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How is Russia so dangerous with an economy smaller than Italy’s?



Thirty years ago, Moscow’s military was stationed from Afghanistan to East Germany, guarding the Russian-led Soviet Union and its military allies...


During the Cold War, Communist Russia ruled over the world’s 3rd largest population, 2nd largest nominal GDP, and regularly topped the US in military spending. It promoted a global political and economic doctrine that directly challenged US-led Democratic Capitalism, and its military alliance, the Warsaw Pact, served as a counter to NATO. The Cold War lasted until the late 1980s/early 1990s, when the Soviet Union and its empire fell apart.

In 2017, Russia’s Nominal GDP (Gross Domestic Product) was ranked 12th, behind 8th placed Italy. At $66 billion, its 4th place annual military expenditure was less than Saudi Arabia’s, and far less than the $600 billion of the US.)

Meanwhile, Russia currently has the 9th largest population, and leads no economic or military union that can challenge the EU or NATO. Based on these figures, Russia should not command the influence it does, yet it has constantly destabilized American attempts to shape and maintain the US-led global pecking order. Eight factors allow Russia to do this, which help distinguish it from other major powers.


1. Size.

Though no longer able to send its military into the other 14 countries that formerly made up the Soviet Union, Russia is still the largest country in the world, and its size alone makes it a global military power. It can move its military to and from North Asia, Eastern Europe, and the borders of the Middle East without ever leaving Russian territory, allowing the Kremlin to project power globally while avoiding the usual diplomatic means.

The US has more than 200 overseas bases, which it leases from 70 other countries. Its global presence is more impressive than Russia’s, though it is also vastly more expensive and dependent on the cooperation of the countries it works with. Ruling over large distances costs a lot of money and manpower; Russia’s expenses are slightly discounted because the vast majority of its forces don’t have to leave the country.

Russia does have a handful of foreign military bases, though most of them are in former Soviet countries near its border. The bases remind these countries that they are not completely free from Moscow’s orbit. Russia’s population may only be the 9th largest in the world, but that is still higher than all of its immediate neighbours except China. Though not the colossus the Soviet Union was, Russia’s current population and size make it a formidable actor in international relations.


2. Military strengths.

Russia currently has the 4th-highest military expenditure in the world, but its armed forces have been consistently well-funded for decades. Saudi Arabia, 3rd behind the US and China, only recently began its massive spending spree. The Saudis buy weaponry from countries with established arms industries, like the US, because their own domestic industry is less developed.




Top 15 defence budgets 2017 (IISS)


Russia exports advanced weaponry as well, recently selling its S-400 missile defence system to NATO-ally Turkey. Other countries are constantly playing catch-up with more powerful countries like Russia and the US, which have cultivated a lead in armaments over time.

The US military is superior to Russia’s, but a more powerful military is meaningless when used recklessly. American-led conflicts in Afghanistan, Iraq, and Libya cost trillions of dollars, hundreds of thousands of lives, and few of the military objectives were achieved. The costs and outcomes for the 2011 American intervention in Libya contrast with those of the 2015 Russian intervention in Syria, the most recent conflicts in which those two countries took the military lead.

Russia also interferes in countries to “inflame conflict and create permanently tense and unstable “frozen zones,” allowing Russia to exert influence and confound its opponents”. This tactic involves using local actors, mercenaries, and the Russian military to keep countries susceptible to violence and instability.

Sustaining relatively low-cost conflicts in neighboring countries, or aiding both sides in separate disputes not directly linked to Russia, allows Moscow to divide and conquer regions that otherwise might be able to repel Russian foreign policy. The looming threat of foreign and internal conflict means it is often easier for smaller countries to accept the Kremlin’s economic, political, and military demands, rather than suffer from their destabilization efforts.


3. Cyber/intelligence operations.

Cyberwarfare is one of the fastest-growing types of conflict between countries, and Russia has been an active provocateur for years. In 2007, Estonia removed a monument to Soviet soldiers in the capital, Tallinn, to a military cemetery outside the city. Russian cyber-attacks then began targeting Estonia’s banking, media, and government sectors -

“The result for Estonian citizens was that cash machines and online banking services were sporadically out of action; government employees were unable to communicate with each other on email; and newspapers and broadcasters suddenly found they couldn’t deliver the news”BBC

More recently, Russia has been accused of meddling in the 2016 US election by stoking tension among voters, stealing damaging emails from the Democratic Party, and organizing rallies and counter-rallies to cause further division.

