Russia’s Future — China or Europe?

I am back in Russia this week, and enjoying it.  Yet while the weather is beautiful, the people equally so, and the ruble holding steady, there is a sense of malaise in the air.  The conflict in Ukraine is clearly on hold, not solved, and this week another new law was passed aiming to stop Russians from cooperating with any foreign-supported organization that might threaten the Russian government’s stranglehold on information and political organization.

New figures also indicate a decline in fertility and increase in mortality, confirming–as my research team wrote in the Appendix to its report on Russia’s demographic future — that the hopeful situation for Russia’s population that appeared just in the last few years has now faded away, returning Russia to a long-term fate of sharp population decline.

How will Russia escape these problems?  There is talk of Russia turning East, and relying on deals with China to strengthen its hand.  Yet I do not believe that will work.

Rejecting Western notions of multi-party democracy and separation of powers, both Russian and China have leaders who believe that strong individual leadership and centralized authority, with no role for an active organized opposition, is essential to preserving stability and reaching their goals.  So it seems natural that China and Russia should become close partners.  With similar visions, couldn’t each help the other achieve their goals?  The recent deal between China and Russia for long-term supply of natural gas to China seemed to mark a new era of cooperation between the two nations.  With visions of a new trans-Siberian high-speed cargo line that would allow Russia to serve as a major transit line between China and Europe, the opening up of Arctic sea lanes that would provide another global east-west link, and cooperation on a host of international issues, from containing Iran’s nuclear ambitions to fighting Islamic terrorism, Russia-Chinese cooperation would seem to have entered its strongest phase since the Sino-Soviet split.

Yet in fact, these appearances are deceiving.  The cooperation between Russia and China is extremely one-sided, benefitting China but offering little to Russia in return.  All the leverage is on China’s side, and indeed China looks set to get stronger while Russia grows weaker.  For Russia to place its bets on a Chinese alliance is extremely ill-advised, for helping China to achieve its dreams may produce nightmares for Russia.

Unequal starting positions

Russia would like to return to its days of being a superpower, or at least being a major power in a multi-polar world, regarded as an equal of Europe, China, and the United States.   No doubt Russia is their equal in its contributions to world music, science, and literature.  But if one looks at demographic and economic relationships, it appears that Russia is out of its league.

Russia today has returned to population growth, driven by improvements in fertility and mortality.  It’s population today, including that of Crimea, is almost 145 million.  Yet this good fortune likely will not last.  Fertility was boosted by prosperity and generous government programs; with oil prices depressed and Western sanctions limiting economic growth, fertility is likely to stabilize or decline.  Given that the women now coming into their prime child-bearing years are those of the exceptionally small cohort born in the post-Soviet crises years of the early 1990s, birth rates are certain to fall.  At the same time, economic distress and looser rules on sales of alcohol will likely see mortality rise again.  The fall in value of the ruble has also made working in Russia less attractive to labor migrants.  Putting all of these trends together, Russia’s population is likely to decline again in the coming decades, falling to perhaps 130 million by 2030.

To the west of this modest sized Russia (about the same in population as Mexico or Japan today) would be a European Union with 465 million inhabitants, and to the east, China with 1.4 billion people.   Thus the European Union and China will likely, by mid-century, have fourteen times the population of Russia.   In terms of their economic output, according to the International Monetary Fund the Gross National Product of the EU today is $18.5 trillion dollars, adjusting for purchasing power (PPP).  That of China is $17.6 trillion.  Together, they have economic output of $36.1 trillion, or ten times the economic output of the Russian Federation ($3.56 trillion).  Since China, even if its growth slows to 5% per year from its present 7%, is likely to continue to growth more rapidly than Russia, by 2030 it seem likely that the combined economic output of the EU and China will also be twelve to fourteen times as large as that of Russia.

In short, Russia is facing overwhelming odds in trying to position itself as a third ‘polar power’ in Eurasia between Europe and China.    It is as if Japan tried to be a third major co-equal power in the Pacific between China and the U.S.   It is simply unsustainable.  More likely Russia will be squeezed between the much larger and economically mightier regions of the European Union and China.

