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13.07.2007. New epoch setting in

Sergei Karaganov, Dean of the School of International Economics and Foreign Affairs of the State University — Higher School of Economics (SU – HSE).

Originally published in Russian in Rossiiskaya Gazeta (federal issue) No. 4407 of July 6, 2007.

On account of recent developments, I have been refraining from sharing my conclusions with the readers for several months.
Relations between the traditional West and Russia – and international relations in general – are sliding toward a new reality. Quantity is transforming into quality. I refrain from calling this a “new Cold War.”
Yet I must warn – since to be warned means to be armed – others about the new quality that global politics, Russia’s relations with the United States and Europe, and international relations on the whole are acquiring.

My rather superstitious reluctance to describe the new level of relations as a new “Cold War” rests also on analytical considerations. At times, these relations will look as a farcical “Cold War”, but the new confrontation, occurring before our eyes, will proceed in new conditions. It is probable that the new scenario will be less profound – although it may be not less dangerous; indeed, it could turn out to be more dangerous – than the confrontation of the past.

This is why I describe this state of international relations as a “New Epoch.”

The main feature of the post-Cold War era was the economic and ideological triumph of liberal-democratic capitalism, above all as represented by the United States, and the redistribution of the human capital, economic and financial resources in favor of countries that abided by this model and their corporations.

The first signs of the New Epoch emerged in the 1990s, when any attempt by Russia to stop the panic retreat caused by the collapse of the Soviet Union was called “neo-imperialism.”
The criticism peaked over the past couple of years.

In recent months, Russia has finally been crossed off the list of democratic countries and declared an absolute authoritarian power. This would be very sad if the list of democracies did not include much more politically backward states with very repressive regimes, which, however, are ready to follow in the footsteps of the United States or other older Western nations. Yet, the very fact that Russia has been crossed off is an important indicator.

Even more alarming is a simplification of criticism to a level that in some respects is even worse than during the Cold War. In those years, the West criticized Communism and its leaders, who suppressed a good people. Now the blame is not only put on Russian President Vladimir Putin, but on all of Russia. At the same time, any critic or opponent of Putin and the Kremlin automatically becomes a democrat and a friend of the West. Cunning logic takes the upper hand in this case, while international discussions slide down into a friend-or-foe paradigm. We have already witnessed such things in the past.

Russia is not the only target of propaganda attacks. China was another target in the late 1990s. Washington politicians even publicly discussed whether they should make China into the official number one enemy and conduct a deterrence policy against it. Later, however, they opted not to wage an openly hostile policy toward China.

Russia began to return the criticism, sometimes even taking the dubious lead in that verbal exchange. Russian policy makers have always included many layers suffering from severe anti-Americanism. The desire to always answer back – better in even more scathing terms – is rooted in the still surviving weakness and vulnerability complex, multiplied by the geopolitical defeats of the 1990s, and in the fear that backward groups of the elite had toward their successful and competitive neighbors.

The enhanced rhetorical confrontation is not the only outward feature of the New Epoch. A transition has begun toward practical actions. The old West tried to wrest political and other concessions from Russia in exchange for WTO membership. Having received no concessions, the West has shut the door for Russia’s accession to the WTO – or at least for the time being. On top of that, the start of negotiations on a new Russia-EU agreement has been blocked due to the reluctance to take in hand – and even the instigation of – the Polish regime.

The mortal haste with which the West is seeking to achieve international recognition of Kosovo’s independence looks like an attempt to consolidate the gains made on the ruins of the Cold War and to maintain the logic and political inertia of the 1990s when Russia had to pretend to agree.

Finally, there is hardly any other explanation for the decision to deploy elements of a U.S. missile defense system in Central Europe than a stupid desire to continue financing this inefficient system, which is losing support in America, and to threaten Russia a bit, or a more refined desire to remilitarize European politics and introduce into it a structural irritant which constantly breeds mistrust and confrontation.
Russia has begun to respond and sometimes play up to the West – voluntarily or not. In response to the plans to deploy a missile defense system, Moscow has threatened to withdraw from the Intermediate-Range Nuclear Forces (INF) Treaty. It has even declared that the system’s elements will become targets for Russian missiles.

