Russia's President Dmitry Medvedev attends a session of the presidential commission for modernisation and technological advancement of the Russian economy in the town of Fryazino outside Moscow, October 28, 2009.
The Obama Administration's strategy of unilateral U.S. concessions may fail. Instead, the U.S. should pursue a strategy based on a realistic assessment of Russian economic power. The White House should deny Russia economic benefits if it pursues anti-American policies. Meanwhile, the U.S. should work with its European allies to diversify their natural gas supplies, to defeat Russian hopes of blackmailing Europe into further strategic concessions, to block Russian weapons and sales to Iran and Venezuela, and to oppose Russia's attempt to reestablish its hegemony in the "near abroad." Finally, the Administration should focus U.S.-Russian strategic and economic cooperation on matters in which pursuit of mutual interests is possible.
The Russian Economic Crisis and Its Aftermath
Since the summer of 2008, the Russian economy has undergone a major economic meltdown, largely due to the global financial crisis. The crisis caused a significant decline in oil and gas revenues, the principal source of income for the Russian economy and the government.
Beginning in the fall of 2008, the financial resources for Russia's assertive foreign and defense policy dwindled, with Russia's massive hard currency reserves declining from about $600 billion to about $400 billion. However, economic growth resumed in the second quarter of 2009 before the reserves were exhausted.
Russia has been an important U.S. foreign policy priority since World War II. For decades, the U.S. has strived to bring Russia into the international system as a predictable and constructive partner. While progress in international security has been slow and difficult, as shown by the August 2008 war in Georgia and Russian intransigence on Iran, the prospects of progress in business and economics appears more promising.
Despite the downturn, Russia has pocketed the Obama Administration's concessions on missile defense deployment in Poland and the Czech Republic, ignored the White House pleas for cooperation on Iran sanctions, and continued to pressure Georgia and Ukraine. Russia is also continuing its military modernization and establishing military bases from the Fergana Valley in Central Asia to the Black Sea.
At the same time, Moscow is a U.S. partner in arms control and resupplying U.S. and NATO forces in Afghanistan. A senior Obama Administration official has characterized Russia as "neither friend nor foe" of the West,[3]while the United States and NATO are defined as principal adversaries in the Kremlin's national security documents.
Clearly, the type of economy and form of government that Russia assumes are strategic issues for the U.S. The Russian leadership is divided on these issues. The foreign and security policies arising from the current commodity-dependent export model, which is promulgated by Prime Minister Vladimir Putin and First Deputy Premier Igor Sechin drastically differ from policies based on a knowledge-based, high-technology economy supported by President Dmitry Medvedev and economic reformers.
An economic model based on natural resources would tend to perpetuate authoritarianism, nationalism, and corruption, and it would require Russia to follow a neo-imperial policy throughout the Commonwealth of Independent States (CIS) to support Russian domination of the pipeline system. In a way, the petrostate model and the associated militarized foreign policy require Russia to label the U.S. as an enemy. A more open and diversified economy would be more compatible with democratization and the rule of law.
Russia's falling economic performance has dampened some aspects of the revisionist rhetoric, but has not drastically changed Russia's foreign policy narrative, which remains decidedly anti-status quo and implicitly anti-American. Recent increases in oil prices ensure the continuation of this policy. Even during the current crisis, Russia has continued to voice strong grievances against the West and made revisionist demands to change key international economic and European security institutions for its benefit.
Unless the Kremlin significantly reorients its foreign and security policy priorities, the Obama Administration's attempt to "reset" U.S.-Russian relations may fail. Only a coherent policy by the Obama Administration and Congress can force the Russian leadership to realize that they would be better served by cooperating with the U.S. and the West than by subverting it.
The Russian Petrostate Rollercoaster
In the 1990s, the Russian economy struggled with a difficult transition from central planning to a market economy under Boris Yeltsin. In the current decade, wealth from raw materials has fueled an increasingly revisionist foreign policy. Yet while the Russian elite views Russia as a great energy and military power, its economic productivity is only one-third of U.S. productivity,[4] and its gross domestic product (GDP) is between $1.1 trillion and $1.8 trillion, depending on oil prices, and is smaller than the GDPs of France, Italy, and the U.K.
From 2000 to 2008, the Kremlin benefited from rising oil prices. Prime Minister Vladimir Putin's popularity soared as Russia entered a period of intense economic growth.
