CSS: No. 149: The Russian Economy

Center for Security Studies (CSS) – Publications

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No. 149: The Russian Economy

Author(s): Philip Hanson, Irina Nikolaevna Il’ina, Carol S. Leonard, Evgenii Plisetskij

Editor(s): Stephen Aris, Matthias Neumann, Robert Orttung, Jeronim Perović, Heiko Pleines, Hans-Henning Schröder, Aglaya Snetkov

Series: Russian Analytical Digest (RAD)

Issue: 149

Publisher(s): Center for Security Studies (CSS), ETH Zurich; Research Centre for East European Studies, University of Bremen; Institute for European, Russian and Eurasian Studies, George Washington University

Publication Year: 2014

This edition considers the current state of the Russian economy. Firstly, Philip Hansen assesses the reasons for the economic slowdown that predated the Ukraine crisis, highlighting that the radical reforms needed to improve business confidence seem unlikely to be undertaken. He also notes that fallout from the Ukraine crisis will have a negative impact on the short-term prospects for growth, and that although in the medium term some restoration of growth is possible, this will only likely reach rates below the global average. Secondly, Irina Nikolaevna Il’ina, Carol S. Leonard, and Evgenii Plisetskij examine the resilience of resource abundant regions in the aftermath of the global financial crisis, by way of a case study of Khanty-Mansiysk Autonomous Okrug. They argue that long-term efficient and cooperative budget planning and performance account for the resilience of such regions.

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How Putin Is Reinventing Warfare

Though some deride Russia for backward thinking, Putin’s strategy in Ukraine betrays a nuanced understanding of 21st century geopolitics.

BY Peter Pomerantsev MAY 5, 2014

The Kremlin, according to Barack Obama, is stuck in the “old ways,” trapped in Cold War or even 19th century mindsets. But look closer at the Kremlin‘s actions during the crisis in Ukraine and you begin to see a very 21st century mentality, manipulating transnational financial interconnections, spinning global media, and reconfiguring geo-political alliances. Could it be that the West is the one caught up in the “old ways,” while the Kremlin is the geopolitical avant-garde, informed by a dark, subversive reading of globalization?

The Kremlin’s approach might be called “non-linear war,” a term used in a short story written by one of Putin’s closest political advisors, Vladislav Surkov, which was published under his pseudonym, Nathan Dubovitsky, just a few days before the annexation of Crimea. Surkov is credited with inventing the system of “managed democracy” that has dominated Russia in the 21st century, and his new portfolio focuses on foreign policy. This time, he sets his new story in a dystopian future, after the “fifth world war.”

Surkov writes: “It was the first non-linear war. In the primitive wars of the 19th and 20th centuries it was common for just two sides to fight. Two countries, two blocks of allies. Now four coalitions collided. Not two against two, or three against one. All against all.” Continue reading

Op-Ed: The POST “Post Cold War” Era in Europe

English: Map showing the maximum territorial e...

English: Map showing the maximum territorial extent of countries under the direct influence of the Soviet Union — between the Cuban Revolution/21st Congress of the Communist Party of the Soviet Union and the 22nd Congress of the Communist Party of the Soviet Union/Sino-Soviet split. (Photo credit: Wikipedia)

April 24, 2014 | Dr. Jeffrey D. McCausland

Russian President Vladimir Putin’s invasion of Ukraine reflects neither strategic wisdom nor military strength. In fact, it reflects just the opposite. Putin invested over $50 billion and significant personal capital in the Sochi Olympics and the upcoming G8 Summit. That has now been squandered. It was clearly humiliating for Putin to watch as the Ukrainian president he had strongly supported, if not hand-picked, was forced to flee Kiev. This was particularly true, given that President Yanukovych fled in response to a popular uprising driven by opposition to his efforts to establish closer Ukrainian relations with Russia at the expense of closer ties to Europe.

