Introduction

As early as in the late 1980s, academic Nikita Moiseev remarked that Russia was entering a period of dusk that could in equal measure turn into a dawn or a decline. Today there’s hardly anybody left outside the immediate “Kremlin circle” (or for that matter even inside it) who would continue to believe in Russia’s dawn.

– Vladimir Pastukhov

 

Taking the Russian state for what it is rather than what we wish it to be is the precondition for appreciating the risks it may pose to both American and Western, and even global security in the years and decades ahead. The French historian Alain Besancon observed long ago that understanding the USSR required us “to remain mentally in a universe whose coordinates bear no relationship to our own.” The same holds true for post-Soviet Russia. If we do not appreciate the mentality that animates and informs the actions of the Russian state, and the distinctive peculiarities of the state itself, we must forever be surprised or confounded by its behavior.

This book is an effort to look at today’s Russia as it really is: in serious and sustained decline. It derives from a year-long project of The Jamestown Foundation directed by one of the editors.[i] The project sought from the beginning to see Russia’s decline through Russian eyes to better understand its main dynamics and nuances, as well as to avoid mirror imaging Russian problems through distorting Western analytical filters. The essays contained in this book by a number of Russia’s and America’s best and most seasoned analysts focus sharply on “the Russian view” of decline and its visible and possible consequences. They occasionally disagree on the details or tempo of decline, but they ultimately support both the premise and its implication: Russian decline is probably irreversible.

These essays were augmented throughout the project by the findings and insights of workshops of experts, both Russian and Western. As contributions to our understanding of the phenomena of Russia’s decline and its possible consequences for both Russia and the West, these analyses suggest that much of the prevailing intellectual architecture guiding how one thinks about today’s Russia—and tomorrow’s—may be substantially wrong.

While Russian President Vladimir Putin’s ambitious and assertive Kremlin has behaved as if Russia is on the geopolitical ascent, by most indicators the Russian state is actually on a downward trajectory—and the likelihood that it will become dangerously unstable is growing given this fundamental strategic contradiction. Russia is headed toward one or a number of significant “inflection points” that will likely fundamentally alter its strength, stability and even shape. This book proposes to explore what may occur en route to these fateful, and perhaps rapidly approaching, “inflection points.” It investigates some of these possible risks from the perspectives of both Russian and Western analysts. Paradoxical as it may sound, a weakening, decaying or even failing Russian state will still possess the capability (and may very well also possess the desire) to threaten American interests profoundly—and in ways we have scarcely begun to consider.

*       *       *

For a decade or more, Russia has demanded to be treated as an ambitious, indeed aggrieved, power on the rise. The ambitions of Moscow’s ruling circles have been of course real enough—but the perception of Russia itself on the rise is, or was, largely an illusion. Indeed, as the analysts’ essays indicate, Russia is declining rapidly across virtually every measure of its power and authority as a state—its economy; demographic profile; human capital; knowledge economy; military development; internal stability and cohesion; social, religious and ethnic identities; and political institutions, practices and safety valves.

Russia’s economy is on life support. According to economist Vladislav Inozemtsev, 67 percent Russia’s economy is derived from exports of energy. Declining energy prices, which likely will accelerate as America’s energy production ramps up and world energy prices drop, more than halved Russia’s exports between 2013 and 2016. “In 2013,” concludes Inozemtsev, “Russia was a country with a $2 trillion economy with GDP calculated at market exchange rates; in 2016, it will be a $1.1 trillion economy, and will slide below $1 trillion in 2017. By 2025, Russia may become the 12th or 13th ranked economy in the world, which means it will no longer be counted as an economic superpower in any sense.” Russia’s share of global exports of all products currently is a puny 2.1 percent.

