FROM THE ECONOMIST INTELLIGENCE UNIT
Russia and the US have swapped a number of people convicted of espionage activity, in an effort to bring closure to an affair that began with the arrest of ten Russians alleged to be deep-cover agents in the US. Neither side has an interest in disrupting the ‘reset’ of relations, which began with a new nuclear arms treaty that is yet to be ratified by either state. For the US, Russia is a potentially useful partner in Afghanistan and over Iran’s nuclear programme. For Russia, the US is an indispensable source of the technology that it needs to modernise its economy; but the reset also rests on the US maintaining a more relaxed attitude to Russia’s reintegration drive in the former Soviet Union.
Russia’s foreign ministry announced on July 9th that an agreement had been reached to swap ten Russian nationals held by the US government for four Russians jailed in Russia for espionage and other crimes. The Associated Press reported later in the day that aircraft from the US and Russia, believed to be carrying the 14 Russians, had landed in Vienna to conduct the swap.
As the Russian foreign ministry conceded in its announcement, the swap is intended by both states to ensure that a recent improvement in bilateral relations is not blown off course. The affair erupted shortly after the Russian president, Dmitry Medvedev, completed a visit to the US in June. The Federal Bureau of Investigation (FBI) announced the arrest of ten Russian nationals who were subsequently charged with conspiring to act as secret agents and to launder money; they were not charged with crimes of espionage, which has led some commentators to conclude that they achieved little and were not of a high calibre.
A number of Russian commentators and parliamentarians have suggested that the affair was created by factions in the US who are opposed to the ‘reset’ of relations with Russia and the new Strategic Arms Reduction Treaty (START), which is yet to be ratified in either country. Fears on the part of Russia that the spy scandal could torpedo START appear to have loomed large in the Russian elite’s decision-making, along with a desire to ensure that the potential economic gains of the reset are not put into jeopardy.
Of the four Russians that the US is to receive, three are retired intelligence officers believed to have worked for US and British intelligence (although only two of them were jailed for spying; the third, Gennadiy Vasilenko, was imprisoned for the possession of illegal weapons). The fourth, arms control researcher Igor Sutyagin, was jailed for writing a briefing for a private UK company on Russia’s nuclear arsenal. He claims that this was produced solely from open sources and did not break any Russian laws; in 2005 Amnesty International declared Mr Sutyagin to be a political prisoner. On some accounts, the US requested symbolic concessions in return for the ten spies it caught, and thus the four men released from prison in Russia are humanitarian cases (as well as Mr Sutyagin, one of the ex-intelligence officers is ill and another has a wife who is resident in the US). On other accounts, the US had long sought to release these four men because they are valuable ‘assets’ and so it has exploited Russia’s discomfort to the full.
The new START deal is the cornerstone of the reset policy of the US president, Barack Obama. It limits Russia and the US to 1,550 warheads and 700 delivery vehicles (missiles and strategic bombers). This enables both powers to manage the decline in their nuclear arsenals (as weapons reach the end of their service life; this is more of a problem for Russia) while maintaining strategic stability. Without the treaty in place, it will be difficult for Mr Obama to press for deeper cuts in the forces of all five declared nuclear-weapon states and so usher the world closer to the goal of nuclear disarmament that Mr Obama declared in Prague in April 2009.
Mr Obama has a clearer, or more limited, sense of strategic priorities than his predecessor, George W Bush. Thus his administration’s principal foreign-policy objectives have been to ‘win’ in Iraq and Afghanistan, to combat the threat of Islamic militancy and terrorism, and to seek to check nuclear proliferation. Consequently, Mr Obama has sought to build constructive relations with Russia, which is a veto-wielding member of the UN Security Council, has extensive experience in Afghanistan and the surrounding area, and is a supplier of nuclear technology and military equipment to Iran. To this end, he has stopped pushing two of Mr Bush’s policies which so enraged Moscow: the construction of a ‘missile shield’ in eastern Europe, and efforts to bring former Soviet states Ukraine and Georgia into NATO.
