Russia Finds Itself Reduced to Irrelevance at Davos

Russian affairs used to attract outsized attention at the annual gatherings of the World Economic Forum in Davos. But this year, the global business elite appeared not to be interested in either the problems or opportunities connected to this troubled and trouble-making power. Moscow’s delegation of Davos-schmoozing veterans tried to give the Russian question a new spin, but they had next to nothing to say on any of the topics at the focus of this year’s debates: whether it was the fourth industrial revolution, disturbances in world trade, or deepening inequality (which Russia exemplifies) (New Times, January 24). United States President Donald Trump made a much-anticipated appearance, but he was careful to avoid any mention of Russia prior to his even more anticipated potential testimony to Special Counsel Robert Mueller, who is investigating Russian interference into the 2016 US elections. Indian Prime Minister Narendra Modi was another guest of honor at Davos, but he found it opportune not to discuss his country’s historically friendly ties with Russia (Kommersant, January 23).

Traditionally, the main theme at Davos has been the future of the world economy. However, Russia’s economy is stagnant, severely affected by corruption and lacking in new drivers (Nezavisimaya Gazeta, January 25). No amount of creative accounting can hide the continuing contraction of Russian real incomes (Gazeta.ru, January 25). The Kremlin’s instructions to promote import substitution have failed to stimulate any increase in industrial output, and Russia is presently more dependent on petro-revenues than at the start of the decade (Kommersant, January 23). Moscow has pinned all hopes for an economic recovery on the slight increase in oil prices connected to Russia’s cartel agreement on production cuts with the Organization of the Petroleum Exporting Countries (OPEC). But the fast introduction of alternative energy sources—a key discussion topic at Davos—makes a new slump in the value of oil all but inevitable (Republic.ru, January 25). For Russia, economic reforms are long overdue; but realistically, Vladimir Putin’s new presidential term will likely bring only a further maturing of crony capitalism.

This economic model is seriously affected by Western sanctions, and each new tightening of this regime draws an angry response from Russian elites (Mid.ru, January 26). The oligarchic business community is growing nervous about the US Treasury’s looming report that will document Russian fortunes built through close ties with the Kremlin (RBC, January 27). Although local experts are rife with recommendations for how to escape from the expected punishment, the deepest worries are now about the “golden boys”—the second generation of Putin’s loyal subordinates (Forbes.ru, January 25: Moscow Echo, January 26). Seeking to preempt the castigation of the narrow circle of Russia’s ruling families, Deputy Prime Minister Arkady Dvorkovich announced at Davos that “oligarchs” had disappeared in Russia and have been replaced by “socially responsible” entrepreneurs (Newsru.com, January 25). Meanwhile, Andrei Kostin, the CEO of VTB bank and a strong candidate for the new blacklist, argued that sanctions amount to an economic war against Russia aimed at regime change (Vedomosti, January 24).

Geopolitical risks were also closely evaluated at the World Economic Forum. And it is remarkable that Russia was not included on the Davos list of “five reasons to lose sleep in 2018” (Weforum.org, January 21). According to this year’s participants, the Ukraine conflict is perceived—perhaps too optimistically—as effectively “frozen,” and the various negotiating channels are considered sufficient to dissuade Moscow from launching a new offensive (Kommersant, January 27). The violent instability in the Middle East is identified as one of the gravest global security risks, and Russia has made itself a big part of this problem. A new spasm of the Syrian war recently began with the Turkish offensive on the Afrin enclave controlled by Kurdish forces. Russia has encouraged this escalation, assuming that the quarrel between Turkey and the US (the main ally of the Syrian Kurds), is a net win for its pro–Bashar al-Assad course (Nezavisimaya Gazeta, January 26). Russia imagines the Turkish setback to US policy, confused as it is, to be insurmountable. Thus, Moscow is not particularly upset about its failure to convene the so-called “congress” of Syrian opposition in Sochi (Newsru.com, January 27). The next major Middle Eastern cataclysm envisaged by the Kremlin is an escalation of the conflict around Iran, perhaps triggered by a US withdrawal from the Joint Comprehensive Plan of Action on Tehran’s nuclear program; and the main benefit for Russia would be a sharp spike in oil prices.

Another serious geopolitical risk contemplated at Davos was China, which could be far less politically stable than last October’s 19^th Communist Party Congress pompously declared. The economic slowdown increases the urgency for reforms, potentially undercutting the overblown authority of President Xi Jinping (Kommersant, January 12). Moscow, its contrived strategic partnership with Beijing notwithstanding, has no clue how to manage these problems but believes tensions between China and the US will grow further, driven by their geopolitical ambitions even more than trade disputes (Nezavisimoe Voennoe Obozrenie, January 26). The recently approved US National Security Strategy appears to confirm this supposition. Yet, Washington and Beijing’s close cooperation in managing the North Korean problem puzzles Moscow—and leaves it on the margins of Indo-Pacific geopolitics (Carnegie,ru, January 16).

Unsurprisingly, Russia is frequently left out of discussions about the future of the global system. The Russian leadership has no interest in thinking about modernization and has effectively cut itself out of dynamics of change, looking increasingly into the past and sticking to the “more of the same” model. More remarkable is Russia’s irrelevance in discussions on emerging security challenges or international cooperation on the gravest threats to the world’s common future.

In the last few years, Russia has pushed itself into the center of global affairs and now perceives its capacity for troublemaking as the main guarantee of its high international status. Putin has developed a taste for and skill in playing the big geopolitical game with high stakes and risks, so neglect from the planners of the global future undercuts his attempts to embody Russia’s “greatness.” He has shown much self-restraint in recent months, swallowing insults from the International Olympic Committee, which banned the Russian flag from the 2018 Winter Games (see EDM, December 11, 2017), and seeking to reduce Russia’s military footprint in Syria (see EDM, December 14, 2017). In just a few months, his next presidential term is due to start after pre-orchestrated elections, and his only plan for securing the survival of the severely corrupt quasi-populist regime might require the declining Russia to plunge itself into new military adventures.