On top of its cyber capabilities, Russia has an enormous and competent spy network that can carry out assassinations, obtain state secrets, and directly influence the intelligence and military operations of a country. In 2008, it was discovered that the top security official in the Estonian defence ministry was a Russian agent, and two more double agents were found a few years later.

While Russia’s intelligence operations are used to exert direct political influence over governments, its cyber-attacks can cripple a country without firing a shot. The Kremlin’s spies operate discretely and covertly, while cyber-attacks are difficult to prevent and link back to the Kremlin. Both systems serve as powerful tools in Russian foreign affairs.


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4. Russian minorities.

Many countries in Eastern Europe and Central Asia have large Russian minority populations. These populations often speak Russian, practice Russian culture, and watch state-sponsored Russian television.

Estonia, Belarus, Ukraine, and others must take into account the political opinions of their Russian minorities, lest they become susceptible to domestic crises. The aforementioned cyber-attacks in Estonia were preceded by riots involving ethnic Russians, which make up 25% of Estonia’s population. They were fed rumours online claiming Estonia was actually destroying the statue, as well as nearby Soviet graves. Over 1000 people were detained, 156 were injured, and one person was killed.

The Kremlin channels a pro-Russian narrative to ethnic Russians living abroad , in order to enhance its ‘soft power’. When 25% of a country identifies as Russian and has been spoon-fed Kremlin talking points for decades, this naturally affects a country’s politics. Powerful figures in Russian-minority countries are often accused of acting as a with Kremlin’s interest in mind, while the Russian populations can easily be used against national governments when needed.




Major Russian gas pipelines into Europe (Burn an Energy Journal)


5. Russian natural resources.

Beginning on January 1st, 2006, Russia temporarily halted all gas exports to Ukraine over a payment dispute. Europe receives a quarter of its natural gas from Russia, half of which passes through Ukraine first. It caused a major diplomatic crisis, and was partly seen as Russia punishing Ukraine for electing a pro-EU government in 2005. On January 1st, 2009, Russia repeated this action, weakening Ukraine’s government further,leading to the election of a pro-Russian government in 2010.

Russia defends its role as Europe’s largest natural gas supplier very aggressively (which I’ve written about here), giving the Kremlin substantial diplomatic power. Withholding gas puts pressure on countries to accept Russian terms, because many of them have no alternative for fuel. Furthermore, it can be used as a bargaining tool in other disputes and negotiations . Despite attempts to diversify, Russia maintains its leverage over Europe in this regard.

On top of being the world’s 2nd largest producer of natural gas, Russia is also the largest producer of oil, and 5th largest producer of steel. These resources are essential for allowing society, industry, and warfare to function. Russia can subsidize its own demand, while most other countries are forced to pay market prices. By controlling significant reserves of natural resources, Russia has both a domestic advantage and a powerful coercive weapon to use in its foreign policy.




Russian-based organized crime routes into Europe (European Council on Foreign Relations)


6. Russian-based organized crime (RBOC).

The post-Communist Russian government was unable to prevent organized crime from taking over the economy during the 1990s. By 1998, it was estimated that the Russian organized crime controlled 40% of private businesses and 60% of state-owned companies. When Putin came to power in 1999, he established control over Russia with a powerful group of military, intelligence, and business oligarchs.

In order to keep the country stable, an alliance was made between members of Russian-based organized crime (RBOC) and their “not-quite-so-criminal but much wealthier oligarch counterparts”. Fighting each other would create more domestic chaos, but there was also a possibility for a symbiotic relationship; the mafia groups ran vast networks of crime and corruption into Europe.

“Russian-based organized crimes groups in Europe have been used for a variety of purposes, including as sources of ‘black cash’, to launch cyber-attacks, to wield political influence, to traffic people and goods, and even to carry out targeted assassinations on behalf of the Kremlin.” — European Council on Foreign Relations

The Russian government provides resources to RBOC for mutually-beneficial financial initiatives and to further geopolitical ambitions. In 2014 , armed Russian men abducted an Estonian counter-intelligence officer, investigating smuggling routes used by organized crime, two days after Obama left the country. The officer was returned as part of prisoner exchange the following year.

In Spain, RBOC “has been active in the region for years, working to build influence among Catalan politicians and businesspeople, and to take advantage of the rivalry between Catalan and national law-enforcement agencies”. Sowing discord among EU/NATO member states is a primary component of Russian foreign policy, and Catalonian independence has become an increasingly contentious issue for the institution in recent months. The Kremlin and RBOC’s ability to add to the unrest cannot be underestimated.

