Russia must realize the 'Asian alternative' does not exist

Gerald Segal, for Asia Times, 26th March 1997

You have to feel sorry for Russia. It is a much-shriveled empire that has lost its superpower status and now shuttles aimlessly between European and Asian delusions of grandeur. It is also an empire that continues to shrink - with the effective loss of Chechnya, for instance - and that because of a weak government at the center, seems unable to control many aspects of its decentralized economic and political system.

How could anyone take the country seriously as anything other than an economic basket case and a political powder keg lying between Europe and China?

Such cynicism, though warranted in many respects, would be shortsighted. Russia could be a very cooperative player from the point of view of the Western powers. The challenge for the West, however, is to figure out how it can help Russia develop its more positive potential.

In these weeks when news of United States-Russia and Sino-Russia summits produce headlines that suggest Moscow is developing a "strategic partnership" with China because of its violent opposition to Western plans to expand the North Atlantic Treaty Organization, it is all the more necessary to think strategically about Russia's Eurasian role.

The key to any long-term improvement in Russia's international position depends on domestic economic and political reform. Russia cynics, especially in Asia, tend to view the country as a basket case that has long been surpassed by China. Asians, even Northeast Asians, virtually ignore Russia as a factor in their region.

Such a glib dismissal, if sustained in the long term, is both wrong and dangerous. It is wrong because, in due course, China, like Russia or India, must manage a mixture of economic and political reform. Both Russia and India are far ahead of China in terms of creating the more liberal kinds of political systems that are necessary to supporting long-term growth. Both countries also have federal systems that, while sometimes creaky, are essential to governing a large country with the forms of decentralization necessary to sustain capitalism in vast nations.

China has yet to meet these challenges, and it is hard to see how it will do so without major dislocation. To believe China need not face these challenges is both wrong and a dangerous illusion for those who count on Chinese growth to sustain East Asian prosperity.

In economic terms, the Chinese economy is clearly outpacing that of Russia and will do so for some time. China has the good fortune to be in booming East Asia, and has the massive foreign direct investment (some 85 percent of all its FDI) of ethnic Chinese. China has a poor peasant labor force that can staff sweatshops for decades, while Russia relies on the export of resources. It will be a long time before Russian growth rates attains Chinese levels.

At a time when Russian capital flight is twice the level of foreign investment, it is hard to argue anything except that the fate of Russia's economy is essentially in its own hands. Western investment will only flow when there is a more rigorous rule of law and more stable politics. Talk of massive "Marshal Plans" has rightly faded from the Western agenda as it has become increasingly clear that Russia must right itself before others will do right by Russia.

The likes of Hungary, Poland and the Czech Republic - the first round of NATO expansion hopefuls - have shown real reformers do get Western investment.

Nevertheless, the West can see the outline of a Russia that is far more willing to be a cooperative player in a rules-based global market economy than China. Russia, not China, is a far better candidate for close cooperation with the elite Group of Seven industrial nations, for it is far closer to being an open economy with a liberal political system. Russia, far more than China, could qualify for World Trade Organization membership if it really focused on the challenge.

Russia is by and large a status quo power - indeed, it is even willing to accept something less than the status quo - while an increasingly assertive China feels history is on its side and that the status can be changed to suit its purposes.

China seeks to take territory from its neighbors, while Russia has ceded (and is likely to cede yet more) vast tracts in recent years. Agreements (not yet finalized) with China include Russia giving up 15 times as much territory as China in border swaps.

Under such circumstances, it might seem perverse for NATO to be antagonizing Russia with plans to expand NATO. It is true that NATO expansion is perverse, but primarily because it should be the European Union, not NATO, that is leading the process of integration of central European states. NATO expansion is a clear second-best option.

But even if NATO expansion is the bluntest form of diplomacy, it remains true that the diplomatic message is an important one for Russia to read. In essence, the process of west European expansion to the east sends the message that if you demonstrate an intention to become a stable, democratic market economy, then you will be welcomed into the club of Europe's developed states. That prospect still beckons to Russia, but it is very much in the future unless Russia makes more rapid progress toward stabilization and economic reform.

Some in Russia believe they have a way to avoid these powerful historical forces of reform. There are those who believe Russia can turn to Asia, and especially China, to avoid the tough challenges of political and economic reform.

But as the past few years of Sino-Russian detente have shown, the "Asian alternative" does not exist. The Sino-Russian "strategic partnership", as it is hyped by Russia, is neither strategic nor a partnership. Sino-Russian trade has stagnated, border agreements are stalled and confidence-building measures are more theater than reality.

Russia has grown to realize that this relationship puts China in the driving seat. Beijing is able to play off parts of the Russian domestic system - the defense industries against the Foreign Ministry, for example - and obtain defense technology that may be used against Russian interests in the not too distant future. A Russia that put all its eggs in the Chinese basket in Asia finds itself shut out of the dialogue about the future of the Korean peninsula and is left begging to join the Asia-Pacific Economic Cooperation forum.

Hence the quiet success of Russo-Japanese relations in the past year, as both countries have grown more worried about a rising China. Japan, along with the US in Asia and NATO in Europe, has the potential to show Russia another way to revive its influence. A Russia that wishes to commit itself to an open, global trading system, should be offered support in East Asia as a signal to China that cooperation has its benefits. East Asians need Russian natural resources, and have every reason to keep China from believing it will have privileged access to these resources.

In security terms, Russia has already proved it can help persuade China to join arms control agreements (the Comprehensive Test Ban Treaty in 1996) and with greater transparency in its arms sales, can ease concerns about the growth of Chinese military power. By giving Russia a stake in East Asia through cooperation with Western-oriented countries, there is even the hope that Russian worries about Western intentions through NATO expansion might be eased.

Make no mistake, NATO expansion will take place and Russia will, in the end, make a deal and accept the reality. But the battle is for the spin-control of the meaning of expansion. If Russians interpret the act as essentially aimed at them, then the risk is they will remain mired in the illusion of Western hostility and tempted by an illusory Asian alternative.

But if Russia sees that it too can join the Western club, NATO expansion might be the reality check for a daydreaming Moscow. Russia needs to understand that in the end it is primarily a European country by culture and inclination. It will always remain a curiosity in Asia and the loss of its Central Asian empire makes this reality all the more stark.

In the first few years after the demise of the Soviet Union in 1991, Russia mistakenly believed its Western orientation meant it would be bailed out of the verdict of history. That was a mistake, in part engendered by well-meaning Westerners who suggested there was an easy path to reform.

The central Europeans have demonstrated that there was no such easy path and Russia must clearly choose reform, with all its pains, before it will obtain real Western investment (not aid). The challenge for Western governments is to find the right mix of incentives and constraints that continues to send this message of "tough love".

A Russia that is merely left to sulk in Eurasia may in time become the largest of the failed states. A Russia that is woven into the web of the global system, on the other hand, can play a useful part in ensuring the success of that system.

Letter to the editor ·