Putin’s Russia: Exploiting the Weaknesses of Liberal Europe

Popularity is Putin’s main focus, and it hinges on showing strength. This also implies that his actions will de­pend on the resistance he encounters. To remain in power, Putin therefore has two main tasks. For one, he has to nurture the basic foundations of Russia’s identity as a traditional great power. It would be shattered if Ukraine or other neighbors with close ethnic and historical ties adopted a Western trajectory. Second, Putin must constantly prove that Russia is a great power. Hence, he increased funding for the military. Also, he founded the Eurasian Economic Un­ion in his effort to talk with the EU on equal terms. In Ukraine, both of these tasks converge: It is the most vi­tal neighbor for Russia’s great power identity and is engaged with the rival EU. If Ukraine adopted a different path, the underlying narrative and the potential to shore up power vis-à-vis the EU would be in tatters. It is these tasks of ensuring regime security that dominate Putin’s policies, rather than abstract notions of ‘national security interests’. But Putin’s dependence on popularity also means that there are limits to his actions. Two factors have made Putin hesitate in Ukraine. First, the appetite for conducting war is checked by the risk of casualties. So far, these have been limited as Putin has been able to arm volunteers from Donbas, Russia, and elsewhere. However, a broader war would necessitate greater involve­ment, which would have an impact on Putin’s rating. Wanting to believe in propaganda is one thing, especially if it is favorable to one’s own cause, but should he decide to sacrifice the lives of thousands of Russian sons and husbands, a different propaganda effort would be necessary. Another weakness is the economy: Economic decline will over time reduce the re­sources that Putin can bring to bear – both internally and, crucially, also to prove Russia’s capabilities as a great power. Therefore, were the conflict only about Ukraine, the challenge to the EU would not be existential; how­ever, as is argued below, it goes well beyond the Donbas.

The roots of the conflict in Ukraine run deep – at the fundamental level, it is also a systemic conflict between the antagonistic political orders of a liberal EU and Russia’s postmodern absolutism. The orders produce dif­ferent fears: EU leaders fear noth­ing more than military conflict, and Putin fears nothing more than the breakdown of his regime. On the contrary, Putin’s Russia has proven to have a higher tolerance for war, obvi­ously accepting physical coercion as a substantive element of power. This is why he has the upper hand over the EU as long as he can extract conces­sions by waging a limited war.

Security: the military’s power to frustrate

Putin’s embrace of postmodern abso­lutism has led to conflict with the EU. Not limited to Ukraine, this struggle presents the first real challenge in dec­ades to the security of EU members as well as to its ‘soft security’ focused external policies. Worse still, the con­flict in Ukraine came unexpected: The EU was lulled by its transforma­tive success in Eastern Europe and on the Balkans, assuming an appar­ent liberal consensus where there was none. Meanwhile, Europe seems to have lost the ability for strategic, politico-military thinking that pre­vailed during the Cold War. The EU has now been forced to acknowledge that it needs a credible ‘stick’ to com­plement the economic ‘carrots’ of its liberal agenda.

A hard landing for the ‘soft’ neighborhood policy

Traditionally, the EU’s policy towards its eastern neighborhood has been stimulated by the more or less suc­cessful waves of enlargement. But while it was strong on its ambition to transform new members and extend the liberal order to further regions, its key flaws have always been a lack of resources and incentives. This ambi­guity reflected policy disagreements in the EU: Whereas some members, such as Poland and Sweden, were strongly in favor of a robust policy or even of­fering membership to Ukraine, con­tinental Western Europe had largely succumbed to ‘enlargement fatigue’, whereas Southern Europe was essen­tially indifferent.

It was only after Russia’s war against Georgia in 2008 that the EU decided to shift up a gear. The argument was that the countries left in between Rus­sia and the EU should be given more attention in order to reduce Russian leverage. Hence, the EU negotiated ambitious association agreements that would help those countries to trans­form into liberal market economies. However, the EU still wanted to of­fer those countries an alternative to Russia on the cheap: enlargement fatigue prevailed – the agreements did not provide for the free move­ment and settlement of people. Fear of work migration and competitive pressure were among the main rea­sons why the EU still did not hold out any membership perspective.

Matters of hard security went totally unheeded, leading to a grave miscal­culation. Some even thought that the EU offer would be the catch-all solu­tion to regional problems: Purported­ly, it would not be seen as a threat by Russia, unlike NATO, while it would assuage the states to the east. Never­theless, hard security soon came to trump the EU’s offers: Those partner countries dependent on Russian secu­rity guarantees, such as Armenia, had to cease cooperation.

