Squandering Its Way to Superpowerdom

“Squandering”: Did the US Secretary of State Grasp the Russian Approach to Budget Spending?
The Kremlin Accused the State Department of Tactlessness and Unprofessionalism, Yet Pompeo’s Remarks Were on the Mark
Yevgeny Karasyuk
Republic
December 13, 2018

padrino.jpgVenezuelan Defence Minister Vladimir Padrino gives his thumb up as he sits on the cockpit of a Russian Tupolev Tu-160 strategic long-range heavy supersonic bomber after it landed at Maiquetia International Airport, north of Caracas, on December 10, 2018. Courtesy of Federico Parra/AFP/Getty Images

Russian’s decision to send strategic bombers on a junket to an airport near Caracas elicited a curious reaction from US Secretary of State Mike Pompeo, who publicly expressed his pity for Russian taxpapers, whose money the Kremlin, habitually disregarding the costs, has been spending on its geopolitical moves.

“The Russian and Venezuelan people should see this for what it is: two corrupt governments squandering public funds, and squelching liberty and freedom while their people suffer,” Pompeo wrote.

The Russian Foreign Ministry responded by calling Pompeo’s statement “utterly unprofessional” and even “villainous.” Pompeo’s remarks, which the Kremlin, in turn, dubbed “inappropriate” and “undiplomatic,” were apparently really lacking in nuance: the hardships of Russians, fortunately, cannot yet be compared with the suffering of Venezuelans. But, hand on heart, was Pompeo so wrong when he talked about the losses to the Russian federal budget and lack of oversight?

Russian society has an extremely vague notion about how much the Kremlin’s expansionism has ultimately cost the country. According to calculations made by IHS Jane’s at the outset of Russia’s operations in Syria in autumn 2015, Russia could have been spending as much as $4 million a day. Later, the Yabloko Democratic Party, which is not seated in the Russian parliament, estimated the Kremlin had spent a total of 108–140 billion rubles [between $1.6 and $2.1 billion] on Syria. A more accurate assessment would be difficult to make. Experts doubt that anyone, including the Finance Ministry, keeps tabs on such expenditures. Thus, nobody knows the real cost of Russia’s involvement in the Syrian conflict, argues the Gaidar Institute’s Military Economics Laboratory.

The budget’s fading transparency has been a trend in recent years. In 2016, secret and top-secret allocations accounted for 22% of total federal budget expenditures, a record for the entire post-Soviet period, and much higher than secret allocations in comparable countries, according to RANEPA’s March 2015 report on the Russian economy.

Quite naturally, this state of affairs has not improved the quality of the state’s financial decisions. In terms of effective state spending, Russia ranked nineteenth in a new rating of twenty-five countries, compiled by the Higher School of Economics using data from the World Bank and OECD. Since they are not priorities for the current regime, problems with child mortality and life expectancy were among the reasons Russia ranked so low in the survey: the government spends more on the army than on healthcare—4.3% of GDP versus 3.8% of GDP, respectively. In these circumstances, the chances the Kremlin’s strategic projects in the Middle East and Africa (e.g., the Central African Republic, Burkina Faso, the Democratic Republic of the Congo, and Mozambique) will be decently funded are always much greater than the national healthcare project, which stipulated increased government spending on cancer treatment. The government nixed the plan over summer.

Since it remains largely Soviet in spirit, Russia’s foreign policy has been categorically blind to history’s lessons. The Soviet Union’s exorbitant geopolitical ambitions and support for fringe regimes around the world left the country with a legacy of mostly toxic multi-billion-dollar debts. The process of writing them off has been disguised as a form of international charity or, speaking diplomatically, official development assistance (ODA). According to RANEPA, writing off the debts of developing countries accounted for 35% of all such “international aid” last year or $425 million. It has been the Russian government’s usual way of doing business. Previously, the Russian government wrote off the debts of Nicaragua ($6.3 billion), Iraq ($21.5 billion), North Korea ($10.9 billion), Syria ($9.8 billion), Afghanistan ($11 billion), and Cuba ($29 billion), among other countries. Venezuela risks joining this sad list. Over the past twelve years, Russia has invested a total of $17 billion in the country.

Russia’s Expenditures on Official Development Assistance (Excluding Humanitarian Aid), 2005–2017, in Millions of Dollars. Sources: OECD, Russian Finance Ministry. Courtesy of Republic

Since it was paid for by the Russian federal budget, which has been running a deficit for the last seven years, Russian officials probably did not see the transatlantic flight of its strategic bombers as too expensive. On the contrary, they saw it as a flashy display of Russia’s military prowess and proof of its influence in the region. However, the government of Nicolás Maduro signed off on the stunt. Subject to growing pressure from creditors and an angry, desperate population, it lives day by day. In all likelihood, it will soon collapse, leaving behind a mountain of unpaid bills and unfulfilled obligations to its allies. If this is the case, can we evaluate the Russian government’s action better than the tactless Mike Pompeo did? Probably not.

