Is Russia a Superpower?

What is certain is that the way Russia develops will be a key-factor in determining the character of this century.

At first glance, Russia bears many of the hail-marks of a great power. It possesses a large arsenal of nuclear weapons, a permanent seat on the United Nations Security Council, enormous reserves of oil and other minerals, a recent record of robust economic growth and more territory than any other country despite being only three-fourths the size of the former Soviet Union.

However, closer impletion reveals a different Russia, argues Richard N. Haass, president of USA` s Council of Foreign Relations. He stresses that much of Russia` s wealth reflects the increased value of energy, not productive economic activity. On the other side, Russia` s armed forces are able to project little in the way of usable military might. Its population is now less than Pakistan` s and is declining by 500,000 people per year, leaving large portions of its vast landmass mostly inhabited. Male life expectancy is now less than 60 years, owing to alcoholism, crime, drugs, disease and a dreadful public health system.

All this adds up to a Russia that, if not quite a Potemkin state, is anything but great. There are limits to what Russia can accomplish in the world in any positive sense, although its capacity to be a spoiler or create problems is considerable. Decisions made in Moscow can affect world energy prices, the future of the Iranian and North Korean nuclear programs and the success of terrorists. “For better or worse, Russia still matters. But, how much will it matter?” asks Haass.

One question concerns political stability. In order to remain intact and functional, the country needs a political system and a society that persuade talented young people to stay in Russia and that provides them with the education to develop their talent. There also must be limits on the power of the central government and the presidency, a degree of regional autonomy and rule of law, in short the rudiments of a modern state and democracy. Alas, Russia is moving more in the opposite direction; political power is becoming more, not less, concentrated.

The economic picture is similarly uncertain. High energy prices are a boon to Russia` s economy, but, as is often the case in the Middle East and other oil-and-gas-rich regions, they can be a burden as well, feeding corruption and discouraging real economic activity. The challenge for Russia` s leaders is to use its oil wealth to educate Russia` s people and rebuild Russia` s infrastructure, thereby ensuring global competitiveness and employment growth.

Indeed, Moscow has expanded control over Russia` s main cash-cow: energy. “The Russian oil and gas sector` s new paradigm can be summarized in two words: state domination”, Ariel Cohen, senior research fellow at the Heritage Foundation, wrote in February 2005 executive memorandum. “The free-market paradigm has been abandoned”. For example, the government` s October 2003 arrest of Mikhail Khodorkovsky, former Russia` s richest mand and head of the country` s second-largest company Yukos, sent shockwaves through the market –in the year after Khodorkovsky` s arrest, capital fight, only $2,9 billion in 2003, soared to $9 billion. Gazprom, the state-controlled gas behemoth, recently acquired Sibneft, Russia` s fifth-largest oil firm, and now enjoys a near monopoly on the country` s gas production and vast network of pipelines.

Hence, Moscow` s maneuvers have validated charges that Russia` s economy is unhealthily tied to oil, a commodity whose value fluctuates widely. “In 1998, when world oil prices dipped to around $10 a barrel, this drop coincided with the worst of Russia` s economic crises and the collapse of the ruble”, wrote Fiona Hills, a senior fellow with the Brooking Institute, in a December 2004 article in the Globalist. This has fueled concerns among investors that Russia` s oil-driven boom may prove short-lived, that energy companies will be unwilling to reform their outdated pipelines networks, or that the government will squander its newfound surpluses.

Added to these worries is Russia` s inflation rate, currently a 11%, which some investors say could inch upward in the coming years. Economists –some of whom recently sent a sharply worded letter to Prime Minister Mikhail Fradkov– are also concerned about Russia` s surge in government spending, much of it allocated to Russia` s cash-strapped regional governments. Then, there is growing talk of Russia` s “Dutch Disease”, which means that high commodity prices are driving up the value of the ruble, which in turn makes Russia` s manufactured good less competitive abroad.

On a geopolitical level, according to Haass, it is obvious that Russia needs a national security strategy to complement its political and economic renewal. All stick and little carrot has failed to quell Chechen nationalism and President Vladimir Putin` s heavy-handed attempts to control Russia` s so-called “near abroad”, as in the Ukraine during the Orange Revolution, have been no more successful. Nor will any posture succeed that seeks to put Russia forward as a geopolitical counterweight to the United States. Such a strategy might be politically satisfying to some, but Russia lacks the resources to compete with the United States and needs good bilateral relations in order to proceed with its own internal transformation.

At the same time, the best way to help bring about a more liberal Russia, one that promises to be more stable at home and more responsible abroad, is by working with it. The outside world can and should support the strengthening of civil society, independent media and a true transfer of political power in 2008. Isolating Russia makes no sense. Russian membership in the World Trade Organization has the potential to strengthen the rule of law, combat corruption and give Russia a stake in better relations with the outside world. Closer ties between Russia and the EU make sense for similar reasons. There should be also some understanding of what Russia and the Russian people have gone through over the past two decades. Losing a country and a special place in the world is the sort of trauma that could lead to the emergence of extreme and potentially violent nationalism.

Russia should be treated as a major power, which means consultations on important global issues. Its voice should be heard on matters ranging from terrorism and weapons proliferation to global climate changes and world economic affairs. In other words, Russia must be treated as superpower, because it still matters, in any case.