When Putin turned to Ukraine and annexed Crimea, the EU was sup­portive of Kyiv, but still loath to con­front Russia directly. Economic in­terests are strong for many members, as is Russia’s outsized diplomatic role in many of the world’s arenas. Even more important was the general desire for friendly relations with Moscow in many corners of the EU. This is joined by considerations of power politics in some small EU countries that see Mos­cow as a partner to balance against an EU dominated by large states.

It is notable that even the Visegrad states of Central Eastern Europe were not coherent: Warsaw was hawk­ish, whereas Prague, Bratislava, and Budapest joined Western Europe in prioritizing the economy. Initial sanc­tions were symbolic as a result, mostly targeting political relations and indi­viduals. More ‘hawkish’ EU members, mostly Poland, Sweden, and the Bal­tics, were placated with a three-stage plan to eventually escalate sanctions.

It took the Kremlin’s excalation in the Donbas to galvanize the EU. The de­cisive catalyst came on 17 July 2014, when what were probably Russian forces accidentally shot down Malay­sian Airlines Flight 17 with a BUK anti-aircraft missile. Now, Germany came around in support for sanctions and took the lead in coordination. This was supported by the UK, the Netherlands, and eventually France. The smaller dissenting states could no longer resist the general trend. At last, the EU was ready to impose financial restrictions against selected banks and companies, as well as export restric­tions for military, dual-use, and cer­tain energy extraction technologies.

The EU’s growing firmness, joined by a tanking oil price, did not go unno­ticed with Putin. Firstly, while his goals remain unchanged, he went back to the negotiation table to agree on the Minsk protocol in September 2014. As this did not end the fighting, Pu­tin limited himself to a comparatively light footprint in Donbas and concen­trated on destabilizing Ukraine rather than on a full-fledged assault. Second­ly, the worsening economic outlook in Russia has reduced Putin’s resources at home and abroad, even though the population has so far rallied behind the leader. Disillusionment among the middle class and the elite may grow over time, making Putin more amena­ble to negotiations with the West over kick-starting his economy.

However, in February 2015, Putin again sensed an opportunity. Some of the sanctions were soon to expire, and the EU’s internal political cri­sis was bleeding into foreign policy: Elections in Greece had added a firm voice of resistance to renewing, let alone thinking of further sanctions. Thus, a new ground offensive by the separatists was again supported with the latest Russian equipment. Putin’s basic logic continues to produce re­sults: Every day the war continues, Ukraine grows weaker as a state and the EU loses out on establishing a workable regional order.

Hard security: Washington, the savior?

Under any scenario – continuing with a liberal neighborhood policy or accepting Russia as a great power in Europe – the EU’s member states would need strong military forces. However, the EU’s military power is weakening in the wake of economic crisis. To be sure, the conflict has brought hard lessons with regard to the continued utility of military force, but these have not, as of now, translated into a higher commitment to military affairs. Even after the events in Ukraine, most EU members are still reluctant to increase their below-norm defense budgets.

This has only added to the EU’s tra­ditional ‘Venus’ character: Attempts at making the EU a full-fledged security actor have fallen flat. The European Security Strategy dates from 2003. Military cooperation between EU members has been affected as well: Franco-British cooperation, the most ambitious partnership, is lingering due to budgetary constraints and con­flicting political agendas. Only small members such as Sweden and Finland are trying to build up closer military ties. As a result, after years of trying to build a common European defense capability, NATO and thus the US are still the main guarantors of European security. This trend has only been re­inforced by the Ukraine crisis – not so much because the US wanted to, but rather because many EU leaders do not have many viable alternatives. Fac­ing the choice between a well-known US role as security provider and Rus­sia’s preference, a ‘multipolar world or­der’ with its inherent instability, many naturally opted for the former.

However, doubts remain whether the underlying premise of the renewed piv­ot to the US is credible, which might reinforce instability. The priority that the US attaches to European defense is uncertain, given the Pentagon’s already stretched commitments, turmoil in the Middle East, and Washington’s increas­ing strategic introspection. Nerves are frayed in Eastern Europe, and Putin may be tempted to test the US com­mitment to those countries. In any case, the outsized role ascribed to the US in the defense of a majority of EU members allows Russia to conveniently equate the EU with NATO and the US, which provides fuel to a regional con­flict and pushes it right up to the global level, elevating the stakes. It also adds fuel to Russia’s propaganda machine in the EU, where many are made to be­lieve that the EU is being dragged into a conflict that is in Washington’s interest.

On balance, the EU’s security is in a dangerous limbo. If the EU wants to uphold its liberal order, it either needs unambiguous assurances from the US about its future long-term commit­ment, or it must start investing into a higher military profile itself. If things continue as before, the low profile of NATO’s European members and the uncertain US outlook might well in­vite Russia to test the commitment of major EU member states and of the US to defending Eastern Europe and the Baltics.

