- Large capital outflows that deter western investments. Too often aid money is
siphoned off to a class of powerful and elite people known as oligarchs.
Realizing that Russia must improve its economy in order to regain prominence,
President Vladmir Putin stated economic progress as a top priority during his
inauguration speech. Furthermore, he recently selected Mikhael Kasyanov as new
prime minister, a man whose background lies in the field of economics and finance.
Western governments responded well to this choice, and Kasyanov was immediately
successful in eliminating half of Russia's outstanding IMF debt. Thus, it is presumed
that Russia will continue to make economic reform and progress a top priority, and will
cooperate with the West towards that aim. Yet, it remains unclear if Russia will make
any significant economic progress during the next two years. While it is true that the
country is experiencing a modest recovery, most of that is due to the rise in oil prices,
and not due to any real market reform.
Yet, when analyzing non-economic issues such as NATO enlargement, it is
unclear whether or not Russia will adopt a similar pro-West policy. Until recently,
Russia's has regarded NATO as an organization bent on containing Russian influence.
Many recent events contributed towards this view including:
- In 1998, NATO and its allies mounted a prolonged bombing campaign
against Serbia, a close Russian ally. Russia was powerless to prevent this from
occurring.
- In 1995, NATO decided to reverse an earlier decision not to enlist new
members.
- In 1999, NATO admitted three former Soviet republics: Poland, Hungary,
and the Czech Republic. In response, Russia decided to revoke its no first strike policy
on nuclear weapons, and embarked on a 15 year military modernization plan.
All these events have reinforced Russian anti-NATO views until Sep 11,
2001. The events on that fateful day have created a global environment of empathy
towards the U.S. that is unprecedented. In light of this, President Putin recently decided
to support America's war in Afghanistan, and to re-look Russia's current policy on
NATO enlargement; he stated that Russia may become more tolerant of NATO
expansion during a trip to Brussels after Sep 11. Indeed, President Putin, may have
pragmatically decided to cooperated with the U.S. and NATO may support Russia's
national interests in light of recent events.
However, Russia policy is influenced by another growing entity, this time
from the East, China. With a yearly GDP increase of over 7%, the world's largest
market, a huge border with Russia, and the world's largest Army, China is a force with
whom Russia must reckon. Recent events prior to Sep 11 have indicated that Putin
fully realizes this as evidenced by his recent tour of China. It is presumed that Russia
will continue its efforts to maintain a good relationship with China, a country which is
wholeheartedly against NATO expansion. Thus it is unclear if Russia will adopt an
policy of Atlanticism (pro-West) or Eurasianism (pro-East).
Significance to Tehran:
Iran's primary issue and concern is the nature of Russia's
reaction to NATO enlargement, and its consequent effects on Iran-Russia relations and
regional stability in the Caspian Region.
It is presumed that NATO will continue its efforts to stop Russia from selling
arms to Iran, and to expand further into former Soviet republics, possibly in the Caspian
Region. Should Russia adopt an Atlanticism approach and tolerate NATO expansion
efforts, it would have a negative impact on Iran-Russia relations, and would present a
significant de-stabilizing factor in the Caspian Region. Russia and Iran currently share
a mutually beneficial relationship through arms sales, the sharing of nuclear technology,
and a common support of anti-Taliban efforts. However, this was not always the case
as evidenced by the last two decades of history.
After the fall of the Shah in 1979, it appeared that Russia would stand to
gain a lot from that development. However, the opposite became evident when the
Khomeini regime dissolved the Moscow influenced Tudeh Party in 1983. 1 Relations between the two countries
deteriorated even further when Russia supplied arms to Iran's mortal enemy during the
1980-88 Iran-Iraq War. Iran responded by supporting Muslim rebels fighting against
Soviet occupation of Afghanistan from 1979-1989.
The fall of the Soviet Union coincided with a thawing of Iran-Russia relations,
predicated by Iranian President then Speaker Ali Akbar Hashemi-Rafsanjani's visit to
Moscow during June 19-23 1989. This visit spurred a Russian commitment to sell arms
and nuclear technology to Iran. In addition to the benefit of receiving hard cash from
Iran for these commodities, Russia has also gained an ally in its territorial disputes in
the Caspian Sea. Russia and Iran claim that the body of water should be treated as a
lake and not a sea. Treating at a sea would give more territorial rights to Azerbaijan
and Kazakhstan. The dispute is especially
important to all concerned parties due to the
projected 70-200 billion tons of oil expected to
lie underneath the Caspian Sea.
