Russia in the global context

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Russia in the global context
Published 29-01-2013, 15:33
In the very beginning of the 21st century, the world community found itself in a time trap – it seems that everything is going around in circles and that the prerequisites for a global revolution or war are taking shape once again. Has the cycle of world events become closed instead of developing by a spiral as before? What are systemic mistakes that have led to this situation?
In the very beginning of the 21st century, the world community found itself in a time trap – it seems that everything is going around in circles and that the prerequisites for a global revolution or war are taking shape once again. Has the cycle of world events become closed instead of developing by a spiral as before? What are systemic mistakes that have led to this situation?

Since the crisis broke out in 2008, analysts increasingly have been pondering our economic and financial future. Will nation states survive in this future or will globalization eventually supplant them?

The problem is that the confident march of globalization faces growing resistance both on the periphery and in the very heart of the civilized world – Europe and the United States. This resistance to globalization is engendering new models of nation states and strengthening national economic modes. The hope that nation states will fall into oblivion is not materializing, despite the best efforts of the UN, WTO, NATO and other institutions.

Nonetheless, the clear changes that have occurred in the global economy are compelling players to seek out new international financial centers – where will they emerge and what is the basis of their potential?

The delayed collapse of the global financial system only increases the scale of the potential disaster that could have an extremely adverse effect on the world economy. The dollar is locked in combat with the euro. Bent on converting "the golden yuan,”  China is stubbornly resisting attempts to resuscitate the financial Frankenstein (i.e. trust in the dollar as the leading reserve currency).

One question still remains unanswered: will the savior of the world order come from the East or the West? The West is tired, while the East is too consumed with energy and passion to exert a balanced and nuanced influence on the situation.

Both the East and the West face a deficit of raw materials and information – though for different reasons – and a surplus of technological resources.

The solution may come from Russia, which has invaluable experience with revolutions and wars and no intention to become by all means a global leader or dominate the world economically or politically. As a result, Asian tigers and Atlanticists continuously change their attitude to the BRICS countries and their abundant intellectual resources and raw materials.

Should Russia again become a testing ground for models of overcoming crisis, as it was in the beginning of last century with great consequences for the country? Or could it become the center of a regional alliance, which will preserve comfortable living conditions on its territory?

Russia’s G20 presidency in 2012 was not terribly auspicious. It did not hearken any fundamentally new decision-making formulas. That said, the drivers of change in the global economic and political system (US and NATO military  became one of such drivers) have been determined and turned into decision-making models for reducing turbulence in the world markets. Russia and China’s stabilizing role in this process was clear. This fact was reflected in the attitude to Russia at top level.

Prospects of improving Russia’s image

The behavior of representatives of the European and American establishment is informed by stereotypes that have taken shaped in their particular political culture, and they consider such a behavior as appropriate. According to this culture, if another social system does not meet certain democratic requirements, it must be defective and should be corrected by outside powers.

Nonetheless, the intellectual and business migration from Russia to the EU and the United States has been very different than the first waves of immigration from the Soviet Union, which formed a fairly repulsive image of Homo Sovieticus yearning for the blessings of Western civilization. The image of Russia began to change when the people coming from there started contributing to the investment and scientific climate in the West.

More and more people are shedding their stereotypes of Russia and started seeing it as a modern and stable state with vast opportunities for self-realization. It is increasingly more convenient and profitable to be an expat in Russia. Indirect evidence of this is the stubbornness with which medium-level foreign managers and employees prolong their job contracts in Russia. This brings to mind historical associations with the times of Peter I and Catherine the Great, when expats who came to work in the Russian Empire became Russified, changed their faith and founded noble clans or craftsman dynasties.

Needless to say, some experts view Russia as a colony for staging financial safaris. There are examples of such conduct. For instance, the Magnitsky affair, which set off the chain of events that has damaged Russia’s image, was rooted in a conflict produced by the less than ethical Western businessman Bill Browder, the founder and CEO of the hedge fund Hermitage Capital Management, who actively engaged in corporate wars in Russia.

Obviously, Russia’s relative economic prosperity, which was particularly robust in the 2000s, is a powerful draw to foreigners. More and more people from the so-called industrialized countries are interested in opportunities to make money in Russia.

The financial crisis (the debt burden of the European and American economies),  very high levels of immigration and other factors have compelled Europeans and Americans to seek new opportunities for themselves in developing countries, particularly BRICS.

The fiscal austerity being pursued by many advanced countries stands in sharp contrast to the Russian government’s strengthened social programs and Russia’s growing public sector, which provides solid guarantees for business plans involving the participation of state companies.

Rosneft’s recent deals with Statoil, Exxon Mobil and BP show that positive changes have already taken place at some levels (in business as well as the perception of the expert community). There is only inertia holding back similar changes in the views of the Western public at large. Although there has been considerable progress in this direction as well.

Western media reveals that ordinary people in the West are disenchanted with politicians and economists who are unable to cope with the crisis in their economies. They are particularly impressed by the fact that, like the Chinese, Russians have become big-time consumers of European and American brands. This stands in contrast to the sluggish, primarily discount-driven demand of the usual target customers of Western markets.

