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A Cold Peace Between Russia and the West: Did Geo-economics Fail?

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The Russian Challenge to the European Security Environment

Abstract

In Chapter 5, ‘A Cold Peace Between Russia and the West: Did Geo-economics Fail?’, Nikita A. Lomagin examines the ways in which Russia has used its economic dominance within post-Soviet space and beyond to achieve political objectives. After a brief discussion of the place of economic sanctions in international affairs, Lomagin examines the Russian response to Western sanctions after the Ukraine Crisis, as well as Russia’s earlier use of economic pressures, primarily against post-Soviet states, in the effort to accomplish political goals. Although Russian geo-economic policy has been only partially successful, it has become an integral part of Russia’s effort to defend its perceived interests in post-Soviet space and beyond.

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Notes

  1. 1.

    Economic relations worth about $35 billion and a potential to grow up to $100 billion declined substantially within a few month after the Russian war plane was downed by Turkish air forces. The Turkish president Erdogan even said that for two killed pilots Russia has preferred to sacrifice not only her business interests but also to lose a devoted friend (Redzhen Taiip Erdogan 2016).

  2. 2.

    The most recent move by the US government was a warning of some top US banks not to bid on a potentially lucrative, but politically risky, Russian bond deal, saying it would undermine international sanctions on Moscow (U.S. Warns Banks 2016).

  3. 3.

    The impact of sanctions on Turkey is substantial. According to Bloomberg, non-performing loans at the nation’s lenders climbed to 3.18 percent of total credit in January 2016. The rise in bad loans is compounding the challenges for Turkey’s $814 billion banking industry as a combination of currency depreciation, Russian sanctions and waning tourist visits amid a spate of terrorist attacks weigh on the economy (Courcoulas 2016).

  4. 4.

    At the beginning of 2016 Ukraine and Russia blocked the mutual transit of trucks within the overall sanction actions that have a reciprocal nature. However, from February 25, 2016 the transit was resumed.

  5. 5.

    The Ukrainian Ministry of economic development spoke about the losses of Ukraine from trade restrictions imposed by Russia and put the figure at $98 billion as of April 2016 (Ministry 2016).

  6. 6.

    The Ministry of Economic Development of Russia foresees negative growth at 0.5 percent in 2016.

  7. 7.

    Fred Kaplan called Russia’s generous loan of $15 billion to Ukrainian President Yanukovych at the end of 2013 a bribe to stop him from signing an association agreement with the EU. – See Kaplan (2016).

  8. 8.

    In total, 37 countries including the United States, the EU, and Japan take part in sanctions against Russia over the Ukrainian conflict.

  9. 9.

    This proves the point advance by Machiavelli in his ‘Prince’ that ‘it may be better for a prince to be feared than loved’ but the prince is in greatest danger ‘when he is hated’. Machiavelli, The Prince, chapter 17. - constitution.org (accessed on September 10, 2016).

  10. 10.

    See Hill (2006); Lo (2003); Zartman (2010); and Blank (2013).

  11. 11.

    See the work Marx, Lenin, Carr, Nye and other top analysts on the issue of power. Of special relevance here is Carr (1984).

  12. 12.

    See, for instance, the studies by Stulberg (2007); Nye (2011); Åslund (2010); and Sussex and Kanet eds. (2015).

  13. 13.

    The EU negotiated as a single actor. For a detailed account of this issue see, for instance, Lomagin et al. (2012).

  14. 14.

    See the statistics on Russia’s Economic Ministry webpage (2016).

  15. 15.

    See also Russia open (2016).

  16. 16.

    For a comparison between Russian and EU migration policy, see OECD (2015).

  17. 17.

    By 2004 energy subsidies to Ukraine reached $5.5 billion per annum.

  18. 18.

    Including Trans-Caspian projects.

  19. 19.

    In response to sanctions introduced by the West against Russia over the crisis in Ukraine Moscow has put into effect a ban on agricultural products in August 2014. On June 25, 2015, Russia decided to prolong the ban until August 2016 and in summer 2016 this measure was extended up to the end of 2017.

  20. 20.

    For a discussion of the Russian Federation’s measures on EU exports of live pigs and pork products due to African Swine Fever, see (WTO 2016a).

  21. 21.

    Similar findings were made by the Austrian Institute of Economic Research (WIFO), which concluded that: the macroeconomic effects of the trade loss, amounting to €34 billion in value added in the short run and €92 billion in the longer run, are much more a result of a general worsening of trade relations between the EU and Russia. Nevertheless, the observed decrease in exports and tourism expenditure of approximately €44 billion due to sanctions was estimated to result in a loss of 0.9 million jobs in the short term. A longer term view suggests that up to 2.2 million jobs (around 1 percent of total employment) could be lost. See (Szczepański 2015).

  22. 22.

    In the 1990s this was not even considered for two main reasons. First, Russia was willing to join a family of civilized nations (see the Constitution) which none of the OPEC states belong to, and, second, joining OPEC contracted the interests of the new-born Russian oligarchs who did not want to be tied by anything both at home and abroad. Membership in a cartel by definition could limit oil production of Yukos, Lukoil and other biggest private oil companies in Russia. On Putin’s main task of fighting the oligarchs as the main security threat to Russia in 2004, see Goldman (2004).

  23. 23.

    For a fuller discussion of this issue, see the chapter by Stanislav Tkachenko in this volume.

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Authors and Affiliations

  1. European University and St Petersburg State University, Saint Petersburg, Russia

    Nikita A. Lomagin

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  1. Nikita A. Lomagin
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Correspondence to Nikita A. Lomagin .

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Editors and Affiliations

  1. Department of Political Science, University of Miami, Coral Gables, Florida, USA

    Roger E. Kanet

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Lomagin, N.A. (2017). A Cold Peace Between Russia and the West: Did Geo-economics Fail?. In: Kanet, R. (eds) The Russian Challenge to the European Security Environment . Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-50775-0_5

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