2018 INTERNATIONAL SECURITY AND ESTONIA

 
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2018 INTERNATIONAL SECURITY AND ESTONIA
INTERNATIONAL SECURITY
     AND ESTONIA

2018
2018 INTERNATIONAL SECURITY AND ESTONIA
2018 INTERNATIONAL SECURITY AND ESTONIA
CONTENTS

   Introduction .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 2
   The domestic political situation in Russia                                                                                                                           .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .   4
   The Russian economy                                                                 .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .      12
                           The effects of the sanctions                                                                                      .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .   14
   The Russian military .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 18
   Russian foreign policy .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 24
                           Outlook for the Minsk Agreements                                                                                                                .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .      28
                           Rosneft and Gazprom as the tools of Russian
                           foreign policy . .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 31
   Relations between Belarus and Russia                                                                                                                     .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .      32
   Intelligence from the territory – threat to foreign nationals in Russia . 35
                           The FIFA World Cup in Russia – Putin’s PR project .  .  .  .  .  .  .  .  .  .  .  .  . 42
   Influence operations .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 44
                           Information warfare units targeting NATO                                                                                                                                         .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .      47
                           Kremlin’s use of misrepresentation of historical events
                           in influence operations .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 48
   Cyber threats .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 52
   Terrorism in Europe .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 58
   North Korea’s weapons programme continues .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 61
   The Estonian Foreign Intelligence Service’s mission                                                                                                                                                            .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .      67
2018 INTERNATIONAL SECURITY AND ESTONIA
2   INTRODUCTION

    INTRODUCTION

    I
        am pleased to present the Estonian
        Foreign Intelligence Service’s third
        public report, in which we describe
    the world security environment surroun-
    ding Estonia.

    In 2017, Russian meddling abroad was
    starkly exposed for a large share of the
    public in the US and Europe. The topic
    received an unprecedented and quite
    deserved level of attention. Defining mo-
    ments included the unanimous assess-
    ment of US intelligence agencies regarding
    Russia’s interference in the 2016 Ameri-
    can election, French president Emmanuel
    Macron’s denunciation of Russian media
    channels as “agents of influence”, and Ger-
    man chancellor Angela Merkel’s warning            MIKK MARRAN
    to Russian president Vladimir Putin not to        Director General,
    meddle in the German election.                    Estonian Foreign Intelligence Service
    Estonian security institutions have been
    talking for years about attempts on Rus-
    sia’s part to splinter the unity and trust     Russia’s fight against the West also
    that exists between nations in the West.       takes place on Russia’s own territory. The
    The awareness of this fact is now spread-      respective chapter of the report examines
    ing more broadly in the US and in many         the modus operandi used by Russian
    places around Europe. Unfortunately, no        special services to recruit or intimidate
    changes can be seen in Russia’s behav-         foreign nationals inside Russia (a practice
    iour. In the years ahead, Russia seems         known as gathering “intelligence from the
    likely to continue its politics of division    territory”). The purpose of the chapter is
    and opposition to the system of Western        not to dissuade people from visiting Rus-
    values. In our report, we illustrate on just   sia, but we do draw attention to the large
    how broad a front Russia is waging this        scale and aggressiveness of the activities
    battle by listing the conflicts and regions    pursued by Russia’s intelligence services,
    where we see Russian interference as           and describe the dangers that people
    highly likely this year.                       could face who travel there.
2018 INTERNATIONAL SECURITY AND ESTONIA
INTRODUCTION         3

In early 2018, the big question pertaining       Estonian security does not exist in a
to Russia is what will happen after its          vacuum; our security and well-being
March presidential elections. The world is       depend on that of our friends, and their
witnessing a carefully choreographed piece       vulnerabilities are our vulnerabilities. That
of theatre that attempts to leave the im-        is why our report also covers the issue of
pression of free elections. But behind the       terrorism. Although the threat of terror-
scenes, a cynical plan is being executed to      ism is low in Estonia, it is high in Europe
ensure Putin and his inner circle retain their   as a whole, and poses a threat to Estonian
grip on power for yet another term. In the       citizens travelling abroad.
report, we detail how complicated this task
                                                 An acute problem that emerged in 2017
is given Russia’s declining socioeconomic
                                                 was the threat from North Korea, which
indicators and gathering mood of protest.
                                                 could lead to noteworthy developments
Our aim is to cover the events in Russia         this year. In spite of the fact that the
that tend all too often to reach the public in   Korean peninsula is geographically far
distorted or incomplete fashion. The Putin       from us, increased tensions in that region
regime is masterful at fostering a false         also impact our security. We are therefore
image and creating deceptions. A vivid           keeping a close eye on the situation there
example of the above is Zapad-2017, the          and also in other distant conflict zones.
major military exercise held last autumn.
                                                 The Estonian Foreign Intelligence Service
For the benefit of the entire internation-
                                                 recently marked its 25th anniversary. Our
al community and the Russian public, it
                                                 mission continues to be the same – to
was painted as a minor counterterrorism
                                                 protect the Estonian state from external
exercise held in Belarus, but actually this
                                                 security threats by providing trustworthy
was but a disguise for large-scale manoeu-
                                                 intelligence for decision-makers. Our task
vres that were a test run for all stages of a
                                                 is to ensure that when Estonian leaders
full-scale war on NATO. Although this was
                                                 gather to make key decisions from the
not the first time this scenario had been
                                                 standpoint of security, they know more
rehearsed, a greater level of concealment
                                                 about the topic than what is available over
could be detected on this occasion. Unfor-
                                                 public channels.
tunately, disinformation and half-truths
also showed up in Western coverage of the        Just as important is the realization that
exercise.                                        we – the government, society and the
                                                 citizens – create our own security space
Although Russia conducts large-scale             every day. The well-known slogan to
military exercises, our report states clearly:   “think globally, act locally” is also valid
the threat of a direct military attack on        when it comes to understanding security
NATO member states in 2018 is low. We            in the Baltic Sea region in 2018.
will discuss this matter in more detail in the
chapter on the Russian military.                 Bonne lecture!
2018 INTERNATIONAL SECURITY AND ESTONIA
4   T H E D O M E S T I C P O L I T I C A L S I T U AT I O N I N R U S S I A

    THE DOMESTIC POLITICAL
          In 2018, internal tensions will grow in Russia, the economy will
          remain stagnant, and the regime will fail to convince the populace
          that there is light at the end of the tunnel. In the coming years,
          this may destabilize the foundations of the current political
          system in Russia.