Without oil prices at least around $100 per barrel (at this writing, about half of this), Russia’s financial reserve fund will run out by 2017, which is already driving cuts to wages and pensions. Personal consumption by Russian citizens has dropped 15 percent in the last two years. Personal incomes have plummeted, and will continue to do so, and poverty levels will continue to rise. No secondary industries show much life, except those owned by foreign companies, many of which are either leaving Russia or have significantly cut back their positions there. Russia Inc.’s attraction to investors, never great beyond a few energy deals, is tanking. Russia’s Kommersant newspaper identifies 60 large global companies that have left Russia in the last three years, including BP, Royal Dutch Shell, Deutsche Bank, ConocoPhillips and Siemens.[ii]

With regard to human capital, the factors that drive much of Russia’s failure cannot be overcome. Analyst Ilan Berman describes an increasingly familiar tapestry of Russia’s collapsing demographics. Fertility is far below replacement; the share of women in prime childbearing age (20–29 years old) will decline by 50 percent in 10 years. This means that the slight uptick of population growth after 2010 will again turn dramatically downward. Abortion remains the main means of birth control, with Russian doctors today performing perhaps twice the official number of 2–2.5 million per annum. “If this tally is accurate,” notes Berman, “then the true cost of Russia’s abortion culture is the annual termination of more than 1 percent of the country’s total population.” Observes political analyst Nikolay Petrov, demographics is imploding Russia’s labor force, without which further economic growth is impossible and deprives “the most active and enterprising parts of society of potential modernization agents.” This is causing “the de facto death of the Russian countryside” and some of Russia’s ethnic republics.

Demographer Nicholas Eberstadt explains how deaths outnumbered births after the collapse of the Soviet Union—it was a “sudden, rough, and wrenching demographic shock.” The Russian Federation recorded more than 14 million more deaths than births in the period 1992–2012, typical of “a society in the grip of a famine, or an epidemic, or a cataclysmic war—not from a modern urbanized literate society during peacetime.” Today’s life expectancy for 15-year-old males is 52 years of age, ranking Russia Inc. just ahead of Burundi and behind Nigeria.

The impact of this demographic catastrophe is felt across all other aspects of Russia Inc.’s human capital. Long known as a country with a highly educated population, Russia’s working-age population with tertiary education in 1990 measured approximately 6 percent of the world’s total; it is below 3 percent today and will decline to less than 2 percent by 2040. Historian Harley Balzer explains how the number of Russia’s students participating in higher education more than doubled between 1990 and 2012, which sounds impressive, but that half of these do so through correspondence courses.

Eberstadt, Balzer, and others conclude that Russia is no longer a “knowledge economy.” The facts are startling. Russia Inc. claims only 0.36 percent of international patent applications, ranking below all OECD countries. Notes Eberstadt: “The entire Russian Federation did not earn as many patents as the US state of Alabama between 2001 and 2015—and Alabama’s population is scarcely more than a thirtieth of Russia’s.” According to Balzer, Russia is among the leaders in just 3 of the 34 most important areas of technology. In terms of scientific publications among BRICS (Brazil, Russia, India, China and South Africa), Russia ranks dead last, at less than one quarter of China’s production despite starting at a significant advantage not so long ago. With regard to publications on nano-technologies (1991–2012), for example, Balzer shows how Russia has produced about 2,500, while China produced more than ten times as many on this vital technology.

Far behind and fast losing more ground, Russia has little chance to catch up to, let alone surpass more advanced Western societies. With a per capita R&D expenditure of $126.90, according to Balzer, Russia spends approximately nine times less than the United States ($1,093) and Japan ($1,023) and six times less than Germany ($757). Political scientist Alexander Sungurov describes how in Putin’s third presidential term, “Russia reverted from efforts to become an ‘innovation state’ to a much more familiar ‘mobilization state.’ ” Inozemtsev writes, “The fortune of Sergey Brin, one of the founders of Google, exceeds all allocations for scientific research made by the Russian federal government in the last eight [!] years.”