I will not burden the reader with listing all mutual reproaches and unfriendly actions. The new confrontation is only unfolding. In order to understand how it can be counteracted and prevented from growing, let us try and sort out its causes.

An analysis of recent rhetoric and actions suggests that the United States and part of the traditional West have so far given up any hope of making Russia into a friendly state and for its integration. There are signs of transition to a policy of “neo-deterrence,” although it will not be the way it was in the past.

At the same time, Moscow has realized that it does not want to and cannot integrate with the traditional West on the terms the latter proposed until recently – that is, a kind of integration without the right to vote. Moscow has begun to change the rules of the game, or at least it is ceasing to play according to the old rules of the 1990s.

The most obvious external cause of the New Epoch’s arrival is Moscow’s increased readiness and ability to uphold its interests the way it sees them now, which is particularly annoying for the political classes of countries of the traditional West because of their bad habit of desiring a feeble and weak Russia.

One could expect that this resentment will soon go away as the partners adapt to the new reality. However, its causes are much deeper. They stem from the weakening of the foreign-policy weight of the leading European nations; it emphasized the inefficiency of attempts to shape a common foreign policy conducted by the lowest common denominator, when, say, Warsaw can block Berlin, Paris or Rome.

At the same time, I will keep emphasizing that the crisis and weakness of today’s Europe cannot and should not overshadow the respect, admiration and even gratitude toward Europeans who have performed a deed and overcome, by integration, their multmillennial terrible history and tradition of state nationalism and suicidal wars, which took a toll of about 100 million lives in the 20th century alone and which gave rise to Nazism and Communism.

The U.S., which in the 1990s believed along with many other countries that it was destined for sole global leadership and even hegemony, bled itself dry by launching the reckless Iraqi campaign. The campaign showed the relative foreign-policy ineffectiveness of America’s military supremacy, set the larger part of the world against America, and tied the latter’s hands. The “soft power” of the United States – the attractiveness of the U.S. model of political and economic development – was dealt a crushing blow. The Iraqi mistake has inflicted even more damage on Washington than the Vietnam War. In those years, at least, a large part of the population and ruling elites of the world supported the war’s objective – fighting Communism. Now, almost no one supports the U.S.

What is particularly worrying to European and American elites, although for different reasons, is Russia’s growing energy might. Europeans worry over their increasing dependence on energy imports and ensuing vulnerability. Furthermore, according to most forecasts, Europe’s dependence on Russian energy supplies will only grow.

The feeling of dependence was aggravated by Moscow’s refusal to give control to Western companies over Russian hydrocarbon fields, and by its revision of some fettering, if not colonial, agreements signed in the 1990s, when Russia was weak and in chaos. That feeling was given a further boost when it became clear that, despite the desperate pressure from Europeans, Russia reiterated its refusal to ratify the Energy Charter and the Protocol to it, which would have provided free access to Russian energy pipelines for all suppliers and consumers.

This normal difference in interests could be overcome to mutual benefit if Europeans agreed to a historic deal proposed by the Russian leadership – exchanging access for Western companies to hydrocarbon fields and extraction facilities in Russia for access for Russian companies to energy distribution networks in Europe. Thus a single energy complex would be created on the European continent, which would greatly strengthen both parties and allay many fears. Officially, Brussels has rejected the Russian proposal, although individual transactions are already being implemented within the framework of the deal’s philosophy.

However, a stronger Russia or a unified energy complex throughout Europe is not in the interests of the United States. Constructive interdependence of Russia and Europe would strengthen both parties and weaken American influence – through Europe’s reduced dependence on non-European energy sources.

This dependence automatically presupposes dependence on the U.S., which alone has the political and military-political capabilities (at least in theory) to struggle for access to resources, trying to guarantee them and receiving political dividends for this.

