Frustrated Leadership: Russia's Economic Alternative to the West

Abstract

The Russian government saw the 2008 global financial crisis as both a repudiation of western neoliberalism and as an ideal opportunity to promote its own international economic leadership. Russia's alternative vision encompasses multipolarity, financial nationalism and political illiberalism. These policies are symbiotic. The state uses its control over financial flows to build and maintain political and economic power at home as well as to project its influence abroad, all justified with a strong dose of great power nationalism positioning Russia as the Eurasian pole in an emerging multipolar world order. However, the Kremlin is doomed to frustration in its quest to assert international economic leadership. The Russian government has the ability to shake up the existing international order but lacks the credibility, stability, or economic clout to lead the creation of a new one. This has troubling implications for the future of international economic cooperation and reform, as Russia's frustrations have increasingly turned it in reactive and confrontational directions. Policy Implications• The west must devise a new strategy towards Russia -one that takes into account Russia's search for great power status and Eurasian leadership without at the same time undermining international economic cooperation or forcing Russia's smaller neighbors to choose sides.• To this end, the US should play a more constructive and cooperative role in meaningful reform of the international financial architecture, especially as regards the International Monetary Fund (IMF).• Given the mismatch between Russia's aspirations and capabilities, the Russian government's attempts to develop the Eurasian Economic Union (EEU), build up Brazil, Russia, India, China and South Africa (the BRICS) group, and devise alternative nonwestern financial institutions should be understood as signs of economic weakness rather than strength.• China, the US, and the EU should work together to discourage financial nationalism in Russia and protectionism in the new EEU, policies that are potentially damaging for all sides.

Alternative Financial Infrastructures in Russia

“…113-114). Still, Nabiullina's network affiliation has sometimes been located around the comparatively liberally perceived former president Medvedev (Johnson, 2018;Kryshtanovskaya and White, 2011, p. 36), and the CBR has long been considered a stronghold of economic liberalism (Johnson and Köstem, 2016) within the wider tendencies to develop Russia into a state-controlled capitalist system via a steady increase of state ownership and control throughout the economy (Vernikov, 2014). In the context of Russia's escalation of hostilities in Ukraine since 2014, the CBR's policy has repeatedly exhibited alignment with the government's foreign policies, for example, when it withdrew around US$100 billion in US Treasury bills from the US Federal Reserve in the context of the annexation of Crimea in 2014, anticipating possible sanctions on the reserves (Johnson and Köstem, 2016).…”

Turkey’s Interest in Closer Relations with Russia: Global, Regional and Domestic Dynamics

“…While the two countries have intensified their diplomatic cooperation in the UNSC as well as the Shanghai Cooperation Organization (SCO) and formed an informal diplomatic bloc against the US and NATO regarding a number of regional issues like Iraq, Iran, Syria and Kosovo, they have also quickly intensified their economic and military links through bilateral agreements. Following the 2008 financial crisis, which also quite negatively affected the Russian economy, it became even more important for Russia to remain close to the so-called rising powers that included not only China, but also India and Brazil (Johnson & Köstem, 2016). It should be noted in this regard that the first ever summit of the newly created BRICS grouping was held in the Russian city of Ekaterinburg back to back with the SCO summit in June 2009.…”

Different paths to regional hegemony: national identity contestation and foreign economic strategy in Russia and Turkey

“…As stated in the most recent Concept of Foreign Policy of the Russian Federation of 2016, Eurasian economic integration is currently Russia's top foreign policy priority in the post-Soviet region. 15 Eurasian integration gathered pace after the global financial crisis, which the Russian ruling elite read as an opportunity to develop a response to the shifts in the global economy (Johnson & K€ ostem, 2016;Krickovic, 2014). Although there were some earlier attempts at Eurasian integration, such as the 1995 Customs Union Treaty and the formation of the Eurasian Economic Community in 2000 between Russia, Belarus and Kazakhstan, the consolidation of great power nationalism encouraged Eurasian integration to develop at a much more robust pace, especially with the Customs Union (2010) and the Common Economic Space (2012) between Russia, Kazakhstan and Belarus, and finally the Eurasian Economic Union in 2015.…”