Different conditions, different approaches

One can see the difference in strategic positions in the differences between the approaches being taken by China and Russia on the world stage.  China is firm in expressing its territorial ambitions, especially in the South China Sea, but has so far avoided any overt conflicts.  Instead, it has tried to win influence over its neighbors by offering investments, trade agreements, and institutions.  It has embarked on a massive campaign against government corruption, and signed an important agreement on climate-change gases with the United States.

By contrast, Russia has found itself engaged in wars across its borders, first in Georgia and now in Ukraine, that have cost it international goodwill and millions of rubles but have brought few benefits.  Russia has little in the way of investments to offer other nations; instead it is struggling to limit capital flight to save investment capital at home.   Instead of agreements to broaden its trade, it has responded to Western sanctions by further restricting imports.  Instead of cracking down on corruption and supporting international efforts on climate change, Russian business and government corruption remains largely immune to requirements for transparency and probity.  And while the U.S. and China area assuming leading roles dealing with global climate change, Russia sits on the sidelines, its government and economy still heavily dependent on the sales of fossil fuels to countries that are in fact doing all they can to cut back on their use.

These differences reflect a simple truth:  China is able to approach its dealings with the world from a position of strength; while Russia is dealing from a position of weakness.

Where does Russia’s future strength lie?

The Russian Federation will not be able to act independently as a third major power on the Eurasian continent – its population and economy are far too small, and its dependence on natural resource sales and unchecked corruption render it more and more like an under-developed nation, rather than a modern scientific and industrial one.  If Russia becomes mainly a natural resource supplier and transit hub for China’s massive economy, Russia will be ever more dependent on the ups and downs of China, and the whims of its leadership.  Down this path lies loss, rather than gain, of Russia’s autonomy and security.

So where can Russia turn to restore its strength?  Oddly enough, the logical answer is to Europe.   Together, Europe and Russia would be a reasonable counter-weight to China in both population and economic might.  Europe and Russia working together would span the entire Eurasian continent, and like the United States would be both an Atlantic and Pacific power.  Russian are, despite their proud and independent culture, mainly Europeans – Russian art, culture, literature, and religion are solidly within the European family, respected and admired for their contributions to Europe as a whole.

Yet instead of taking its natural place as one of the leading powers within Europe, Russia has essentially gone to war with Europe over the issue of allegiance and influence in Ukraine.  This conflict over a small and economically modest nation (Ukraine’s economy is smaller than that of Peru or Romania, at $370 billion PPP-adjusted) has moved Russia further away from full engagement with the $18 trillion dollar economy on its doorstep, that of the European Union.  Of course, Russia’s long association with Ukraine and feelings of kinship have led to Russia’s military engagement there.  But in the long run, this conflict, like that in Georgia, simply moves Russia further away from the logical position in which it would have its greatest economic and political strength, and that is through closer engagement with Europe, not conflict and separation.

If Russia is to win the respect and admiration of the world, it needs to return its economy to growth, reduce its dependence on natural resource exports, limit corruption and open its economy to greater competition.   Selling ever more raw materials to an ever-more-dominant Chinese economy will not achieve those goals.  Instead, internal reforms, making peace in troubled regions, and seeking to take advantage of opening and further engaging with Europe are the ways that Russia can restore its strength.

The world has changed, and the Russian Federation will never play as dominant a role in global affairs as did the Soviet Union in the 1950s and 1960s.  Yet at the same time, the Russian people should never again suffer from conflicts as they did in the Second World War.  Moreover, with the advance of Russian technology and skills, the Russian people have every reason to expect that even in a smaller Russian state, they will achieve new heights of prosperity and security.   France and Britain are no longer superpowers, and Switzerland never was one (except in watches), but the quality of life their people enjoy today is something that Russians would gladly enjoy as well.

Russia’s strongest future is not to be an isolated nation, but to enjoy its status as one of the largest and most powerful countries within Europe.  To fully realize that future, however, Russia will have to shift back to a course of engagement and friendship with Europe.  The sooner that takes place, the better for Russia and its people.

 

 

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About jackgoldstone

Hazel Professor of Public Policy at George Mason University
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