Russia Hosts and Promotes Emerging Power Groups

This month, Russia hosted back-to-back meetings of two organizations representing “emerging powers” on the global scene. The first of the two, both held in Yekaterinburg, was a meeting of the heads of state of the Shanghai Cooperation Organization, which is made up of Russia, China and the four central Asian states (and former Soviet republics) of Kazakhstan, Uzbekistan, Tajikistan and Kyrgyzstan. In 2006, Iran, India, Pakistan and Mongolia were inducted as observer states and expected to become full members soon. The presidents of the four observer countries, including Mahmoud Ahmadinejad of Iran, were all in attendance at the Yekaterinburg meeting. (When the U.S. originally applied for observer status at the SCO, it was turned down).

As I mention in Chapter 9 (“America’s New Rivals”), the SCO is nominally an alliance of “good neighborliness and friendly cooperation” but many observers see it as a counterbalance to NATO and perhaps to the EU. In 2003, Chinese Premier Wen Jiabao proposed a long-term goal of turning the organization into a free trade area, reminiscent of the early phases of the EU.

The alliance already includes countries occupying three-fifths of the Eurasian landmass, and an expansion that would bring together China, Russia, India and Iran would be an imposing global force. Furthermore, it would bring together some of the world’s major oil reserves in Iran, Russia and the Caspian Sea. Some analysts see a strategic and economic effort among these countries to reduce the U.S. hold on the region’s energy resources. China and India, as the world’s fastest-growing energy consumers, may want to secure central Asia’s energy resources for their own economies. Iran and Russia, two of the world’s largest energy suppliers, want to reduce their dependence on sales to the West.

The idea of challenging Western (and especially U.S.) global dominance was evident in the communiqué from the meeting—The Yekaterinburg Declaration—which proclaimed that

“the tendency towards true multipolarity is irreversible. There is a growing significance of the regional aspect in settling global problems.”

Russia’s long-expressed opposition to “unilateralism” and “unipolarity” is a not-so-subtle swipe at the United States. Moscow’s preference for alternate configurations was evident in a second meeting in Yekaterinburg, right after the SCO assembly. This was the inaugural summit of the so-called “BRIC” countries—the emerging economic powers of Brazil, Russia, India and China. Russian president Dmitry Medvedev was perhaps guilty of hyperbole in calling the summit “the epicenter of world politics” but there is no doubt this is a formidable foursome. According to The Economist, the BRIC’s share of world output leapt from 16% in 2000 to 22% last year. For the last decade, GDP growth in the BRICs has outpaced that of the world, and of emerging and developing economies (see The Economist charts above). These four countries alone control about 40 percent of global currency reserves.

During the summit, the leaders talked about assuming more say in global policy-making; reforming the International Monetary Fund; and a plan to switch some of their foreign currency reserves out of dollars and into IMF bonds (an idea which is also the subject of much discussion in China). As the New York Times observed, the BRIC summit was

“intended to underscore the rising economic clout of these four major developing countries and their demand for a greater voice in the world. And Russia, the group’s host and ideological provocateur, is especially interested in using the summit to fire a shot across Washington’s bow.”

Russian Reflections in a U.S. Mirror

A prominent Russian professor and former KGB analyst,Igor Panarin, predicts that the U.S. will collapse and break into six pieces next year. His forecasts are “all the rage” in Moscow and Panarin has become a media celebrity in Russia. As interesting as his theories are though, and as bad as things are in the U.S., his predictions are way overblown, reflect a shallow understanding of the United States, and actually tell us more about Russia than about the U.S.

In December the Wall Street Journal reported on an interview with Panarin, entitled “As If things Weren’t Bad Enough, Russian Professor Predicts End of U.S.” The Russian sees mass immigration, economic decline and moral degradation in the U.S. leading soon to a civil war and a collapse of the dollar. Soon thereafter, the richer states will withhold funds from the federal government, effectively seceding. The country will break into six pieces, based mostly on ethnicity, and foreign powers will move in to gobble them up. (There is a map of the future Un-United States in the WSJ article).

As with many such apocalyptic scenarios, there are bits of truth in Panarin’s analysis. He points to the problem of U.S. debt, and foreign debt in particular as a “pyramid scheme” that is unsustainable. In an Izvestia interview in November, he predicted the U.S. financial crisis would worsen, that unemployment would grow, and that people would lose their savings. He sees the revival and growth of both Russia and China as major political and economic powers. All this is pretty accurate.

