Since the invasion of Crimea, Russia’s President has been conducting an experiment in anti-western rebellion
Since the Russian invasion of Crimea last February, many different phrases have been used to describe the tactics of the Russian President, Vladimir Putin. Some have spoken of a ‘new Cold War’. Others have described him as ‘anti-western’ or ‘anti-American’. But there is another adjective one could also use to describe his behaviour: ‘experimental’. For apart from everything else he has said and done, Putin has, in effect, launched a vast experiment into whether it is possible to extract a large and relatively well-integrated country from the global mainstream, and to reject the rules by which that mainstream runs.
In truth, the experiment began long before Crimea. For several years now, Russia, a member of the World Trade Organisation, has defied the spirit of that institution by using selective trade boycotts — Lithuanian cheese, Polish meat — to make political points. In 2008, the Russian army also invaded and then occupied parts of Georgia, more or less with impunity, which at least poked a hole in the ideal of ‘Europe whole and free’. But the annexation of Crimea truly broke new ground: by not only moving troops across borders but actually altering borders in Europe by force, he challenged both the written and unwritten rules which have governed politics on the continent since 1945.
The US, Europe, Australia and Japan responded with sanctions which were deliberately designed to target a small number of wealthy Russians. But Putin broke new ground again. Instead of responding in kind, he banned food imports from the West. Because Russia normally imports at least a quarter and possibly as much as half of its food — not only Parmesan from Italy but frozen vegetables from Poland — he ensured that food prices would rise, not just for a small number of people but for the entire nation. It was a calculated risk: the Russian President and his entourage apparently reckoned that the Russian people would agree to pay higher prices for food in exchange for military glory. Unlike decadent Europeans and spoiled Americans, Putin seemed to believe that Russians would stoically suffer on behalf of the motherland at a time of crisis.
Was he right? We are about to find out. This week the rouble, which has lost a third of its value in three months, slid by 9 per cent in a single day. A recession is now predicted. Inflation is predicted too, as high as 8 or 9 per cent. A controversial but long-planned pipeline construction has been abruptly cancelled. Major Russian banks are asking for government loans. Russian companies which earn in roubles and borrow in dollars are suddenly in trouble. Capital has been swiftly flowing out of the country, and some banks are rumoured to be limiting withdrawals. There are so many rumours about capital controls that the prime minister, Dmitri Medvedev, has explicitly denied them.
Not all of Russia’s economic disruption is caused by sanctions, of course. Since last spring, oil prices have also dropped by nearly 40 per cent. The world’s largest oil producer, Saudi Arabia, has just made it clear that it won’t lower production in order to push them up again, at least for the time being.
This might not matter as much to other oil producers, but for more than a decade Putin has coasted on the illusion that historically high oil and gas revenues could both support the national budget and disguise Russia’s failure to create a more productive economy. High energy prices even paid for the excesses of autocracy and an expansionist foreign policy: the Sochi Olympics, the billionaires’ palaces, the adventure in eastern Ukraine, the military exercises on a Cold War scale, even the €9 million loan which a shady Russian bank has just made to the far-right French National Front.
Sanctions have exacerbated the difficulties created by the collapse in oil prices, and in this narrow economic sense, Putin’s experiment has failed, or at least proved to be very expensive. Oil prices may rise again, Russia has large reserves and its economy may well recover — but in the meantime ordinary Russians will pay a huge price. If nothing else, we have learned that it is very expensive to break international economic rules and to live without allies. Even the Chinese have used the crisis to take advantage of Russian weakness, negotiating for themselves an advantageous gas deal: it’s often forgotten that they like the rules of globalisation, which until now have suited them very well.
The broader political test of the experiment is still to come. For Putin is historically correct in thinking his break with the mainstream might be possible. Once upon a time, the citizens of the Soviet Union really were willing to put up with terrible hardship in the name of defending their country. At the beginning of this crisis, some Russians sounded as if this were 1941, when Hitler invaded the USSR and the nation rallied round Stalin. The Ukrainians were said to be Nazis; Nato was said to be encircling. The head of a state polling agency told the Wall Street Journal, ‘If the West doesn’t like us, that means we’re on the right track.’
In this atmosphere, rapidly falling living standards — blamed, of course, on the West — might well persuade Russians to rally around their embattled leader, who might be inspired to push his military adventurism further. There is another 1941 precedent to keep in mind here too: in December of that year, Japan bombed Pearl Harbor, at least partly in retaliation for an American oil embargo.
Still, this is 2014, not 1941, and if nothing else, the past decade of high oil prices gave many Russians a standard of living that their Soviet parents and grandparents could never have imagined. There are not just oligarchs but concentric circles of people who have invested in the West, travelled in the West, shopped in the West or otherwise benefited from Russia’s integration into the global economy, if only because they bought those cheap frozen vegetables. They have no clear mechanism to respond to the onrushing economic crisis. Alternative leaders have been eliminated, and alternative policies are not discussed, but that doesn’t mean they’ll remain passive forever.
They could leave the country, withdraw their money, stage a palace coup or simply find ways to make life in Russia unpleasant for Russia’s leaders in ways we haven’t yet imagined. Maybe there’s no point in speculating. After all, this an experiment, and we don’t yet know how it will come out.