In case you missed it, early this week Kremlin authorities produced a large public celebration, replete with fireworks, on the first anniversary of Russia’s takeover of Crimea. It was accompanied by a fawning TV documentary featuring President Putin in which he reveals that he put Russian nuclear forces on highest alert during the takeover to make sure the United States did not interfere. Meanwhile, Russian-supported militias continue their war in the eastern Ukraine designed to carve out a separatist “state” aligned with Moscow. And Russian naval ships show up off the coast of Scandinavia and heavy bombers are suddenly conducting patrols on the edge of British airspace — and over the Gulf of Mexico. In sum, Russia under Vladimir Putin has become a first order security problem for Europe and the United States.
It wasn’t supposed to be like this. With the collapse of the Soviet Union, post-communist Russia was expected to finally become a normal country — part of a Europe “whole and free.” The long-suffering Russian people could build a future of peace and prosperity. Instead we have aggression against Ukraine and growing efforts to intimidate and browbeat Europe and the United States — just like the bad old days of the Cold War. In the process, Moscow has become a factory of lies. Popular demonstrations in Kiev against an abusive corrupt regime were a fascist putsch; a civilian airliner downed by a Russian anti-aircraft missile was actually shot down by a Ukrainian jet fighter; the Ukrainian army “crucified” a Russian child; uniformed Russian troops observed fighting in Ukraine are actually not there; funerals for Russian soldiers killed in Ukrainian fighting are not reported because they never happened. And so it goes.
The European Union and the United States have responded with economic sanctions on a Russian economy heavily dependent on financing from European banks. In a remarkable accident of timing, sanctions have coincided with plummeting international oil and gas prices — and with it the revenues that support the Russian state. Russia’s economy will contract by at least 5 percent this year while the currency (the ruble) has lost roughly half its value. If you are a Russian businessman who borrowed Euros or dollars to finance an investment in Russia that will earn rubles, you are in deep trouble when the banks demand repayment — in dollars and Euros. Sanctions have closed off Russian enterprises, medical centers and research institutes from the European ties that are vital sources of investment, technology and innovation. The Russian economy isn’t just contracting, it is stagnating. The celebratory fireworks in Crimea illuminated shuttered storefronts. Occupied Crimea is an economic basket case since European tourism, a mainstay of the economy, disappeared.
What in the world is going on? Why have Putin and his coterie of sycophants launched Russia on such a dangerous and self-destructive trajectory? A small industry of Russia experts has been trying to answer that question and a working consensus has emerged. Like every autocrat, Putin’s highest priority is staying in power. A few years ago, large street demonstrations in Moscow called for him to step down. He was booed at a major sporting event. Putin urgently needed to rebuild his political support. There were two avenues open to him. He could offer himself as the agent of economic reform, modernization and prosperity. Alternatively, he could be the paladin of revived national power tapping into a deep strain of Russian xenophobia fueled by Russia’s battered pride after the collapse of the once fearsome Soviet empire. Putin and his ex-KGB cronies have chosen the latter. In the process, they have produced a grotesque personality cult replete with Putin posing shirtless on horseback with a steely gaze on the world. Kremlin spokesmen pronounced that Putin was literally indispensable: “Without Putin, there is no Russia!” A long list of perceived grievances against the haughty Americans fuels the fires of resentment. What really angers the Kremlin is that the United States does not seem to be properly intimidated.
Russia’s imperial tradition and notions of a mystical and superior “Russian soul” have been resurrected. Neighboring lands with significant Russian populations must be reunited with the “motherland.” Lesser, smaller nations on Russia’s periphery should be compliant and subservient toward Moscow. All this was to be supported by military intimidation and by the dependence of Europe on Russian oil and gas. With oil selling at $110 per barrel Russian state revenues seemed limitless. And European capitals would quake in fear that a cutoff of Russian gas and oil could leave them “freezing in the dark.” Once again other nations would tremble when the Russian bear chose to growl. For the citizens of Russia, it all added up to a new social contract — Russians would elevate Putin onto a throne in return for a restoration of Russian pride and imperial vocation – while economic reforms took a back seat. Urbanites who were more focused on their economic prospects than on imperial grandeur and who saw the West as source of emulation, not an adversary — those people were shouted down. Their leaders were (and are) arrested and/or killed.
But Putin has disastrously miscalculated. Oil is selling at $47 per barrel, not $110. The Europeans, who were supposed to be weak and feckless, have adopted and held to tough sanctions. The Ukrainian government in Kiev has unexpectedly defied Moscow. Russia, led by a narcissistic thug, now finds itself in an economic cul-de-sac. It is a tragic and dangerous story — for Russians and for all of us.