Reflection on Moscow and the Second Fletcher-MGIMO Conference

By Daniel Drezner, Professor of International Politics, The Fletcher School

I spent last week in Moscow meeting with myriad Russian foreign affairs and economics scholars and participating in a conference at MGIMO University. This was the follow-up to a fall conference hosted by The Fletcher School.

Last fall, the common consensus was that the state of the bilateral relationship was at its lowest point since the Cold War. That was before the Trump administration ratcheted up diplomatic and economic sanctions, pulled out of the Iran nuclear deal and slapped new tariffs on Russian steel. It is safe to say that things have gotten worse.

After a marathon day with seven full panels, along with additional meetings sprinkled throughout the week, I have a few takeaway thoughts.

1) The fundamental attribution error on both sides is strong. Our Russian interlocutors treated the allegations of Russian interference in the 2016 election as a joke that could be easily dismissed. This was not because they believed no effort was made. Rather, they were bemused at the notion that the Russian government was competent enough to affect the outcome. What Westerners attribute to Russian intent seems absurd on its face to Russian analysts.

This probably sounds dismissive to Western ears, but it is worth noting that the Russians have their own version of fundamental attribution error. At one meeting, a Russian interlocutor insisted that the Trump administration was executing a brilliant grand strategy designed to “defeat” Russia. While this was the most exaggerated version of this statement, I was surprised at how many Russian observers articulated some variant of this belief. My reaction to this was as dismissive as their reaction to allegations of election interference.

Like the Cold War, both sides are now vastly exaggerating the capabilities of the other side.

2) Russia’s pivot to Asia? Meh. Putin’s grand strategy move after Crimea was to copy President Barack Obama and attempt a pivot to Asia. This included the strengthening of the Eurasian Economic Union (EAEU), closer ties to China and a conscious distancing from the European Union.

I spoke with a number of Russian experts on Eurasian integration. They all said the same thing: This was mostly a mirage. For a variety of technical reasons, the EAEU was, if anything, an extension of the European Union’s regulatory scope. Chinese foreign direct investment has increased, but that investment is entirely in Russia’s extractive industries. Furthermore, the development of the Belt and Road Initiative threatens to undercut Russia’s competitiveness in transport and its leverage over Central Asian countries via its pipeline network. As one private-sector economist put it to me, Russia’s economic statecraft increasingly looks as if it relies on last century’s techniques.

3) The problem is with the economy. There is no denying that the Russian Federation is surviving the West’s increasing number of economic sanctions. After a few years of contraction, the economy is growing again. But just barely. Both foreign and domestic investment have stagnated, and private-sector entrepreneurship is not making any headway in new business starts. The sanctions have stunted Russian investments in the high-tech sector. Meanwhile, the rest of the Eurasian region is outgrowing the Russian economy.

This Bloomberg analysis from Olga Tanas, Gregory White and Hayley Warren sums it up:

Even with the recent rebound in oil prices, the recovery is sputtering and the ruble still weak. One bright spot is record-low inflation, but that hasn’t been enough to restart investment, hamstrung by U.S. and European Union sanctions and an unfriendly local business climate. Turnout at the forum among major global chief executives is still low.

The bottom line? Putin’s leverage in the global economy is fading, not strengthening.

Russia is a great power in many ways, but its weight in the global economy is not one of them.

4) Is there a way out on Ukraine? Maybe. Russians are in lockstep on the question of Crimea; to them, the annexation was perfectly lawful and will never be reversed.

On eastern Ukraine, however, there was a very different tone. Even the more hawkish Russian analysts sounded sobered by the frozen conflict in that region. Unfortunately, the status quo is likely to persist until Ukraine’s 2019 presidential election. Russia is clearly hoping that Yulia Tymoshenko will be a more accommodating negotiating partner than current president Petro Poroshenko.

One could envision a future settlement whereby there is some small measure of autonomy granted to the Donbass, Russia retreats behind its border, and the sanctions related to that part of the conflict are lifted. One Russian analyst suggested that in the future, Crimea would be treated the same way the West treated the Baltic states after the Soviet Union annexed them.

5) Moscow in the spring is rather lovely. Most Russian cities do not look terribly different from their appearance in the Soviet era. Moscow is a whopping exception. The service sector now resembles Europe. Architecturally,  gleaming new skyscrapers have been erected and some prominent eyesores have been taken down. The city has been polished up nicely for the World Cup next month.

This piece was republished from The Washington Post.