was to be perceived as a modern leader who was strengthening Russian democracy.

Since then, the situation has changed. Not only does Russia not appear to be eager to join the EU, but it also chooses to be on somewhat confrontational terms with some of the most influential Western countries. Putin's Russia is not aiming to approximate its political system to the democracies of the West; on the contrary, today the Putin administration defends the concept of sovereign democracy and claims that European countries have their own problems with democracy.

Russia and the United States

At Putin's first meeting with U.S. President George W. Bush, the American immediately warmed to the new Russian leader, and initial predictions were that their relationship would herald a new era of Russia-U.S. cooperation and that the scars of the Cold War might finally be healed. This view was further embedded when Putin was the first leader to offer his support to the United States after the terrorist attacks of 9/11. Since then, however, relations have chilled to the point that Vice President Dick Cheney harshly criticized Russia - a move that was followed by Putin attacking the American "unilateral" foreign policy at a security summit in Munich. Since then, the United States and Russia have been at odds over missile defense, independence for Kosovo and how best to deal with Iran. Although Putin and Bush still seem to have a close personal relationship despite the wide geo-political divide between them, this may not be the case with the next U.S. president, who could well take a tougher line with Russia.

Russia and the EU

Relations between Russia and the EU have evidently suffered since Russia's emergence as an economically strong and stable nation state on the Union's eastern border. Problems have arisen over energy security and the protection of European companies' rights in Russia - notably over the treatment of Royal Dutch Shell - and disagreements between Russian and Ukraine over energy supply. Russia has also become increasingly concerned about U.S. and European influence in the new EU member states on its borders. The Russia-EU partnership and cooperation agreement appears likely to lapse in December, and negotiations for a new one have yet to begin. The start of these negotiations was blocked last year by Poland over a Russian embargo on Polish meat imports.

Estonia, another vehemently anti-Russian former Warsaw Pact country and EU member, had a recent run-in with the Russian government over the removal of a Soviet war memorial from the central square in Tallinn. On the other hand, Moscow continues to host a stream of European heads of government, hoping to win lucrative contracts for their companies. Italian utility ENI has recently entered the market, as has French oil company Total. The enlarged EU seems to be having serious problems forming a coherent policy on the resurgent bear, with some countries going for a strongly negative position and some concerned with protecting their business interests.

Russia and the UK

Although the UK is currently the EU member with the worst political relations with Russia, paradoxically, it is the country with potentially the best business relationship with Russia (see here). The UK has demonstrated concern on a number of occasions with regard to Russia's slide away from democracy and the protection of private property - apparently seeing the YUKOS affair as a watershed moment in this regard. What has made the situation worse is the decision by the British courts to shelter a number of individuals wanted for prosecution by the Russian state - notably the exiled tycoon Boris Berezovsky, who openly preaches revolution in Russia from his Mayfair mansion; and the Chechen separatist Akhmed Zakayev, whom Russian officials regard as a terrorist but who spends his time fraternizing with British intellectuals and giving lectures on Russian brutality in Chechnya. This group of Russian exiles in London recently entered the news due to the poisoning of Alexander Litvinenko, a former KGB agent with a UK passport. The Litvinenko affair has reached fever pitch, culminating in recent tit-for-tat diplomatic expulsions from London and Moscow. However, both sides have maintained throughout the affair that business relations should not be affected. It is difficult, though, to see for how long the two can remain totally separate.

An important theme that has affected all of Russia's relations with the West has been a changing of the guard at the leadership levels in several European states and such a change is due to come in the United States. With these changes in leadership, a new generation has emerged that has more experience with the modern post-Soviet Russia and a better understanding of the political mentality that has emerged in Russia since the collapse of the Soviet Union, particularly French President Nicolas Sarkozy, the son of Hungarian immigrants, and Angela Merkel, the first East German Chancellor of the reunified German state. The emergence of a new leader in Russia will also be an important step in the development of Russia's relationships with the West.