      Putin assuaged this humiliation with a military invasion of Crimea on March 1. On March 20, the Russian Parliament overwhelmingly approved a treaty presented by Putin to formally annex the Black Sea peninsula. At this juncture, it seems impossible to envision Moscow backing down, withdrawing its forces, and returning Crimea to Ukrainian control. President Obama, as well as Western European leaders, have acknowledged this reality. The so-called “post-Cold War era” has now come to a close, and the West must now confront a new European security environment. What is the nature of the new threat? What is the general outline of a new strategy for the United States and its NATO allies?
      It is important to realize that the longer-term threat posed by this new era does not herald a return to the Cold War. That “twilight struggle” had an ideological underpinning. It pitted Marxist-Leninist ideology against democracy and market economies. When Nikita Khrushchev made his famous threat, “We will bury you!” in 1956, he was not necessarily predicting imminent war so much as a belief that history was on the side of Communism. He believed that it was Communism, with its focus on a command oriented economy rather than the Soviet military, that would ultimately triumph. Continue reading

Ukrainian extremists move headquarters from Kiev to Dnepropetrovsk

April 24, 0:40 UTC+4

In Russia, the Investigative Committee opened a criminal case against Yarosh on charges of public calls for terrorist and extremist activities

© ITAR-TASS/Zurab Javakhadze

KIEV, April 24. /ITAR-TASS/. Ukraine’s extremist organization Right Sector has moved its headquarters from Kiev to Dnepropetrovsk, said its leader Dmitry Yarosh who is running for president.

“It’s easier to monitor the situation in Donbass from Dneptropetrovsk,” Yarosh said on Wednesday.

Earlier, local media reported a meeting in camera between Yarosh and head of the Dneptropetrovsk regional administration Igor Kolomoisky.

The Right Sector leader denied receiving funding from oligarchs. “We’re not using oligarchs’ money in politics, but when a war is on, we do not object to their funding the army,” he said. Continue reading

Russia: Digging Themselves in Deeper

Why Big Oil is doubling down on Putin’s Russia.

BY Keith Johnson APRIL 22, 2014

Russia may have become an international outcast in the wake of its annexation of Crimea and continued destabilization of eastern Ukraine. But for one group of powerful multinationals, Russia these days is less pariah than promised land.

Big Western oil companies from BP to Shell have not just stayed the course in Russia in recent months — many have essentially doubled down on oil and gas investments there and built even closer ties with Russian energy firms. Taken together, the deals could send billions of dollars flowing into the Russian economy just when Barack Obama’s administration is trying to hammer it hard enough to persuade Russian President Vladimir Putin to reverse his annexation of Crimea and stop menacing eastern Ukraine.

“We’ve made clear that we’d be prepared to target certain sectors of the Russian economy if we see a significant escalation, including direct Russian military intervention in eastern Ukraine,” White House spokesperson Laura Lucas Magnuson has said. Continue reading

Ukrainian navy decimated by Russian move into Crimea

Tim Ripley, London – IHS Jane’s Defence Weekly
25 March 2014

UkraineOfficers of the Ukrainian navy Grisha V-class frigate Lutsk raise the Russian naval ensign on 20 March. Source: PA Photos
Ukraine’s maritime forces have been dealt a heavy blow by the Russian intervention in Crimea, with 12 of its 17 major warships and much of its naval aviation assets falling under Moscow’s control.
In the eight days since the controversial referendum on 16 March that opened the door for Crimea to be absorbed in the Russian Federation, almost every Ukrainian naval base and ship on the peninsula has been seized by Russian forces or local pro-Moscow self defence units.
The scale of the crisis facing the Ukrainian navy is apparent from the fact that around 12,000 of its 15,450 personnel were based in Crimea when Russia intervened on 27 February. Over the past three weeks, the majority of the Ukrainian military personnel on Crimea have defected to the Russian military or resigned from military service, according to announcements by the new pro-Kremlin administration in Crimea. Some independent media reports appear to broadly support Russian claims in this regard. Continue reading

Ukrainian Authorities plan to Attract `US Private Military Company Greystone ‘ according to the Ukrainian Secret Service ‘

#AceWorldNews – DNEPROPETROVSK – March 25 – Ukrainian authorities plan to attract US private military company Greystone Limited to suppress protest moods of the mostly Russian-speaking population in the east of the country.

According to Ukrainian Security Service, mercenaries will be engaged in political search and protection of state security over inability of Ukrainian law enforcement agencies to curb on leaders and activists of pro-Russian movement independently.

This initiative was put forward by oligarchs Ihor Kolomoyskyi, a co-owner of Ukraine’s PrivatBank, and Serhiy Taruta, head of the industrial union of Donbass, a coal basin in eastern Ukraine, as these business tycoons were appointed as governors in central Ukraine’s Dnepropetrovsk region and eastern Ukraine’s Donetsk region, respectively.

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