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CHAPTER FOUR


Key U.S. Security Policy Issues

Future Security Cooperation with the West
The Possible Rise of Ultra-Nationalism in Russia
Ukranian Stability
The Future of Economic Reforms
Russia's Challenge on the CFE Flank Agreements


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Future Security Cooperation with the West

Late 1993 proved to be a watershed year in shaping the U.S. attitude towards Russian participation in post-Cold War international security problems. Russia's decision that securing its own vital interests had to take precedence over cooperation with the West, and the specter of ultra-nationalists rising to power in Moscow, made it clear that the West was incorrect in its assessment that Russia was too preoccupied by domestic problems to be interested in international affairs.

While always acknowledging that Russia was a major power, the U.S. and the rest of the West often tended to address international security problems without fully taking stock--or advantage--of Moscow's interest in such matters. The situation began to change in early 1994, when Russia inserted itself into the situation in Bosnia.

Consequently, Washington has started to consult more with Moscow on a variety of problems. In the spring of 1994, the U.S. welcomed Russia as a fifth member of the Quadripartite Contact Group addressing the Bosnia problem. Similarly, it consulted with Russia on the North Korea nuclear problem, and worked in the U.N. Security Council to acknowledge Russia's peacekeeping role in Georgia after Russia showed a readiness to conform to international norms.

The U.S. approach towards security cooperation with Russia is best represented by the Partnership for Peace program, which envisions broader European cooperation on security matters, while at the same time hedging against the appearance of a new threat to European security. The U.S. encourages Russia's contribution to international security, but at the same time recognizes that Russia is not yet ensconced in the democratic and market traditions, and a Russia turned hostile or unstable would present a major challenge for European security. Nevertheless, security cooperation between Russia and the West will continue to expand as political and economic reforms take root in Russia and other areas of the former Soviet empire. At least six factors will affect future cooperation between the states of the former Soviet Union and the West on security matters:

Security cooperation within the CIS. There is a growing acceptance in most of the non-Russian states that their security depends on cooperation--even alliance--with Moscow. This has led to a number of bilateral military cooperation treaties between Russia and the other successor states. Russian security cooperation with its neighbors, as a rule, will come with a stipulation that those receiving Moscow's assistance or guarantees will not allow other major military powers to station troops on their territory without approval from Moscow. Consequently, non-Russian states of the region--with the possible exception of Ukraine--will tend to shy away from forms of cooperation with the West that might meet with Russian disapproval.

Ukraine's position. Ukraine has cooperated with the U.S. and with Russia on some nuclear issues, especially the U.S.-Russian-Ukrainian trilateral agreement facilitating Ukraine's denuclearization and ratification of the Nuclear Non-Proliferation Treaty. On the other hand, Ukraine could seek a security position that is independent of Russia, in which case Kiev will want to cooperate as much as possible with the West on security matters. A Ukraine that is fully independent of Moscow on security matters and cooperative with the West will likely increase strains and decrease cooperation between Russia and the West in the near term.

Russia's vital interests. Cooperation with the West will also hinge on Russia's assessment of its vital interests. Moscow's new policy of defending its vital interests regardless of the West's attitude on a given problem may well lead to situations in which cooperation between Russia and the West is not possible--even to situations where confrontation is possible.

The West's intentions in the "near abroad." Another key factor is Moscow's perception of the intentions of other major powers towards the area of the "near abroad" and Russia itself. Like the West, Russia comes out of the Cold War with lingering doubts about the trustworthiness of its former opponent. This inclination to distrust the West was heightened in 1993 when NATO first seemed ready to expand to the borders of the former Soviet Union, and the Western powers talked of mediating conflicts within the Caucasus and Central Asia. President Yeltsin's strong objection to additional NATO eastward expansion plans reflects Russia's continued extreme sensitivity to proposals or policies that appear to be aimed at isolating Russia or decreasing Russia's influence in the regions along its borders.

Russia will continue to promote European security agreements that boost Russia's role while devaluing the role of NATO. Russia's decision to join the Partnership for Peace program should be viewed as a tactical step in Moscow's long-term plans for re-organizing and expanding Europe's security structures.

