Russian Foreign Policy // Comments

10 march 2016

Russia has to reinvent its economic model

Andrey Kortunov Director General of the Russian International Affairs Council, RIAC member

Andrey Kortunov, Director General of the Russian International Affairs Council (RIAC), thinks that greater cooperation between Russia and Western powers is possible in Syria and that the Russian people, like its counterparts, is wondering why a large joint anti-terrorist coalition doesn’t exist. Western economic sanctions have been counter-productive since they failed to change Russia’s position in Ukraine and to erode President Putin’s popularity at home. It’s also up to Kyiv to comply fully with the Minsk agreements, explained Kortunov. Finally, Russia has to reinvent its model of economic development in order to move ahead, concluded Kortunov who answered our questions below:

1) Russia’s decision to launch air strikes against terrorist groups in Syria on the request of the Syrian government has drawn much criticism on behalf of Western governments which accused Russia of not targeting Islamic State (ISIS). The popular perception however, in Europe as well as in the USA, looked more positive. Does it mean there’s room for greater future cooperation abroad between the West and Russia despite differences?

A.K.: Indeed, one of the differences between Russia and most of the Western governments was the definition of ‘terrorist organizations’ in Syria. The West insisted that most of opposition groups fighting against Damascus constituted the so-called ‘moderate opposition’, while Russia argued that a large part of the ‘moderate opposition’ actually gravitated towards radical fundamentalists and served as a recruitment and supply base for ISIS. After very intensive consultations and exchange of intelligence information, this gap in perceptions has been narrowed and now there is more understanding between Russia and major Western players in the region about who really belongs to terrorists and who does not. That opens more room for cooperation on the ground though some serious differences are still to be dealt with.

2) On November 13, 2015, the worst terrorist attacks in France’s history took place in Paris, killing 130 and wounding several hundreds. How was the event perceived in Russia, by the government and the population? How do Russian geopolitics experts like you globally interpret the growing terrorist threat against the national security of so many countries?

A.K.: Like everywhere in the world, the terrible terrorist acts in Paris were regarded in Russia as a colossal human tragedy. For many Russians it was particularly emotional because the killings in France took place right after a terrorist attack on a Russian aircraft in Egypt with more than 200 people killed in the accident. On top of the widespread human sympathy to the French people, there were expectations that Russia and France would now forge a strong military-political alliance to fight terrorism together. However, after the trip of President Hollande to Washington and to Moscow it became clear that such an alliance was not in the cards, which left the Russian public somewhat disappointed. Many Russians wonder why Moscow, Paris, London and Washington cannot overcome their political differences and put together an anti-terrorist coalition like the one that they had during the Second World War.

3) The European Union (EU) has enforced economic sanctions against Russia because of the conflict in Ukraine. Although such sanctions have been regularly denounced as costly and counter-productive, the EU has continued to renew them. To your mind, have these sanctions been effective in any way? And what can be done today to break the deadlock and re-establish sound economic relations between EU countries and Russia?

A.K.: The sanctions did have a serious negative impact on the Russian economy. However, they failed to change the Russian position in Ukraine or to erode the popularity of President Putin inside Russia. Today the position of the European Union is that the lifting of sanctions depends on the full implementation of the Minsk Agreements on Ukraine signed a year ago by the leaders of Germany, France, Russia and Ukraine. However, in Russia many consider this approach hypocritical, because the implementation of the Agreements depends not only on Moscow, but also on Kyiv, which appears to be reluctant or incapable to comply fully with the political provisions of the Minsk Agreements. In any case, sanctions remain a major obstacle on the way to restoring the EU – Russia relations, and the longer they last the more difficult it will be for both sides to get back to ‘business as usual’.

4) With a 3.7% decrease in its GDP for the year 2015 and the 127% fall of the value of its national currency, the ruble, against the US dollar over the last two years, Russia would be, according to Western media, on the brink of economic collapse. Yet both the Russian people and government sounded more optimistic. What’s your opinion about Russia’s overall economic situation? Has diversification decided by President Vladimir Putin started to bear fruits?

 

A.K.: The fundamental problem of the Russian economy is not in the Western sanctions. It is not even in a sharp decline of the global energy prices. In order to move ahead, Russia has to reinvent its model of economic development. The old model designed and assembled in early Putin’s years, has depleted its potential. It is still robust and the predictions of the imminent economic collapse of the country look at least premature, but change is badly needed. The Russian economy has to be more diverse, innovative, flexible, and more based on human capital that the country has than on natural resources that state corporations like Gazprom can extract. The needed reforms are likely to be painful, controversial and politically risky. This is why it is likely that these reforms will be launched after the end of the current election cycle in Russia – that is after elections of the State Duma in fall of this year and presidential elections in March of 2018.

Source: Cyceon

 

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Andrey Kortunov, “Russia has to reinvent its economic model,” Russian International Affairs Council, 10 March 2016, http://russiancouncil.ru/en/inner/?id_4=7370

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