Marek Menkiszak, head of the Russian team at the Center for Eastern Studies, describes Russia’s struggle with economic problems facing Western sanctions. How is the threat of new US restrictions affecting the Russians? Will it hurt the current Nord Stream 2 project?
How did the Korean crisis affect Russia’s cooperation with China?
Marek Menkiszak: The cooperation tightened. We have an informal division of labor. However, China has so far maintained and continues to provide for the Korean regime. Formally, both countries support UN sanctions against North Korea. However, as experts with access to knowledge on this subject inform the media, we are dealing with bypassing the sanctions. A more visible subject is Russia. We hear about Russian oil products reaching North Korea, smuggled with the use of strange intermediaries. The opinion among experts is that this is happening in the Russian-Chinese agreement. China uses Russia to hide behind it, and the Russians are ready …
…to become a whipping boy. What is their business?
Russia’s strategic interest is for the regime in North Korea to survive because it is an enemy of the United States. This reasoning is simple. The United States is a fundamental opponent from the point of view of the people currently ruling in Russia. Anyone who challenges the US and leads to a weakening their influence in the world is, in one way or another, supported by the Russians. Russia has no problem with the fact that North Korea has a military nuclear program and already has nuclear weapons. It is important that it weakens the USA in this way.
Does the import substitution impregnate Russia for sanctions?
The picture is rather negative. Substitution takes place partially in two directions, towards switching supplier and strengthening domestic production. If you look at the statistics, agri-food production is growing rapidly, which is also due to the high harvest last year. Another year of sanctions increases the demand for Russian production. The problem is that official market researches show a serious decline in quality. What about the fact that good quality products are replaced by Russian ones, if their price increases due to lack of competition, and the quality decreases due to low technology and the desire to save in production. There are many products on the shelves that do not meet Russian standards. You cannot replace everything. For example, the import level of high-performance machine tools from the West reached 90 percent. This cannot be easily completed with products from Russia and must lead to a decrease in quality. There is more and more information about defects and accidents resulting from the fact that Russian equipment was failing where it replaced the Western.
Is it different in the hydrocarbon sector?
There are attractive deposits and technologies allowing for new mining in Russia. Some can be imported from outside the West. The question remains, however, about profitability. Investing in technology and new energy sources is unprofitable, if traditional methods provide cheap raw material, then there is no political impulse. There are programs for the development of renewable energy sources, but these are point investments that are not necessarily profitable and developing them on a large scale is pointless in Russian case.
What about the substitutability of deposits in Russia?
New conventional deposits in the Arctic, including onshore and part of the Siberian deposits, is a large resource that gives Russia opportunities for activities. It is still the main raw material base. This is associated with costs, but there is a mechanism for replacing old deposits, whose exploitation is becoming more and more expensive, by new ones. However, these are mainly conventional deposits. Russia is trying to develop unconventional technologies, but this is not an economic priority. The Russians want to participate in international competition. It is therefore also a way to attract the attention of foreign capital. We are back here to the problem of sanctions.
Meanwhile, an article about the doctrine of General Gerasimov appears in Politico. He argues that the Russians influence events all over the world. They have relative stability. Do they really try to change the fate of the world?