The West's willingness to treat Russia as a partner. Russia's leeriness of Western intentions will be also affected by the West's willingness to include Russia as an equal partner in resolving international problems of interest to Moscow. If Moscow's participation is sought early in future planning processes, the West can expect Russia to cooperate as long as the West is not pushing a position at odds with Russia's vital interests. However, if the West is seen to be excluding Russia from the planning process--as Russia believed was the case in Bosnia in 1993--then Moscow may obstruct Western activity, using its veto authority in the U.N. Security Council if necessary.

The power of ultra-nationalists. The ascent to power of ultra-nationalists in Russia would for all practical purposes end any possibility of cooperation between the West and Russia. Ukraine, on the other hand, would be even more eager to cooperate with the West under such circumstances, assuming it still believed that its security depended on its ability to remain free of Moscow's domination.

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The Possible Rise of Ultra-nationalism in Russia

The results of the December 1993 parliamentary election in Russia raised the specter of ultra-nationalists gaining political control in Moscow, followed by Russian soldiers marching south and west to re-establish the old Tsarist and Soviet empires. The statements of Vladimir Zhirinovsky were well known in the West before the elections, but were of little concern because he had no power base in government. But the vote in December--and the efforts by several states in Central Europe to use the ultra-nationalists' election success to add urgency to their pleas to gain entry into NATO--changed the West's perception of the ultra-nationalist threat, making it a major topic of discussion.

The possibility of an ultra-nationalist government in Russia does exist--and has for two to three years. The appeal of the ultra-nationalists can be traced to several factors: resentment over the loss of superpower status, alarm over the growth of crime, and dissatisfaction with the growing gap between the upper and lower economic classes in Russia. In the minds of the ultra-nationalists and their supporters, these problems can be traced either to Western schemes or to the actions of Russian leaders acting in the interests of the West.

However, ultra-nationalists are not on the verge of taking charge in Moscow. The vote for the ultra-nationalists in the December 1993 election was at least in part a protest against the dislocation caused by the erratic reform policies of Yeltsin and Gaidar. Moreover, while the election resulted in ultra-nationalist and traditionalist parties gaining close to 40 percent of the seats in the Duma, centrists--who support continued reform but at a slower pace--gained a sufficient number of seats to ensure that reform will be continued, albeit at a slower pace and under more direct control by the government.

Combined with the fact that advocates of a foreign policy based on Russia's vital interests who are not ultra-nationalists gained the upper hand in the executive branch, this indicates that, while Russia will be more independent of the West on security matters, it will not necessarily be reactionary or confrontational. There is, to be sure, support for a stronger Russia in international affairs, but not necessarily support for an aggressive foreign policy that risks confrontation with another major power.

The ultra-nationalists will, however, be able to influence both Russian policies in the "near abroad" and, indirectly, the activities of other Soviet successor states in the region. The ultra-nationalists are sure to create trouble wherever there are Russian populations living under the control of other ethnic groups--both inside and outside of Russia itself. This, in itself, will likely cause the Russian government to make national security decisions in an environment that is highly emotional and confrontational.

Moreover, the ultra-nationalist groups will try to portray U.S. international actions as inherently anti-Russian. Thus, relations between Washington and Moscow will be conducted in an environment in which ultra-nationalist forces seek to use U.S. actions to attack the legitimacy of the Russian regime in power.

The U.S. has sought to counter the specter of ultra-nationalism by supporting reform efforts designed to improve the material well-being of the average Russian and enhance the likelihood that Russia will play a positive role in international affairs. However, because of the prolonged deterioration of the Russian economy and the ability of ultra-nationalists to take political advantage of that deterioration, U.S. policy makers increasingly must consider how their actions toward Russian domestic matters and international issues of interest to Russia will be perceived by the average Russian--whether that perception seems reasonable or not.

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Ukrainian Stability

The fact that Ukraine's internal differences over economic and international policies corresponds to an east-west ethnic and geographic division within the country presents the possibility of domestic instability. Labor problems in eastern Ukraine and the political battles between Crimean officials and the government in Kiev may foreshadow increased turmoil. Of the two, the Crimea problem has the greatest potential for creating international repercussions.