Stretching over the former Soviet Union and penetrating Western Europe, RBOC gives Russia an unofficial non-state actor that can help promote Moscow’s agenda. RBOC “is neither a simple pawn of state nor wholly independent”, often reliant on how and where the Kremlin allows it to operate. Nonetheless, RBOC and the Kremlin offer each other resources and services that allow them to advance their interests together across Europe.


7. Measuring Russia’s economic strength.

The most common way of measuring an economy is by looking at its Nominal GDP. This is the total value of all goods and services that a nation produces in a year, converted from the local currency into US dollars. The US dollar is used as a benchmark largely because it so dominant in international trade.

Russia’s currency, the Rouble, has depreciated in value substantially in the last few years. Their economy has been hit with economic sanctions and a drop in the price of in oil (which it exports), damaging the Rouble’s value. Russia’s nominal GDP in 2016 was $US 1.3 trillion, putting its economy in 12th place. Italy, which uses the Euro, had an economy which produced a total value of $US 1.85 trillion, putting it in 8th place.

However, looking at an economy by its Purchasing Power Parity (PPP) can change a country’s ranking. PPP measures economies in International Dollars, which have the same purchasing power that the US dollar has in America. For example , an iPhone costs roughly the same amount of $US in every country before taxes, because they are expensive to make. However, products like fruit and vegetables are generally cheaper, in $US, in countries with lower standards of living. The same meal might cost $US 30 in Italy, but only $US 10 in Russia.

Put simply, $US 1.3 trillion goes further in Russia than $US 1.85 trillion in Italy, when the local currency is converted to International Dollars instead. Russia’s economy in 2016 measured $3.4 trillion international dollars, putting it in 6th place. Italy’s economy in 2016 measured $2.3 trillion international dollars, putting it in 11th place.

The amount of Roubles and Euros created by Russia and Italy remains the same, but their value varies significantly when converting them to US dollars or International Dollars. The US economy is the exact same in both nominal GDP and PPP because its currency is the benchmark. Both nominal GDP and PPP are just two different ways of ranking a country’s economic strength; its true ranking may be somewhere in between the two.



St Basil’s Cathedral, Moscow (Pixabay)

8. Foreign policy and the application of resources.

The top-15 Nominal and PPP economies are either US allies, or generally acquiescent to American foreign policy. Even China, the US’ foremost economic rival , has benefited from the US-led economic system, and the regional stability fostered by an American military presence after WW2. Though China has been taking steps in recent years to militarily-counter the US in Asia, the two countries have attempted to maintain a stable relationship, as their economies largely depend on one. Neither China nor the US are willing to jeopardize their economic fortunes and the relative military stability in Asia.

Russia, however, views the American global order in a sharply negative light. It does not enjoy the same economic relationship with the US as China does, while the collapse of the Soviet Union crippled Russia politically, economically, and militarily. Moscow has been unable to prevent countries in its Eastern Europe from joining NATO and the EU, while China has only grown more dominant since the collapse of the Soviet Union. Russia has attempted to destabilize this current state of affairs, and sees the US as the largest threat. The Kremlin hopes to undermine American foreign policy enough to regain some of what it has lost in the past three decades.

Russia has been successful at destabilization because of its size and because of its dedication to being disruptive. North Korea’s economy is absolutely feeble, yet the country has been a constant distraction for the US. Russia has been able to consistently and successfully obstruct the American global order, as it is so much more powerful than other countries hostile to the US.


Conclusions.

Russia’s unique set of tools and resources have allowed it to remain a political, military, and economic power, almost thirty years after the fall of the Soviet Union. Meanwhile, no other country is both willing and able to obstruct US foreign policy on a near-global scale. Because Russia does not accept its current standing within the American-led global order, it will do all it can to destabilize it.

Though Russia does not enjoy the same control over Eastern Europe and Central Asia as the Soviet Union did, it is still able to wield considerable influence over these regions. It remains a world power, and because Russia rejects the current international order, it is the most formidable geopolitical opponent the US has. Without dialogue, the two countries will continue to clash around the world. Weak countries will bear the brunt of their rivalry; strong countries will take advantage of the US and Russia while they are distracted.🔷


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(This piece was first published on The Blog!)


(Cover: Flickr/Ninara - Piskaryovskoye Memorial Cemetery is located in Saint Petersburg.)


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