          T
                      he main goal for Putin and                      though Russia’s current political leaders
                      the political ruling clique is                  have never shied away from using
                      to stay in power. In the short                  various administrative means for influ-
                      term, this means that the                       encing election results, such attempts
          2018 presidential elections have to be                      will run significant risks on a backdrop
          carried out smoothly. The unfavourable                      of general discontent. The ruling elite
          domestic political situation will give the                  remember 2011, when State Duma
          Kremlin less manoeuvring room.                              election fraud was the last straw that
                                                                      led to resentment brimming over into
          As regards the re-election of Putin, the                    protests among the middle class in the
          domestic political realities in 2018 are                    largest cities. The elite want to avoid a
          now less in his favour than ever before                     repeat of such a scenario at all costs.
          – dissatisfaction with the actions of the                   But eliminating the root causes of the
          political elite and the situation in the                    dissatisfaction – political and economic
          country has grown significantly. Political                  stagnation – is impossible as long as
          activism is simultaneously on the rise,                     the system continues to be tilted in the
          especially among young people. Even                         ruling clique’s interests.
2018 INTERNATIONAL SECURITY AND ESTONIA
T H E D O M E S T I C P O L I T I C A L S I T U AT I O N I N R U S S I A   5

SITUATION IN RUSSIA
  THE DOMESTIC                                    ruling elite. With the personal standard
  POLITICAL REALITY                               of living declining, the lavish lifestyle
                                                  of senior officials and corruption cases
  The domestic political situation in             caused greater resentment. Moreover,
  Russia in 2018 will also be character-          as the recession dragged on, there was
  ized by growing discontent among                increasing lack of confidence in the
  the population. The reasons for the             capability of the central government,
  broader dissatisfaction of its citizens         all the more since top Russian leaders
  come down to the political and eco-             did not go beyond well-worn clichés in
  nomic impasses, either separately or            addressing solutions to the country’s
  in combination. The first serious signs         problems. As a result, many citizens
  of growing discontent emerged in the            have long since started to doubt
  second half of 2015, when the number            whether their leaders’ prescriptions are
  of protests increased due to the coun-          feasible. A certain segment of society
  try’s economic difficulties. During that        – above all, the younger generations
  time, public accusations against the            – are bothered by the political system
  Kremlin and Putin were rare, and the            itself; the stagnated, kleptocratic sys-
  direct triggers for the protests and the        tem is seen as the main obstacle to the
  slogans were largely apolitical. But the        country’s development, and is seen as
  scope of political demonstrations had           having a negative impact on their future
  grown significantly by spring 2017.             prospects.
  Russia’s economic downturn
  affected how society react-
  ed to the actions of the

  AS REGARDS THE RE-ELECTION OF PUTIN, THE
  DOMESTIC POLITICAL REALITIES IN 2018 ARE NOW LESS
  IN HIS FAVOUR THAN EVER BEFORE – DISSATISFACTION
  WITH THE ACTIONS OF THE POLITICAL ELITE AND THE
  SITUATION IN THE COUNTRY HAS GROWN SIGNIFICANTLY.
2018 INTERNATIONAL SECURITY AND ESTONIA
6   T H E D O M E S T I C P O L I T I C A L S I T U AT I O N I N R U S S I A

          When comparing the current situation
          to 2011, the main differences are the va-
          riety of reasons for the discontent and
          the spectrum of those dissatisfied. In
          2011, the catalyst for the protests at the
          start of the decade was dissatisfaction
          among a fairly small part of society –
          mainly the Moscow and St. Petersburg
          middle class – with the current political
          system. The overwhelming majority of
          people in Russia did not support the
          protests.

          Putin’s public approval ratings are
          still high, but it is questionable how
          reliable or valid the figures are, given
          the current atmosphere in Russia. First
          of all, the ratings results cannot be fully
          interpreted without knowing the exact
          changes that have taken place in recent
          years in the structure of the response
          rate, especially among those who de-
          clined to answer. Secondly, the accuracy
          of the results is influenced by self-cen-
          sorship as people may be reluctant to
          criticize the regime.

          A transformed media space and
          new ways of exchanging information
          play an important role in the broader
          spread of criticism of the Russian
          regime. While Kremlin-controlled
          information channels are still domi-
2018 INTERNATIONAL SECURITY AND ESTONIA
T H E D O M E S T I C P O L I T I C A L S I T U AT I O N I N R U S S I A   7

                                    nant in the sphere of traditional mass
                                    media, especially television, their
                                    impact on society has decreased as
                                    new media become more extensively
                                    consumed; this trend will continue.
                                    The widespread use of social media
                                    has brought Russia’s outlying regions
                                    closer to the large cities than ever
                                    before. That is probably one reason
                                    why the protest demonstrations of
                                    2017 spread so widely. New media
                                    platforms also offers convenient ways
                                    to organize demonstrations – ones
                                    that can be hard for state security in-
                                    stitutions to track. This forces Russia’s
                                    elite to worry even more about how
                                    they will conduct the 2018 presidential
                                    elections.

                                    In response to the broader protests,
 Prime Minister
                                    propaganda targeting the younger gen-
 Dmitri
                                    eration was increased with an attempt
  Medvedev’s
                                    to enforce even tighter control over
  luxurious winter
                                    exchanging information online. One
  residence in
                                    aspect that characterizes youth-ori-
  Sochi
                                    ented activities is their reliance on old
                                    concepts – emphasis on World War II
                                    themes and military-oriented patriotic
                                    education – that are out of step with
SO URC E:                           the times.
HTTP://AVMALGIN.
LIVEJO U RN AL.                     While new media has been harnessed
CO M/4 271 637.H TML
                                    to influence young Russians, so far it
2018 INTERNATIONAL SECURITY AND ESTONIA
8   T H E D O M E S T I C P O L I T I C A L S I T U AT I O N I N R U S S I A

          has not achieved impressive results.                        down on internet freedoms. In July,
          More often than not, the anti-oppo­                         the State Duma adopted a decision
          sition propaganda on new media has                          under which the Russian internet
          left an awkward impression. Impor-                          supervision authority Roskomnadzor
          tant steps were taken earlier, too, for                     will have the right to blacklist an-
          improving the possibilities of con-                         onymizers and VPN services, which
          trolling the internet and new media.                        are used for viewing websites blocked
          In 2017, the Russian regime showed                          in Russia. The State Duma approved
          more speed and muscle in clamping                           a proposal requiring all users of social

                                                                                Direct conversations
                                                                                with young Russians
                                                                                where every detail is
                                                                                stage-managed play
                                                                                an important role in
                                                                                propaganda youth
                                                                                outreach, leaving younger
                                                                                audiences in particular
                                                                                with the impression of an
                                                                                inert and old-fashioned
                                                                                apparatus. Such inhibited
                                                                                formats do not seem to
                                                                                be an effective channel
                                                                                for youth-oriented
                                                                                propaganda. Pictured: one
                                                                                such meeting at the Sirius
                                                                                Centre in Sochi.
                                                                                SO URCE: AP/SCANP I X
T H E D O M E S T I C P O L I T I C A L S I T U AT I O N I N R U S S I A   9

TV CHANNEL VIEWERSHIP IN RUSSIA
BY AGE GROUP

    100 %

     80 %

     60 %

     40 %

     20 %

       0%
                  Almost           3-5 days      1-2 days        Less than          I do not         I do not
                 every day          a week        a week        once a week        watch TV         own a TV

      Age            18-30 years        31-45 years         46-60 years         Older than 60 years

SOURCE :
Ф О М Н И Б У С 2 0 17

media and instant messenger services                      In addition, tried and tested tactics
to identify themselves using a person-                    are used to apply pressure on more
al mobile phone number. This change,                      active critics of the government –
it is hoped, will foil the anonymity                      unfounded accusations and searches
of protest organizers. It is not likely                   of organizations’ offices and activists’
that the measures to curb Internet                        homes, organized hooliganism against
freedom will succeed in being fully                       persons and their property, and
implemented.                                              pressuring people through employers
                                                          and education institutions. Russia
10   T H E D O M E S T I C P O L I T I C A L S I T U AT I O N I N R U S S I A

                Navalny supporters at a rally in
                 Novokuznetsk on 9 December 2017.
                 SOURCE : AP/SCAN PIX

           continues to be a country where the
           more active critics have a justified fear
           for their own safety and that of their
           loved ones. It is likely that the ruling
           elite will try to further strengthen
           their pressure methods against critics
           of the regime and control of transmis-
           sion of information.