By 2008, Russia had become one of the 10 largest economies in the world. In only 10 years, its GDP had increased by more than eightfold (measured in U.S. dollars), having grown at an average annual rate of around 7 percent in constant rubles.[5] Real wages increased significantly, from $62 in 1999 to $529 in 2007.[6] Russia had the best stock market performance of any emerging markets during this time.[7]
This economic growth occurred despite the Kremlin's efforts, beginning in 2003, to renationalize much of Russia's natural resources and other strategic sectors of the economy. In 2003, the Kremlin took control of YUKOS, the largest publicly traded Russian oil company, and jailed its owner Mikhail Khodorkovsky. During Putin's second presidential term, the Kremlin's international rhetoric and actions became increasingly assertive, even aggressive.
TO READ COMPLETE STORY....Click this link
Disclaimer statement
Whilst every effort has been made to ensure the accuracy of the information supplied herein, DTN News ~ Defense-Technology News cannot be held responsible for any errors or omissions. Unless otherwise indicated, opinions expressed herein are those of the author of the page and do not necessarily represent the corporate views of DTN News ~ Defense-Technology News.
Tuesday, November 03, 2009
DTN News: Russia's Economic Crisis And U.S.-Russia Relations ~ Troubled Times Ahead
DTN News: Russia's Economic Crisis And U.S.-Russia Relations ~ Troubled Times Ahead
*Source: The Heritage Foundation by Ariel Cohen, Ph.D. and Richard E. Ericson, Ph. D. Backgrounder #2333
*Abstract: Russia's revenues from oil and natural gas are enabling its aggressive and often anti-Western foreign policy. Russia's falling economic performance has toned down Russia's rhetoric, but has not drastically changed Russia's foreign policy narrative, which remains decidedly anti- status quo and implicitly anti-American. The U.S. needs to devise incentives for steps that facilitate Russia's integration into global markets, but deny benefits if Russia continues to pursue anti-American policies or refuses to enact the needed changes.
(NSI News Source Info) KOTTAKKAL, Kerala, India - November 4, 2009: As the Obama Administration embarks on a major readjustment of U.S. policy toward Russia,[1] U.S. policymakers need to understand how the economic crisis is influencing Russia's foreign and domestic policies, and thereby affects U.S. interests. Much of Russia's assertiveness and adventurism in recent years floated on a bubble of expensive oil and natural gas exports. Today, however, the Russian elite appears to be divided between those who hope that natural resources will continue to finance Russia's assertive foreign policy, and those, like President Dmitry Medvedev, who are calling for a major reform to clean up corruption, strengthen the court system, and move away from the current resource-export model toward a knowledge-based economy that is integrated into the global economy.Russia's President Dmitry Medvedev attends a session of the presidential commission for modernisation and technological advancement of the Russian economy in the town of Fryazino outside Moscow, October 28, 2009.
The Obama Administration's strategy of unilateral U.S. concessions may fail. Instead, the U.S. should pursue a strategy based on a realistic assessment of Russian economic power. The White House should deny Russia economic benefits if it pursues anti-American policies. Meanwhile, the U.S. should work with its European allies to diversify their natural gas supplies, to defeat Russian hopes of blackmailing Europe into further strategic concessions, to block Russian weapons and sales to Iran and Venezuela, and to oppose Russia's attempt to reestablish its hegemony in the "near abroad." Finally, the Administration should focus U.S.-Russian strategic and economic cooperation on matters in which pursuit of mutual interests is possible.
The Russian Economic Crisis and Its Aftermath
Since the summer of 2008, the Russian economy has undergone a major economic meltdown, largely due to the global financial crisis. The crisis caused a significant decline in oil and gas revenues, the principal source of income for the Russian economy and the government.
Beginning in the fall of 2008, the financial resources for Russia's assertive foreign and defense policy dwindled, with Russia's massive hard currency reserves declining from about $600 billion to about $400 billion. However, economic growth resumed in the second quarter of 2009 before the reserves were exhausted.
Russia has been an important U.S. foreign policy priority since World War II. For decades, the U.S. has strived to bring Russia into the international system as a predictable and constructive partner. While progress in international security has been slow and difficult, as shown by the August 2008 war in Georgia and Russian intransigence on Iran, the prospects of progress in business and economics appears more promising.
Despite the downturn, Russia has pocketed the Obama Administration's concessions on missile defense deployment in Poland and the Czech Republic, ignored the White House pleas for cooperation on Iran sanctions, and continued to pressure Georgia and Ukraine. Russia is also continuing its military modernization and establishing military bases from the Fergana Valley in Central Asia to the Black Sea.