However Panarin’s more extreme predictions about the U.S. seem more like a reflection of what has happened in Russia—-he is “projecting” as psychotherapists like to say. His concern about “moral decay” in the U.S., for example, is hard to fathom given the extremely high levels of alcoholism, divorce, crime and corruption in Russia. And the breakup of the US seems more a reflection of Russia’s own past—the 1991 breakup of the Soviet Union into 15 separate countries. But the parallels are few: each of these 15 “republics” of the USSR were based on entirely different nationalities, or ethnic groups, with little holding them together but the centralizing force of the Communist Party. As contentious and fragmented as the US can sometimes seem, almost all people here still consider themselves, first and foremost, Americans.

What is most interesting about Panarin’s predictions—and their popularity in Russia—is what it says about Russia’s desired place in the world. The country has been through some very rough times over the last two decades, and under Putin has begun to revive and reassert itself. Vladimir Pozner, a prominent Russian tv journalist, says Panarin’s vision “reflects a very pronounced degree of anti-Americanism in Russia,” which, he says, is “much stronger than it was in the Soviet Union.”

In The End of the American Century, I point to Russia as one of America’s potential “New Rivals.” One can not ignore that Russia is the largest country in the world, occupying almost twice the territory of the U.S. Within those borders it contains the world’s most abundant array of natural resources. It is the world’s second largest producer and exporter of petroleum and has, by far, the world’s largest reserves of natural gas. Russia’s economy has been growing at about 7 percent annually. It also has the world’s largest stockpile of nuclear warheads.

Both Russia’s citizens and its leaders want Russia to play a bigger role on the world stage and to be more respected by other countries. Premier Putin has been particularly vocal and critical of U.S. efforts to dominate the globe, referring not so subtly to a “world of one master, one sovereign.” He has said that “the trust in America as the leader of the free world and free economy is blown for ever.” (See The Economist's special report on Russia, "Enigma Variations," for more on this theme).

Russia has its share of problems, as the U.S. does. But it will be a force to reckon with, and the U.S. will have to learn to deal with Russia, as with other countries, as partners or competitors, rather than subordinates or enemies.

America Loses Global Economic Leadership

Over the last decade, the U.S. has lost political, military and international influence in the world; now it has lost its economic clout as well. The collapse of the financial system in the United States, the very linchpin of both the American and global economies, has evoked comments of gleeful retribution from some countries, and worrisome concern from others. But everywhere, now, there is a recognition that the U.S. economy is weak and vulnerable, and hardly a model for emulation by others. The collapse of this final pillar of U.S. global leadership is also encouraging other countries to assume a more assertive role.

Some of the sharpest criticism, and even sarcasm, came from the usual suspects. Venezuela’s Hugo Chavez mocked Lehman Brothers

“They were always producing negative reports about Venezuela. . . .They forgot about themselves ... and 'boom!' they were bankrupt." (Toronto Star, 9/16/08)

and then skipped the opening of the UN General Assembly to visit China instead, saying that Beijing was now much more relevant than New York.

At a meeting of the Nonaligned Movement in Tehran, Iranian President Mahmoud Ahmadinejad proclaimed that

“the big powers are going down. . . .They have come to the end of their power, and the world is on the verge of entering a new promising era.” (NYT 7/30/08).

But even more moderate leaders have echoed such sentiments. The president of Argentina, Christina Fernandez de Kirchner declared that

“We are witnessing the First World, which at one point had been painted as a mecca we should strive to reach, popping like a bubble.” (NYT 10/3/08)

In Latin America, according to the New York Times (10/3/08), governments “have been working for the past decade to reduce their dependence on the American economy,” have “diversified trade with the rest of the world,” and have set aside funds “for times when international conditions turn sour.”

In Moscow, both former President (now Premier) Putin and his successor, Dmitri Medvedev, have been flexing Russia’s diplomatic and military muscles for several years. The Kremlin has repeatedly rejected U.S. global dominance in a “unipolar” world, and with its landmark conflict with Georgia in August, asserted its own “privileged” sphere of influence in the world, “just like other countries in the world.”(NYT 8/31/08). With the U.S. economic crisis, Medvedev, like Kirchner, has called into question even U.S. economic leadership. He asserted last week that U.S. global economic leadership was drawing to a close. “The times when one economy and one country dominated are gone for good.” (NYT 10/3/08).

While the U.S. financial crisis has accelerated these moves away from the U.S. economy, the trend had begun years before, and is an integral part of the decline of U.S global influence more generally. Surveys in recent years by the Pew Global Attitudes Project found surprisingly little support in other countries for “the American ways of doing business.” Antipathy to the U.S. business model is particularly widespread and strong in Latin America and western Europe. In the 2007 Pew survey, in only a third of the 46 countries surveyed did a majority of respondents like the American ways of doing business. Most of those were in Africa.

For most of the postwar era, the United States has been both a political and economic model for countries and peoples around the world. This began to wane in recent years, especially in the face of the belligerent and unilateralist policies of the Bush administration. The financial collapse of the U.S. is one more nail in the coffin of U.S. supremacy and global dominance.