This situation resembles the fierce struggle that Washington waged in the late 1950s-1970s against the “gas-for-pipes” deal between the Soviet Union and Western Europe. The U.S. lost that struggle, and export-oriented gas and oil pipelines were built from the Soviet Union to Western Europe.

The struggle over the energy issue has become so acute because of fundamental, even revolutionary, although almost unnoticed, changes in the world economy and politics over the last 8 to 10 years. These changes have weakened the general global positions of the traditional West and increased its relative energy vulnerability.

Until recently, the bulk of the world’s energy resources were owned or controlled by Western companies; now, within a short period of time, the situation has reversed. The larger, if not overwhelming, part of the world’s energy resources outside North America and Europe are owned or controlled by national states or state-run companies. Furthermore, these states are more and more obviously following in the footsteps of Venezuela, by using their resources as a basis for an independent, anti-American policy. The rules of the game are changing before our eyes. The “Seven Sisters” era is ending, when oil giants had total access to energy resources, whose relative prices were gradually dropping, and when the world’s GNP was redistributed through this mechanism. We are witnessing a defeat of a major area of the U.S. and Western policy of the last 60 years – the policy for ensuring control over energy-producing countries to gain unimpeded access to cheap energy resources of the so-called Third World, where the bulk of these resources are concentrated.

Russia has found itself at the cutting edge of this new redistribution of power and influence in the world, being a kind of symbol for this.

Many analysts in Moscow believe that the harsh reaction from the West and the political and propaganda pressure exerted on Russia were caused only by discontent with the increasing independence of Russia’s foreign policy and with the growth of the Russian economy and Russia’s international influence. This conclusion is only partly right.

The main reason lies in the weakness of Western countries: the United States because of Iraq, and Europe because of the EU’s growth crisis, as well as the “revolution” in the energy field.
The pressure is not so much an attack on Russia as a counterattack intended to prevent a further weakening of the West’s positions and possibly win them back. This counterattack is a major, constituent feature of the New Epoch. Russia is just a bit unlucky to have become a symbol of the changes and to have found itself on the frontline of fire.

There is one more change in the world, which may weaken the positions of the traditional West still further. Recent months have seen a series of publications (whose number will likely increase) about an unfolding struggle between two models of development – the liberal-democratic capitalism of the traditional West and authoritarian capitalism. Previously, the success of the latter model was largely ignored. The fast progress of Southeast Asian countries and South Korea seemed to be an exception rather than a rule. However, the rapid growth of China, despite predictions over the past 20 years of its early collapse, does not permit indulging in escapism anymore.

After the victory of the liberal-democratic capitalism in the Cold War it seemed that this victory was final. However, 10 to 15 years later, it has turned out that the competition is not over. People have come to realize that there is another model of capitalism, which potentially is no less attractive to the former Third World countries – that is, the majority of humanity– and which is effective economically and acceptable politically for most people. This model is authoritarian capitalism. Unlike Communism, capitalism ensures growth, although uneven, of the wellbeing for the majority of people; and unlike totalitarian Communism, authoritarianism ensures an acceptable level of personal freedom for the same majority. Furthermore, experts have taken a fresh look at history and raised the issue of the historical perspective of such a model. Now it turns out that authoritarian Japan and Nazi Germany (and formerly other Axis countries) lost the First and Second World Wars not because their development models were inefficient, but because they were destined to lose: first, because of the U.S. economic machine which came to rescue European liberal democracies, and then because of the totalitarian Soviet Union with its people who were ready to fight to the end, despite horrible sacrifices joined.

People have now come to the conclusion that the victory of the liberal-democratic model might be rooted not in democracy, but only in capitalism, while democracy may lose in a bitter competition, let alone in a war.

History does not provide a definitive answer as to whether authoritarian capitalism is only a stage in development toward a more liberal model. I do hope it is. I would not only like to see a better standard of living, but also more freedom for Russia and its citizens.