           In the run-up to the presidential
           elections, there has been increased
           emphasis on feigning political plu-                         well-known and of some interest to
           ralism to increase the semblance of                         the public, while safe and not posing
           legitimacy of the vote and as a sump                        a real threat of unseating the incum-
           for opposition-minded sentiment.                            bent. In 2012, this role was played
           As people in Russia have long found                         by Mikhail Prokhorov. In 2018, both
           it hard to take seriously opposition                        Ksenia Sobchak and Pavel Grudinin
           candidates who are officially sanc-                         appear to fit this role. Sobchak is
           tioned by the regime, the Kremlin will                      well-known and merits attention, but
           need at least one fresh new candidate                       most Russians view her as an un-
           to play the role of “independent”                           suitable candidate for president or as
           challenger. The person suitable for                         any kind of serious politician. For the
           this would be an individual who is                          latter reason, Sobchak’s criticisms of
T H E D O M E S T I C P O L I T I C A L S I T U AT I O N I N R U S S I A   11

                                                 FOR THE FIRST TIME IN YEARS,
                                                 THERE IS REASON TO SPEAK OF
                                                 A CREDIBLE OPPOSITION FORCE
                                                 IN RUSSIA. ALEKSEI NAVALNY
                                                 GAINED NOTEWORTHY INFLUENCE
                                                 AMONG THE POPULATION AND
                                                 HAS BECOME A REAL THREAT
                                                 FOR THE KREMLIN.

                                                influence among the population and
                                                has become a real threat for the
                                                Kremlin. Key reasons for his success
                                                are his skilful use of social media to
                                                get out his message, as well as the
                                                fact that he speaks of problems that
                                                matter to society. The main reason for
the government are entirely safe as             his success, however, is the change in
far as the Kremlin is concerned and             the social situation. General discon-
her political agenda is perfect material        tent has grown, and this provides a
for the appearance of an open public            grateful audience for an opposition
debate.                                         leader who speaks openly about
                                                problems and creates opportunities to
Despite the central government’s
                                                protest against them.
actions against opposition and ma-
nipulation of popular sentiment, there
is, for the first time in years, reason to
speak of a credible opposition force.
Aleksei Navalny gained noteworthy
12   T H E R U S S I A N E CO N O M Y

     THE RUSSIAN ECONOMY
          The growth and
          decline of the Russian
          economy reflect oil price
          fluctuations, not structural
          development of the
          economy itself.

          T
                       he current function-
                       ing of the Russian
                       economy can no longer
                       guarantee the well-being
          of society. Fundamental reforms are
          needed, but it is unlikely they will be un-
                                                        The primary condition for surviving and
          dertaken, as this would be contrary to
                                                        being successful in Russia’s business
          the interests of the ruling elite. To dis-
                                                        world is not having competitive goods
          tract from the real economic problems
                                                        and services, but a patron who is as
          and mislead the Russian public and the
                                                        high as possible in the power hierarchy.
          West, the Kremlin is maintaining the
                                                        In more profitable sectors, enterprise
          appearance of public debate on possible
                                                        is in the hands of the ruling elite or
          reform and liberalization of the Russian
                                                        closely connected circles, and there is
          economy.
                                                        no actual competition. Such a system
          President Vladimir Putin and his inner        is favoured by a biased judicial system
          circle continue to use state power to         that is controlled by the ruling elite, in
          maximize their personal influence             which no independent entrepreneur can
          and to provide for their own financial        expect the transparent administration
          security. The silencing of critics and        of justice. Providing closely connected
          pressure on civil society also means the      businesses with profitable govern-
          creation of an environment extremely          ment contracts has become so much
          unfavourable to economic development.         the norm that the Russian press uses
T H E R U S S I A N E CO N O M Y   13

                                         »» The state plays a dominant role in the
                                            economy, and thus market-economy
                                            processes have marginal influence, being
                                            akin to imitations of a true market econo-
                                            my. Initiative from private enterprise faces
                                            too high a risk in such an environment.

                                         »» The economic structure is tilted toward
                                            large companies. Small enterprise is
                                            hindered by bureaucracy and arbitrary
                                            exercise of power and corruption among
                                            lower officials. The low proportion of
                                            small businesses leads to a lack of
                                            competition, which in turn creates more
                                            inefficiency.

                                         »» The labour market is not flexible. Crises
rankings of income earned by perform-
                                            are not used to spur reform of the labour
ing government contracts as a measure
                                            market by retraining and developing
a companies’ influence.
                                            small business. In a crisis, there is a
Falling energy prices and economic          reluctance to lay off workers and a prefer-
sanctions experienced in recent years       ence for riding out the crisis, with the
amplify the structural problems in the      burden borne collectively.
economy and have highlighted the need
                                         »» Citizens have low trust in those who are
for reforms. Compared to the low oil
                                            beyond their immediate social circle and
price in 2016, the past year brought
                                            this mistrust is amplified by recurrent
slight economic growth, which tends to
                                            experiences of dysfunctional rule of law.
feed a misconception that the hardship
                                            This in turn breeds apathy and a waiting
has been overcome and keeps reforms
                                            attitude. Citizens do not view change
from being implemented.
                                            positively, and as a result have low cour-
To summarize, the Russian economy           age for action, yet these two things are
has a complex problem based on the          indispensable for carrying out economic
following factors.                          reforms.
14   T H E R U S S I A N E CO N O M Y

HOW MUCH RUSSIAN FAMILIES WITH TWO CHILDREN
HAVE LEFT TO SPEND AFTER ESSENTIALS

          One indicator characterizing a country’s     Only a very small share of these house-
          social landscape is the compulsory           holds earns the arithmetic mean in-
          costs of a family with two children.         come, and the absolute majority has to
          This type of household accounts for          subsist at very low income levels. Only a
          the greatest share of the population         small proportion of Russian inhabitants
          and is a good basis for generalization.      enjoy a standard of living equivalent to
          Monetary value shows the amount that         the average of Western countries.
          should cover monthly expenses, such
                                                       The social stratification also has a
          as clothing, footwear, transport, durable
                                                       regional dimension. A large part of
          goods, and leisure activities.
                                                       the well-being for Russian citizens is
          Looking back on Putin’s third term           defined by where they live. It is often
          in office, 2012–17, we see that this         possible for Russian inhabitants to
          indicator has dropped about 15 percent       upgrade their standard of living just by
          since 2011. Even more important than         moving from rural areas to cities, and
          the decrease is that social stratification   from the cities to foreign countries. The
          has increased.                               realization that part of their problem is
                                                       rooted in where they live makes Russian
                                                       citizens less enterprising and reduces
                                                       the regional tax base even further.

