In this week’s Western media highlights, the Guardian discusses the deteriorating relationship between Russia and the West, which it has labeled “Cold War 2.0.” And Leonid Bershidsky weighs in on the Kremlin’s deny-all tactics, arguing that U.S. Democrats could borrow from Russian officials’ playbook on issues of security. In the Russian media, analysts argue that optimism about the alleged revival of the Russian economy may be premature and that the Kremlin’s constant “saber-rattling” is meant to provoke fear and anxiety in the West.

 

According to a number of Russia observers, the so-called "new Cold War" between Russia and the West no longer sounds like a figure of speech. President Putin (depicted above) spoke about current tensions with the West at this week's Valdai discussion club, a state-funded forum where Russian analysts and officials explain Russia’s policies. Photo: TASS

 

From the West

Cold War 2.0: How Russia and the West Reheated a Historic Struggle

Patrick Wintour, Luke Harding, Julian Borger, The Guardian

“The post-cold war era is over, and a new era has begun. Cold War 2.0,” the Guardian writes this week as it seeks to define what a new relationship with Putin’s Russia could be for the West. According to the paper’s sources, a United States NATO general described Putin’s response to the 2014 annexation of Crimea as a “paradigm-shifting speech” that has characterized the European debate on Russia more than anything, leading many to assume we’re witnessing the buildup of a new cold war. As the list of Putin’s provocations grows, Western leaders are increasingly anxious about the new rules of the game with a more aggressive and unpredictable Russia. Some acknowledge the West’s share of responsibility for the status quo, mainly through its expansion of NATO into the Baltics, and the controversial 2011 United Nations resolution on Libya that deepened the distrust between America and Russia. But opinion in Europe remains divided as to an appropriate response, with sympathizers on the left and right choosing to look the other way while Putin carries out a Grozny-style bombardment of Aleppo. The Guardian suggests a number of policy initiatives going forward, including further sanctions on the Russian economy and high-profile individuals. Also, citing investment banker Bill Browder, the article suggests the West could cut Russia off from the international banking payment system, a tactic that successfully forced Iran into negotiations over its nuclear program in 2012. “There are no easy answers to the Russians,” claims a European diplomat, comparing the former Cold War to the current predicament. “Now the danger is there is no order. There is no accepted language. We are not talking the same language.”

 

How the Kremlin Handles Hacks: Deny, Deny, Deny

Leonid Bershidsky, Bloomberg View

Leonid Bershidsky, Bloomberg View columnist and founding editor of Vedomosti, offers his take on the Ukrainian “CyberHunta” hacks that recently exposed the Kremlin’s plans to “destabilize” the political situation in Ukraine. The hackers produced an information dump of over 2,000 e-mails from the e-mail account of Vladislav Surkov, a lead Kremlin ideologue. Putin’s press secretary Dmitri Peskov subsequently denied the authenticity of the leak; however, the Atlantic Council’s Digital Forensic Research Lab experts argue otherwise. Bershidsky notes that unlike the leaked e-mails of Clinton and her allies in the U.S. presidential campaign, the Kremlin has chosen a simple tactic of denying all, while Surkov himself, apparently expecting to be hacked, never uses his e-mail directly, thus leaving no evidence of being personally responsible for the disruption in Ukraine. Bershidsky maintains that this tactic shows that “Russian government communications are better protected than those of the U.S. Democrats,” who have only themselves to blame for not adequately securing their servers.

 

Four Rules For a Realistic Reset with Vladimir Putin

Philip Stephens, Financial Times

British journalist and author Philip Stephens makes the case for a realistic approach to Russia-West relations this week. “Mr. Putin craves respect” is a point that has often been overlooked when judging the Kremlin’s actions abroad, yet Stephens claims that Obama was on point when he described Russia as a “regional power,” whose actions in Ukraine were evidence of weakness rather than strength. Stephens notes that “by every metric… Russia faces inexorable decline,” yet its leader is still more than keen to take risks while the West turns in on itself, a heretofore underestimated trait of the Russian president. As Putin sets his sights on the liberal international order, gaining support on the far left and right in Europe, Stephens offers four principles that could be at the foundation of a new reset with Russia, but this time one based on realism: resolve, consistency, engagement, and respect. First, the West should send clear messages that there will be consequences if Russia crosses “red lines”; second, it should stay united and not allow Putin to exploit its domestic divides; third, cooperation with Russia is possible on issues of mutual interest, such as proliferation and counterterrorism; and finally, Western leaders can be more sly and diplomatic and let Putin think he’s getting the respect he craves. “The sadness is that, if Mr. Putin continues to pretend Russia is a great power, it will eventually cease to be a great nation,” concludes Stephens.