The elected government in Crimea is now actively seeking to loosen its ties to Kiev. While it is unclear as to how much autonomy the Crimeans are willing to settle for, many politically active Crimeans demand nothing less than reunification with Russia, or independence. Crimean appeals for Russian support have resulted in the dispute becoming international in nature, with both Kiev and Moscow reacting to the provocations of local Crimean officials. Anti-Ukraine Crimeans--with the support of Russian ultra-nationalists and even many moderate Russian political elements--have engaged in activities that have threatened to bring Russia and Ukraine into military conflict. For example, throughout the spring of 1994, Russian and Ukrainian leaders exchanged a series of low-key threats based primarily on reports of troop movements around the Crimea. Many of these reports proved to be false provocations originating from local political factions.

The leaderships of both countries appear to be trying to prevent increased tension over the Crimea. However, political conflicts between Crimean Russians and Ukrainians may continue to occur quite often--resulting in bellicose charges and counter-charges, illegal seizures of property, and threatened troop deployments by Kiev and Moscow.

The situation is complicated by the fact that neither the Russian nor the Ukrainian government can afford politically to be seen as giving in to the other. Russia's leadership must be seen by its citizens to fully support the rights of ethnic Russians abroad, especially in the Crimea, which many Russians view as rightfully a part of their country. Ukraine's leadership, on the other hand, cannot afford to accept any agreements regarding the Crimea that convey the impression that Kiev is ceding part of its territory to Russia--the country that has historically dominated Ukraine and now looms as Kiev's most serious military threat. While the outcome of the Ukrainian parliamentary and presidential elections of 1994 may allow the political leaders of the two countries to discuss the problem in a spirit of good faith, domestic political pressures on both groups of leaders will remain.

The problem is further aggravated by the dispute over the Black Sea Fleet, which is supported by extensive facilities located on the Crimean peninsula. Russia is determined to maintain access to these facilities to support the part of the fleet that will go to Moscow. Specifically, Russia wants exclusive access to the facilities in Sevastopol, and is attempting to get Kiev to base its portion of the fleet in Odessa, which is not located on the peninsula. While Kiev has been willing to let Russia have the majority of the fleet's ships, and even recognizes Russia's need for an extensive support system, acceptance of Russia's exclusive access to support facilities in the Crimea is probably more of a concession than Kiev is willing to make, in light of its current efforts to assert control over the Crimea.

Because the leaders of Russia, Ukraine, and Belarus were interested in disbanding the central Soviet government as quickly as possible when they established the CIS in December 1991, they ignored many such contentious issues that would eventually have to be addressed. Agreements by the Commonwealth signers to recognize each other's borders may have been politically expedient, but the capricious manner in which some of these borders were established are now being challenged by ethnic groups that are disadvantaged by the results. The Crimea will no doubt remain a problem for a long time, primarily because the leaders of both Russia and Kiev lack the political confidence and public support to offer the concessions that are necessary to resolve the situation.

For its part, the international community has tended to view the Crimea problem as an internal Ukrainian issue, and Russia as an external troublemaker seeking to take land that belongs to another nation. This position has tended to limit the West's potential to contribute constructively to the resolution of the problem. The West's view of the situation suggests that it should support Kiev; yet it cannot afford to antagonize Russia on an issue of such importance. Consequently, the West has relegated itself to the sidelines.

Nevertheless, the international community may have to play a role in the Crimea problem if a peaceful solution is to be achieved. The possibility of Russia and Ukraine accepting international arbitration would be greater if the problem were redefined as an international issue resulting from the inadequately prepared and hastily signed CIS agreement. Such arbitration might be welcomed by the political leaders involved, although not by Russian ultra-nationalists, who would likely interpret it as Western encroachment into Moscow's historic sphere of influence.

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The Future of Economic Reforms

The status of economic reforms varies throughout the region, but in no state can the economy be considered strong. During 1992 and 1993, Yeltsin alternated between enacting radical economic reform measures advocated by the West and watering down those measures in order to limit public and political opposition. The result is that neither the market system envisioned by advocates of "shock therapy" nor the centrally managed reform approach advocated by economic moderates has materialized. The inflation rate in Russia reflects the results of the government's see-saw policies. During 1992 and 1993, the monthly rate was never lower than the July 1992 rate of 7.1 percent, and it reached a high of 31.1 percent two months later. (In January 1992, the rate hit 296 percent when the government lifted price controls, but this figure was an anomaly.)

