With the ruble in trouble, stock markets plunging and the economy bleeding billions of dollars, Russia’s economic outlook is a far cry from the situation that current Prime Minister and future President Vladimir Putin left when he handed the top job over to Dmitry Medvedev four years ago.
While some efforts have been made to turn the situation around, including attempts to streamline and restructure Russia’s financial institutions and boost the investment climate, the Russian government’s continuing stranglehold on the economy and disreputable financial institutions are keeping investors away.
Putin will have to deal with this economic nightmare on his almost certain return to the Kremlin. One might think Putin would already be focusing all his attention on this perilous situation. However, it seems that his mind is elsewhere, dreaming about the imperial days of the past. Putin’s concerns about losing Russia’s “sphere of influence” as other powers such as China, the EU and Turkey begin to make inroads into Russia’s almost sacred “back yard,” is clearly occupying Putin’s mind. With Medvedev having made little progress on Russia’s policy goal of increasing Moscow’s weight on the world stage, Putin seems to have been contemplating how to turn this around.
A few days after announcing his intention to run for the presidency again, Putin penned his first foreign policy priority. His newest brainwave is the creation of a Eurasian Union. While the concept is more bones than meat, Putin has grandly described it as “the new integration project for Eurasia: a future that begins today.” Although I guess he has not yet run the idea past those countries that he will endeavor to seduce (in one way or another) into signing up for this initiative, he has said that the end result would go far beyond a more integrated economic space, rather the key aim would be to become one of the “poles of the modern world.”
Not surprisingly, Putin has not yet proffered up any further details. He has offered no information on how such a union would be implemented or coordinated. Indeed I doubt very much that he has given it much thought at all. It probably sounded like a good idea that would surely get people talking and get him newspaper headlines, which indeed it has done. No doubt he will make up the rest as he goes along.
While Putin has stated that such a union would greatly help integrate countries in the region by combining their human and economic capital to “ensure the stability of global development,” he does not see it as a replacement for the Commonwealth of Independent States (CIS), but rather as a complementary tool that would strengthen cooperation between the states in areas such as transportation and energy.
However, no matter how nice this may sound to Mr. Putin, I doubt that the countries he is targeting will view it in the same light. First, most of the former states of the CIS simply do not trust Russia, with several having less than harmonious relations with Putin, so I imagine that the initial reaction to the creation of such an organization would be one of suspicion, likely being perceived as something that will mainly be of benefit to Russia (both politically and economically) and, almost inevitability, Russia would monopolize it and be the main decision maker, as has been the case with the Collective Security Treaty Organization (CTSO) and CIS.
Furthermore, Russia hardly has many success stories in terms of other such organizations. The Russian-led Customs Union, which was officially launched this summer, has only Kazakhstan and Belarus as members. While Russia pulled out almost every trick in the book to get Ukraine to join, ultimately Kyiv rejected it, knowing that the economic benefits of joining would be very short term, that it would not help their integration into the world economy and that the main beneficiary would be Moscow. Rather Kyiv chose to move ahead with a Deep and Comprehensive Free Trade Agreement with the EU instead, much to Russia’s fury.
Clearly this union is a reflection of Putin’s imperial tendencies and his obsession with maintaining a “near neighborhood” policy. Putin wants to reassert regional dominance, to be a center of power and to try and prevent countries like Ukraine from further integrating with the EU. While it is clear that it is optimal for all these nations to have good ties with their big neighbor, these relations need to be based on equal partnerships.
Unfortunately, today’s Russia does not believe in equal partnerships with what it still views as its former subjects. Putin’s return is likely to entrench this further. Frankly, Putin would be better placed to concentrate his attention on halting the economic and social disintegration of his country, rather than spending his time daydreaming of empire building and spheres of influence.