Russia and the East

Russia's perceived intention to become the leader of a bloc whose interests are opposed to - or at least not in line with - the thinking of NATO countries, has become another aspect of its apparent falling out with many of the main Western powers. Russia has consistently aggravated attempts by the UN Security Council to deal firmly with issues such as Iran's nuclear program, North Korea and the rise of a Hamas-led government in Palestine. Russia's proximity to a number of these regimes has proved to be a double-edged sword for the world's leading industrialized powers since, on one hand, Russia is often an obstacle to their desired aims in dealing with such regimes, but, on the other, often represents the main line for negotiation with them. The main worry for the Western powers may be not that Russia is often keen to represent the interests of these nations, but that Russia seems to be keen to establish a bloc that can be a counterweight to NATO power. While current problems between Russia and the West are pragmatic, if they become ideological, this would clearly represent a very negative development.

Russian Policy in the CIS and Baltic States

Russia's relations with its closest neighbors have changed dramatically in Putin's eight years in the Kremlin. To a significant degree, this has contributed to the deterioration of Russia's relations with Western democracies. As the Soviet Union collapsed in the 1990s, Russia was too focused on its own internal politics to be able to make a great effort to stop its influence from decreasing dramatically with its former partners, and aimed only to maintain friendly political relationships with the former Soviet republics, trying to preserve its remaining economic ties.

Since its resurgence, Russia has attempted to bring some of these countries back into its sphere, with varying degrees of success. The color revolutions in Ukraine and Georgia have seen these two countries set their sights on NATO and the EU, which has caused friction with Moscow and resulted in difficulties over trade and, in the case of Georgia, a heightened level of tension around Abkhazia and South Ossetia. The Baltic States, along with Poland, have become the leaders of an anti-Russia movement in the EU, which has often resulted in economic retaliation from the Russian side. In Central Asia, Russia has had more success in building relationships with the former republics, but a new power struggle has emerged in the region, largely focused on control of the area's wealth of natural resource. The Russians remain on top of this battle for influence, but are being forced to compete on a more level playing field with the United States and China.

Most recently, the new theme of energy emerged in Russia's dealings with other countries of the former Soviet Union. Russia is trying to defend its monopoly in distributing gas to world markets from Central Asia and was a major opponent of the construction of the Baku-Tbilisi-Ceyhan pipeline, which bypasses Russia. On the other hand, Russia is rather aggressively increasing the prices it charges for energy supplies to Georgia, Ukraine, Moldova, Armenia and Belarus. Relations with this latter group of countries have become more commercially based, and, in fact, are already forcing these energy-importing economies to conduct reforms aimed at greater liberalization and centralization of the economy. These changes may result in decreased dependencies of these countries on Russia both politically and economically, probably contrary to Russia's own aspirations.

The Challenge of the WTO

Membership in the World Trade Organization (WTO), a goal embraced first by Yeltsin, has long been an important post-Soviet aim for Russia, and was, for some time, dangled as a carrot after the break-up of the Soviet Union, despite the protests of some Russian business leaders. In 1999, Putin made WTO membership a clear policy priority, and although Russia has been making slow progress towards membership of the organization for some time, there seems to have been a lack of momentum in the process recently, owing largely to a lack of political will. A recent economic embargo on Georgia even seemed to take negotiations back a step, as Georgia suspended the bilateral trade agreement it had already signed with Russia. The Russians have now completed bilateral WTO talks with the United States, but the removal of the Jackson-Vanik amendment may have become more difficult under a U.S. Congress more inclined towards isolation.

At a recent meeting of the working group on Russia's WTO accession, new issues reportedly arose. Now, in the final year of Putin's rule, WTO accession has become a much more realistic target than it was eight years ago, but somehow still remains a target that is difficult to hit.

Economic leverage

A major factor in Russia's emergence on the world stage has been its new role as a global economic power. Although it cannot yet be seen as a fully developed economy, Russia is considered a major energy source and the continuing search for energy security has increasingly seen the West turning to Russia's huge reserves of natural resources. Russia is demonstrating economic growth rates that are sustainably above the growth rates of developed nations - a factor that has allowed it to become one of the world's top 10 economies in terms of GDP. It is also surrounded by countries that are also demonstrating very high growth rates.

Simultaneously, the high oil prices have allowed the Russian government to pay down Russia's international debt, meaning that many of the Western nations that lent money to Russia during the 1998 crisis now have less leverage.

Another important factor is the huge opportunity Russia's emerging middle class constitutes for sellers of Western goods, and the massive boost being given to the international capital markets by the arrival of Russian companies and investors. All this adds up to Russia increasingly becoming an economic power worth reckoning with on the global stage, which adds to general confidence in the country's foreign-policy initiatives.