Publication: Eurasia Daily Monitor Volume: 2 Issue: 206

A visit to the Netherlands on November 1-2 provided Russian President Vladimir Putin with a timely opportunity to re-establish his European credentials. The previous week had a distinct Asian flavor with the prime-ministerial meeting of the Shanghai Cooperation Organization (SCO) in Moscow (Kommersant, October 27). It was all smiles and handshakes, but then events turned quarrelsome as the UN Security Council took up the Syrian issue. For Moscow, far more than just arms sales and debt repayment was at stake with Damascus, since a week prior to that debate it had felt obliged to condemn Iran for the appeal “to wipe Israel from the map” (Nezavisimaya gazeta, Lenta.ru, October 28). Foreign Minister Sergei Lavrov did his best to soften the resolution prepared jointly by the United States and France by threatening to veto it – and then joined the unanimous vote for a seriously watered down document (Kommersant, November 1). Tehran was thus assured that it could count on Russian support in the forthcoming discussions in the IAEA, but after a diplomatic “victory” of this sort it was quite necessary for Putin to show his Western face.

No topic suits the purpose of fostering “togetherness” better than the common struggle against terrorism, and Putin exploited it to the fullest by asserting that Russia was defending not only its own but European interests as well in Chechnya and the Caucasus since, “If we would allow the terrorist to raise their heads in one place they would do it also in other places” (RIA-Novosti, November 2). He warned against showing any weakness in this struggle against “animals in the human form” and observed ironically that some European politicians showed so much concern for human rights as if they attempt to be “greater Muslims than the Prophet Mohammed” (Lenta.ru, November 2). Apparently, the Kremlin now is certain that Russia’s place in the forefront of the confrontation with international terrorism is beyond question and also that – unlike some vacillating Westerners who are too soft on the enemy that seeks to abuse democratic norms – it has a winning strategy.

This confidence is based partly on the absence of any terrorist attacks in Moscow for more than a year but mostly on the remarkably quick suppression of the armed uprising in Nalchik, Kabardino-Balkaria, in mid-October (Vedomosti, October 14; EDM, October 14, 20). The unusual feature of that bloody clash was that the rebels did not invade from Chechnya but were all local citizens, mostly teenagers (Izvestiya, October 18). The majority of Russians saw in Nalchik not an efficient joint operation of the army and special services but a manifestation of the escalating crisis in the North Caucasus (Gazeta.ru, October 19). Even mainstream conservative commentators argue about the dead-end of Russia’s policy in this region caused largely by the denial of the progressive paralysis of the thoroughly corrupt local power structures (GlobalRus.ru, October 20). Putin, nevertheless, insists upon presenting this “victory” as proof of the effectiveness of his counter-terrorist strategy, dismissing the skepticism of Dutch journalists (Kommersant, November 1).

What makes him so sure of himself is the second theme that invariably comes to dominate the discussions during his European tour: Russian exports of oil and gas. There was nobody from Gazprom in Putin’s entourage this time, but he managed to advance this behemoth-of-a-company’s agenda by advertising the prospects for joining the “strategic” project for a gas pipeline under the Baltic Sea (Vremya novostei, November 2). Meeting with business leaders, the Russian president also impressed them with his grasp of technical detail related to the Sakhalin-2 project where Royal Dutch Shell had found serious reasons for re-negotiating the deal – which, according to Putin, was quite unfortunate and totally unconvincing, so the international energy giant would have to abide by its original commitment (Kommersant, November 2).

There are apparently no doubts in the Kremlin that the hydrocarbon agenda is a major source of Russia’s international strength, but economic experts in Moscow keep questioning this assumption with growing alarmism. One part of their criticism is aimed at the strengthening state control over the oil industry, which quite inevitably leads to its diminishing efficiency, whatever the level of world prices. Despite ambitious claims by Viktor Khristenko, minister for industry and energy, at the recent oil-and-gas week in Moscow, Russian oil production has been growing very slowly this year and quite possibly will start to decline due to the sustained lack of investment in basic infrastructure (Nezavisimaya gazeta, November 1). However, another and graver part of the experts’ concerns is related to the structural imbalances in the economy aggravated by the so-called “Dutch disease,” which was mentioned in passing in Putin’s remarks in the Netherlands but has acquired many unique features in Russia. A recent report for the government produced by Andrei Belousov, a highly respected economic analyst, indicates the high probability of three successive crises, the first of which – in 2007-2008 – could be caused by social tensions accentuated by the uneven distribution of inflowing petro-rubles (Vedomosti, November 2; Ekho Moskvy, November 1). It coincides quite uncomfortably with the next electoral cycle but nevertheless could be defused if the government abandons its current economic populism and starts thinking seriously about the investment climate.

References to Peter I’s visit to Holland in the late 17th century were quite flattering to Putin during his PR sessions in the Netherlands (Komsomolskaya pravda, November 2). One significant difference, however, is that Peter went to that country in order to learn, which, eventually made him a great reformer. Putin tried his best to demonstrate that Russia did not need any more learning and refused to speculate about his place in history. Experts are probably wasting their advice since Putin’s “era” most probably would be remembered as the time of missed opportunities for reforms that could have propelled Russia through all the crises towards a true European future. Greatness in leadership is again needed – and so pitifully absent.