At the same time, Moscow is a U.S. partner in arms control and resupplying U.S. and NATO forces in Afghanistan. A senior Obama Administration official has characterized Russia as "neither friend nor foe" of the West,[3]while the United States and NATO are defined as principal adversaries in the Kremlin's national security documents.
Clearly, the type of economy and form of government that Russia assumes are strategic issues for the U.S. The Russian leadership is divided on these issues. The foreign and security policies arising from the current commodity-dependent export model, which is promulgated by Prime Minister Vladimir Putin and First Deputy Premier Igor Sechin drastically differ from policies based on a knowledge-based, high-technology economy supported by President Dmitry Medvedev and economic reformers.
An economic model based on natural resources would tend to perpetuate authoritarianism, nationalism, and corruption, and it would require Russia to follow a neo-imperial policy throughout the Commonwealth of Independent States (CIS) to support Russian domination of the pipeline system. In a way, the petrostate model and the associated militarized foreign policy require Russia to label the U.S. as an enemy. A more open and diversified economy would be more compatible with democratization and the rule of law.
Russia's falling economic performance has dampened some aspects of the revisionist rhetoric, but has not drastically changed Russia's foreign policy narrative, which remains decidedly anti-status quo and implicitly anti-American. Recent increases in oil prices ensure the continuation of this policy. Even during the current crisis, Russia has continued to voice strong grievances against the West and made revisionist demands to change key international economic and European security institutions for its benefit.
Unless the Kremlin significantly reorients its foreign and security policy priorities, the Obama Administration's attempt to "reset" U.S.-Russian relations may fail. Only a coherent policy by the Obama Administration and Congress can force the Russian leadership to realize that they would be better served by cooperating with the U.S. and the West than by subverting it.
The Russian Petrostate Rollercoaster
In the 1990s, the Russian economy struggled with a difficult transition from central planning to a market economy under Boris Yeltsin. In the current decade, wealth from raw materials has fueled an increasingly revisionist foreign policy. Yet while the Russian elite views Russia as a great energy and military power, its economic productivity is only one-third of U.S. productivity,[4] and its gross domestic product (GDP) is between $1.1 trillion and $1.8 trillion, depending on oil prices, and is smaller than the GDPs of France, Italy, and the U.K.
From 2000 to 2008, the Kremlin benefited from rising oil prices. Prime Minister Vladimir Putin's popularity soared as Russia entered a period of intense economic growth.
By 2008, Russia had become one of the 10 largest economies in the world. In only 10 years, its GDP had increased by more than eightfold (measured in U.S. dollars), having grown at an average annual rate of around 7 percent in constant rubles.[5] Real wages increased significantly, from $62 in 1999 to $529 in 2007.[6] Russia had the best stock market performance of any emerging markets during this time.[7]
This economic growth occurred despite the Kremlin's efforts, beginning in 2003, to renationalize much of Russia's natural resources and other strategic sectors of the economy. In 2003, the Kremlin took control of YUKOS, the largest publicly traded Russian oil company, and jailed its owner Mikhail Khodorkovsky. During Putin's second presidential term, the Kremlin's international rhetoric and actions became increasingly assertive, even aggressive.
TO READ COMPLETE STORY....Click this link
Disclaimer statement
Whilst every effort has been made to ensure the accuracy of the information supplied herein, DTN News ~ Defense-Technology News cannot be held responsible for any errors or omissions. Unless otherwise indicated, opinions expressed herein are those of the author of the page and do not necessarily represent the corporate views of DTN News ~ Defense-Technology News.
Russia's President Dmitry Medvedev attends a session of the presidential commission for modernisation and technological advancement of the Russian economy in the town of Fryazino outside Moscow, October 28, 2009.
The Obama Administration's strategy of unilateral U.S. concessions may fail. Instead, the U.S. should pursue a strategy based on a realistic assessment of Russian economic power. The White House should deny Russia economic benefits if it pursues anti-American policies. Meanwhile, the U.S. should work with its European allies to diversify their natural gas supplies, to defeat Russian hopes of blackmailing Europe into further strategic concessions, to block Russian weapons and sales to Iran and Venezuela, and to oppose Russia's attempt to reestablish its hegemony in the "near abroad." Finally, the Administration should focus U.S.-Russian strategic and economic cooperation on matters in which pursuit of mutual interests is possible.
The Russian Economic Crisis and Its Aftermath
Since the summer of 2008, the Russian economy has undergone a major economic meltdown, largely due to the global financial crisis. The crisis caused a significant decline in oil and gas revenues, the principal source of income for the Russian economy and the government.