Translated by the Russian Reader

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Fyodor Krasheninnikov: Russian History According to the Crimean Calendar

brickwall faceThe writing is on the wall.

Russian History According to the Crimean Calendar
A New Period of Russian History Kicked Off in 2014, But There Is No Proof It Will Last for Centuries
Fyodor Krasheninnikov
Vedomosti
April 11, 2018

In a recently published article, Vladislav Surkov argues we should regard 2014 as the first year of a new calendar, the beginning of a centuries-long era of “political solitude” that emerged after a long period of ambivalence on Russia’s part. Although the thoughts outlined in the article are primarily Mr. Surkov’s personal convictions, they do in some way describe the outlook of Russia’s supreme political elite, to which Mr. Surkov certainly belongs, and they are interesting only in this sense. Among other things, his take suggests that, after 2014, nothing comparable in importance to the events in Crimea has happened nor will happen, meaning Russia seemingly experienced the “end of history” in 2014.

2014 will undoubtedly go down in history as the year of Vladimir Putin’s most memorable achievement. Russia’s annexation of Crimea led to many changes both at home and abroad, but what mattered most was that it was accomplished easily, quickly, and bloodlessly, and led to an incredible surge in the president’s popularity due to the fact that a large segment of society rallied around him. The more alarming the circumstances of spring 2018, the dearer to the president and his entourage are the memories of the happy spring of 2014. Surkov’s article can read as a belated reiteration of Faust’s “Stay a while, you are so beautiful,” as a reluctance to accept the inevitability of change and the ephemerality of all “forevers.”

The flip side of the myth of a new era’s beginning is the fear 2014 was actually the culmination of modern Russian history and things will only get worse in the future. The tendencies of recent years have fully confirmed this fear. Only four years have passed, but the spring of 2018 is nothing like the spring of 2014 in terms of feeling and mood. Russia is not on the offensive; instead, it is on the defensive. The west’s pressure on it has been multiplying and causing palpable problems for the economy. For the first time in four years, the country’s leaders have been forced to acknowledge the dangers posed by US sanctions and give up repeating the argument that all sanctions are a boon to the economy. It is no wonder. In 2014, the sanctions were much weaker, and given the euphoria in the air, they went almost unnoticed. Besides, in 2014, it was still possible to believe the sanctions were temporary. They would be lifted in the very near future, the west would swallow what had occurred, and everything would go back to what it had been. In 2018, the euphoria has long vanished, and if there is still talk the sanctions will soon be lifted, it should be put down more to inertia and confusion than anything else. Although it was intentionally timed to coincide with the fourth anniversary of the Crimean triumph, the presidential election did not produce anything comparable to the inspiring impression generated in the wake of Crimea’s annexation. The celebration of Putin’s electoral victory lasted only ten days, cut short by the disastrous shopping mall fire in Kemerovo and the official day of mourning announced in its aftermath.

Russia cannot look forward to proud “political solitude” in the coming years or at any other time. The modern world is too small for anyone to isolate themselves, especially on their own terms and inside borders of their own choosing. At home, especially among the elite, one can still live in the past for a time and pretend this is still the triumphant year of 2014. One call still pretend Russia is threatening everyone, denouncing everyone, and demanding a reaction from everyone, and that it has centuries and millennia ahead of it. In fact, however, it is Russia that is threatened, Russia that is denounced, and Russia from whom everyone demands a reaction. There are no grounds for supposing this onslaught will wane in the foreseeable future instead of intensifying. Russia’s main trump card in 2014 was its willingness to engage in confrontation and brinksmanship, which the west was not willing to do. That card has now been trumped in turn. After a long period of wavering, the leaders of the Nato countries have also proven capable of engaging in deliberate escalation and frightening their opponents with determination. This seems to have been a major surprise to the current regime in Russia.

A new phase in modern Russian history undoubtedly began in 2014, but there is no proof it will last for centuries and be a time of endless rapture over the annexation of Crimea. For the time being, everything points to the fact it will end much more quickly than many of us would imagine and in such a way that we shall not want to remember 2014 at all.

Fyodor Krasheninnikov is a political scientist who lives in Yekaterinburg. Translation and photo by the Russian Reader