                                                       The falling standard of living in regions
                                                       makes it more costly and complicated
                                                       for the Kremlin to ensure the county’s
                                                       integrity and the current economic
                                                       mechanisms are incapable of solving
                                                       this problem. At the same time it is
                                                       clear that fundamental changes for
                                                       improving the business environment
T H E R U S S I A N E CO N O M Y   15

and restructuring the economy would       collapse. Whether that indeed happens
weaken the positions of the elite and     depends more on the Kremlin’s ability
the economic circles associated with      to divert the attention of the masses
them. Continuing on the same eco-         than on economic measures.
nomic policy course could end in social
16   T H E R U S S I A N E CO N O M Y

          THE EFFECTS OF THE SANCTIONS

          The consistent implementation of             Although Russia would not gladly admit
          sanctions has come as a surprise for         it, the sanctions have had a compre-
          the Kremlin. In hoping that the West’s       hensive and long-term effect on the
          unity in establishing and maintaining the    Russian economy. The sanctions will
          sanctions would be short-lived, Russia       shave at least one percentage point off
          made a miscalculation. The error is due      of Russia’s economic growth in 2018.
          to the inability to see Western policy       Along with structural problems and
          as values-based. Perhaps the Kremlin         low oil prices, Russia’s economy will be
          hoped that pragmatic and economic            stuck in low gear. The longer sanctions
          considerations would win the day and a       last, the more ingrained the tendency
          return to mutually beneficial deals would    for investors and companies to forgo
          be imminent, as the Russian market           any transaction that may have a Russia
          and opportunities in Russia are indeed       connection.
          important for the West. But it failed to
                                                       Domestic Russian propaganda is fairly
          recognize how thoroughly Russia’s ac-
                                                       adept at creating a myth of how the
          tions went against Western values and
                                                       “unjust” Western sanctions are an
          how this has destroyed trust in Russia.
                                                       attack by an external enemy that is
          The West’s sanctions imposed on              causing economic hardship for ordinary
          Russia have had economic and political       Russians. This narrative shields Rus-
          impact. The solidarity between Europe        sia’s leaders from criticism for a failed
          and the US has been substantial, to the      economic policy, and helps to some
          Kremlin’s surprise. Politically, Russia is   degree to paper over the fundamental
          displeased at finding itself in isolation    weaknesses in the economy.
          at a time that it seeks a role as a global
                                                       Even now, import substitution policy
          player. Potential new American sanc-
                                                       and counter-sanctions breed a patriotic
          tions cause anxiety among Russia’s
                                                       spirit in Russia, but this is no substitute
          elite and would strengthen the effect
                                                       for a new economic environment and
          further.

            THE SANCTIONS WILL SHAVE AT LEAST ONE PERCENTAGE
               POINT OFF OF RUSSIA’S ECONOMIC GROWTH IN 2018.
T H E R U S S I A N E CO N O M Y   17

                                               Contraband cheese seized on the
                                                Russian-Finnish border in August
                                                2017.
                                                SO URCE: HT T P : //S Z T U.CUSTO M S. RU

                                            foot, causing disgruntlement among
                                            the population by destroying smuggled
                                            food. Russian people, however, are keen
                                            to acquire contraband products. Certain
                                            Western foodstuffs have a firm local
                                            following (even everyday perishable
does not lead to a rise in well-being. So
                                            staples such as cheese) and are of a
far, the import substitution programme
                                            quality Russian goods cannot compete
has only been partly fulfilled. There are
                                            with, and thus they are actively smug-
clear problems with availability of high-
                                            gled in.
tech parts in the energy sector and the
military industry is also experiencing a    It is currently premature to predict
drought when it comes to components         whether sanctions will lead to compre-
sourced from the West. Injections of        hensive changes in Russian policy or
capital into Russian companies have         deter planners of future Russian foreign
nearly dried up. Russia’s other partners    policy adventures. Until the presidential
do not appear to be interested in filling   elections, President Putin will not be
the vacuum. High interest rates and         able to make sudden moves that are
Russian banks’ difficulties in raising      comparable to losing face. Even during
capital have a stranglehold on small- to    a new term for Putin, Russian society
medium-sized enterprises and their          cannot for long delude itself by blaming
borrowing needs. Russia’s own coun-         the West for its problems or think that
ter-sanctions have not been effective       the country’s basic economic problems
in the area of import substitution and      were caused by sanctions. Russia is not
have not managed to drive a wedge be-       devoid of economic and political knowl-
tween EU member states. In their zeal       edge, and a consistent sanctions policy
to impose countersanctions, Russian         will help these ideas gain better traction
authorities have shot themselves in the     in Russia.
18   T H E R U S S I A N M I L I TA RY

     THE RUSSIAN
     MILITARY
          The only existential threat to the sovereignty
          of Estonia and other Baltic Sea states emanates
          from Russia. However, the threat of a direct Russian
          military attack on NATO member states in 2018 is low.

          A
                       s long as Russia is ruled       against Estonia, Latvia, Lithuania and
                       by an authoritarian regime      Poland. In the course of the exercise,
                       whose top priority is to        Russian armed forces underwent all
                       exercise political dominance    phases of an all-out war: Russia’s
          over its neighbours, Russia will continue    military intervention in response to a
          using military pressure against Esto-        “colour revolution” in Belarus, escala-
          nia, Latvia and Lithuania. Considering       tion into a conventional war with NATO,
          that authoritarian regimes tend to see       and finally, to nuclear war.
          threats where none exist, it is not com-
                                                       Russia’s general behaviour in relation to
          pletely beyond the realm of possibility
                                                       military exercises shows that the coun-
          that the Russian leadership will make
                                                       try’s leadership does not care about
          a strategic miscalculation, believing
                                                       the fundamental values of international
          that NATO’s collective defence is not
                                                       treaties, including the principles of
          effective.
                                                       building transparency and trust. What
          Russian military planners do not view        was, according to the official notice,
          Estonia, Latvia and Lithuania separate-      a six-day exercise actually lasted six
          ly; they approach Europe and NATO as         weeks. Russia’s official media coverage
          a whole. In Russia’s latest major military   significantly distorted the size of the
          exercise Zapad-2017, Russian armed           exercise as well: publicly, the exercise
          forces practiced a full-scale war with       area was declared as Belarus and Ka-
          NATO in Europe. According to the sce-        liningrad, but actually the exercise was
          nario, the conflict started in Belarus. As   held all over western Russia, from the
          usual, one of the main elements of the       Barents Sea to the border of Ukraine.
          military exercise simulated an offensive     Furthermore, officially it was declared
T H E R U S S I A N M I L I TA RY   19