This shift in US policy made the START agreement possible, since when Russia has voted in the UN Security Council for a further tightening of sanctions on Iran because of its nuclear programme. Further cooperation from Russia may be needed in due course on Iran, and also in Afghanistan. Russia has been mooted as a supplier of military equipment to the US-led coalition in Afghanistan and it is an influential player in the countries of Central Asia and the South Caucasus which are becoming important transit points for the supply of equipment to western forces in Afghanistan. Domestically, moreover, the reset with Russia is portrayed as one of Mr Obama’s main foreign-policy successes–hence the desire to quickly turn the page on the spy affair.
Russian modernisation and empire
For Russia, the reset serves very different purposes. Mr Medvedev’s address to the federal assembly in November 2009 unveiled a new policy agenda: to modernise the country and its economy. Russia’s elite was shocked by the extent of the economy’s decline in 2009 and has concluded that it is necessary to diversify, so the country is less reliant on the export of raw materials (crude oil, gas, metals and timber) and semi-finished products. This necessitates a change in Russia’s foreign relations, for the country’s preferred partners in creating a world order that isn’t dominated by the US–Venezuela, Iran and China–cannot provide Russia with the technology, expertise or finance it needs to become an innovative, high-tech economy and financial hub. Realistically, Russia can only obtain these inputs from Western states and the authorities calculate that they are more likely to do so in circumstances of harmonious relations.
Within the modernisation/innovation agenda, particular emphasis has been placed on the creation of a Russian Silicon Valley in Skolkovo, outside Moscow. A leading Russian industrialist, Viktor Vekselberg, has been put in charge of the project in a bid to ensure it has a strong commercial focus. On his trip to the US in June, Mr Medvedev visited Silicon Valley and met with senior executives from Apple, Twitter and Cisco. Cisco even promised to invest US$1bn on innovation and business development in Russia over the next decade. The involvement of US-based companies is probably a prerequisite for the success of the Skolkovo project, hence Russia’s determination for better bilateral relations. Whether this will be sufficient, in the absence of secure property rights in Russia and a favourable business climate, is another question.
Of perhaps equal importance for Russia is the perception that the US is no longer seeking to prevent Russia from pursuing peaceful reintegration in parts of the former Soviet Union. This is most readily apparent in the US decision to put the question of NATO membership for Georgia and Ukraine aside. Russia’s leadership has also been encouraged by the absence of US protest over the April deal with Ukraine to extend Russia’s lease on the Crimean naval base to 2042 in return for a ten-year discount on gas supplies. Since then the US and Russia have worked together to support the new pro-Russian leader of the Kyrgyz Republic, Roza Otunbayeva, and the US has not queried the full establishment of a customs union between Russia, Belarus and Kazakhstan that aspires to become a single market and to integrate other former Soviet states. The recent visit of the US Secretary of State, Hilary Clinton, to Ukraine and Georgia had a pro forma feel. She told Ukrainian leaders that the door to NATO was still open but emphasised that it was for them to decide on the country’s orientation. In Georgia Ms Clinton affirmed US support for the country’s territorial integrity but evidently Washington will not do anything to help Georgia regain control of Abkhazia or South Ossetia.
Whether either side will see its aspirations for closer bilateral relations realised is open to doubt. Russia backed moves to tighten UN sanctions on Iran but it has displayed its irritation at the US and Europeans for instituting much tougher sanctions of their own. Moscow says it will turn on the Bushehr nuclear power plant in Iran later this year. Whether it would ever use all levers at its disposal to put pressure on Iran, let alone to authorise the use of force against it, is open to doubt. Russia and Iran are the two principal Caspian powers and Iran has the potential to destabilise the states of the South Caucasus (and the Russian North Caucasus) to the detriment of Russian security interests. On Afghanistan, there is little prospect that Russia would ever commit troops and, though it does not wish to see the US fail, it is wary of western powers establishing a permanent military presence in Central Asia. Moreover deeper cooperation on Afghanistan seems very unlikely while Russia perceives that western forces in Afghanistan are turning a blind eye to the production of opium, a sizeable proportion of which goes to the Russian market and has created a heroin epidemic.
While Mr Obama remains in office, the Russians can probably rely on the US tolerating CIS reintegration so long as it remains peaceful and does not impinge on the ability of western states to prosecute their war in Afghanistan. The chances of Russia receiving a glut of US high-tech investment are rather more difficult to gauge. For a start, it is not in Mr Obama’s power to deliver. And a host of other factors, in particular relating to Russia’s business environment, will play a more decisive role than the state of bilateral relations.