The problem was aggravated by the fact that Russian legislatures during this time failed to create the legal basis for an investment-friendly environment. Moreover, there has been little progress in converting the vast military industrial complex to the production of consumer goods--a problem of major importance, since the most effective production elements of Russia are in the military industrial sector.

The Ukrainian economy is in even worse condition. Virtually no effort has been made by the Ukrainian government--or the governments of the other Soviet successor states, for that matter--to convert from a command to a market economy. Consequently, Ukraine has a small and unstable market sector and a huge, unproductive, and outdated state-controlled sector.

The dismal economic performances of the two largest states of the region have resulted in growing dissatisfaction with the political leadership of both countries, to the point that a further downturn in their economies could provoke major political unrest and a downfall of the leadership. Payment of wages routinely lags for months in Russia and Ukraine--in August 1994, Russia reported that wage arrears amounted to 3.5 trillion rubles and were increasing by 15 percent a month, resulting in numerous regional strikes and public protests. In mid-1994, Russian opposition groups called repeatedly for universal strikes in the transportation and oil industries in hopes that they would cause the downfall of the Yeltsin government.

As a result, some political leaders in the region have started to pay increased attention to the social consequences of their economic reform policies. Since at least the beginning of 1993, the Russian government has devoted increased attention to alleviation of economic hardship and prevention of social unrest. Unfortunately, these measures have not proven very fruitful.

Nevertheless, economic reform measures continue to be enacted. During 1994, the government made great and much-needed strides in controlling government deficits and inflation. In February 1994, the inflation rate dropped to 9.9 percent from 22 percent the month before, and remained in the single digits for several months.

Additionally, Prime Minister Viktor Chernomyrdin successfully resisted pressure from the uniformed military and military-industrial leaders to approve a 1994 military budget of almost 90 trillion rubles, rather than the 40 trillion cap favored by the government, which may reduce defense orders by 80 percent. Moreover, in July 1994, Chernomyrdin started the long-awaited bankruptcy program for unprofitable state-supported industries.

In an effort to minimize social fallout from such reforms, the government has increased its control over the reform process, in an effort to balance the dislocations caused by market reforms with compensatory social programs. It has also increased efforts to reduce economic crime--including that by growing organized crime organizations--the prevalence of which tends to undermine public support for reform.

Ukraine and the other successor states, on the other hand, have yet to take major measures to reform their economies. A major reason for this appears to be that these countries have historically been more dependent on Russia than vice versa. To some extent, most had grown accustomed to this dependence, and were genuinely unprepared for what came next when the carpet of Russian support was pulled out from under their feet. In the fall of 1994, the newly elected president (Kuchma) and parliament passed a series of reform measures, but it is too soon to assess their success.

This economic relationship between Russia and the rest of the CIS is becoming more evident to the political leadership of the region, and may well lead the non-Russian states, including Ukraine, to seek closer economic ties with Russia. As the dominant partner in any such economic relationship, Moscow will be able to choose and mold these economic ties on the basis of the advantages they offer to Russia.

The U.S. has been a strong supporter of economic reform in the region. Moreover, while the U.S. has advocated an aggressive approach to market reform, it recognizes that success requires that states themselves take the initiative. Washington's policy has been that U.S. support must follow the initiation of reform by individual states. Consequently, even in Russia, which has undertaken the greatest reform efforts to date, U.S. support has been provided in a series of stages corresponding to the reforms undertaken by Moscow.

U.S. bilateral economic support activities have been concentrated on the more rapidly reforming regions of Russia, in order to develop the fundamental building blocks of a market system and to provide models at the local level. Initial efforts involved primarily technical assistance programs. In FY 1994, Congress increased assistance to $2.5 billion.