that 12,700 troops took part but actual-      systems as well as the establishment
ly there were more than 100,000.              of new units and commands. The same
                                              trend continued in 2017. The first group
The nature of the exercise was nothing
                                              of new Su-30SM fighters was de-
new: anti-NATO scenarios have been
                                              ployed in the Kaliningrad Oblast. In the
used in most Russian armed forces
                                              Western Military District, new divisions
exercises, including all of the previous
                                              are formed and infrastructure is built.
Zapad exercises. Although the plans
                                              In 2018, the Baltic Fleet will get its first
and scenarios have remained the same,
                                              two Karakurt-class missile corvettes.
the Russian armed forces are able
                                              The importance of these ships lies
to practice the military operations in
                                              above all in their weapons systems. The
greater detail with each exercise cycle
                                              new Kalibr cruise missiles, which can
– a number of the elements previously
                                              attack land targets within 2500 km, will
simulated on a map are now played out
                                              be part of the ships’ arsenal. In 2018,
in the field.
                                              the Russian armed forces will complete
In 2018, the Russian armed forces’ an-        the rearmament of the Kaliningrad mis-
nual exercise will be held in the Far East,   sile brigade with the Iskander missile
under the name of Vostok-2018. The
scenario will involve a regional conflict
in the Pacific Ocean region. We know
from previous years that somewhat
paradoxically, the Vostok exercises are
also targeted mainly against a perceived
threat from the United States.

The largest land border between Russia
and NATO increases the military impor-
tance of the Baltic Sea region for Rus-
sia. Besides regular military exercises,
the Russian armed forces have consist-
ently strengthened their presence in the
region with the most modern weapon
20   T H E R U S S I A N M I L I TA RY

                                                                   Russian President Vladimir Putin,
                                                                    Defence Minister Sergei Shoigu (on
                                                                    the left) and Chief of the General
                                                                    Staff of the Armed Forces Valeri
                                                                    Gerasimov (on the right) observing
                                                                    the Zapad exercise in the Luzhsky
                                                                    district in the Leningrad Oblast.
                                                                    SO URCE: AP/SCANP I X

                                                                   The shooting of Iskander-K missile
                                                                    during the Zapad-2017 exercise in
                                                                    Luzhsky district which is roughly 100
                                                                    kilometres from the Estonian border.
                                                                    SO URCE: AP/SCANP I X

          system. This system can be used to            The weaknesses of the Russian armed
          attack strategic targets within a radius      forces must also be taken into account
          of 500 km.                                    when assessing Russia’s military
                                                        capability. Neglect, corruption and theft
          In 2018, the formation of a National
                                                        are still prevalent in the Russian armed
          Guard based on internal forces and
                                                        forces. Although the number of con-
          Ministry of the Interior institutions and
                                                        tracted military servicemen is growing
          units – a process started in 2016 – will
                                                        due to economic difficulties, the num-
          be completed. In the final phase of the
                                                        ber of disciplinary violations has also
          reform, the OMON and SOBR special
                                                        increased in the past year, suggesting
          police units will be integrated complete-
                                                        low morale among the newly enlisted.
          ly into the National Guard’s paramilitary
                                                        With economic problems deepening
          structure, and the National Guard will
                                                        and the cuts and inflation spreading
          thereafter be prepared to fulfil all of its
                                                        into the armed forces budget, discipli-
          domestic security and national defence
                                                        nary problems and tensions are likely to
          functions. In connection with this year’s
                                                        rise in the future as well. Staff turnover
          presidential elections and the football
                                                        is still high among younger officers.
          championship in Russia, the National
                                                        For young officers, the Russian armed
          Guard will be put to the test, as the
                                                        forces provide limited decision-making
          post-reform security services must en-
                                                        freedom, discourage their initiative,
          sure that the elections proceed without
                                                        and assign menial service duties – all
          major protests and unrest.
T H E R U S S I A N M I L I TA RY   21

of which lower morale. Also, the lack       2017 that Russia had won the Syrian
of qualified junior specialists remains a   war and was withdrawing its troops.
problem. These shortcomings will affect     At the same time, in 2018 Russia is
the military readiness of all combat        likely looking for ways to get involved in
units.                                      other conflict areas in the Middle East
                                            and Africa. The main purpose of such
The Russian military operation in Syria
                                            activity is to irritate the West, and not
has essentially exhausted itself after
                                            necessarily contribute to the resolution
achieving its three primary goals. In
                                            of these conflicts.
terms of publicity, Russia has managed
to abundantly but not convincingly          Russia’s war against Ukraine will con-
promote itself as a participant in solv-    tinue in 2018. Russia’s goal is to main-
ing the world’s problems and a force        tain a constant level of military activity
against terrorism. Russia has been able     in eastern Ukraine and, through that,
to secure the right to use the port of      keep the internal situation in Ukraine
Tartus, and has in essence used Syria as    unstable.
a testing range for its weapon systems.
                                            The likelihood of Russia’s covert or
Further involvement in the conflict
                                            overt military intervention in countries
would expose inherent weaknesses
                                            where it claims to have privileged inter-
in Russia’s military and diplomatic
                                            ests, such as Belarus, Moldova or Ka-
capabilities. These factors influenced
                                            zakhstan, is medium. Previous military
Russia’s announcement in December
22   T H E R U S S I A N M I L I TA RY

               The Russian nuclear submarine Dmitry Donskoy cruising by
           

                                                                                          SO URCE:
                                                                                R EUT ERS/SCANP I X
               Denmark’s Great Belt Fixed Link crossing.

          interventions in Georgia (2008),             posing a threat to the survival of the
          Ukraine (2014) and Syria (2015) show         Kremlin-obedient regime. It should be
          that the Russian leadership has the will     noted that the term “colour revolution”
          and the readiness to intervene mili-         can be used by the Russian leader-
          tarily outside its borders. The “colour      ship in the public narrative to describe
          revolution” element at Zapad-2017            almost any situation. It can also be used
          also shows that Russia wants to be           to describe both actual and hypothetical
          prepared if necessary for a rapid military   future events, thus helping to justify
          intervention in Belarus, if the Belaru-      pre-emptive operations.
          sian people’s bid for democracy starts

               IN 2018 RUSSIA IS LIKELY LOOKING FOR WAYS TO GET
         INVOLVED IN OTHER CONFLICT AREAS IN THE MIDDLE EAST
               AND AFRICA. THE MAIN PURPOSE OF SUCH ACTIVITY
                  IS TO IRRITATE THE WEST, AND NOT NECESSARILY
           CONTRIBUTE TO THE RESOLUTION OF THESE CONFLICTS.
T H E R U S S I A N M I L I TA RY   23

HOW RUSSIA IGNORED
INTERNATIONAL AGREEMENTS
A good example of Russia’s lack of transparency is its attitude toward international
agreements related to regional security. One such is the Vienna Document on
Confidence- and Security-Building Measures from 2011, which the OSCE countries
including Russia have signed.

   WITH THE ZAPAD EXERCISE, RUSSIA IGNORED THE LETTER AND SPIRIT
   OF THE VIENNA DOCUMENT AGREEMENT.