In an explosion of cognitive dissonance, the Russian version of the top ten global universities places Lomonosov Moscow State University at number five: higher than Harvard, Stanford, Cambridge and Chicago. (Princeton, ranked first in the United States, failed to make the list.) In fact, only about one-third of Russian higher education institutions conduct R&D, notes Balzer, and the number is shrinking. Few Russian firms engage in innovation-enhancing research, and most new technology is imported. The majority of R&D institutions are run by the state, and these institutes employ 77 percent of the workers employed in R&D. “Around two-thirds of funding for S&T [science and technology] comes from the government, including more than half of the support for science in the business sector. Financing from business represents just 26% of total spending.” Since 1990, Russia has been unable to increase its output of commodities. It produces virtually no commercially viable high-tech products. Russia, in short, ruled from the corporate suite has little innovation, and “the likelihood of a coherent policy to address Russia’s knowledge economy decline remains questionable.”

Russia’s educated work force is also disappearing fast. Smart and talented Russians are not shunning the global economy. But they increasingly participate in it from somewhere other than Russia. Huge numbers are voting with their feet, causing a brain drain that has gone from a stream to a flood. Outmigration by Russians jumped dramatically after the collapse of the Soviet Union, but had stabilized at lower levels by 2010. Then, beginning in 2012, it jumped from 123,000 to 309,000 in 2014, and to 350,000 in 2015. Most of these new emigrants are young, liberal and well-educated, exactly the type Russia can least afford to lose. Where these people were headed was also no secret. In 2015, there were over 265,000 Russian applications for green cards in America.

The impact of the chaos in Russian education has been particularly devastating for the younger generation. Balzer notes that about 70 percent of young Russian specialists interviewed in late 2013 viewed reforms proposed by the Academy of Sciences as something negative, with a growing number discussing their desire to move abroad. Loss of its talent would send most countries into a panic. Such is not the case with Russia, as a number of the Jamestown Foundation participants noted. To the contrary, Vladimir Putin welcomes this development because it rids his country’s ranks of potential dissidents.

Novosibirsk is one of Russia’s leading regions for science, professional education, and production systems known historically for its advanced innovation capacities. Professor Evgeny Vodichev, a science policy expert in Novosibirsk, observes that corruption in Russia, the absence of political reforms, and competition between Russia’s center and periphery will be “unfavorable” for the development of innovation, with the advantage skewing heavily to the center. Regions like Novosibirsk are witnessing “a decrease in investment and a retreat from modernization,” with innovation being one of the first casualties. Vodichev concludes that innovation will occur mostly or exclusively in the military sector.

But the military sector is making its own substantial contribution to Russia’s decline, according to military analyst Pavel Baev. While Russia’s leadership views its military as the main instrument for succeeding in its confrontation with the West, “Moscow is unable to channel sufficient resources into proper maintenance of this complex instrument, which consequently becomes prone to accidents and malfunctioning.” Examples from Russia’s recent adventure in Syria are plentiful, especially accidents in the Air Force. Baev notes that the Russian leadership’s belief investment in its military will slow or reverse Russia’s overall decline is illusory. To the contrary, rearmament “has instead turned into a value-destructing generator of stagnation, much like in the late Soviet years.”

However, once the funding tap to the military was opened wide, there was no turning back. Any retreat from funding the sector lavishly will likely lead to uncontrollable social turmoil in a critical industry. But to meet investment targets in the military sector, Russia’s leadership must “deprive other sectors of investment resources and squeeze social programs.” Baev concludes that Russia’s defense industry “may be characterized as an unreformable black hole.” Worse, constant reorganizations in this sector intended to compensate “for the lack of other components of state power” are never completed, “which then leads to an acceleration of the general decline of the economy.”

