Perspectives December 21, 2015
Is Putin a Hoarder of Frozen Conflicts?
Despite plunging oil revenues and crippling sanctions, Russia's leader keeps adding to his collection of costly, unresolved military adventures.
Despite plunging oil revenues and crippling sanctions, Russia’s leader keeps adding to his collection of costly, unresolved military adventures.
Vladimir Putin can’t help himself. The Russian economy shrank by more than 4 percent over the past year, indebted state-owned companies are cut off from international financial markets, the value of the ruble is falling along with the price of the country’s vital energy exports, and the finance minister has warned that the government’s reserve fund could be exhausted as early as next year.
Yet the president continues to expand Russia’s commitments abroad through military interventions that—in addition to perpetuating human misery and repressive rule—tend to leave local populations dependent on Russian largesse. Experts have offered a variety of theories, many of them pseudo-psychological, to explain this seemingly irrational behavior. To frustrated government accountants, however, Putin’s activities must resemble nothing so much as hoarding.
Consider the following acquisitions:
Strictly speaking, Putin inherited Russia’s obligations toward this breakaway region of Moldova and its half a million inhabitants. Russian troops are officially there to uphold a 1992 cease-fire and guard Soviet-era munitions depots. But Moscow has resisted attempts to reintegrate the territory and used its leverage to help keep Moldova out of NATO and the European Union.
Maintaining a pro-Russian ministate is not cheap. The Kremlin supports Transnistria with natural gas supplies, budget subsidies, and pension payments, and there are signs that its funds are running dry. In 2015, Russia has been cutting its de facto aid due to the depreciation of the ruble, and the local government has trimmed pensions and salaries. This may have contributed to setbacks for the Transnistrian president in last month’s legislative elections, though the winning party is itself close to Moscow.
2. Abkhazia and South Ossetia
These two separatist territories in Georgia, with about 250,000 and 50,000 residents, respectively, have had some degree of autonomy and Russian support since fighting conflicts with the Tbilisi government in the early 1990s. However, Moscow’s involvement increased dramatically in 2008, when war broke out between government and separatist forces in South Ossetia and Russia invaded Georgia through both territories to defend its clients.
Since then, South Ossetia has moved ever closer to the Russian Federation, with Russian transplants often holding senior government positions in the region. Abkhazia has resisted steps toward complete integration, but it too is now home to large Russian military bases and dependent on Russian subsidies. Russia’s worsening economic situation has consequently affected the territory, roiling its already fractious political landscape.
Crimea, with about 2.4 million residents, is much larger than the foreign territories previously placed on the Kremlin’s balance sheet. When Russian forces invaded in February 2014, the price of crude oil stood at about $100 a barrel. It has now fallen to less than $40, burning a giant hole in Moscow’s budget. The occupation also triggered a series of damaging international sanctions. Nevertheless, having illegally “annexed” the peninsula, Russia is obliged to provide public services to its marooned population. The difficulty of doing this without a land link became clear last month, when saboteurs cut off the flow of Ukrainian electricity from the north.
In eastern Ukraine, the sections of Donetsk and Luhansk currently occupied by separatist rebels and Russian troops are home to approximately 3.5 million people, and the local economy has been devastated by fighting with Ukrainian government forces since mid-2014. Setting aside the cost of the military action itself, Moscow is reportedly spending tens of millions of dollars a month on pensions alone to keep the population afloat.
Even as the situations above slid from bad to worse this fall, Putin ordered a major military intervention in Syria with the aim of propping up the brutal government of President Bashar al-Assad. The ultimate costs of the enterprise—both human and financial—are incalculable at present, but it’s clear enough that Russia can’t afford its existing commitments, let alone an open-ended conflict and client state in the Middle East.
Russian authorities have searched for a way out of the economic crisis. The Orthodox Church has proposed an alternative banking system based on traditional social values. Unfortunately, meaningful relief is unlikely to come until energy prices recover and, more importantly, Russia has a new president.