Russia's Rise on the Global Stage -- Journal Report

Date : 01/19/2020 @ 8:03PM
Source : Dow Jones News

Russia's Rise on the Global Stage -- Journal Report

By Thomas Grove 

MOSCOW -- Vladimir Putin's efforts to reassert Moscow's global influence appear to be bearing some fruit. But 20 years after he first assumed the Russian presidency, his efforts to revitalize the country's economy have languished.

Mr. Putin recently proposed changes to Russia's constitution that he could use to retain his grip on power, perhaps in a new role to tend to his legacy from behind the scenes. As he ushers in a new government following the resignation of Prime Minister Dmitry Medvedev, he will be sure to try to maintain tight control, analysts say.

Meanwhile, as questions mount about America's role around the world, he is also likely to see to it that Russian military forays into the Middle East, extension of energy pipelines to strategic neighbors, and increasingly assertive foreign policy overall continue as well.

Moscow, in keeping with its long-term goal of returning to superpower status, has consolidated its military presence in Syria, where it was the deciding factor in winning the war for President Bashar al-Assad. Irregular Russian mercenary groups in Libya, the Central African Republic and possibly Venezuela also give the Kremlin tools to operate in the shadows abroad.

In China and Europe, Russia uses its oil and natural-gas reserves to improve ties. The Power of Siberia gas pipeline to China has been open since last year, and Moscow is using the Nord Stream 2 project, a natural-gas line being laid from Russia to Germany beneath the Baltic Sea, as a lever to try to improve relations with Europe's biggest economy.

The U.S. imposed sanctions last month against companies and individuals participating in the Nord Stream pipeline's construction. The effect of those sanctions is as yet unclear, but Moscow hopes they will be a thorn in the side of U.S.-German relations, and not Russian-German ties, analysts say.

Moscow increasingly looks to China as a potential partner against the West, following Western sanctions over Russia's invasion and annexation of Crimea and covert military operations in eastern Ukraine. After a decade of upgrades to Russia's armed forces, Moscow and Beijing are carrying out more military exercises together and are set to sign a new military cooperation agreement this year. In 2019, the two countries carried out their first joint patrol of the Asia Pacific as part of their growing defense ties.

Trade likewise has grown between China and Russia, due not only to closer ties in general but to threats of a trade war between the U.S. and China. Bilateral trade between the two countries rose to a record $110 billion last year, compared with $84 billion in 2017.

Some analysts look at this growing relationship and say that Moscow risks becoming dependent on China for its economic and military power.

The biggest hindrance to Russia's achieving its global ambitions remains its weak growth. Renewed ambition on the world stage has done nothing to improve living standards for the vast majority of Russians. Real income fell in five of the past six years, leading to increased dissent among many, especially outside the country's capital and wealthiest city, Moscow.

GDP growth for the first nine months of 2019 was 1.1%, compared with the year-earlier period. But while some of this weakness is attributable to sanctions, Russia's reliance on hydrocarbons and failure to reform its private sector have hamstrung economic prospects.

Mr. Putin has tied the weak economy to a deepening demographic crisis, which is expected to cause Russia's population to shrink starting next year, according to a projection by the United Nations. The U.N. foresees Russia's population falling by around 7% by the middle of this century, to 136 million from 146 million last year.

As part of efforts to stimulate the economy, Moscow has put forward a meager privatization program through 2022, which looks to sell off shares in a number of state companies, the largest by far of which is VTB, Russia's No. 2 bank. But privatization is unlikely to bring any major source of new revenue into the government's coffers. Indeed, many analysts see an increasing role for the government in the economy. Top Russian tech firm Yandex recently was forced to agree with the government on a new shareholder structure that would ensure the company's controlling shares don't fall into foreign hands.

Protests in Moscow last year were the biggest display of dissatisfaction with the Kremlin in nearly a decade. While various opposition politicians, including Alexei Navalny, tried to turn the protests into a sustained movement against the Kremlin, the use of police force and court cases against protesters helped snuff out opposition for now.

Mr. Grove is a reporter for The Wall Street Journal in Moscow. He can be reached at thomas.grove@wsj.com.

 

(END) Dow Jones Newswires

January 19, 2020 14:48 ET (19:48 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.


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