The NATO exercise that threatened mutually assured destruction began with a fictional scenario that today doesn’t seem all that fictional — Russia delivers arms to Syria and Iran.
Leaders of several Gulf States, threatened by Russian intervention, seek U.S. military involvement, according to the scenario. The President responds by dispatching military advisers to the region and increasing our naval presence there.
As the NATO war game played out, rising tensions eventually provoke Russian military aggression against its neighbors. The U.S. President, in response to a request from his military commanders, authorizes the “limited use of nuclear weapons against pre-selected fixed targets.”
Russian military leaders who observed the NATO exercise concluded that the U.S. was plotting a real nuclear strike against the Soviet Union. American intelligence officials had no idea at the time how badly the Soviets were misreading our intentions or how close the world was drawing toward nuclear conflagration. War was averted. But just barely, if the newly declassified intelligence assessments are to be believed.
Today, Russia is doing far more than merely supplying arms to Syria and Iran, leaving President Obama frustrated and flummoxed, but not fumbling for the nuclear launch codes. Instead, the President watches helplessly as Vladimir Putin asserts himself in a region where the U.S. once held sway, vaguely warning that Russian intervention is “not a smart, strategic move.”
He may be right.
At least that’s a reasonable inference from a recent paper by Polish economist Marek Dabrowski. In the paper, written for a European economic think tank, Dabrowski argues that Putin’s kleptocratic regime has systematically pushed the Russian economy toward ruin. If not reversed, Putin’s policies could jeopardize his foreign ambitions and imperil his rule.
Putin’s backers dismiss such talk. For them, Russia’s economic woes are temporary and largely attributable to sagging oil prices. The country is resurgent despite economic setbacks, advancing its interests in Eastern Europe and the Middle East in defiance of the U.S. President Obama seems no match for his Russian counterpart, whose strategic calculations seem always to give him the upper hand.
Putin’s intervention in Syria is the most recent example. Russia is in Syria at the invitation of its elected government and with the authorization of the Duma. It is coordinating its military operations with the Syrian and Iranian armies. It has a clearly defined national interest – to protect its lone Mediterranean military base – and a clear objective: to prevent the sort of regime change in Syria that produced chaos in Libya and years of bloody warfare in Iraq.
Obama’s Middle Eastern War of Choice, by contrast, is a muddle of good intentions, bellicose threats and conflicting pronouncements. His military intervention lacks purpose and direction. Avoiding American casualties appears to be its chief military goal. Congress has not authorized it. Syria has not requested it. We are accomplishing little, but doing enough to earn a seat at a negotiating table with an assortment of the region’s despots, terrorists and goons, recently enlarged to include the ayatollahs. Putin, meanwhile, is not satisfied with merely being at the negotiating table. He wants to sit at its head.
Clarity of purpose, however, is no guarantee of success, particularly when military capability rests on a shaky economic platform. Dabrowski recites the grim facts. Russia’s GDP has been shrinking since shortly after its seizure of Crimea. Its economy is smaller today in real terms than it was in 2011. The IMF projects that it will contract further this year. The ruble has been devalued, inflation has been in the 14-17 percent range throughout most of 2015, foreign exchange reserves are declining, and the government is burning through reserve funds it maintains as a cushion against fiscal shock.
Dabrowski believes that the roots of this recession run deeper than the plunge in global commodity prices and the imposition of sanctions, although both are certainly contributing factors. He traces those roots to Putin’s “politically motivated crackdown on the largest Russian private company, Yukos.” Putin had the company’s president and at the time Russia’s richest man, Mikhail Khodorkovsky, arrested in 2003, ultimately engineering the takeover of his company by state-owned Rosneft. That transaction shrunk the private sector’s share of GDP from 70 to 65 percent. The government now holds a controlling interest in twelve of Russia’s largest joint-stock companies and its “unitary enterprises” (state-run entities) extend to such diverse fields as weapons sales, nuclear energy and alcohol production.
Putting a politician – and a rather authoritarian one, at that – his cronies, and a bribe-hungry bureaucracy in control of so much of the means of production has had predictably dismal results. Natural gas production under monopolist Gazprom, Dabrowski notes, has stagnated since its formation in the early 1990s, as Putin has bent its business model toward his foreign policy objectives and away from its bottom line.
The Heritage Foundation Index of Economic Freedom ranks Russia 143rd of 178 countries. The World Bank and the World Economic Forum place Russia more in the middle of the pack, but note that the country lags in property rights and reliable police services and has too many “irregular payments and bribes,” creating a climate that stymies business formation and growth.
In the circumstances, it is no wonder that Russia is a net capital exporter. Dabrowski notes that large enterprises keep their profits and assets abroad and fund current activity with foreign borrowing, a practice that sanctions have to some extent curtailed.
Dabrowski argues that a recovery in oil prices alone won’t return Russia to the path of growth. It also needs diversification, something that Russia, Dabrowsky says, can more easily accomplish than can other commodity-dependent economies. Diversification, however, requires political change. It won’t occur without “improving the business and investment climate and stopping the authoritarian drift in domestic politics and geopolitical confrontation with the West and Russia’s neighbors.”
Putin is unlikely to heed Dabrowski’s advice to break up oligopolies he helped create and that undergird his power. Liberalizing the Russian economy carries political risks that aren’t worth taking. Why should Putin change when his approval ratings stand at 89 percent, no doubt in part because of his appetite for geopolitical confrontation?
Then again, public approval can be ephemeral. George H.W. Bush achieved an 89 percent approval rating in February 1991; more than ten years later, his son registered 90 percent. Both saw their popularity plummet – the first because the economy soured, the second because of the unforeseen consequences of war. With Russia’s economy in recession and its troops in Syria and Ukraine, Putin risks both.
His boldness and risk-taking behavior have led to a Russian resurgence in world affairs. But in the longer run, President Obama may have it right: Putin’s Syrian adventure may turn out not to be so smart.