Beginning in the fall of 2008, the financial resources for Russia's assertive foreign and defense policy dwindled, with Russia's massive hard currency reserves declining from about $600 billion to about $400 billion. However, economic growth resumed in the second quarter of 2009 before the reserves were exhausted.
Russia has been an important U.S. foreign policy priority since World War II. For decades, the U.S. has strived to bring Russia into the international system as a predictable and constructive partner. While progress in international security has been slow and difficult, as shown by the August 2008 war in Georgia and Russian intransigence on Iran, the prospects of progress in business and economics appears more promising.
Despite the downturn, Russia has pocketed the Obama Administration's concessions on missile defense deployment in Poland and the Czech Republic, ignored the White House pleas for cooperation on Iran sanctions, and continued to pressure Georgia and Ukraine. Russia is also continuing its military modernization and establishing military bases from the Fergana Valley in Central Asia to the Black Sea.
At the same time, Moscow is a U.S. partner in arms control and resupplying U.S. and NATO forces in Afghanistan. A senior Obama Administration official has characterized Russia as "neither friend nor foe" of the West,[3]while the United States and NATO are defined as principal adversaries in the Kremlin's national security documents.
Clearly, the type of economy and form of government that Russia assumes are strategic issues for the U.S. The Russian leadership is divided on these issues. The foreign and security policies arising from the current commodity-dependent export model, which is promulgated by Prime Minister Vladimir Putin and First Deputy Premier Igor Sechin drastically differ from policies based on a knowledge-based, high-technology economy supported by President Dmitry Medvedev and economic reformers.
An economic model based on natural resources would tend to perpetuate authoritarianism, nationalism, and corruption, and it would require Russia to follow a neo-imperial policy throughout the Commonwealth of Independent States (CIS) to support Russian domination of the pipeline system. In a way, the petrostate model and the associated militarized foreign policy require Russia to label the U.S. as an enemy. A more open and diversified economy would be more compatible with democratization and the rule of law.
Russia's falling economic performance has dampened some aspects of the revisionist rhetoric, but has not drastically changed Russia's foreign policy narrative, which remains decidedly anti-status quo and implicitly anti-American. Recent increases in oil prices ensure the continuation of this policy. Even during the current crisis, Russia has continued to voice strong grievances against the West and made revisionist demands to change key international economic and European security institutions for its benefit.
Unless the Kremlin significantly reorients its foreign and security policy priorities, the Obama Administration's attempt to "reset" U.S.-Russian relations may fail. Only a coherent policy by the Obama Administration and Congress can force the Russian leadership to realize that they would be better served by cooperating with the U.S. and the West than by subverting it.
The Russian Petrostate Rollercoaster
In the 1990s, the Russian economy struggled with a difficult transition from central planning to a market economy under Boris Yeltsin. In the current decade, wealth from raw materials has fueled an increasingly revisionist foreign policy. Yet while the Russian elite views Russia as a great energy and military power, its economic productivity is only one-third of U.S. productivity,[4] and its gross domestic product (GDP) is between $1.1 trillion and $1.8 trillion, depending on oil prices, and is smaller than the GDPs of France, Italy, and the U.K.
From 2000 to 2008, the Kremlin benefited from rising oil prices. Prime Minister Vladimir Putin's popularity soared as Russia entered a period of intense economic growth.
By 2008, Russia had become one of the 10 largest economies in the world. In only 10 years, its GDP had increased by more than eightfold (measured in U.S. dollars), having grown at an average annual rate of around 7 percent in constant rubles.[5] Real wages increased significantly, from $62 in 1999 to $529 in 2007.[6] Russia had the best stock market performance of any emerging markets during this time.[7]
This economic growth occurred despite the Kremlin's efforts, beginning in 2003, to renationalize much of Russia's natural resources and other strategic sectors of the economy. In 2003, the Kremlin took control of YUKOS, the largest publicly traded Russian oil company, and jailed its owner Mikhail Khodorkovsky. During Putin's second presidential term, the Kremlin's international rhetoric and actions became increasingly assertive, even aggressive.
TO READ COMPLETE STORY....Click this link
Disclaimer statement
Whilst every effort has been made to ensure the accuracy of the information supplied herein, DTN News ~ Defense-Technology News cannot be held responsible for any errors or omissions. Unless otherwise indicated, opinions expressed herein are those of the author of the page and do not necessarily represent the corporate views of DTN News ~ Defense-Technology News.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment