The news headlines in recent weeks have been dominated by rising diplomatic tensions between Russia and the West. The White House has stuck with its plan to locate missile defense bases in Eastern Europe. Putin first offered Azerbaijan, then at the recent "lobster summit" between Presidents Putin and Bush in Kennebunkport, southern Russia as alternative sites for the American missile defense system (assuming that these bases are intended to counter Iranian and not Russian missiles). However, the White House did not accept Putin's offer, and the Kremlin raised the possibility of re-targeting nuclear missiles at Europe. Finally, last week Putin announced his decision to suspend Russia's participation in the Conventional Forces in Europe treaty (CFE).
The response from some Western media outlets has been measured, while from others it has been predictably hysterical. This week Newsweek International published an article with the sensational title "The Tyrant's Turn", and asked if "Russian President Vladimir Putin was supposed to be a pro-American reformer, what went wrong?" In contrast, the BBC has been more subdued in its reporting in the game of tit for tat between America and Russia. In the article "Cool Not Cold - Russia's New Foreign Policy" the BBC quoted one analyst saying that this is just another "diplomatic warning shot from Russia", which "under President Vladimir Putin started to harden up its foreign and domestic policy, but this is something they [Western countries] will have to learn to live with for the foreseeable future."
Before discussing whether this will lead to a new Cold War, someone has to ask the question: does Russia need Europe, and does Europe need Russia? And what do experienced Western leaders really believe about the New Russia?
"Talk of a new Cold War, though, is wrong" -- so says Sir Rodric Braithwaite, who served as Great Britain's ambassador to Moscow from 1988 to 1992. Sir Braithwaite is the author of a new book on the ill-fated Soviet invasion of Afghanistan. "We are going through a period of bad relations, not the threat of war. Russia now has huge interests in the West and wants to invest more. That is, after all, what we told it to do. And it needs our money as much as we need its oil and gas. There is a certain hysteria in the West about Russia." Sir Braithwaite is absolutely right.
As for the Newsweek piece, calling Putin a tyrant is nonsense. Whether Westerners with increasingly partisan and polarized electorates can believe it or not, the Russian President's sky high approval ratings (currently hovering around 80%) are authentic. Such strong support is understandable--according to The Economist, which has also been harshly critical of the Putin Administration, Russian GDP has increased nearly threefold since 2002 and has grown at between 6% and 7% each year since 2003. Inflation fell to under 10% last year, and Russia's trade balance has increased threefold in four years.
What Western governments don't understand is that personal attacks against Mr. Putin or his successor will not win them more cooperation from Russia. The Russian people elect their president and parliament, and eventually these elected officials make decisions on the behalf of the population. Putin's policies have not only been successful in reviving the Russian economy, they have made him popular with the Russian people for restoring Russia's standing in the world. The International Olympic Committee's recent decision to award the 2014 Winter Olympics to Sochi, after Putin personally addressed the delegates in English and French, was a proud moment for the whole nation. For millions of Russians, many of whom stayed up until 4 a.m. to hear the announcement live from Guatemala City, the Olympic victory represented the world's recognition that Russia is back and open for business.
As for Russia's so-called "backsliding on democracy", most Russians remain very skeptical about these claims, with many dismissing it as propaganda funded by exiled oligarchs or as a legacy of the Cold War. People in Russia don't know that the former chessmaster and current Wall Street Journal columnist Garry Kasparov pretends to be a Russian opposition leader abroad. They don't see Mikhail Khodorkovksky as a political prisoner, but as a white collar criminal whose company engaged in fraud and tax evasion on a massive scale. Personally, I have yet to find a single common Russian who would not like to see Boris Berezovsky back in Moscow facing justice for the nearly 500 bombings and contract killings that happened at AvtoVaz related to his ownership of that company. Now, even Brazil wants to put Berezovsky on trial for money laundering, but Great Britain continues to harbor this fugitive along with an indicted fundraiser for the Chechen terrorists, Ahkmed Zakayev.
Russia needs Europe for capital. After exporting little more than oil and weapons during the Nineties, in the last seven years Russia has created booming retail, manufacturing and construction industries with a huge influx of foreign investment. In fact, direct foreign investment for the first half of 2007 in inflation-adjusted dollars exceeded the entire total Russia took in during the Yeltsin years. The little Russian town of Bor hundreds of miles from Moscow, according to the Wall Street Journal, is now producing a growing share of windows for the European cars assembled on Russian soil. The town received a $100 million investment from Belgian investors. By 2009, both Toyota and Ford will be producing cars for export in Russia. IKEA has successfully opened several stores, not just in Moscow and St. Petersburg but also in the regional cities of Nizhny Novgorod and Kazan. On the boutique side of the retail business, Ralph Lauren personally attended the opening of the largest RL store in the world last week in Moscow.
In construction, a sector where Americans and Europeans have been slow to invest in Russia, Chinese and Arab investors are quickly achieving results. Chinese construction companies are building the tallest skyscrapers in Europe in Moscow as well as a billion dollar tunnel in St. Petersburg. The Dubai-based firm Limitless LLC has started the largest real estate development in Russia's history -- 44,000 acres (18,000 hectares) which will include 150,000 residential and commercial units and will cost $11 billion. Starbucks is having a hard time entering Russia, after its place on the market was taken by Coffee House -- a franchise created by a young Russian who thought the coffee shop idea was not a bad one after his student exchange visit to the United States. However, in the U.S., the Pacific Northwest is still leading the way in American trade with Russia, led by Boeing's recent $3 billion dollar order from Aeroflot.
Europe needs and will need Russian energy (whether it's oil, gas, coal or electricity) for the foreseeable future. Political pundits speculating about substituting oil and gas from the Middle East for Russian supplies are hoping that politics will trump economic reality. Liquefied natural gas (LNG) tanker deliveries from Qatar remain expensive compared to gas delivered through pipelines. And while Iran is second only to Russia in proven natural gas reserves, last winter the Islamic Republic could not reliably deliver gas to neighboring Turkey, and Ahmadenijad's government recently had to institute gasoline rationing in Teheran.
Russians want to make money, prosper and pursue happiness -- to live a life that even their parents growing up in the Soviet Union could never have imagined in their wildest dreams. Until 1861, the year America began a bloody civil war over slavery, 95% of the Russian population lived as slaves under the Tsars. The abolition of serfdom did not do much to improve the life of Russia's peasants, and this led to the revolution of 1917. During the 20th century, Russians lived through the doomed experiment of Communism, then the euphoria of democracy in the Nineties, which quickly turned to disillusionment as Russia suffered the worst economic collapse any country has experienced since the Great Depression.
Compared to all of the above, which would be Russia's entire history, Putin is considered by most Russians to be one of the most successful and liberal leaders in Russian history. Although the West may be disappointed that Russia is not going to become a bigger version of Sweden or Germany, this is a historic fact that Western statesmen should accept. Russians will be friends with anyone who wants to do business with them and who won't threaten their national security. Russian businessmen who own properties in London and Prague are not the people trying to blow up Jeeps at Glasgow airport. If the West needs a real enemy, it doesn't have to look very far; the enemy has already showed up in New York and London. If the West needs to improve someone else's democratic ideals -- there is still plenty of work left to be done in China, Venezuela, Africa and the Arab world.
Paul Reynolds of the BBC wrote, "We are in a new situation for which the Cold War is not a good example. That was a multi-generational, philosophical, epoch-making struggle in which one side won and the other lost. This is a situation in which Russia is not an enemy but cannot be described as a close friend. It is a competitor, playing by some international rules and by some it has made up itself."
Russia's exiled oligarchs and their "little helpers" do much damage to Russian relations with the West, while presenting a distorted picture of Russia in the global news media. After all, it's not Russian, but Chinese government, which persecutes Christians and monitors the Internet. However, when it comes to Russia, the editorial page no longer seems to be talking about the same country as the business page, or the nation that Westerners have discovered while visiting Russia or meeting Russian people in the last few years. There is also some evidence that this profound shift in attitudes is taking place among Western leaders as well. The best example would be the remarks made by President Bush at his joint press-conference with President Putin in Kennebunkport, Maine:
"Russia has made some amazing progress in a very quick period of time. One of the first conversations I had with Vladimir Putin was about Soviet-era debt. This is a country with no debt. It's got solid reserves. It's a significant international player. It's got a growing middle class. For those old Russian hands who remember what it was like, there's an amazing transformation taking place. Is it perfect from the eyes of Americans? Not necessarily. Is the change real? Absolutely. And it's in our interests -- in the U.S. interest to have good, solid relations with Russia."