Russia did not notify Zapad-      Russia did not invite          A couple of weeks before
2017 to other states party to     observers from other OSCE      Zapad-2017’s official phase, the
the Vienna Document, even         countries to Zapad-2017,       Russian armed forces organised a
though the number of military     although it should have        covert large-scale snap exercise, in-
personnel (over 20,000 land       done so. It invited only the   volving more than 100,000 military
and airborne forces) exceeded     defence attaches residing      personnel. Paragraphs 41 and 41.1
the notification threshold.       in Russia as “guests” on       of the Vienna Document oblige to
Paragraphs 38 and 40.1.1 of       visiting day. Paragraph 47.4   notify other countries of the start
the Vienna Document oblige        of the Vienna Document         of a snap exercise. Such extensive
a country to provide 42 days      obliges a country to invite    snap exercises are held an average
advance notice of an exercise     observers to exercises         of five times per year by the Russian
involving at least 9,000 mili-    involving at least 13,000      armed forces. In paragraph 67.1 of
tary personnel.                   military personnel.            the Vienna Document OSCE coun-
                                                                 tries pledged to hold a maximum
                                                                 of one exercise involving at least
                                                                 40,000 personnel every three years.
Belarus, a participant of Za-
pad-2017, was not in violation
of the provisions of the Vienna
Document and was open to
neighbouring countries and the
international community.
24   R U S S I A N FO R E I G N P O L I C Y

     RUSSIAN
     FOREIGN POLICY
           Russian foreign policy and security
           policy is based on an adversarial
           stance toward the United States and
           the West in general. The main goal of
           the Putin regime is to end its political
           isolation and to restore its position
           on the world arena.

         R
                       ussian foreign policy be-       sphere of influence in its neighbour-
                       haviour is opportunistic. To    hood, where its aim is to slow down the
                       achieve its goals, Russia       pace of democratization and any sort
                       combines political, diplo-      of Western integration. Russia does not
           matic, economic and military means in       draw the line there, and also meddles
           various global or regional conflicts. In    in politics in more distant countries. Its
           this manner, the regime tries to leave an   so-called fight against terrorism is one
           impression that it plays an important       of the most transparent foreign policy
           role in international politics and that     pretexts used in recent years to satisfy
           without President Vladimir Putin it is      its ambition of being a superpower in
           not possible to resolve global problems.    more distant regions. Russia uses the
           The Kremlin exploits and, if necessary,     counterterrorism narrative to strength-
           leverages conflicts around the world to     en its foreign policy position and to
           increase its influence in various regions   establish relations on a political and
           and undermine international processes       security institutional level. While Russia
           and formats involving the West.             seeks to show its readiness for inter-
                                                       national cooperation by invoking the
           A central role in Russia’s superpower
                                                       fight against terrorism, this is a front
           ambitions is played by maintaining its
                                                       for acting contrarily to the West, often
RU SS I AN FOR E I G N POL I CY           25

                                                 President al-Assad and President
                                                  Putin in the Hmeimim Air Base
                                                  in Syria on 11 December 2017 where
                                                  Putin announced that Russia’s
                                                  mission in Syria is accomplished.
                                                  SO URCE: X I NHUA/ S I PA USA/SCANP I X

                                              Russia’s role in Syria is currently signif-
                                              icant. Using this position, Russia will
                                              continue to stake out a more favourable
                                              position in international talks in several
                                              other conflicts, including on Ukraine
flouting international conventions and
                                              issues. We can expect that “cooperation
agreements.
                                              offers” concerning Libya and Syria will
In 2018, Russia will continue its oppor-      be extended to Europe. In the Persian
tunistic foreign policy. It will persist in   Gulf, Russia will try to strike a balance
its broader opposition to the West and        between intensifying cooperation (in-
actively oppose NATO enlargement and          cluding military) with Qatar and Saudi
sow division in the EU. As to countries       Arabia’s regional demands.
in the region, the Kremlin will continue
                                              In Afghanistan, the Kremlin will contin-
to oppose NATO enlargement to Fin-
                                              ue meddling on the pretext of fighting
land and Sweden and also maintain its
                                              terrorism. The same counterterrorism
efforts against potential enlargement
                                              pretext will also continue to be used
in the Balkans. In the Western Balkans,
                                              in various Central Asian countries, to
the Kremlin can be expected to seek
                                              preserve or strengthen its role as a
closer relations with Republika Srpska
                                              guarantor of security and to intervene in
in Bosnia and Herzegovina and continue
                                              their local politics.
influence operations and intervention in
internal Montenegrin politics in the run-
up to the presidential elections.
26       R U S S I A N FO R E I G N P O L I C Y

EXAMPLES OF RUSSIAN MEDDLING

                                                  In the Western Balkans, Russia is actively trying to hinder
                                                  NATO enlargement. Although Montenegro’s accession could not be
                                                  prevented, Russia is attempting to portray the actions of the EU and
                                                  the US as a failed project and maintain a global superpower image
                                                  through its historical ties in the region.

In Libya, Moscow’s broader goal is to obtain a new ally on NATO’s
southern border, whose influence could be used against European
countries. Russia has actively supported the Libyan National Army led
by Gen. Khalifa Haftar, a force opposing the UN-supported Libyan unity
government. Alongside political legitimacy, Russia supports Haftar also in
other ways. For example, Russia has repeatedly taken on the printing of
Libyan dinars, which are delivered to the cash-poor territories controlled by
Haftar. Russia is also maintaining ties with the Libyan unity government,
which understands that Russia is equally capable of escalating the conflict as
it is of defusing it.

                                                   In the Persian Gulf region, Russia is trying to undermine the
                                                   US-led regional security architecture. To do so, Russia is trying to
                                                   benefit from the frictions between the US and its Arab allies concerning,
                                                   above all, Iran’s role in the region. Russia has courted the monarchies
                                                   around the Gulf both economically and politically. It is also preparing
                                                   arms sale transactions with both Saudi Arabia and Qatar. In the same
                                                   way, Russia has also repeatedly passed itself off as a so-called neutral
                                                   peace broker in the Yemen civil war. With these steps, Russia tries to
                                                   undermine the US’s regional role and simultaneously transform itself
                                                   into an indispensable negotiation partner in the Middle East.
RU SS I AN FOR E I G N POL I CY          27

      In the case of Syria, the Russian narrative trumpets an ongoing fight
      against terrorism, but the reality is that Russia is there in order to
      halt a string of defeats for the Bashar al-Assad regime while trying
      to increase its presence and possibilities to influence developments in
      the region. In this sense, Russia’s intervention in Syria since 2015 has been
      successful. Although Iran’s influence in Syria has grown significantly as a
      result of the conflict, Moscow has managed to reinforce its military presence
      in Syria. In addition, Russia has succeeded in breaking out of the diplomatic
      isolation imposed on it due to the Ukraine conflict, achieving a situation
      where at least in the Syrian issue, Russia can act as an equal counterpart
      alongside the leading countries and regional forces.

                                              Regarding intervention in the North Korea crisis, Russia’s ambition
                                              is clear: to become an internationally recognized global actor, and to
                                              undermine the role of the US at the same time. Russia is exploiting the
                                              conflict to spread a narrative that the US is principally to blame in the North
                                              Korea question. Russia volunteers itself as a “peace dove” which prefers
                                              diplomatic channels and could possibly broker talks.