Economy: dividing the EU

While Putin’s Russia faces the EU from outside, its economy is a challenge coming from within. Having started as an economic project, the EU might also fall due to economics – most viv­idly expressed in the continuing crisis of the Euro, which is weighed down by heavy public debt burdens. The lagging growth is only a syndrome, however. More severe for the politi­cal coherence of the EU are the grow­ing divergences between EU member states. Those, in turn, are driven by the underlying political blockades that have been further deepened by the crisis response policies. These poli­cies and their economic effects have undermined the EU’s legitimacy in the eyes of large parts of the Europe­an population. The lack of economic performance also supplies additional arguments to those that look towards Moscow as an alternative to Brussels.

The EU’s crisis response: fuelling realism

When the Euro crisis hit in 2008, not many countries were keen to take a lead: France had a high debt load and rising unemployment rate itself. Italy was hit hard by the crisis. The role of crisis manager thus fell to Ger­many. Germany was ready to provide the EU’s financial assistance with the necessary firepower, but together with its northern partners, it demanded strict reforms and spending cuts in return. Five years on, unemployment and poverty have declined to a long-term low in Germany, while the op­posite has happened in Southern EU countries, especially in Greece. This has undermined the trust in the EU.

Worse still, the crisis response poli­cies, while technically and morally justified, were in part self-defeating. They had a counterproductive ef­fect on the ability of the periphery to reform: Contributing to higher inequality, they undermined societal readiness to accept reform. Instead, they fuelled fears of social decline and mistrust of elites. As argued below, this has given rise to radical right- and left-wing alternatives.

The EU’s concrete policies contributing to these trends were the bank bailouts, austerity, and quantitative easing. First, bank bailouts were designed in a way that emphasized the responsibility of states and discounted the responsibil­ity of creditors. Hence, taxpayers in the EU and especially the crisis states were held responsible, while the financial system and its decision-makers were saved. Only in the case of Greece did private creditors have to accept a ‘vol­untary haircut’ – equal to only one e­ighth of total Greek debt. While there might have been good systemic reasons to bail out the banks, this policy was the ‘original sin’ of crisis response with long-term distributional consequenc­es. This precedent can also be used to agitate against the EU as representing the interests of financial markets.

Second, the austerity policies that have been negotiated by the Troika of the EU, the International Monetary Fund (IMF), and the European Central Bank (ECB) foresee a radical reduction of expenses and structural reforms to put the state budget on a positive long-term trajectory. Usually quite heavy on the expenditure side, these programs again tend to impact mainly the mid­dle classes and the poor rather than the rich, amplifying the effects of the eco­nomic crisis. This is all the truer as the rich successfully exercised their power to avoid accountability in crisis-ridden states – which is an issue wholly, unre­lated to the Troika policies. For exam­ple, it is estimated that wealthy Greeks hold the equivalent of 65 per cent of their country’s GDP in assets abroad.

Third, the ECB’s quantitative easing is a concession to periphery states. It was not officially supported by Germany and is intended to somewhat reduce the impression of German domina­tion of the EU. The ECB’s main trick is to buy government bonds so that their yield stays low, regardless of the risk perceived by market actors. The economic results are excess liquid­ity and ultra-low or negative interest rates. The latter penalize savers and future pensioners – again, the mid­dle class. Excess liquidity has to be invested somewhere, which elevates asset prices. Hence, stock and prop­erty owners profit. The only positive effect for the poor may be in terms of investment and employment rising due to a weakened currency, but in­vestment has not been boosted so far.

The EU thus finds itself in a vicious circle. Countries have to improve competitiveness, but the EU’s policy responses to the crisis have further worsened the societal foundations needed to achieve it. To be sure, lo­cal elites are also to blame. But the policies followed by the EU under German leadership have constituted a useful target for those who prefer to view the EU as an imperial project, weakening its coherence.

Putin’s economic attraction

With the EU in a profound economic and institutional bind, and helped by the growing divergences, Putin’s Russia holds considerable attraction as a part­ner for trading and balancing against German influence. This has already weakened the resolve of the EU when it comes to sanctions. It also bolsters those who want to sacrifice the existing European order for the sake of profits.

To be sure, the crisis in Ukraine and the falling oil price have somewhat weakened Russia’s economic soft power for the time being. The South Stream gas pipeline, Russia’s main project in the EU, is an obvious casu­alty of the conflict. With this pipeline, Russia planned to divide and rule by attracting the Balkans and Central European countries economically. But the financial sanctions and the wors­ening outlook for Russia’s Gazprom have killed the project.

