In the Thick of It

A blog on the U.S.-Russia relationship
The Kremlin, Moscow, Russia.

Russia in 2019 and What Lies Ahead

February 14, 2019
Daniel Shapiro

What can we expect for Russia in 2019 and beyond? At a recent policy workshop held by the Washington, D.C.-based PONARS Eurasia network, scholars and analysts addressed this broad question and related issues, including the outlook for Vladimir Putin’s fourth term as president, the expected impacts of sanctions and some aspects of Russian foreign policy. With Russia’s political and economic environment arguably the most challenging the Kremlin has faced in years, the points that resonated the most at the workshop were that Putin will maintain his power through the end of his term (and possibly beyond), will likely implement policies to combat his falling approval ratings and will continue shifting Russia toward new partnerships—mainly in East Asia, Southeast Asia and the Middle East. Prospects for U.S.-Russian relations were generally seen as grim, although one historically minded scholar provided a spark of optimism for the future, saying that America’s current turmoil could lead to more normal relations sooner than commonly believed.

Putin: Strong or Weak?

Regarding Putin’s near future, one group of scholars at the Feb. 1 workshop generally agreed that the Russian president will maintain power for the duration of his current term, discussed potential Kremlin fixes to problems of legitimacy and lower-than-usual approval ratings and debated whether or not Putin would retain some form of power after his term ends in 2024. Nikolay Petrov, from Moscow’s Higher School of Economics, argued that the “relationship between society and government has changed” since the Kremlin’s unpopular pension reforms, with Russians no longer willing to accept things they would have “gladly” accepted before the reforms. A Levada Center poll from June 2018 showed that 89 percent of respondents negatively viewed the increase in men’s retirement age to 65 years and 90 percent opposed the increase for women to 63. Levada also found that the share of people who named Putin as their most trusted public figure dropped from 59 percent in November 2017 to 39 percent in September 2018. Petrov argued that Putin has a “huge problem with legitimacy” and believes the Kremlin will likely embark on another “small victorious war”—an idea Brian Taylor of Syracuse University disagreed with, saying that such an undertaking would only compound Putin’s approval-ratings problem after five straight years of declining domestic living standards. Kirill Rogov of the Moscow-based Liberal Mission Foundation agreed that Putin’s low ratings are “challenging and dangerous for the regime” and that some sort of change is needed. He argued, however, that the Kremlin had demonstrated its strength, not weakness, in 2018, able to tell the public “all [its] bad news” (budget consolidation, pension reforms, tax hikes) and not sustain critical damage. Sarah Wilson Sokhey from the University of Colorado Boulder agreed that the regime remains quite strong, noting that there are some “very capable people” working in the Kremlin and that, pension controversies notwithstanding, Putin will remain firmly in power over his next six years. Beyond that time frame, Petrov put forward two possible scenarios that could help Putin keep some hold on power post-2024: (a) He could move to chair the Security Council and the State Council after leaving office; or (b) he could pursue a “Belarusian option,” involving leadership, in some form, of the Russian-Belarusian Union State, which has existed de jure since 2000.

Economic Challenges

Russia’s economic forecast poses its own challenges. While the Putin administration has laid out ambitious macroeconomic goals—including ensuring that Russia’s economic growth stay above the world average, that inflation remain below 4 percent per year and that productivity increases by 5 percent each year—Brian Taylor noted that these goals are “highly unlikely to be achieved in the next five or six years.” Although macroeconomic stability does exist in Russia, growth remains low, and certainly below the world average, he said; living standards are falling, and Russia is underperforming compared to its fellow BRICS countries. Indeed, in its January 2019 Global Economic Prospects report, the World Bank predicts that Russia’s GDP will grow by 1.5 percent in 2019—well below the projected world forecast of 2.9 percent and the forecasts for any of the BRICS countries, with the exception of South Africa. Additionally, sanctions remain a key problem for the regime—and will likely continue to be for some time. Nigel Gould-Davies of Mahidol University International College focused on sanctions’ impacts on Russia’s elites, arguing that Russian business elites are in an “unprecedented state of anxiety.” (That said, recent reporting shows that some business elites have clearly benefitted in the face of sanctions.) David Szakonyi of George Washington University argued that while sanctions have heightened the political risk involved in doing business with Russia and, as such, have scared off many Western companies, the weakened ruble has made some Russian exports much more competitive in world markets. In February 2014, the exchange rate was around 35 rubles to the dollar; currently it is about 65, helping boost Russia’s 2018 budget surplus close to 3 percent of GDP. Additionally, Szakonyi argued, despite Western skittishness toward trade with Russia, Moscow has made steps toward increased cooperation with countries in East Asia, Southeast Asia and the Middle East, blunting the effect of sanctions to some degree. Thus, while sanctions have hit some elites and companies hard and have spawned a “cloud of risk” surrounding business in Russia, the government is accumulating resources for a “spending spree” should another crisis hit. Overall, the panelists discussing Russia’s economy and its great-power status generally agreed that sanctions are here to stay, as did those discussing Russia’s foreign policy and its impacts.

Russia’s Shifting Place in the World

Panelists also discussed various aspects of Russian foreign policy, including Moscow’s relationship with former Soviet republics, its shift toward East and Southeast Asia and U.S.-Russian relations. Irina Busygina from the Higher School of Economics in St. Petersburg discussed Russia’s relationship with other post-Soviet states, focusing mainly on the Eurasian Economic Union (EAEU), which she considers to be the “first relatively successful attempt to establish strong multilateral institutions of post-Soviet regional integration.” Generally, until 2014, negotiations regarding the formation of the EAEU involved “non-transparent bilateral bargains” with potential members; however, following the Ukraine crisis, this approach changed. Moscow felt it could no longer afford to lose “any member” of the union and moved quickly to establish an “ambitious multilateral project in Eurasia,” which Busygina argued in fact has reduced Russia’s relative power in the post-Soviet space. Additionally, according to Dmitry Gorenburg of CNA Corp. and Harvard University, Russia has moved closer to Southeast Asia as part of an overall “turn east” that began after the 2008 financial crisis. The goals of this move are many—to avoid overdependence on the West, to modernize the Russian Far East, to find markets for Russian weapons and resources and so on. The discussion of Russia-U.S. relations was dominated by sanctions, with a separate, briefer discussion of the Arctic, and the overall outlook was relatively bleak. However, Ivan Kurilla of the European University in St. Petersburg claimed that a return to normal relations is “not as distant” as many might think, arguing that the United States is going through an “identity crisis” whose end could provide an opportunity for improvements in relations, as such critical junctures have, according to Kurilla, many times in the past.

Daniel Shapiro is a graduate student associate with Russia Matters and Harvard's Davis Center for Russian and Eurasian Studies.

Photo by essuera shared on Pixabay for free use.

The opinions expressed in this commentary are solely those of the author.