If Russia had advantages in other arenas, it might muddle through. But Russia is fracturing along regional, ethnic and religious lines. Historian Stephen Blank chronicles Russia’s efforts to hold on to the Russian Far East and Siberia, concluding that Russian leaders have been eager to cut a deal with China—which covets the territory—to prevent losing it. In fact, the Siberia Question, argues Andrei Piontkovsky, is central to Russia’s future. As goes Siberia, so goes Russia. Russia has entered into “bondage agreements” with China over energy and resources to keep China at bay in the East. Nearly all participants in the Russia in Decline project, especially the Russian participants, pointed to the danger of Russia breaking up along regional and ethnic lines with groups in central Russia—e.g., Tatarstan and Bashkortostan—and in the North Caucasus increasingly aggressive, and successful, in separating themselves from Russia proper.

This tendency to break away from the center is notable across virtually all of the Russian Federation. But the most worrisome developments for the country come from the growing sense of identity and alienation among Russia’s vast Muslim population. To hold back separatism in the North Caucasus led by Chechens, Russia has simply paid them off in money and patronage, according to specialist Marlène Laruelle. Putin has appointed loyal strongmen from the local populations who are “tasked with eliminating rebellious movements in exchange for unlimited political and economic impunity, and a right to play the card of Islamization.”

These tradeoffs could push these territories in the same direction as Pakistan’s northern tribal federal areas, Laruelle says: “local clanic leaders and Islamic insurgents maintain a precarious (im)balance in remote regions of the country with the blessing—voluntary at first, now uncontrollable—of the central authorities.” This deal, which in effect pledges these local strongmen not to blow up Moscow in exchange for a free hand in their political affairs—including increasingly their own foreign and security policies—and little restraint on their attachment to radical Islam, is tenuous by anyone’s assessment.

But is Moscow safe from insurgency and inter-ethnic strife? “Moscow now has the largest Muslim community in Europe; about 1 million Muslim residents and up to 1.5 million Muslim migrant workers,” notes Laruelle. Other important federal institutions are also at risk. Ilan Berman cites projections that Russia’s Muslims will number at least one-fifth of Russia’s total population by 2020, and “may make up a majority of Russians by as early as mid-century.” This means, argues Laruelle, that “in 10–20 years, the majority of conscripts to the Russian army will be of Muslim background. “Already the Russian military has created ethnically distinct military brigades to impede conflict between ethnic groups under arms.

In a workshop associated with the Jamestown project, renowned expert Paul Goble described how, in addition to breaking apart, Russia is also sinking because the permafrost underlying 65% of Russia’s territory is melting rapidly due to global warming. Citing the extensive work by Russian scientists, Goble noted that by 2040, two-thirds of Russia’s permafrost will have melted with potentially catastrophic consequences: much transport infrastructure will be worthless; entire towns and industries will cease to exist; and resultant public health disasters—e.g., smallpox, anthrax—will almost certainly prove beyond Russia’s capacity to handle.[iii]

Good governance would find managing this Russia a colossal challenge under the best conditions, but Russia lacks “governance” altogether. Historian Irina Pavlova describes how, after 1991, “the mechanism of Communist power, with its infrastructure of ruling and secret decision-making remained intact,” a trend which continues to deepen, except that today “Putin has resolved the problem of consolidating and maintaining his power even more efficiently than Stalin because in a modern informational society the same goals can be achieved by effective manipulation of public opinion, which makes mass repressions redundant.”

As an organizational model, Putin’s elites now resemble “a Tsar’s court, rather than a board of trustees,” describes Petrov. Putin is surrounded by “loyal servants,” not skilled managers. It used to be that elite clans at the top in Russia had to agree on important decisions through a long process, but today each clan goes its own way without consulting with the others. Putin ultimately must adjudicate; he can veto or override, but at significant cost. “Under these circumstances, the risks of making and implementing poor decisions that go against the interests of the system—or not making decisions on time—are growing.” This “system” cannot plan or forecast, and it cannot react to crises effectively, due to the growing shortage of resources. The notorious silovki—powerful actors in the political, military, and security elite—siphon off whatever profits or low hanging fruit materializes. The major aim of the country’s elites is “to plunder national wealth rather than increase it,” writes Inozemtsev. Meanwhile the elites have no incentive to undertake industrial modernization because this would create a middle class that would threaten the kleptocracy’s grip on power.