 

From Russia

Coursonomics: Why It’s Early to Talk About the End of Recession in Russia

Kirill Rogov, RBC

Political commentator Kirill Rogov analyzes the latest statistics of the Russian economy, pointing out that many indicators show positive dynamics and overall “a sense of stability is being observed in the economy.” There are signs of revival in a number industries, but, according to the author, this positive trend is linked to the strengthening of the ruble over the summer period, and was noticeable both in 2015 (the ruble’s value dropped by 23 percent to its record low) and in 2016 (it increased by 17 percent). What does this tell us? The ruble’s strengthening stimulates the Russian economy by reducing the share of import components in production costs, which, in fact, is the result not of import-substitution but rather of the fact that the economy still functions within the old paradigm. Though a weaker ruble stimulates domestic production, it has a negative impact on the export income of the Russian budget and causes a growth of the deficit. Rogov argues that next year the country may not be able to get away with a deficit growth the way it has in previous years. He also concludes that the ongoing plummeting of retail trade and investments are symptoms of the recession not being over yet, with negative trends highlighting fundamental problems in the Russian economy: “low profitability of investments, … exacerbated by geopolitical costs.”

 

New Abnormality

Vladislav Inozemtsev, Vedomosti

Since the early 2010s, Russia has entered the so-called “new economic reality” that is characterized, according to Director of the Center for Post-Industrial Studies Vladislav Inozemtsev, by “negation… of competition, efficiency, transparency, development, innovation.” In other words, this reality is a form of state capitalism (Russia’s Federal Antimonopoly Service estimate that over the last decade, the state share of the economy has doubled—from 35 percent in 2005 to 70 percent today). Inozemtsev argues that despite the obstacles of the existing economic order, Russian business needs to develop an optimal strategy that would help it weather this era of “new abnormality.” Such a strategy may include: abandoning any attempts at politicization; establishing closer ties with the ruling bureaucracy; decreasing profitability and restricting investments that lead to capitalization growth (it would be more reasonable to create “safety cushions” abroad); rejecting acquirement of new assets and following the strategy of organic growth instead; and integrating relevant businesses operating abroad with the core company in Russia. According to the author, this strategy will allow Russian business to survive and preserve its experience for a future, more optimistic period of the country’s development.

 

“Satan 2” and “Radioactive Ash”: How Russia Finally Managed to Scare the West

Tatiana Stanovaya, Slon.ru

This week Russia has unveiled a new nuclear missile nicknamed “Satan 2,” causing a great stir in the Western media, which immediately plunged into vigorous discussion about the possibility of the Kremlin starting a war. Political commentator Tatiana Stanovaya poses the question: are these fears of the Russian nuclear threat justified? According to Stanovaya, the fact that Russia’s Makeyev Rocket Design Bureau was developing the missile had been reported as early as 2011, while the media frenzy this week was caused by a small news piece featuring the first photo of the missile published on the Bureau’s website. Normally, it seems, this news would not be perceived as shocking or threatening, so why the reaction? Stanovaya reminds readers that over the last two years, the West has been persistently bombarded by reports of Putin’s aggression and military prowess in various parts of the world, which predetermined today’s disproportion between the news itself and the conclusions drawn from it. Stanovaya argues that the West’s irrational fears have been provoked not just by the media, but also by the Kremlin’s purposeful propaganda campaign and Putin’s general unpredictability. And these fears are exacerbated as the Kremlin maintains its military rhetoric and “saber-rattling” by European borders.

 

Nathan Andrews helped compile this week's roundup.

 

According to the latest poll by Levada-center, 69 percent of Russians believe that price hike is currently the most acute problem in the country; 50 percent are concerned with poverty, 40 percent—with unemployment; 34 percent—with economic crisis, 28 percent—with corruption and bribery. Only 3 percent are troubled by the restrictions of the civil liberties.

Our newsletter delivers a digest of analytical articles and op-eds published on our website, along with the latest updates on the IMR activities on a monthly basis.