Russia has one of the lowest income tax rates (13%) among developed countries. This rate has been in place for a fairly long time, testifying to the general stability of Russia’s tax system.

It is the low income tax rate that attracts highly paid foreign professionals. Using ways of evading double taxation, they only pay taxes in Russia, to the irritation of the governments of their home countries. There are numerous examples of labor (and tax) migration.

The notorious brain drain has been slowing in the last few years. To be more precise, intellectual migration continues due to inertia. But it is telling that those who left Russia are returning home, thanks to the enticement of generous government grants, to work at big and small companies alike.

The tide reversed even earlier among intellectuals and entrepreneurs – in the beginning of the 2000s when it became clear that the 1998 crisis had objectively strengthened the Russian economy and brought to power in the Kremlin people with a desire to create a strong welfare state. This process did not happen overnight but became pronounced in the latter half of the 2000s.

Another striking positive trend is Russia’s 6% unemployment (which continues to fall), which stands in stark contrast to European countries – many of them are inexorably approaching 10%, and some have already far surpassed it.

Naturally, one of the reasons for Russia’s low unemployment is the absence of generous unemployment benefits, which provides significant motivation to hunt for a job.

Despite the opinion widespread in some segments of Russian society, the level of political freedom in Russia, that is, the freedom to express opinions that diverge from the official viewpoint is high compared to the United States, for one. Regrettably, we have not found the statistics to support this conclusion, but it is based on our own contacts in the US and Russian governments.

Political polemics, while poor in quality, are not suppressed by the Russian authorities at either the federal or regional level.

Moreover, the actions of the government in 2011 and 2012 testified to the considerable liberalization of the Russian political system despite the clear signs pointing to an imminent conflict between protesters and government at various levels – signs that were particularly pronounced in late 2011.

The level of interest in President Vladimir Putin, the main figure of Russian political and economic life, shows that he is the one who set the course and pace of structural changes in the country. Judging by the fixation of the non-parliamentary opposition on Putin, even this segment of Russian society has acknowledged that Putin is steering Russia’s development.

Putin’s prestige is high in the United States, Russia’s main foreign critic. Forbes magazine invariably places him high on its rankings. 

The scandal over Ian Bremmer – a leading political analyst of the prestigious US magazine, Foreign Policy, who named Putin the world’s most influential politician in his personal ranking (he gave him second place, in fact, leaving first place vacant) – only emphasized the Western establishment’s interest in the Russian president.

Russia’s undeniable achievements under the current leadership are being diminished with the express purpose of making the Russian government more pliable and dependent on international opinion and eventually provoking in it yet another political inferiority complex.

The aforementioned reasons are mostly economic – high-tech countries need the raw materials and skilled labor that Russia can provide.

Those who are portraying Russia as an "undeveloped country” are either sincerely mistaken or have an agenda. Their underlying concepts are wrong if only because Russia could not be ousted from the G8, despite unofficial attempts to do so.

Putin is often in the right. Despite so-called public opinion and the desire of experts to shape the world order, this fact often comes to the fore, as it did during Putin’s so-called Munich speech in February 2007, in which he told representatives of the Western establishment exactly what he thought about their double standards with respect to countries they call "undeveloped” or "developing,” that is, those countries that are not part of the club.

The more the Western media departs from the new trend of growing interest in Russia on the part of the business community and the public at large, the more critical of Russia they become. They are expressing a lopsided view of Russia and its president to please the political groups that are either inherently hostile to Russia or are using hostility to pursue their own interests.

Results and conclusions

How will the global system develop and "reset” – with the help of a global revolution or a world war?

This example of the West’s dual mentality should not delude the expert community because it is always possible to find several alternative solutions. Recently, Russia and China lifted the global political system out of crisis either on their own or through concerted action. Suffice to recall the notorious case of Syria.

In 2013 Russia’s place in the world must be determined and the role of external and domestic factors that influence this positioning must be revealed.

The West pretends that its prescriptions for the world arrangement are the most effective. The East agrees but acts as it sees fit. In this context, Russia is simply obliged to offer a third way that takes into account the ideas of the West and the potential of the East.

Ignorance of history is not an excuse for mistakes. All countries build their futures from the bricks of the past. As such, Russia’s destiny is predetermined – if it takes advantage of its unique position and seizes this moment, it will become a source of ideas based on its rich experience in the 20th century, rejecting both war and revolution.

The problem is that, having refused to recognize Russia as one of the global centers after the collapse of the USSR, both the West and the East still see it as one factor in their broader framework. One suspects they have knowingly misjudged the significance of Russia’s international role.

The attempts to sideline Russia in the global balance of power in the 1990s and 2000s destabilized the entire world order. This is why Russia would not leave the G8 despite the attempts of certain countries to oust it from the club.

Western elites fear the reemergence of the USSR for a reason – this prospect is based on objective political reality.

The question is whether the West and the East are ready to accept this (i.e. yielding to the clear trend towards integration) in the name of restoring balance in global politics, economics and finance.  Another question is whether Russia is ready to shoulder the burden of unification and restore its reclaimed superpower status.

Alexei Mukhin is President of the Center for Political Information.

Valdai Club

 

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