Rough Times Ahead for U.S.-Russian Ties

Clashes over democratic principles and geopolitics will continue to sour relations.

By Andrew C. Schneider, Associate Editor, The Kiplinger Letter

December 13, 2004

The political crisis in Ukraine is abating now that all sides have agreed to a new presidential ballot on Dec. 26. But neither the White House nor the Kremlin will forget the sharp words they exchanged over Ukraine in the heat of the moment. The clash signals an escalation of tensions between the U.S. and Russia that have been building below the surface for some time. It isn't the start of another Cold War, but the time when Washington could look on Moscow as a budding strategic partner is quickly fading into history.

Underlying the deterioration of U.S.-Russian relations in the past couple of years is a sharp divergence of views on democracy. President Bush is determined to spread democratic principles in Iraq and elsewhere around the world. Russian President Vladimir Putin views them as an impediment to his consolidation of power and creation of economic stability. Putin also sees Western support for democracy in the former Soviet republics as a blatant attempt to undermine his influence. The conflict over Ukraine clearly underscores this rift.

As relations continue to sour, Putin may well retaliate against U.S. and European Union companies doing business in Russia. Though Putin wants to promote investment as a way to strengthen the economy and help Russia regain global gravitas, he doesn't flinch from punishing domestic businesses or executives that he perceives as a threat to his authority. U.S. firms operating in the Russian petroleum, banking, consumer products, telecommunications and other industries are now vulnerable to similar treatment.

For some time, Putin has intervened overtly in the domestic politics of neighboring states from the former Soviet Union—a region Russians refer to as the "near abroad." He supplies support for leaders who toe Moscow's line. Alternatively, in cases where leaders resist Moscow, Putin throws his weight behind their opponents or pro-Russian separatist movements.

Bush has been reluctant to challenge Putin directly up till now, largely because of Russia's support of the U.S. in the war on terror. But Bush will take a tougher line with Russia during his second four years. That will mean not only helping to shield a future democratically elected government in Ukraine from Russian manipulation but also pushing more openly for Russia to remove its troops from two of its other neighboring republics, Georgia and Moldova. If the Kremlin isn't swayed, expect more-direct U.S. financial support for pro-democracy movements in Russia itself, including opposition parties Yabloko and the Union of Right Forces.

Events at last week's meeting in Sofia, Bulgaria, of the Organization for Security and Cooperation in Europe (OSCE) provided a taste of things to come from the White House. Russian Foreign Minister Sergey Lavrov accused OSCE election observers of intervening in and manipulating the Ukrainian elections. Outgoing Secretary of State Colin Powell struck back, strenuously defending the observers and then taking Russia to task for the situations in Moldova and Georgia.

Putin may be backing down tactically on Ukraine, but that doesn't mean he has necessarily finished tampering there. Under constitutional reforms put in place by the Ukrainian parliament, still dominated by President Leonid Kuchma's supporters, much of the next president's powers will effectively be transferred to the parliament in September 2005, well ahead of the next legislative elections. That will allow pro-Kuchma—and, by extension, pro-Putin—elements to continue to influence Ukrainian internal politics, no matter who wins the Dec. 26 presidential vote.

"From the Russian point of view, unless they have Ukraine under their thumb, their country is indefensible," says Peter Zeihan, a senior analyst for Stratfor, a global intelligence company. "If you look at Ukraine, its border [with Russia] is roughly at the limit of penetration of Nazi Germany in World War II. Without it, [the Russians] don't even have a chance of becoming a regional power again, let alone a great power." Much of the Russian political leadership still views Ukraine as an integral part of Russia, which it was for more than three centuries, rather than as an independent country.

Putin's recent statements about upgrading Russia's nuclear arsenal raise concerns that a new Cold War is right around the corner. But retired Lt. Gen. William E. Odom, director of national securities studies at the Hudson Institute, says Russia cannot afford to rebuild its entire nuclear arsenal, even with its newfound oil wealth. Its conventional forces, meanwhile, are enough to bully tiny Georgia or Moldova, but Russia's failure to subdue even Chechnya says much about the army's deterioration since 1991.

Putin also will seek opportunities to cause the U.S. trouble in places far removed from Russia's back yard—Venezuela, for example, to which Russia recently sold arms. Further, Russia's position on the United Nations Security Council puts it in an excellent position to stand in Washington's way in addressing Iran's nuclear program, should the questions of invoking sanctions ever come to the table. Finally, Putin will use his country's energy resources to strategic advantage. Growing European dependence on Russian natural gas and Russia's expanding role as an oil exporter provide longer-term leverage in his relations with the West.