In Afghanistan, Russia is using counterterrorism rhetoric to
justify its activities. Russia is increasing its troop presence under the
guise that the American-led coalition is failing in its fight against drug
trade and terrorism. Russia maintains contacts with the major parties to
the Afghanistan conflict in order to keep its options open for any future
scenario. Similarly to its actions in Syria, Russia has also tried to form
alternative coalitions and negotiating platforms that undermine the
formats established on the basis of international agreements.
28   R U S S I A N FO R E I G N P O L I C Y

           OUTLOOK FOR THE MINSK AGREEMENTS

           Russia has only partially achieved its        to a greater extent while Russia feigns
           desired goals in its aggression against       commitment to the Minsk accords and
           Ukraine. Crimea is occupied, the war in       diplomatic solutions. These mutually
           eastern Ukraine continues to destabilize      exclusive trends gained particular mo-
           European security, and Ukrainian socie-       mentum in 2017.
           ty and economy are still vulnerable. But
                                                         In a situation where Russia’s opposition
           Russia’s main goal – to draw Ukraine
                                                         to the West and the ever-deepening
           into its sphere of influence – is slipping
                                                         isolation could become permanent,
           away irreversibly. The Minsk Agree-
                                                         the Kremlin is attempting to save face.
           ments, which brought the worst of the
                                                         The upcoming presidential elections in
           fighting to a halt in eastern Ukraine,
                                                         Russia are also forcing Vladimir Putin
           coupled with Ukrainian resistance and
                                                         to propose actions that have at least
           the unanimous pressure from the West,
                                                         the semblance of being peace-oriented.
           has kept the fighting to the level of
                                                         In September 2017, Russia’s president
           local skirmishes, which no longer poses
                                                         made a proposal to the UN to send an
           an existential threat to Ukraine. The
                                                         armed mission to eastern Ukraine to
           fighting nevertheless has had a heavy
                                                         provide protection to the OSCE special
           human toll. Russia seems unwilling to
                                                         observer mission operating there. This
           break it off, but rather uses the violence
                                                         idea was meant to take the initiative
           as an instrument to achieve the control
                                                         out of Ukraine’s hands, as the Ukrainian
           of Kyiv it yearns for.
                                                         president had announced a plan prior
           It has been more than three years since       to the UN General Assembly meeting
           the Minsk agreements were signed.             to demand UN peacekeepers be sent to
           Russia has had many opportunities to          the area. Russia’s proposal was noth-
           bring the conflict to a peaceful solution,    ing but an attempt to defer a solution
           if it wanted to. Instead of cutting off its   to the conflict burdening Ukraine. At a
           proxies in eastern Ukraine and no longer      time when the international community
           equipping and directing the militants,        is waiting for true steps to be taken to
           the Russian administration is playing a       resolve the bloody conflict, Russia is only
           two-faced game. The occupied eastern          suggesting solutions that would only
           Ukrainian areas are being integrated          make the conflict more entrenched. Rus-
           with the Russian economy and society          sia apparently sees this as a sustainable
RU SS I AN FOR E I G N POL I CY     29

                                                 prospect, as it believes that it can shift
                                                 the responsibility to various interna-
RUSSIAN FOREIGN POLICY                           tional organizations in a manner that
                                                 reduces Russia’s accountability while
INITIATIVES TO WATCH
                                                 increasing the status of the self-pro-
IN 2018:                                         claimed formations – the Donetsk
                                                 and Luhansk people’s republics – that
»» International initiatives on Ukraine and in
                                                 undermine Ukraine’s territorial integrity.
   the Middle East
                                                 Russia’s calculations are predicated on
»» Pressure on Europe regarding Syria and        the belief that multiple frozen conflicts
   Libya                                         on its borders are a manageable strat-
                                                 egy for the long term and that this will
»» Negotiations between warring factions in
                                                 yield direct political benefits for Russia,
   Libya
                                                 giving it an instrument for keeping its
»» Activities in Afghanistan justified by the    neighbourhood at heel.
   fight against terrorism
                                                 However, Russia’s rationale for attack-
»» Influence activities in Montenegro and        ing Ukraine is increasingly on unstable
   Moldova before and during elections           footing. At the Valdai Discussion Club
                                                 forum on 19 October 2017, President
»» Ever closer relations with Republika Srpska   Putin floated a new pretext – the claim
   in Bosnia and Herzegovina                     that it was trying to prevent a Srebreni-
                                                 ca-type tragedy in Donbas. By citing the
»» Consolidation of influence in Central Asia
                                                 goal of avoiding massacres in eastern
                                                 Ukraine as an excuse for maintaining
                                                 control of the Ukrainian border, Putin

       AT A TIME WHEN THE INTERNATIONAL COMMUNITY
     IS WAITING FOR TRUE STEPS TO RESOLVE THE BLOODY
    CONFLICT, RUSSIA IS TABLING IDEAS THAT WOULD ONLY
               MAKE THE CONFLICT MORE ENTRENCHED.
30   R U S S I A N FO R E I G N P O L I C Y

                                                                           The building where
                                                                           the paramilitary
                                                                           representation of
                                                                           the Donetsk people’s
                                                                           republic in Ostrava,
                                                                           Czech Republic was
                                                                           registered until April
                                                                           2017.
                                                                           SO URCE: G O O G LE M APS

           once again confirmed what he him-           resentation” in Italy was joined by centres
           self, his diplomats and officials have      in Greece and France. The latter one is
           schizophrenically persisted in denying      led by a failed and convicted municipal
           for many years – Russia controls the        politician. In April 2017, the paramilitary
           occupied areas of eastern Ukraine           representation of the Donetsk People’s
           because it has a specific strategy for      Republic in Ostrava, Czech Republic
           doing so. Yet it is evident that Russia’s   (pictured), was closed by court ruling and
           assessment of the situation – which         in December, Russian agent of influence
           was the grounds for its aggression          Johan Bäckman, who had previously
           against Ukraine – was not even close to     claimed to represent the Donbas in
           reality. Considering Russia’s potential     Finland, announced a new representation
           from the standpoint of security, this       had been opened in Helsinki. Such groups
           conveys a negative message, at least in     – although marginal – spread disinforma-
           Russia’s neighbourhood.                     tion, originating from the Kremlin via the
                                                       “Donetsk foreign ministry”, aimed against
           Examples of manipulations against the
                                                       Ukraine and the West. As the Donbas
           West orchestrated by Russia can also
                                                       separatists’ attempts to imitate diploma-
           be seen in the phantom representations
                                                       cy in the West have proved unrealistic,
           of the eastern Ukrainian separatists – in
                                                       Russian agents attempt to register the
           particular the Donetsk People’s Re-
                                                       representations or NGOs and associate
           public – in Europe. In 2017, the “rep-
                                                       them with existing associations.
RU SS I AN FOR E I G N POL I CY   31