2
Currently, Azerbaijan and
Kazahstan both have contractual partnerships
with Western oil companies such as BP (foot),
and have expressed a desire to join NATO. It
is unclear how NATO will react, and it is
unclear if Iran will take proactive steps to
prevent that from happening. Indeed, recent
events imply that Iran would take extreme
measures. In June 01, in response to a joint oil drilling effort between British Petroleum
and Azerbaijan, Iran mobilized troops along the Azerbaijan border, and sent military
aircraft through its airspace. 3 Russia has
also shown its resolve in this matter by conducting live ammunition naval exercises on
the Caspian Sea.
Iran's preferred outcome is that Russia tries to contain NATO enlargement
and adopt a more Eurasian foreign policy doctrine.
Russia's preferred outcome is an increase in power and influence through
economic and political means. Cooperation with NATO may or may not help in this
purpose.
Driving Factors. (Note: stakeholders are in bold, and factors
are underlined)
 |
Political: Ever since the fall of the
Soviet Union, Russia has experienced a severed downturn in political influence. To
reverse this course President Putin will have to decide whether to reverse its
tolerance of NATO in order to bargain for other Russian national
interests, or try to contain NATO influence by working with other superpowers such as
China. The former Soviet republics, encouraged by the power vacuum created
by a declining Russian hegemony, are also factor in that countries such as
Azerbaijan and Kazakhstan have indicated a desire to join NATO.
Such developments have driven Russia's continued efforts at political reform.
In Iran, President Khatami, although seen as a moderate force in the
region, is solidly against NATO or western influence in the Caspian Region.
China, a country with an unusually strong central government, is expanding its
influence globally and regionally. China is against NATO expansion and will
presumably pressure Russia to support this view.
Economic: At the national level, Russia is enjoying a modest
economic recovery due to a rise in oil prices, but it is no way permanent unless
the country institutes further economic reform. Until now, Russia was
unsuccessful in reversing its deterioration of economic influence at a regional
level over the former Soviet republics. When Russia suddenly released price
controls on its market after the fall of the Soviet Union, its economy suffered from shock.
Hyperinflation resulted and ultimately caused the devaluation of the rouble, and default
on IMF loans. The quick pace in which the government pursued privatization
also had negative consequences. Corruption became rampant, as a class of
oligarchs emerged who illegally bribed officials with stock guarantees in return
for privatization and government contracts. Without a fair and impractical court
system, this sort of corruption scared away western investment, and a
huge capital outflow resulted which continues to this day. Needless to say, the recent
rise in oil prices cannot counter these factors without true reform. Putin has made this
goal a top priority, and has selected a prime minister, Kasyanov, who is
completely focused on it.
The economic deterioration of Russia has global effects as well. Former
Soviet Republics have started to look elsewhere than Russia to attract lucrative
business deals and investment. Azerbaijan's recent collaboration in the Caspian Sea
with western businesses such as British Petroleum is only one such example.
This is a source of pressure for Russia to reverse its economic decline by either
cooperating with the west or concentrating on eastern markets such as China.
Social: The social welfare of Russia is driven by many factors to
include: level of nationalism, and economic welfare. The economic
doldrums in Russia have included high unemployment, low wages, and an increase in
poverty. The downturn in the economic welfare of the Russian people has had a
negative impact on the level of nationalism in Russia and the health of its people. It has
also fueled a relatively high distrust of the federal government and the
social elite. However, a recent economic recovery due to increased oil prices,
may drive a subsequent rise in nationalism, but that remains unclear.
Critical Uncertainties.
Russia's Tolerance of NATO: range of futures. While Russia's
reaction to NATO enlargement is ultimately ambiguous, it is more defined within a two
year horizon. Putin will have to make a decision between adopting a doctrine of
Atlanticism (pro-West) in cooperation with NATO or one of Eurasianism (pro-East),
concentrating on Asia. One extreme could result with heavy NATO influence in the
Caspian with Russia and Iran losing territory rights in that highly contested area, and
with Caspian countries joining the defense alliance. Heavy mobilization could result and
the threat of regional conflict in that area would increase dramatically. The opposite
extreme could result with a strong economic and possible military relationship with
Russia and China, thereby serving as an effective force for NATO containment. This
arrangement would benefit Iran and Russia since China is projected to become the
world's largest market for energy.
Russian Economic Influence: true ambiguity. An
extreme case is that oil prices collapse due to an expanding war on terrorism, and
Russia's economic situation deepens. This will force the country to concentrate on
domestic issues and diminish its role in international affairs as well as the regional
dispute in the Caspian. This would create an "open door" for NATO to enlarge and
negatively influence the Caspian from Iran's perspective. In the opposite extreme,
Russia prospers economically and is successful at attracting the interests of former
Soviet Republics. In this case, the trend of these countries looking to the West would
decrease, and regional stability, in the eyes of Iran, would increase.
