Perils of Turning East

For most of Russia's post-communist history, pro-Western liberal forces have dominated foreign policy. As early as 1990, President Boris Yeltsin had decided that integration into the Western system of states was in Russia's long-term strategic interests. He and his liberal aides have pushed hard to maintain close relations with Western powers as a way to gain access to resources from international financial institutions, relieve debt obligations, enter international trade and capital markets, attract foreign investment and, more generally, obtain recognition as one of the world's "Group of Eight" leading industrialized nations.

At several junctures, Russia's pro-Western tilt appeared to be changing. After Liberal Democratic Party leader Vladimir Zhirinovsky's victory in the parliamentary elections in 1993, government officials began to talk tougher regarding relations with the West. But policy did not change. After the communist electoral victory in 1995, Yeltsin replaced his pro-Western foreign minister, Andrei Kozyrev, with Yevgeny Primakov, a seasoned Soviet bureaucrat known for anti-Western and pro-Eastern stances. Still, policy did not change fundamentally.

Primakov's appointment aroused new attention in Russia to relations with Iraq, Iran, China and non-Western states more generally. In all of these relations economic interests have been at the center of attention. Although occasional rhetorical flares from the Foreign Ministry regarding the need for a multi-polar world, a Russia-China alliance or a new Russian leadership role in the developing world may have rekindled nostalgic memories of past superpower greatness, these statements have had little influence on the principal objectives of Russian foreign policy. Economic interests with the West always trumped geopolitical interests in the East or South. Powerful interest groups such as Gazprom, LUKoil and Uneximbank made sure of it.

With the latest crisis in Iraq, Yeltsin has allowed Russian foreign policy to stray from the strategic objective of the last decade. Today, the coincidence of Russia's melting financial markets and the specter of U.S. military intervention in Iraq has forced Russian foreign-policy makers to decide which is more important -- cash from the West or geopolitical balancing in the Middle East. To date, Primakov has seemed to convince Yeltsin that geopolitics is more critical. This is a grave mistake.

Russia cannot afford to play "balance-of-power" politics in the Middle East, both because of the potential damage the gambit might mean for domestic financial markets and because Russian threats to balance U.S. actions in the region are not credible.

During the last month, Russia's financial situation has become dire. Two billion dollars fled the country last month alone, fueling speculation that Russia might suffer a financial meltdown similar to those in Asia. Central Bank authorities aggressively intervened by raising interest rates and proclaiming that bank reserves are sufficient to withstand any run on the ruble, and they may be right. But if they are wrong, Russia is in trouble.

At first glance, this financial situation might not seem like it has anything to do with the looming war in Iraq. Look again. If Russian financial markets do collapse and the country is in need of a bailout from the International Monetary Fund, then Western goodwill, and U.S. goodwill in particular, is a precondition. This goodwill will not be forthcoming if Russia continues to defy and frustrate U.S. efforts regarding Iraq.

The decision to bail out a long-time ally like South Korea was a political no-brainer for the administration of U.S. President Bill Clinton. Mustering support to bail out Russia will be much more difficult even if Russia supported the U.S. actions in Iraq wholeheartedly. If Russia appeared in any way to be on the side of Iraq if war did occur, there would be little support for a Russian bailout.

And what does Russia stand to gain from Primakov's peace mission? Superpower status is not in the cards. The immediate economic advantages of open trade with Iraq again are only a fraction of the potential economic benefits of Western integration. Primakov's ego as Middle East hand may be stroked, but it comes at a high price to Russian businesses and citizens more generally.

Perhaps Russian financial tycoons and oil barons want Russia's market to crash? This is the most sinister of all possible explanations. If foreign capital exited Russia, stock prices would fall further, and create real opportunities for Russia's capitalists to swoop in and buy up properties at fire-sale rates. A financial meltdown might scare away Western investors from the upcoming Rosneft auction, allowing Russian investors to cut a domestic-only deal.

If true, this last scenario means that Russia's liberal, pro-Western orientation in foreign policy matters may have finally come to halt. If Russian businesses give up on the West and instead decide that they prefer to monopolize Russian markets for Russians only, then U.S.-Russian relations and relations with the West in general are in for a rough ride. The big loser would be the Russian people, given that such a move would mean slower growth, little investment, fewer jobs and higher prices.

But this drama is not over yet. Yeltsin still can tighten the reins on Primakov and refrain from making any further statements about World War III. Such acts would allow U.S. government officials to help Russia withstand this latest financial storm, which in turn might even help restore confidence in the Russian market.

Michael McFaul is professor of political science and Hoover fellow at Stanford University and a senior associate at the Moscow Carnegie Center. He contributed this comment to The Moscow Times.