Russian Economic Crisis Offers Opportunity for Integration with West, Argues New CFR Report

The economic crisis in Russia and its aftermath present the West with “an opportunity it has not had over the past decade to enmesh Russia more deeply into the liberal economic order,…which can provide the capital and access to international institutions that Russia needs to boost its competitiveness,” writes Council on Foreign Relations (CFR) Adjunct Fellow Jeffrey Mankoff in a new Council Special Report.

He argues that although the worst of the economic crisis seems to be over, Russia will continue to feel the ill effects longer than other industrialized nations because of its “rigid economy burdened with an overweening state role.” This has led to Russian president Dmitry Medvedev and others calling for major economic restructuring in areas such as property rights, corporate governance standards, and efforts to tackle corruption. “If successful, their economic policies could undermine the semi-authoritarian, state-capitalist model developed under Prime Minister and former president Vladimir Putin,” posits Mankoff in The Russian Economic Crisis.

However, he warns, “the speed of Russia’s recovery and obstacles along the way will play a major role in determining both the success of Medvedev’s call for modernization and the course of Russia’s foreign policy: a quicker recovery would diminish the pressure for fundamental reform and lessen the need for caution internationally.”

To pursue a path of economic integration with Russia, Mankoff offers the following options for Western policy “in this window of opportunity.”

-     Leverage Russia’s need for foreign investment to promote economic reform, particularly a greater commitment to transparency and the rule of law, as well as reduced tension over energy.

-     Deepen bilateral U.S.-Russian economic ties, including civilian nuclear cooperation. “Allowing Russia to become a major center for uranium reprocessing would go some way toward alleviating [its] financial concerns and increase U.S. leverage with Moscow, especially if packaged as part of a deal to end Russia’s involvement in the Iranian nuclear program and support sanctions against Tehran at the UN Security Council.”

-     Encourage Russia to remain on the path to World Trade Organization membership. “While WTO membership would boost the Russian economy, having Russia in the WTO also benefits the West. It provides a legal framework and recourse for foreign investors, and enhances the legitimacy of the liberal international economic order.”

-     Promote reform and development in Russia’s post-Soviet neighbors. “Because some Russian leaders regard regional autarky as an alternative to participation in the global economy, a secondary aim of U.S. policy in the wake of the crisis should be to enhance the resilience of Russia’s post-Soviet neighbors at a moment when Moscow is focused on getting its own house in order.”

For the full text, visit: www.cfr.org/russian_economy_CSR.

Jeffrey Mankoff, a specialist in Eurasian/Russian affairs, is an adjunct fellow for Russia studies at CFR. He is also associate director of International Security Studies, Yale University. Previously, he was a John M. Olin National Security fellow at Harvard University, and a fellow at Moscow State University. Mankoff has written articles and op-eds on a range of topics connected to Russian foreign policy past and present, including continuity and change in the post-Soviet era, U.S.-Russian relations, the role of political parties, the Balkan crisis, and the diplomacy of Tsarist Russia.  He is the author of Russian Foreign Policy, a book on the evolution of Russian foreign policy in the Putin years. In addition to research, he teaches classes at Yale on modern diplomatic and military history.

Council Special Reports (CSRs) are concise policy briefs that provide timely responses to developing crises or contribute to debates on current policy dilemmas. CSRs are written by individual authors in consultation with an advisory committee. The content of the reports is the sole responsibility of the authors.

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