Nevertheless, the liberal-democratic victors now see that they are beginning to suffer another defeat, even though it may be only temporary.

The perception of this defeat is exacerbated by facts known to all who want to think and read, facts which many try to dismiss. The attack on Iraq for the sake of proliferating democracy has strengthened opposing political forces, weakened the global position of the United States and all Western democracies, and made democracy per se less attractive.

The defeat of most of the partially imported “color revolutions” in former Soviet republics came as a crushing blow to the idea of the all-conquering liberal democracy. Kyrgyzstan is sliding into deep chaos and is regressing. Ukraine is in political chaos, although I believe and hope that it has a chance to overcome it. Democracy is in crisis in other regions, as well. The democratic elections in Palestine have plunged the country into a civil war. Lebanon, which is quite democratic, has been set on fire, while its neighbor – the authoritarian Syria – is developing quite well.

The competition of models is not just a struggle for the sense of moral superiority. In the long run, the victory of a model means a redistribution of manpower and all other resources in favor of states personifying that model. The period from the late 1980s to the beginning of the 2000s saw a giant redistribution of resources in favor of the United States and old Europe. Now the process has stopped and may reverse itself.

Russia, despite its development model which many enlightened Russians find embarrassing, is restoring, albeit very slowly, its magnetism for many medium-developed societies and countries. I myself have seen this gravitation toward Russia on many occasions – much to my surprise. Many societies, tired of poverty, chaos and uncertainty, want to copy the sovereign, growing, peaceful and better governed Russia.

I know the driving forces of Russian politics well, thus I did not understand the accusations of exporting authoritarianism made by the West against Russia in recent years. The export of socio-economic models would be the last thing the present super-pragmatic Russian leadership would do. Yet, the export must be taking place, after all, because Russia is now demonstrating to post-Soviet and developing countries that they can live in other ways, and not only according to the model of the dependent liberal-democratic development of Central and Eastern Europe.

And the most important thing is that if Russia succeeds, the attractiveness and international weight of China, considered by the U.S. its main rival, will greatly increase.

Russia, which is a key state for the political and military-political balance in the world from the point of view of competition between political and socio-economic models, has been pushed by history into the center of a new competitive struggle between the liberal-democratic and authoritarian models of capitalism.

Mistrust toward the authoritarian development model largely explains European suspicion about Russia’s energy policy. An authoritarian state finds it easier to manipulate its energy and other assets for foreign-policy purposes. In this sense, democracy is more convenient, as it is less suited for such manipulation.

The wind of geopolitical luck is still blowing into Russia’s sails. But it cannot afford to sit on the fence. Russia is now in the midst of two new competitions at once, which will largely determine the future of the world.

These are competitions between the traditional West and energy-producing countries for control over energy resources, and between the liberal-democratic and authoritarian models of capitalism. On top of that, Russia is located on three divides – between radical Islam and Christian civilization, between the rich and the poor, and between Europe and Asia.

These divides are exacerbated by the deepening of the present stage of globalization, marked by increased financial and economic interdependence, the on-going loss of control by weakening national states over economic processes, and more importantly, by an informational and media revolution, which is responsible for supplying unprecedented information and causing the political awaking of billions of people. These developments may equally bring the world to democracy or mob rule. The latter will reproduce authoritarianism both within states and in their mutual relations.

The New Epoch, at least for Russia, is made up of the globalization of the informational revolution, the ensuing awakening of the public, the decline in governability over international security processes, their breaking down into chaos, the old divides between Islam and Christianity, between Europe and Asia, and between wealth and poverty, coupled with the two new competitions for energy resources and between two models of capitalism.

The New Epoch requires a basically new policy and new understanding of the increasingly complicated world.

There are many signs that the New Epoch, just as the epoch when the victorious liberal-democratic capitalism dominated, is a transition to some other phase in the world’s development. How Russia should behave in this New Epoch will be the subject of one of the following articles.