poker

 

“They (the Europeans) look at the Russian people as barbarians, who wander in Europe rejoicing, that somewhere and something can be destroyed – and destroy it just for the sake of destruction, for fun, for the pleasure of simply overseeing its demise, like hordes of savages, like huns, ready to launch as assault on the ancient Rome and to demolish the holy shrines, without any appreciation of the value of what they are destroying”

Fyodor Dostoevsky

(The Writer’s Diary – Dnevnik Pisatelya)

 

Putin has entered the final stage of his tenure at the helm of the Kremlin. Whatever he achieves abroad will not matter if the internal situation continues to disintegrate in a seemingly irreversible and self-propelling downward spiral.

 

The Russian president is trying the ultimate poker game to confront China and the US while reaping the observer’s benefits. So far he has proven to be a master of brinkmanship and the circumvention strategy.

 

Putin’s to-do-list is quite pragmatic, although many attribute to him the role of a Messiah. Instead of aiming at idealistic virtues he has finally returned to the base line of Russia’s foreign policy as defined by the late Evgeni Primakov – abandon East Ukraine, keep Crimea and above all keep the price of oil and gas high and lines of communication with the West open.

 

The principle of circumvention is a tactical policy line of the Kremlin when it runs out of other options. Where Moscow believes it can resolve a problem with sheer force without risking an overwhelming counter action, it does not hesitate to send in the troops (Georgia, Crimea). Where the chances of a clear win within a short horizon are slim, circumvention becomes indispensable.

 

At first it was Ukraine, then Eastern Europe and most recently the EU.  Russia keeps on circumventing.

 

Success story headlines abroad are an inalienable part of the Kremlin’s deficit management technique at home. For all the hype about the detour to China, the circumvention tactic on the EU failed miserably. The famous rerouting of energy resources away from Europe and the overall strategic interplay with Chinа against the West was meant to impress both the EU and the US, yet it has simply dissipated.

 

The Chinese leaders had an agenda of their own and refused to play second fiddle in Putin’s orchestra. Instead Beijing chose to pursue a patient yet cunning and subdued Russia policy, building up on its stronger and diversified economy, as well as the asymmetry in vulnerabilities and dependencies with Russia. The lack of access to the global capital markets escalated Moscow’s hunger for loans from Chinese sources and brought debt levels to all-time highs.

 

Rosneft alone has over $65 billion in net debt exposure, mostly to Chinese creditors. Gazprom’s badge of honor project – the Power of Siberia is still tens of billions of dollars away from completion and has tens of billions of already incurred debt, mostly to China. Both megadeals – for gas supply with Gazprom for $400 billion and with Rosneft for $270 billion – dramatically shrank in size with the drop in oil and gas prices.

 

Despite Putin’s continued efforts, the message from Beijing finally arrived in Moscow – Russia will not be treated at par and certainly the Chinese leaders are not giving a blank check of support for Moscow’s actions abroad. China carefully studied and learned the lessons from the heavy handed gasplomacy of the Kremlin vis-à-vis Europe, opposed the invasion in Ukraine and drew redlines. Over-reliance on gas imports from Russia, when alternatives are remote, is a double-edged sword. Instead of delaying or halting indigenous oil and gas development projects in favor of Russian imports, the Chinese energy giants Sinopec, CNPC and CNOOC embarked on ambitious local gas and oil development programs, including shale gas and expanding the existing network of 13 LNG terminals with 8 new ones.  Adding insult to injury for the Kremlin, the Chinese government backed down on the extent of advance payments for future gas and oil delivery and promised commodity backed credits for the Power of Siberia and the Altai pipelines, while successfully mastering deeper economic and demographic penetration of China into Eastern Siberia and the Far East of Russia.

 

Playing poker with China proved to be a challenge well beyond Putin’s command, which forced him to seek regional checks to balance China’s dominance in bilateral relations, boosting ties with Japan, India and other Asian counterweights.

 

In most of the circumvention type actions Moscow tested the classic matrix of the balance of forces, establishing short-term tactical coalitions of interests. However, most of its efforts came short of target, both against the EU and China, where Putin seemed to be racing against the clock, soon to realize he needs a fast track for a reset of relations with the West.

 

Donald Trump’s presidency seemed to offer a unique chance.

 

Vladimir Putin is no dreamer – he understands the limits of Russia’s military or hybrid power. The Russian president is desperate to keep this larger than life image of his power and potential beyond the narrow confines of Russia’s real power base. Most of the power gap between his real and perceived potential is compensated by media-amplified extremist visions of Putin’s destructive or negative power. Where facts come short his brinkmanship and controlled propaganda machine inculcate the post-truths.

 

The Kremlin’s propaganda war machine has incessantly focused on the destruction of NATO and the EU as the bilateral track for advancing Russia’s interest with member countries proved less and less efficient in light of the growing role of the EC and NATO-level decision making.

 

Moscow suffered blows with the collapse of the bypass pipelines strategy – notably South and North Stream, which forced the Kremlin to seek ways in which it could pursue its interests from within these EU states, influencing the local democratic and electoral processes. The Kremlin made up its mind to replace key leaders in the European Union – the UK, France and Germany. The top-down destabilization concept hinges on the probability of the Russian leader striking a ‘Yalta’ global deal with President Trump. The tradeoff as seen at the Kremlin seems like a replica of the old Holy Alliance of the 19 century with both countries focusing on China, a US priority, and on the EU, a Russian priority.

 

Failing to engage Trump in the shortest possible term, the Russian president will miss the window of the rarest opportunity and the whole process could be rolled back. The immediate repercussions will be felt across Europe – Putin’s favorites will lose momentum, Moscow will sour relations with China and the Kremlin’s tsar could face a reversal of fortunes with the West and China responding asymmetrically and possibly even in a coordinated manner to Russia’s double bottom policy lines.