Russia's Political Reform: range of futures. While Russia is
committed to political reform, the extent of these reforms is unclear for the next two
years. If it remains a strong centralized government, the chance that Russia would act
more decisively to counter NATO would increase. However, if major liberalizing reforms
are passed that re-distribute power back to territories and provinces, Russia's foreign
policy may suffer, and even worse, states may vie for autonomy. Furthermore, this
uncertainty is closely tied to the economic uncertainty facing Russiia; if the country
prospers, political reform would also prosper.
Scenarios.
NOTE: SCENARIOS 1,2,3,4 ARE ORDERED IN ORDER OF
PREFERENCE TO IRAN WITH 1 BEING THE MOST PREFERRED.
Scenario 1: The Bear Awakens. This scenario is most
preferred Iran because it projects a more powerful Russia with greater economic clout.
Russia's improved economy reverses the current trend of former Soviet Republics
looking to the West, and establishes open trade partnerships which fosters a regional
economic powerhouse to rival the EU and NAFTA. Western businesses benefit
tremendously here, and are sympathetic to Russia's grievances concerning NATO
enlargement. Russia enters into an expanded economic partnership with the East and
the Middle East. This benefits Chine immensely as it needs Russian and OPEC's
energy reserves. NATO views the developments in alarm, and decides to delay
expansionist plans in the Caspian. Russia convinces Azerbaijan and Kazakhstan to
give up their territorial claims on the Caspian, and NATO does nothing due to China's
threat to give Russia unilateral access to its domestic markets. Iran gains from this
development in the Caspian, and continues to receive Russian aid. It becomes
Russia's principle agent in the Middle East.
 |
Scenario 2: All Growl No Teeth. Russia declines further economically,
and must resort to military saber rattling to try and contain NATO. As the economy
worsens, nationalistic movements gain strength in the Dumas, and they view NATO
increasingly as a military threat. Azerbaijan and Kazakhstan continue to drill in the
Caspian with western oil companies, and continue to press for NATO membership.
NATO announces that it will allow them to enter, and Russia responses with massive
mobilizations along its Caspian and European borders. Yet, NATO continues to court
the Caspian because it views Russian military as obsolete. Indeed the worsening
economic conditions have driven operational strength of Russia's military to a
historically low. Its equipment is out of date, and their is an unprecedented morale
problem within the ranks. NATO pauses in its enlargement goals, but continues to
actively pursue them. Iran feels that it can no longer count on Russia as a formidable
ally, and is forced to consider inciting rebellion among the large Shiite Muslim
populations in the Caspian countries.
 |
|---|
Scenario 3: The Bear Whimpers. Russia prospers
economically due to a heavy increase in western aid, and the passage of economic
reform. This increase in prosperity also ushers in a new wave of liberalizing political
reforms. However, due to NATO attacks on Kosovo, which it still remembers keenly, it
continues to oppose NATO enlargement. While this gives the alliance pause, it does
not prevent them from pursuing more members because Russia has become so reliant
on Western businesses and investments. As NATO looks to the Caspian, Iran begins
clandestine planning of covert operations against western interests in the area.
Without a Russian counterweight there, U.S. more openly backs Azerbaijan and
Kazahkstan, and consequently becomes an increasingly large target for Iranian backed
operations. Russia spouts rhetoric against NATO expansionism, but does nothing
physically to stop it.
Scenario 4: A Happy Bear Goes to Sleep. Ironically, while this scenario
is the best from an American standpoint, it is the worst for Iran. Here Russia enjoys
spectacular growth through increased foreign investment after the passage of economic
reform and a strengthening of its court system. As the economy improves, liberal
political reforms are passed, and the Russian government becomes more closely
aligned with Western ideology. More importantly, it views NATO as a political
organization and not a threatening defense alliance. Thus, it happily allows NATO to
continue its encroachment, content that it can mutually benefit. The territorial dispute is
resolved with Azerbaijan, Kazakhstan and Russia the clear winners with the backing of
NATO. Furthermore, NATO convinces Russia discontinue its sales of arms and nuclear
technology to Iran which it complies because it no longer needs the funds. Iran will
seek unconventional and asymmetrical means to retaliate.
Endnotes
1. Katzman, Kenneth, "Iran, Russia,
and the New Muslim States,"
http://ourworld.compuserve.com/homepages/usazerb/124.htmBACK
2.The Economist, "Storm in a Precious Teacup,"
Aug 2, 2001.BACK
3.Ibid.BACK
2002, Foreign Area Officer
Association
Springfield, Virginia
Maintained by LTC Steve
Gotowicki.
http://www.faoa.org