Nevertheless, Putin has not given up on his game of ‘divide and rule’: Now, he is trying to capitalize on the new gov­ernment in Athens, choosing Greece as the new end point of the proposed gas pipeline to Turkey. The tactic is al­ways the same: Promising construction contracts and transit revenues, Russia lures its partners to toe a pro-Russian line in the EU, be it with regard to for­eign policy or energy laws.

While the EU’s sanctions and Russia’s counter-sanctions did not have a large impact on overall growth, they do im­pact local economies. The reduction of economic cooperation with Russia is an easy target for those forces criti­cal of the EU. The sanctions thus add to the prevalent criticism of the EU’s economic policies. The rise of alterna­tive elites and their non-mainstream parties is now driving this point home – with a little help from Putin.

Politics and Putin: ideological subversion

The economic crisis with its growing imbalance between EU countries has led to a political backlash against the EU and the liberal ideology it stands for. As liberalism puts the individual with its freedom and rights in the center, it breaks down traditional communities and identities that act as stabilizers. This tends to be compen­sated if liberal markets are perceived to bring overall benefits, as individu­als adopt a positive, progressive out­look on the future. If markets do not deliver enough benefits, however, the balance tilts against liberalism: Fear of decline and distrust of elites results in renewed calls for community.

As the EU has never been able to fos­ter a ‘thick’ identity with redistributive institutions, this call is directed at the nation-state. As a result, demands are heard for ‘real’ national elites that will reinstate borders and protect the na­tion instead of following the demands of global markets. The EU is being hit twice: Both as a liberal project that has been advocating the completion of the internal market since the Maastricht treaty, and as a supranational institu­tion, because demands for national sovereignty do not mix well with the spirit needed to make common insti­tutions work. This feebleness of the EU’s ideology is again being exploited by Putin’s Russia.

The rise of anti-mainstream parties

The EU’s party landscape is witnessing a rapid transformation. Anti-mainstream parties from the right and left are ris­ing, and they are forming new lateral partnerships on an illiberal and social axis. In Northern Europe, far-right na­tionalism is on the rise, which is often directly opposed to EU membership. In Southern Europe, where austerity is the defining feature of life, nationalist left-wing parties are more prominent. All of them promise a return of politics, ‘real change’ instead of the endless admin­istration of political life under current governments. As the Syriza-ANEL coa­lition government in Greece illustrates, there is not much enmity between left and right. While they disagree on identity politics and chauvinism, both agree on their state-centric and social agenda, as well as their staunch oppo­sition to the US and the EU.

Far-right nationalist parties react to the fears of solitary economic decline. Taking their cue from Putin, they seek to revitalize the community of the na­tion with its traditions as a source of inspiration and mobilization. Muslim immigrants are often the main target, while the EU is a secondary target limiting national autonomy. Far-right nationalists are now the third-largest force in France, the Netherlands, Austria, Greece, Denmark, Finland, and Sweden. In the UK, France, and Denmark, they won the 2014 elec­tions to the European Parliament, EP, while the ‘Alternative for Germany’ came fifth. Those parties either want to leave the Schengen Agreement, the Euro zone, and the EU, or sub­stantially renegotiate existing trea­ties so as to minimize the impact of transnational cooperation to the bare minimum level, for example, to fight crime. To make the renovated nation­al home more comfortable, most of them vow to invest strongly in social protection of the elderly.

In Southern Europe, which is suffer­ing from austerity and a profound malfunctioning of its state institutions and elites, more ‘progressive’ causes are taking root. Some parties, like come­dian Beppe Grillo’s ‘Five Star Move­ment’ in Italy, which came in second in both national and EP elections, rally against the mistrusted institutions of representative democracy, but do not have an elaborate ideology that would let them take up the key questions. Grillo’s success is not likely to last.

More traditional left-wing parties ral­lying for a strong welfare state and against the ‘austerity diktat’ are likely to have a more profound impact. The landslide victory of Alexis Tsipras’s Syriza in the 2015 Greek elections will have repercussions in Spain and Italy. The concessions that he will be able to extract will also be demanded else­where. In Spain, the leftist Podemos movement draws heavily on Tsipras’s experience and is now the most popu­lar party, having come fourth in the EP elections.

Interestingly, strong anti-systemic parties are not easy to be found in the new EU member states of Cen­tral Eastern Europe. For one, the eco­nomic crisis has hit them less severely or has been overcome quicker due to the better societal cohesion. Secondly, Muslim immigration is not an issue in these societies. Third, the mainstream parties have traditionally been more inclusive of Eurosceptic attitudes and social conservative values. Hun­gary, where radical ethno-nationalist and anti-Semitic Jobbik party is the third-largest political force, is an exception.