 

The privatization of Rosneft’s minority package exemplifies the extremes to which Putin is ready to go in his geopolitical poker game, sacrificing limited and depleting resources in order to reach  the ultimate rescue arrangement with Trump, playing US against EU companies in a game of positive business discrimination following the lifting of sanctions on Russia.

 

Having failed to reset relations with President Obama and to block sanctions in the EU via Viktor Orban and Alexis Tsipras, to name a few, Vladimir Putin tried to play it big and tried to influence the choice of the next US president – both in tangible, subversive action, including hacking, and by projecting a scary image of his ‘omnipotence’ to manipulate elections in the West.

 

In the operation with the highest stakes in his political life the Russian president mobilized all conceivable allies and forces he had assembled during years of careful preparatory work, including bringing a concerted and unprecedented propaganda operation involving a web of controlled western media assets, politicians, Russia’s intelligence agencies, NGOs, political parties and businesses.

 

In Moscow, Putin seems invincible, while in the West, leaders and the public in general are vulnerable to manipulation via open public channels.

 

After the publication of the report of the US intelligence services concerning Russia’s influence on the democratic process, hacker attacks, mechanisms and channels of influence, it became clear that while Vladimir Putin is able to penetrate the virtual space border of the US and interfere with its electoral process, his overall political objective will inevitably run afoul of the defense systems of American democracy that have many layers and many mechanisms for countering autonomous mode operations. And the Kremlin’s open and hyperactive clumsy attempts to take sides in an internal US debate on Russia policy elicits greater damage than benefits to Mr. Trump.

 

But the fact of the matter is that America is divided and Russia’s Putin can take a substantial chunk of the credit for that.

 

The consequences of these intelligence reports can hardly be overstated. With the publication of the unclassified part and the controlled leaks, as well as the speculation on the classified portion, the United States formally entered into the hot phase of Russia’s declared information war. US presidents are confined to operate within a preset range of the possible – the mainstream of US Foreign policy – and this can hardly change.

 

Just as President Donald Trump was forced to replace key figures in his campaign team to get rid of the blatant pro-Russian tilt, now the US Congress has left Mr. Putin with no other option but to step in personally and challenge the reports of the US intelligence community.

 

Gravity matters in geopolitics, too.

 

Between Putin and the West there can be no peaceful coexistence with the lines of communications broken.

 

The level of the West’s mistrust is below sanitary minimum; the damage is irreparable. Even if the Russian president succeeds in replacing key Western leaders with his alike, the underlying factors that determine the ground base for relations between Putin’s Russia and the EU, the US and even China point to a deep and irreconcilable difference in value and interest set.

 

What Putin seeks is well beyond what the West can deliver. He can offer little besides a promise to limit the use of negative power, which in turn, represents geopolitical blackmail.

 

He needs spheres of influence in order to extract benefits and secure substantial financial flows back home in order to consolidate his power base at home and appease his boyars. The decline of the Russian economy seems permanent and it can’t generate the revenues needed to suppress the rivalry between different power groups and the public.

 

The lifting of sanctions under the most plausible scenario will not alleviate the economic situation dramatically, unless the West starts pouring in funds and technologies to bail him out. And this is not going to happen any time soon.

 

It might border on extreme absurdity, but the lifting of sanctions might instead of healing the internal situation expose Putin’s impotence and thus lead to his demise sooner rather than later. The key factor that keeps the Russian president afloat – the militarized public conscience and the external enemy – would cease to exist.

 

Therefore, with or without sanctions, Putin will need to revert to the West as the enemy-on-duty in order to remain at the helm at home, denying all Real Politik proponents the key premise behind rapprochement with Russia’s Putin.

 

Any Putin-Trump deal would involve recognition of Russia’s right to its own spheres of influence, including control of its near abroad, which includes countries in Central and Eastern Europe. The key driver behind Putin’s assault on the EU is that Moscow lost its control over its former Soviet allies, which has translated into the threat of loss of market share for Gazprom, Rosatom and Russia’s oil giants. Given the poor perspective of wealth generation within Russia, today’s rulers at the Kremlin will increasingly rely on exports and secured markets for Russia’s energy resources against a background of low energy prices. The loss of CEE markets and the need to regain the right to collect geopolitical taxes on Moscow’s sphere of influence is central to the survival strategy of President Putin.

 

That is why he needs the EU and NATO to disintegrate and there to be a replay of the Reagan-Gorbachev Reykjavik summit between himself and Trump.

 

For any Western leader – moreover for the leaders of the US and the EU – agreeing with Mr. Putin on his terms means not only to betray the people of the EU and the US, but to invite trouble and a difficult-to-mend rift in transatlantic relations, as well as a regional conflict spread due to divergent geopolitical aspirations.

 

The only way out of the situation is through transition in Russia and its return to a self-sustainable development mode that doesn’t require geopolitical tax spheres of influence, but would imply a congenial and compatible with the global order competitive national economic and political model. It is up to the Russian people to decide who will lead the country on this road.

 

At present, it does not seem Vladimir Putin could deliver on this option.

 

He seems intent to continue to use his negative power and destabilize individual regions through targeted hybrid attacks and tactical alliances with local authoritarian leaders.

 

Donald Trump has every chance to enter history either as the leader who accepted the terms of the engagement Moscow offered that led to the breakup of NATO or to define the terms of containment of the new Russian threat and to lead the West.

 

When delivering his famous speech in Fulton, Churchill hardly knew that it would go down in history as the threshold and historic mark for the new Cold War.

 

In time we could equally refer back to the report of the US intelligence community as a historic milestone in modern history.

 

By Ilian Vassilev

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