Like a rudderless ship running out of fuel and buffeted in an icy storm, the Russian economy looks as if it is heading for a crash.
All the graphs – the rouble-dollar rate, the slump in GDP, bank
interest rates, oil prices – look like menacing icebergs. The only
question seems to be how long the ship can stay afloat.
There are two immediate causes of the crisis: the price of oil, and
western sanctions. Oil is trading at below $60 a barrel while Russia,
still overwhelmingly dependent on exports of its most precious resource,
needs a price of $105 to balance its books. That’s the consequence of
having failed to reform and diversify the economy over the past 20
years.
As for the west’s sanctions, they were introduced with one explicit
aim – to force Putin to change tack in Ukraine. At least, that was the
stated aim. But since the measures show no sign of having any effect on
his thinking, and yet the west is considering even more sanctions, there
is obviously another goal – to punish Putin for his actions, regardless
of whether he changes his mind. Sadly, it is not Putin who feels this
punishment. It is the Russian people.
The west needs to accept a simple fact: that Putin’s response to
sanctions is always bizarre. He tends to favour reactions that hit his
own people rather than the west. America passed the Magnitsky Act to “punish” those alleged to be responsible for the killing of the lawyer Sergei Magnitsky,
and Putin responded by banning adoptions of Russian orphans by
Americans. There is no sign that the killers of Magnitsky suffered in
any way; indeed the only official being investigated for the crime was released.
The west imposed sanctions on Putin’s “cronies” and Russian banks
because of the invasion of Ukraine and annexation of Crimea; and Putin
responded by banning the import of western foodstuffs.
To keep repeating the same mistake again and again and expecting
different results is, as they say, a sign of madness. And if by doing so
you punish only ordinary Russian people, then it is also cruel – and
counterproductive. Twenty years ago the dream was to rescue the former
communist world and bring prosperity and democracy to its people. What
we are doing now is impoverishing and alienating the Russians.
We can, of course, stick to our guns and insist that “sanctions are
having an effect”. But what will we gain if the only effect is to
destroy the Russian economy? Perhaps the hope is to destabilise the
country so much that Putin is overthrown. (I detect much schadenfreude
among observers, who desperately hope a collapse of the Russian economy
will bring about Putin’s fall.) If so, it is a highly dangerous game of
chance. Pouring fuel on Kremlin clan wars that we barely understand
would be the height of folly. We have no idea what the outcome might be –
and it could be much worse than what we have at present.
Or perhaps the hope is that the Russian people, ground down into
poverty and despair, will rise up against the Kremlin and install a
government of the west’s choosing. Dream on!
It has long been my contention that we should deal with the causes of
Putin’s aggressive behaviour, not the symptoms. There is a way to bring
him back into the fold (always assuming that anyone actually wishes to
do so any more), but it will require fresh ideas that are utterly
unappealing to most of the west’s leaders. It will take bold and
imaginative thinking, not kneejerk reactions and the false logic of
piling on ever tougher sanctions.
Perhaps it is time to recognise that George W Bush’s disastrous
foreign policy legacy encompasses far more than just Iraq, torture and
the fanning of terrorism. Bush also understood nothing about Russia –
right from the moment that he looked into Putin’s eyes and told us how
he “got a sense of his soul” – and now we are living with the consequences.
It was the Bush administration that created the sense of insecurity
that has caused Russia to react, and overreact, to every perceived
threat – including, most recently, the perception that Ukraine was being
forcibly dragged out of Russia’s orbit and into the west’s. Bush
unilaterally abandoned the anti-ballistic missile treaty,
seen by Russia as the cornerstone of strategic balance; he began
building a missile shield on Russia’s doorstep; he expanded Nato to
Russia’s frontiers, blithely granting the east Europeans “security”
while causing Russia to feel threatened.
The solution is clear. Abandon the missile shield. End the expansion
of Nato. And think boldly about a new security arrangement for the whole
of Europe – one that will bring Russia in rather than leaving it
outside feeling vulnerable. If this were done, everything I know about
Putin and Russia tells me the crisis over Ukraine would be solved - and
the Russian economy would not end up being needlessly destroyed, causing
woe and bitterness among its people. If it is not done, we will have to
deal with a resentful Russia for decades – for Putin’s successors will
also demand security.
Let us return to the ideals of 1989, when Mikhail Gorbachev envisaged a new “common European home”. That is what every Russian leader since him has wanted – while the west, it seems, never did.
• Angus Roxburgh served as an adviser to the Russian government from 2006 to 2009