Further, notes political analyst Anton Barbashin, the quality of Putin’s regional elites, many of whom are parachuted inorganically into the regions from outside, has plummeted since the 1990s and continues to degrade. Loyalty is favored over efficiency, Putin’s personnel selections are “corrosive,” and strongmen sent from the center to sort out the periphery usually do so “in the service of their own interests.” And consequently, the outflow of talent accelerates.

Russia has no obvious succession planning. As noted by sociologist Denis Volkov, Russia’s current leaders are aging, and by the time of the next electoral cycle (2020), most will be in their late seventies. Actuarial tables do not lie, and they say change is coming. Russian elections, structured (and intended) to bless existing authorities rather than supply new elites, will be challenging, argues Volkov, especially in an environment of economic decline and social strife. “And there is absolutely no guarantee that the transfer of power in the mid-2020s will be as successful as the transfer of the presidency from Putin to Medvedev at the end of the 2000s. In this set of circumstances, there is a danger that the post-Putin political system could collapse altogether.”

Adds Vladimir Pastukhov, “decline lies in the thinning of Russia’s ‘cultural layer’ and consequent degradation of the elites, who turned out to be incapable of finding adequate responses to new historic challenges.” And as more and more of Russia’s educated talent flees to Europe and the United States causing innovation and growth to collapse, “Russia will move closer and closer to the precipice of becoming a ‘loser state,’ ” argues Sungurov. If Putin were no longer in power and no credible successors were obvious, a bad scenario would lead to worse: “the Russian Federation will collapse into six or seven parts […] all with different political regimes,” many with nuclear weapons.

*       *       *

The downward pull of Russia’s myriad pathologies may eventually—probably sooner than later—precipitate Russia’s failure as a state. For those of us raised asking when and how the former Soviet Union would finally collapse, Russia’s demise is not a long stretch. But these were questions most Western intelligence agencies, research institutions and think tanks eschewed as too provocative to tackle, as if to speak of them was to invite their reality. But they have to be addressed; evidence that Russia is headed toward an ugly denouement is now too plentiful to ignore.

The pathways to Russia’s future will be shaped by the facts of its decline. These pathways pose arduous challenges for the new stewards of America’s foreign and security policies. Even a casual look at Russia’s planned defense expenditures—dropping, to be sure, but relatively higher than investment in most non-defense areas—demonstrates where Russia’s leadership believes decline can be slowed most effectively. Russia’s military is not what it was, and it is unlikely to regain its technological prowess, let alone find the conscripts it needs to build a serious army again. But for many conflicts, it will good enough to compete effectively and, against reluctant competition, even prevail. In the background, Russia will increasingly rattle its nuclear armory and, if all else fails, use it, as it has repeatedly threatened to do. “Putin’s Russia demonstrates military might through constant massive exercise that imply the threat of the use of force,” notes defense analyst Pavel Felgenhauer, “but thus far it has tended to bully and attack the weak,” for example Georgia, Ukraine and the Syrian opposition.

“The Kremlin,” observes Pavel Baev, “is convinced that its readiness to accept greater risks is a major political advantage in various tests of wills and asymmetric responses that shape the mode of this confrontation [with the West]… The regime’s capacity to absorb a defeat is quite low and further diminished by the heavily propagandistic emphasis on ‘new victories’…” The house of Putin “lives in fear of a sudden shift in public opinion caused by a revelation if its weakness.” With its existence as a viable state on the line, Russia will be forced to take unprecedented risks aimed at keeping Russia competitive—and Putin and his associates in power—for as long as possible.