In FY 1995, U.S. activities will shift to support for trade and investment. In order to lay the groundwork for this stage, Vice President Gore has met with Prime Minister Chernomyrdin in a series of meetings since 1993. The U.S. hopes that, as a result of these efforts, capital flowing from the U.S. private sector will play a larger role in the economic renewal of Russia.

At the same time, the U.S. is actively pressing the international business community and international financial institutions to assist Russia's efforts to move to a market economy. The urgency of such international support increased after the Russian parliamentary elections of December 1993, which reflected the growing disillusion of the Russian people with the reform efforts. It is primarily through international channels--particularly the International Monetary Fund (IMF)--that meaningful financial and long-term technical support can be provided to Russia and the other newly established states of the region.

The IMF has been designated by the U.S. and the other Western industrial nations as the main agent for steering Russia and the other Soviet successor states through the reform process. The IMF provides loans to states only after they agree to undertake macroeconomic policy changes and establish economic performance targets. The IMF turned its attention to the former Soviet Union in 1991, inviting the Soviet republics to enter into a "special association" with the IMF and World Bank shortly after the failed August 1991 coup attempt in Moscow. Russia became a member of the IMF in June 1992; it has the ninth-largest IMF quota (which determines countries' voting and borrowing rights), ranking behind only the G-7 countries and Saudi Arabia. As of May 1994, Russia's quota allows it to borrow approximately $4.1 billion annually--if it meets its IMF budgetary and macroeconomic reform targets, which so far have posed major problems.

In April 1993, the G-7 deputies announced a $43 billion aid package to Russia. Because of Russia's problems with meeting IMF performance targets, the G-7 countries also agreed to create a new loan facility within the IMF-- the Systemic Transformation Facility (STF)--which is intended to address criticisms that the rigorous conditionality of the IMF does not permit it to be sufficiently responsive to the needs of Russia and the other former Soviet republics. As of April 1994, Russia had received $3 billion in loans under the STF.

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Russia's Challenge on the CFE Flank Agreements

The CFE Treaty signed by members of NATO and the Warsaw Pact in 1990 called, among other things, for limits on the number of forces that could be deployed on the northern and southern flanks of the former Soviet Union. These limits are to be achieved by November 1995.

However, since 1992, Russia has sought to have the flank limits revised upward to account for its assessments of new security threats to Russia in the wake of the Soviet Union's demise. Russia believes that increased turmoil in regions like the Transcaucasus and the possibility of a "Muslim threat" from the south requires it to have more forces deployed on its southern flank. On September 5, 1994, Minister of Defense Pavel Grachev emphasized this point by stating that the limits were against Russia's "vital interests."

Currently, agreements call for the Russian military to have no more than 580 armored personal carriers, 700 tanks, and 1,280 artillery pieces in its northern and southern flanks by the deadline in 1995. The agreement does, however, allow the Russians to transfer unlimited numbers of armored personnel carriers to internal security forces (as opposed to the Russian army) in the flank regions, as long as "such organizations refrain from the acquisition of combat capabilities in excess of those necessary for meeting internal security requirements." Moreover, the treaty offers Russia the possibility of addressing its flank concerns without breaking the limits through storage rules, temporary deployments, non-limited equipment, and other means.

Since 1992, a Russian military build up in the southern flank region has occurred, with the transfer of troops and weapons previously stationed in the Baltic states and East Germany. In 1994, Russian deployments in the flank regions exceeded the November 1995 limits by approximately 2,000 armored personnel carriers, 400 tanks, and 500 artillery pieces.

The flank limits were negotiated at the behest of Turkey and the nordic NATO countries out of concern that force reductions in Central Europe would be redeployed on the flanks and create an increased threat to those countries. They retain these concerns, and oppose Russia's request to revise the limits upward. There is also concern that if the CFE flank limits are revised, further revisions are bound to follow until the treaty is of little or no value. Additionally, some suspect that Russia is really seeking revisions in the flank agreement in order to enhance its military capability to impose its will in the "near abroad."

Although some Russian officials have stated that they intend to be in full compliance with the flank region limits by the deadline of November 1995, pressure to revise the limits will probably exist throughout the year. Moreover, the other signatories to the CFE treaty will have to decide what actions to take, if any, should Russia fail to comply with the limits by the deadline.


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