The Foreign Service Journal, April 2007

But today the Kremlin is attempting to turn this liability into a strength by transforming Russia into an “energy superpower.” Natural resources account for 80 percent of total exports, and energy accounts for 60 percent of resource exports. More than 50 percent of investment flows into the natural resources sector. Other characteristics of what could be called a petro- state are also becoming increasingly pronounced: the fusion of business and power; the emergence of a rentier class that lives on revenue from the sale of natural resources; endemic corruption; the dominion of large monopolies; the vulnerability of the economy to external shocks; the threat of “Dutch disease,” where high oil prices drive up the value of the ruble, putting a premi- um on imports and undercutting manufacturing exports to the detriment of domestic industry; and a large gap between rich and poor. Russia differs from other petro-states in one respect, however: the more it becomes a natural resources appendage for the rest of the world, the more its elite soothes its inferiority complex by promoting Russia’s ambitions to be a global player. A new phenomenon, the “nuclear petro-state” with superpower ambitions, may yet surprise the world. Russia in the Global Arena After 15 years of retreat in its foreign policy, Russia is regaining confidence. This confidence stems not only from high oil prices and the Kremlin’s attempt to over- come the humiliation of the 1990s, but also from purely external factors: the confusion surrounding European integration, America’s difficulties in Iraq and world resentment of U.S. hegemony. However, the most pow- erful factor explaining Russia’s new assertiveness is neces- sity. The Russian system can’t consolidate itself without a global presence. Maintaining Russia’s superpower ambi- tions and its domination of the former Soviet space is cru- cial to the perpetuation of its political system. During Putin’s first term, the Kremlin developed a multivector approach to foreign policy, which amounted to simultaneously moving west and east while refusing to make a final commitment to either direction. A substitute for the old geopolitical agenda, this approach was essen- tial for Russia’s survival in light of its diminished power and failure to integrate with the West. But today the Kremlin has abandoned ambiguity. For the first time since perestroika, Moscow has publicly declared through its foreign affairs minister, Sergei Lavrov, that Russia can- not take sides in global conflicts, but must act as a media- tor — a la Moscow’s attempts to intervene in the ongoing disputes between the West and Iran or Hamas. In short, Russia is not going to join the West. Regardless of how it might be spun, Russia’s relationship with the West is now one of “partner-opponent” — cooperation in certain areas and obstruction in others, all on the Kremlin’s own terms. Ukraine’s Orange Revolution proved to be a water- shed in the evolution of Russia’s post-Soviet identity and foreign policy by provoking the Kremlin’s desire to recov- er lost ground. The Russian elite now seeks to persuade the West to endorse a new “Yalta Agreement,” in which the West would recognize the former Soviet space as Russia’s area of influence, and accept its role as energy superpower. As for the latter, Putin has offered the world a two-part energy security proposal: First, Russia would give foreign investors access to its major deposits in exchange for allowing Russian companies access to for- eign pipelines and retail networks. Second, the West would legitimize the fusion of state power and business in Russia by letting state companies like Gazprom act as transnational majors. The West is not enthusiastic about Putin’s bargain, but appears to be at a loss as to how to build relations with Moscow. Meanwhile, the new Russian assertiveness has already triggered two energy conflicts — with Ukraine and Belarus — sending shock waves around Europe. Elaborating the new foreign policy doctrine, Foreign Minister Lavrov has offered the idea of the “geopolitical triangle,” with the U.S., Europe and Russia as the corners; Lavrov also called for abandoning the old alliances in favor of “network diplomacy.” Along the same lines, President Putin, in his Feb. 11 speech at the Munich Conference on Security Policy, put Russia forward as a pole of opposition to the U.S., yet simultaneously hinted at his desire to remain a partner of the West. How far is Moscow ready to go to pursue this new, con- troversial agenda? Is it ready for confrontation with the West? A significant portion of the Russian elite is trying to have it both ways: integration with the West for them- selves and their families, but not for the rest of society. These representatives of the ruling class, such as the oli- garch and governor Roman Abramovich, live in the West with their families, hold accounts in Western banks and even manage their Russian assets and perform their jobs from abroad. Yet, when back in Russia, they make a big F O C U S 28 F O R E I G N S E R V I C E J O U R N A L / A P R I L 2 0 0 7