Participants in Jamestown’s Russia in Decline project returned to this theme over and over. Declining Russia is like a poker player who knows he has a bad hand, but that he must continue to play it to remain in the game. He will bluff, intimidate, coerce, and deny as long as cards remain in his hand and the other players fold. He will place outsized bets in the belief that others will throw in their hands. Of course, at some point, Putin will miscalculate, creating contingencies for Western foreign policy and defense planners that will require difficult decisions and concerted responses. Some of these probable contingencies are foreseeable; others are not. “Never in its history has Russian authoritarianism been so aggressive, so determined, and so consistent in its actions,” writes Pavlova. Russia today “is more dangerous than the Soviet Union was during the Cold War.” Moreover, “the main tools of its foreign policy arsenal remain, just as they were in Stalin’s time—blackmail, provocations and bluffing.”

Felgenhauer reminds us that the center is the weakest point of any authoritarian state, the Russian Federation being no exception. “Any change that may eventually happen will come not through elections with ballot boxes stuffed in the provinces, but through some revolution in Moscow, peaceful or otherwise.” Thus the importance of the “dormant discontent of the better educated professional class in Moscow and St. Petersburg.” Other analysts see the restiveness of Russia’s periphery as the trigger to a larger national implosion. Either way, nearly all saw the die as cast: Russia’s decline is irreversible, with consequences that will be far reaching.

Conclusions and Policy Recommendations

What kind of actor will declining Russia become? In fact, evidence is already plentiful. Russia’s deteriorating condition means that it will be hard pressed to compete effectively in a world of several rising powers with interests in displacing it. Russia’s window of opportunity to be an effective competitor is closing rapidly on all sides. Can anything be done to plan for Russia’s inevitable decline? Throughout the Russia in Decline project, participants offered a wide range of thoughtful scenarios and recommendations. A short list of their recommendations for policy would include:

  1. Developing a comprehensive ability to track and understand the dynamics of Russian decline and the kinds of contingencies that these dynamics could produce.
  1. Understanding Russia’s decline and the pathologies that drive it through Russian eyes. How do Russians envision their future? Where do they believe Russia currently is strong and holds advantages over its Western adversaries? Every effort should be made to avoid “mirror imaging” Russia’s condition and options through Western filters. Putting additional effort into understanding Russia’s public attitudes and sentiments, as efforts to influence them will increasingly have to be part of any Western strategy; this will also serve as a transmission belt of scarce knowledge that we would have difficulty obtaining in other ways.
  1. Developing a multi-dimensional strategy—or suite of strategies—that includes both hard and soft power elements. For example:
  • designing and implementing a strong “flank” strategy to strengthen the new states around Russia (Ukraine, the Caucasus, Central Asia) that are likely to be primary targets of Russian aggression, and in which important Western interests increasingly reside;
  • strengthening NATO and Europe’s military capabilities; and
  • building an information strategy to proactively counteract Russia’s pervasive propaganda and efforts to shape the competitive environment according to its own vision and objectives.
  1. Reviewing lessons from the Cold War on efforts to dissuade and contain Russia, and their effects and consequences.
  1. Creating within the National Security Council a framework for understanding Russia, not a graduate seminar, which can be updated and improved continuously.
  1. Entertaining opportunities for both “cost-imposing” and “competitive” strategies that distract and deflect Russian attention in ways that raise its costs for activities that threaten Western interests, while re-channeling, where possible, Russian energies to support our preferred outcomes.
  1. Expecting surprise. Given Russia’s increasingly precarious competitive position and its growing predisposition to act in ways that we might think irrational, we need to anticipate possible surprises through exercises and analyses that take surprise into account. “Wildcards” are inevitable and can be planned for, and hedging strategies can be designed to deal with them.

 

ENDNOTES

 

[i] https://jamestown.org/programs/rd/.

 

[ii] http://rbth.com/business/2016/01/21/which-companies-are-leaving-russia_561111.

 

[iii] See many related entries in http://windowoneurasia2.blogspot.com/.