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Russian Pragmatism: making the right choices in 2016

By Samuel Rogers.

For the remainder of the second half of the second decade of the twenty-first century, Russia has an unprecedented number of internal and external issues (addressed below), which have combined to reach a critical point, not seen since the end of communism and the collapse of the Soviet Union a quarter of a century ago. Taking these concerns together, they have the potential for increased internal upheaval in the form of a repeat of the street protests in 2011, high levels of capital flight (though this risk receded slightly in late 2015) and further deterioration in relations with 'partners' such as the US and European states are genuinely realistic. The list of problems that Russia faces is long and has increased, especially since the onset of the Ukraine Crisis and the annexation of Crimea in February 2014. The issues can be divided into two categories: internal and external.

Internally, increasing social divisions persist. With chronic underinvestment in services such as health, housing and education, Russia runs the risk of underestimating the potential for widespread social discontent, which may be exercised on the streets, such as the Moscow Protests in 2012, led by opposition figure Alexei Navalny. Worse still for the incumbent regime, potential outcomes could mirror the fate of Yanukovich in neighbouring Ukraine who was ousted in 2014. While this may seem a dramatic outcome, the continued lack of engagement with these situations compounds its potential.

Another key area, which successive Russian governments have failed to take initiative on is economic diversification. The heavy overreliance on the extractive energy industry, through sales to foreign markets has been exposed by the unprecedented decrease in global oil prices – which are at their lowest since the 1990s – and this decrease is having an adverse impact on the Russian economy. While attempts have been made to participate more strongly in areas other than energy, such as the Skolkovo technology hub, investment is limited and fails to have the impact anticipated by former President Medvedev when he championed the idea during his time in power.

Perhaps most pressing of all internal concerns in Russia are the persistent high levels of corruption relative to other European countries. The more prevalent forms of corruption in Russia occur on the judicial and public procurement level, greatly impeding efforts to counteract this problem through legal frameworks. The effect of this is debilitating to civil society as a whole, preventing the establishment of genuine democratic creations such as NGOs, opposition groups and internet and media freedoms.

Externally, Russia is facing a schism in the post-Soviet status quo vis-à-vis its former adversaries. Since the first election of Vladimir Putin in 2000, Russia had sought to involve itself more heavily with the West and western institutions e.g. the WTO. As the first decade of this century continued, Russian desire for integration into such institutions waned, culminating in Putin's speech at the Munich Security Conference in 2007. Nine years on, such institutions have effectively turned their backs on Russia and in some instances become openly hostile to it (though Russia did join the WTO in 2012). Most importantly, this has been driven by the onset of the Ukraine crisis, begun in Kiev – the origin of Russian culture – in November 2013 in the city's Maidan square, which culminated in the fleeing of President Yanukovich in February 2014.

This widely unpredicted alteration in political structure on Russia's border is considerably more significant than the Georgian War of 2008, not least because of the de facto divide, which has split Ukraine into government vs rebel military skirmishes, loosely kept in check by the fragile Minsk Protocol. Russia's external difficulties have increased as a direct result of the conflict in Ukraine. Primarily, these have materialised through Western-imposed economic sanctions, designed to weaken Russia through bans on food imports and access of Russian banks to Western credit lines.

Additional external challenges for Russia include, but are not limited to, first the recent decision to partially withdraw from military action in Syria, which is intended to (a) challenge ISIS directly and (b) show support for long-term ally, President Assad. Second, strains in relations with strategic allies – or at least those states with the potential to become so – as set out by Russia's pro-Western integration drive in the early 2000s such as the European Union states and Turkey, the first NATO member to shoot down a Russian plane for fifty years.

The potential to over or under react to these challenges would be present for any state in Russia's situation. At a time when Russia's budget deficit is predicted to reach $21.7bn in 2016, meaning this year will be the first since 2011 where military spending has not increased significantly, which is in line with maintaining the deficit at 3% of GDP, pragmatic financial decisions will have to be undertaken, which do not threaten the government's domestic and international position. What is clear is that Russia cannot afford to maintain conflict in Ukraine, airstrikes in Syria, finance large energy projects such as the planned nuclear power plant construction in Hungary, while sanctions and low oil prices persist. Russia is at a critical juncture. Never in the post-Soviet period has it endured such internal and external pressures with genuine potential to undermine the economic and political power – and will – of the regime. 2016 will be a year in which tough choices have to be made.

One key question is, which of the outlined challenges is most important for Russia and the current government's longevity, especially given the next Presidential elections are just two years away? Internally, Russia should do more to strengthen the rule of law, which will lay the foundations towards the creation of a truly independent judiciary, which is a key step in tackling corruption at the legal level. Russia's best option externally will be to engage with the US and its allies and to negotiate the terms of sanctions, thus freeing up financial mechanisms allowing it to diversify its economy in the longer term. By doing so, higher potential will be generated to find a political solution in the Ukraine and further, a broader international coalition could then be formed, which includes Russia as a key partner, to counteract ISIS, especially in Syria. Regardless of these issues, there persists a culture of informality in the annals of Russian political power, whereby many of the close associates of the Kremlin are engaged in a culture of clientelism and opaque methods of decision-making. The trusted personnel surrounding Putin help to ensure that the ruling party, United Russia, maintain power but simultaneously, it is crucial they do not repeat the mistakes of other post-socialist governments who typically underinvest domestically, resulting in popular protest.

Samuel Rogers is a PhD Candidate at the School of Sociology, Politics and International Studies (SPAIS)at the University of Bristol.