ROSNEFT AND GAZPROM AS THE TOOLS
OF RUSSIAN FOREIGN POLICY

General economic constraints will keep       In Serbia, Gazprom uses the same
Russia’s foreign policy influence in         influence means that it did in Ukraine:
check in 2018 as well. The Kremlin has       a long-term supply contract has been
little money to support governments          signed with a monopoly, Srbijagas. This
of Moscow’s liking and thus it will rely     enterprise is characterized by corrupt
on the large state-owned corporations        schemes, politicians’ participation in
Rosneft and Gazprom.                         company management and opaque
                                             transactions. Through Gazprom, Russia
This is risky business – for instance,
                                             establishes relationships that make CIS
Rosneft’s loans and agreements in
                                             countries dependent on Russia. For ex-
Venezuela (totalling 6,7 billion EUR)
                                             ample, the price of the natural gas sold
may end up making a loss if the Ven-
                                             to Belarus and Kyrgyzstan is decided by
ezuelan government continues on the
                                             the Kremlin, like investments into the
same economic policy course, which
                                             gasification of Kyrgyzstan. The ex-
has made what was once the wealthiest
                                             penses from this type of foreign policy
country in South America insolvent.
                                             instrument are borne by Gazprom.
Rosneft’s investments (totalling 1,2
                                             The risks assumed by Rosneft and Gaz-
billion EUR) in Iraqi Kurdistan, the inde-
                                             prom in the state’s foreign policy inter-
pendence referendum of which was not
                                             ests are compensated by the risk-free
recognized by the Iraqi central govern-
                                             redistribution of oil and gas exploration
ment, are also in doubt. Baghdad has
                                             sites in Russia.
restored control over the oil fields and
has contested the Rosneft deal with the
Kurds.
32   R E L AT I O N S B E T W E E N B E L A R U S A N D R U S S I A

     RELATIONS
     BETWEEN
     BELARUS AND
     RUSSIA
          President Alyaksandr Lukashenka’s
          autonomy is dwindling, and although
          Belarus is stable on the surface,
          uncertainty is growing in the country.

          A
                        bove all, the country’s                       Russian control over Belarusian
                        uncertainty is based on its                   military capabilities is increasing; the
                        almost full dependence on                     legal framework is being supplement-
                        Russia. Most of the crude                     ed to bring the armed forces of both
          oil imported from Russia is exported                        countries under a joint command in the
          from Belarus as refined oil products.                       case of a threat, and there is deepen-
          This accounts for almost a third of the                     ing harmonization of both countries’
          budget revenue of Belarus. The 1,6                          armed forces and training of units
          billion EUR loan allocated by Russia                        at the tactical level, right up to the
          in 2016–18 is essential for refinancing                     creation of mixed units. The Belarusian
          past loans taken by Belarus. Belarus’s                      armed forces are also equipped with
          economic dependence gives Russia                            Russian military equipment, making
          leverage it can use if necessary to force                   Belarus technologically and financial-
          Belarus to take decisions not benefit-                      ly dependent on Russia for decades
          ting Minsk’s development. For example,                      to come. The leaders of Belarus are
          if oil exports using Latvian and Lithu-                     interested in inexpensive solutions for
          anian ports are re-routed to Russian                        maintaining their armed forces while
          ports, Russia will assume direct control                    Russia’s goal in this cooperation is to
          over Belarus’s petroleum exports.                           strip the Belarusian armed forces of
R E L AT I O N S B E T W E E N B E L A R U S A N D R U S S I A   33

                                                      Belarusian president Alyaksandr
                                                       Lukashenka and Russian president
                                                       Vladimir Putin.
                                                       SO URCE: AP/SCANP I X

                                                  declining, more and more Belarusians
                                                  are travelling abroad in search of work,
                                                  above all to Russia and Poland.

                                                  In terms of foreign policy, Belarus has
                                                  attempted to foster the image of a
                                                  guarantor of regional security, hosting
                                                  talks on the eastern Ukraine conflict
                                                  and promoting the Helsinki 2.0 initiative
                                                  aimed at getting China, Russia, the US
                                                  and EU leaders behind the negotiating
                                                  table, looking for new and constructive
                                                  solutions. Taking part in the Za-
their autonomy so that they would be              pad-2017 exercise as an ally of Russia
crippled in case of a conflict.                   dealt a significant blow to this image.
                                                  Belarus’s initiative to invite foreign ob-
The protests of spring 2017 showed
                                                  servers to the exercises did not reduce
that if Russia decides to reduce
                                                  neighbouring countries’ fears related
economic support to Belarus – as it
                                                  to the exercises. The two countries’
temporarily did that year – this will have
                                                  presidents did not meet in the course of
a direct effect on the socioeconomic
                                                  the exercises, which shows that Russia
situation in Belarus. In this situation,
                                                  does not consider Belarus an equal
Belarusian officials were forced to
                                                  partner. In the run-up to Zapad-2017,
find other income sources to fund the
                                                  the FSB detained a Ukrainian citizen,
budget, such as the “social parasites
                                                  Pavel Grib, on Belarusian territory. This
tax” (imposed on people who have
                                                  demonstrated a direct subordination
worked less than six months per year),
                                                  to the Russian special services and
which brought thousands of people to
                                                  makes one doubt whether the Belaru-
the streets in Minsk and the regions. A
                                                  sian authorities are capable of keeping
steep rise in utilities expenses in 2018
                                                  developments under control in their
will directly hit the wallets of Belaru-
                                                  own country. In addition to Grib, the
sian people. With the standard of living
                                                  arrests of the Ukrainian journalist Pavel
34   R E L AT I O N S B E T W E E N B E L A R U S A N D R U S S I A

               Joint exercises are one measure by which Russia increases
           

                                                                                                         SO URCE:
                                                                                                   TASS/SCA NP I X
               its control over Belarusian military capabilities.

          Sharoiko and the businessman Alek-                          After the 2018 presidential election,
          sandr Skriba are a sign of the country’s                    Russia will continue applying pressure
          efforts to please Russia in sowing                          and increasing control over the Bela-
          tensions in relations with Ukraine.                         rusian economy, politics, military and
                                                                      social life, as the complicated situation
          The common visa space agreement be-
                                                                      in the Belarus economy will increase
          tween Belarus and Russia means that
                                                                      internal discontent and instability. Once
          visa policy is essentially placed under
                                                                      again, the sale of strategic Belarusian
          Russian control. Belarus will essentially
                                                                      companies to Russia and the establish-
          lose its right to decide on who enters
                                                                      ment of a Russian military base on Be-
          the country – yet another step in the
                                                                      larusian territory will be on the agenda.
          erosion of sovereignty. Russia’s decision
                                                                      Street protests would be sparked more
          to set up temporary border checkpoints
                                                                      by a worsening socioeconomic situation
          on the Belarus-Russia border in spring
                                                                      than calls from the fragmented oppo-
          2018 and intensify checks on the roads
                                                                      sition.
          and railways should also be seen as
          pressure on Belarus. Should the visa                        The demise of the sovereignty of
          issue be resolved, some other topic                         Belarus would reinforce Russia’s sphere
          would come up immediately, such as                          of influence in the proximity of Central
          infiltration of terrorists from Belarus                     Europe.
          to Russia or growing cross-border
          smuggling, which would be prevented
          by more effective border controls.
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