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Year 2014 has been a watershed year for Russia. The country’s image abroad was bolstered by the Winter Olympics held in Sochi, only to face a sharp reversal after the West condemned its acquisition of the Crimean peninsula. Russia’s economy struggled in 2014, as it faced sanctions over the escalating Ukraine crisis, lower oil prices and an unstable ruble, but the country also signed a long-anticipated gas deal with China and completed preparations for the official start of the Eurasian Economic Union with Kazakhstan and Belarus in January 2015. Eurasia Outlook asked its experts to reflect on the dramatic events of 2014 and to share their predictions for Russia’s future and for its role on the global stage going forward.
The role of military force—both applied directly and used as an instrument of political and psychological pressure—significantly increased in 2014.
Direct use of force was foremost associated with the Ukraine crisis. Crimea’s reunification with Russia involved the deployment of Russian troops on the peninsula in addition to the Black Sea Fleet contingent in Sevastopol. These military contingents blocked the Ukrainian forces and ensured the conduct of the Crimean referendum. The Russian contingent was covertly and rapidly transferred to Crimea and acted in conjunction with special forces and armed local separatists. This tactic became known as “hybrid war,” although it did not involve actual combat.
A similar operation soon followed in the Lugansk and Donetsk regions, where thousands of Russian armed volunteers showed up. But, in this case, the use of force by both sides led to large-scale military clashes, massive casualties (including civilian ones), vast destruction, and massive flight by refugees.
The civil war in Syria, where external support was provided to the rebels, provides another example of the use of military force in 2014. After it was transformed into a sweeping offensive by the Islamic State (IS) militants in Syria and Iraq, the United States and some of its allies to intervene militarily in order to halt IS advances.
Military force was also used indirectly, primarily in connection with the Ukraine crisis. Russia demonstratively concentrated its troops near Ukraine’s eastern borders, started conducting large land- and sea-based military training exercises, combat aircraft flights in close proximity to NATO airspace, and broadly advertised strategic missile launches. For its part, the United States and its allies responded with a demonstration of military force, increasing their military presence along Russia’s western frontiers. All of this has revived, albeit as of yet on a smaller scale, Cold War era practices and created mutual suspicion and hostility between Russia and NATO.
So far, it ought to be acknowledged that the use of force represented by these new “hybrid war” tactics has yielded some tactical successes: Russia unified with Crimea and blocked Ukrainian military efforts to suppress the separatist people’s republics in Donetsk and Lugansk. In this manner, these territories effectively became unrecognized quasi-state entities. The future of these exclaves, however, remains murky. No one knows how the strategic balance of forces between the conflicting sides will change and who stands to gain or lose more from the new harsh military-political confrontation between Russia and NATO.
The conflict between Russia and NATO has drastically escalated global tensions; this conflict carries greater risks of armed incidents, undercuts the arms control regime, and breaks down security cooperation in all areas. Neither side can prevail in this show of force, but all are bound to suffer great and multifaceted losses.
Therefore, despite the heightened role of military force in global politics in 2014, there is no reason to believe that force will again become an effective tool of state policy, especially over the long term.
The year 2014 destroyed a big geopolitical myth. After this year, Russia can no longer pretend to be an “energy superpower.” The manual, and incompetent, management of its enormous natural wealth and human resources, along with an almost complete disregard for the laws of the market, have led the country to catastrophe.
Russian oil production has begun to decline because of the de-privatization of this vital industry and its monopolization by giant companies led by corrupt and arrogant government bureaucrats. A distorted fiscal system put the brakes on innovative approaches to oil exploration and production and discouraged the development of small and hard-to-recover reserves. The invasion of Ukraine also played a negative role, with international sanctions against Russia’s petroleum industry accelerating the decline. By 2030 Russia may become a net importer of oil unless a political miracle happens.
The dependence of the West on Russian natural gas is also proving to be nothing more than Moscow’s wishful thinking. Gas exports to Europe are plummeting; new low prices—stimulated by the development of unconventional reserves in North America—erode the profit margins of Russia’s monopoly exporter of gas, Gazprom. The ambitious goal to claim a major niche on the global market of liquefied natural gas remains a dream because of the prohibitively high costs of producing this commodity in Russia. And colossal projects to sell natural gas to China are commercial failures, fed only by megalomania of the Kremlin.
The geopolitical effects of this new face of Russia may be tremendous. The combination of a poor population with a dilapidated economy plus a government with imperial ambitions and a hoard of nuclear weapons is a dangerous mix.
The presidents of the Eurasian Economic Union (EEU) and Collective Security Treaty Organization (CSTO) member countries met in Moscow this December in a very friendly atmosphere. At least, such was the picture that the Russian federal television channels presented to their viewers.
The EEU will start functioning on January 1, 2015. In the near future, Armenia and Kazakhstan will join the organization's three founding members—Russia, Belarus, and Kazakhstan. Clearly, the EEU's establishment can be considered a success for Russia, since it expended colossal effort to integrate part of the post-Soviet space under its auspices.
The “Eurasian child,” however, is being born under less than favorable conditions. The Kazakh President Nursultan Nazarbayev noted that “the Eurasian Union is exposed to a great risk today, to be honest, in light of the crises.” Ruble devaluation was the key cause of his concern—it made Russian manufacturers more competitive, which he thinks may trigger protectionist measures from Russia's partners. The collapse of the ruble was primarily caused by a deep crisis in the Russian economy, accelerated in part by the Western sanctions that grew out of the Ukrainian crisis and isolated Russia from the West and some other parts of the world.
Its creators define the EEU as a purely economic structure, but it is impossible to get away from its political component. The EEU had long been referred to as the EU and EAU (both standing for Eurasian Union; only in the past year, another “e,” for “economic,” was added to this acronym. In fact, Russia has not abandoned its political ambitions within the EEU, although the Kremlin tends to avoid mentioning this.
Instead, Russian political ambitions took an extreme form in Ukraine, which made the other EEU members uneasy. Both Kazakhstan and Belarus want to distance themselves from Russian policies in Ukraine, choosing to emphasize their neutrality on the issue and develop their own relations with Kiev. Naturally, none of this helps to consolidate the EEU.
Moscow was also prepared to compensate certain states for the possible costs associated with the EEU and Customs Union (CU) membership. It is becoming increasingly difficult to deliver on this promise given the current lack of funds.
Thus, with just a few days until the EEU official start, its participants still have some reservations as to the organization’s prospects. The essential question here is whether Russia will be able to find a way out of the Ukrainian crisis by improving its relations with the West (the EEU partners are prepared to help it in this) and avoid economic collapse.
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