The name of General Gierasimov is probably now better known in the West than in Russia. Of course, the Russians carry out offensive operations that can not be underestimated. However, these are not new things. History repeats itself. The Soviet Union also conducted sophisticated activities abroad. Only measures have changed, but not philosophy, mechanisms and approach. Do not look everywhere for a Russian trace. The fact that hundreds of thousands of fake accounts in social media controlled from Russia promoted Brexit. This does not mean, however, that the Russians led to the exit of Great Britain from the European Union. It is true that Russia is trying to use various problems, local crises and tensions, everything that can destabilize the situation in Western countries, which are a natural opponent. On the other hand, it was not Russia that led to Brexit, it did not provoke the referendum in Catalonia and did not elect Donald Trump for the president of the United States. Russians only used existing processes for their subversive and propaganda activities. Creating an impression that Russia is almighty works in its favor. This is a paradox. Of course, you should not underestimate the threat. However, from the Kremlin’s point of view, the worst prospect is to ignore Russia. For this reason, the Russian authorities, in line with their limited capabilities, try to show that they are able to take some destabilizing actions and that they are an opponent to be reckoned with and negotiated with. Russia wants to talk to the West about the division of spheres of influence. This tender still did not take place, but it seems that the Kremlin does not draw the conclusion that politics should be changed to a more positive one, although Russia is already trying to improve its image, for example in North Korea, Syria and Ukraine. Russia wants to show that treated well is able to do something good. Nevertheless, the elites in the Kremlin still believe that the negative instruments are more effective and that they are a necessary condition for recognizing Russia as a power, its interests and capacity for partnership in negotiations.
Will the West make concessions to Russia in 2018?
I do not think so. The European Union is dominated by the feeling of tiredness with the situation. The low-intensity war in Donbas is less and less interested in Europe, especially in the West. There is an impression that we should go further and talk with Russia about topics in which we can cooperate, especially economically. There is a temptation to normalize relations with this country. The US approach is brutally pragmatic. There is a desire to punish Russia for crossing red lines by interfering in American politics during the elections. On the other hand, there is a belief that sanctions are meant to make Russia come with the offer. I like this policy. This is the reverse of the policy of the previous administration, especially in the first term when there was – so far characteristic for Western Europe – an approach that in the event of Russia’s aggressive action one should ask: What have we done wrong, so Russia has become so aggressive? And another: What can we offer Russia to change its behavior? Americans work differently today. They are critical of Russia and strike it with their actions. The Kremlin has a choice. It can go on short circuit and receive more blows, or show a good will and try a constructive attitude, for instance by submitting offers to the US. This policy is starting to bear fruit. In my opinion, the gestures of opening up Russia to a lesser extent result from the fact that the Kremlin is convinced of its strength. Russia is likely to fear that the current sanctions are not over and can be broadened. It is also a sense of uncertainty and a lack of hope for normalization, the collapse of sanctions and a change in the policy of the USA, France and Germany, which was so strong in Moscow a year ago. The Russian political calendar, that is the presidential election on the 18th of March and the summer football world cup, which are to be Russia’s great propaganda success, also matter. Sport in Russia has always played an important political role and is part of the legitimacy of Putin’s regime. Therefore, it is very important for the Russian authorities that there will be no attempts to destabilize the political during the election period, which the Kremlin fears obsessively. He fears a kind of American revenge, for example through information activities. Therefore, in my opinion, if there are no extraordinary circumstances, just how radical US actions towards Russia, Moscow will not take any serious aggressive actions in its environment.
How does Nord Stream 2 testify about the state of these relations?
It is in fact the same thread. If you look at this project without emotions, it is bad, first of all, because it will change the European Union market by long-term and even stronger linking Europe with Russia as the main source of gas supplies. It will make Germany the main energy hub and draw them into a policy of strengthening the presence and influence of Russia in Europe. Germany and Russia will cooperate with each other more and more. This is a bad prospect from Poland’s point of view, but also an abstract European interest. Denmark’s resistance may lead to a revision of the Nord Stream 2 route, but not its blocking. In the European Council, it is difficult to obtain support for a possible blockade due to the involvement of some of the large European companies in this undertaking. After the talks about the so-called the Jamaican coalition in Germany, the only serious threat to the implementation of this project is at this time the risk of US sanctions, and not necessarily their introduction. It would be very difficult because it would mean a serious US-Germany conflict. Rather, it is about creating a credible possibility of introducing such restrictions. European companies would have to reckon with this. Although sanctions have not been introduced so far, the shareholders of the project are not currently part of the consortium, but only provide loans to Gazprom. This means that these companies are taking a different position towards Nord Stream 2, which remains the Gazprom project. The Russian side assumes the financial risk.
Interview conducted by Wojciech Jakóbik