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Western and Eastern Vectors in Russia’s Modernization Process
By Dr. Tomislava Penkova, Research Fellow at the Milan based Institute for International Political Studies (ISPI) and lecturer at the Catholic University of Milan
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Introduction Modernization is not a new but rather a recurrent theme in Russia’s domestic and foreign policy. It has always been linked to two factors: Russia’s material capacities (economic resources, broadly speaking) and its self-perception of being a great power (an issue of identity and status in international relations). This time again these two factors seem intertwined. The country’s unprecedented economic upturn and growing international role stimulated a new modernization phase. It is a comprehensive process that will take some years to be fully accomplished. Its context is largely shaped by the 1990s’ economic structures and setbacks. Today, an adequate infrastructure and resources are required to convert the economy into a modern one and to raise standards of living. As Prime Minister Putin put it, a proper environment should be created for attracting long-term ‘smart’ investment and innovative technology to ensure the competitiveness of national human resource potential. Although at the current stage modernization is a state-driven process, an important role should be envisioned in the future for the private sector as well. A fundamental aspect of Russia’s industrial upgrade is not only the purchase/transfer of foreign new technologies, but also investment in patents/licenses in order to maintain and develop the acquired technological basis. Therefore the country should increase domestic investments along with the stabilization of foreign ones, and strive to make economy competitive. The current modernization agenda shares great similarities with the previous modernization efforts in terms of Russia’s inherent connection with Europe (seen in general as the West). The latter has always been a driving factor in Russia’s attempts to industrialize (see the Partnership for Modernization between Brussels and Moscow) and in setting the terms of its place in the European continent. Modernization and foreign policy A prerequisite for a secure business climate and stable foreign investments in Russia is the absence of major tensions between Russia and the West. Modernization and competitiveness are two interdependent factors closely linked to foreign policy. Some believe that modernization is an exclusively domestic process but this position implies an isolationist foreign policy. The latter will prevent Russia from creating the most favorable conditions for economic and technological synergies with the West. Russia is not self-sufficient in its modernization path. This ‘benign dependency’ underlines the crucial role foreign policy plays in the process of innovative development. Modernization is an attempt to end the political loneliness in which the country found itself in the aftermath of the collapse of the USSR. It seeks to re-gain the previous international role and prestige corresponding to Russia’s history and national pride. Modernization is also about Russia being recognized and integrated on a par with the Western world and its standards. In this sense identity and the need to strengthen the resource basis (new technologies, competitive industry, improved human potential) re-emerge again in the history of Russia’s industrialization. Finally, modernization is about selective imitation and cautious adaptation and convergence towards Western models but on Russia’s terms and at its own speed. It is a policy of common interests with the West, of cooperation and rapprochement and builds up on the reset with the US, NATO and the European Union (EU). Some even argue that although the EU should take an active part in the modernization of Russia, the lead role ought to be played by the US. Notwithstanding Washington’s active part in projects such as Skolkovo, bilateral relations are much broader and complex than Russia’s modernization, which so far is not a priority for Washington. The connection between modernization and Russo-Western relations is twofold. On the one hand, modernization is possible because of the reset with the West (it is a consequence). Normalization
with the West was indeed a pre-condition for modernization. On the other hand, modernization may further strengthen Russo-Western relations (here it is a cause). Russia’s recognition of the need to adapt to innovative advancement and to have a stable foreign policy significantly facilitates its request for an upgrade with regard to the West. In his article “Go Russia!” President Medvedev stressed that “harmonizing our relations with Western democracies is not a question of taste, personal preferences or the prerogatives of given political groups. Our current domestic financial and technological capabilities are not sufficient for a qualitative improvement in the quality of life. We need money and technology from Europe, America and Asia”. The eastern vector Starting from Medvedev’s statement, is it doable to develop an eastern vector of Russia’s modernization (meaning China and India) along with the western one? A policy such as the EURussia Partnership for Modernization has not been launched with any other international actor. Modernization is about rendering Russian economy competitive through injecting high technologies, investing in the country’s human potential and attracting foreign capital – a task that only the West can fulfil. The eastern vector, instead, may be associated with new aspects of the modernization course stemming from its (successful) outcome; it may be a second phase of Russia’s advancement, but not an alternative source of modernization. This direction may constitute a market for Russia’s goods, increased trade relations and interdependence, which will contribute to strengthening Russia’s influence in regional affairs and raising its status as a leading economic power. Such considerations entail following a European/Western course to implement the modernization strategy, and a more pragmatic Euro-Pacific one to associate Russia with the world’s leading economic powers. The Asian direction of Russia’s foreign policy is a vector that is closely related to the country’s aspiration to be an economic power. Premier Putin has affirmed that by 2020 Russia will not only be among the wealthiest and most powerful states, but will also be one of the most progressive and dynamic ones. He also warned against de-industrializing the country by moving production units elsewhere (the entire technological and industrial production chain should remain on Russian territory, from research and design to manufacturing). Compared to the Western trend of delocalization to Asia and boosting local markets’ potential, Russia is not yet able to explore other markets and to shape their growth (it is not a modernization-maker). It rather views those markets as subjects of possible strong trade relations. While courting the West, Russia is aware that Europe is increasingly losing its key role in global politics due to the rapid shift of gravity towards the Asia-Pacific region. Moscow acknowledges this weakness by supporting the leading position of BRICS and its gradual transformation from an economic power into a politically influential center. In Russia’s view, the BRICS membership is an evidence of its identification as a leading economy together with the other economic giants in the dynamic Asian region; that status enables the Kremlin to claim a greater political influence on the international arena. Its participation in the given grouping indicates that potentially part of its self-constructed identity (of an important economic and political player) lies in Asia, not so much in the West, and that the eastern and western vectors could be reconciled, not necessarily opposed. President Medvedev has stressed that Cooperation for Modernization should be the key theme of Russia’s 2012 presidency of the APEC forum, which suggests an intention to put this issue high on the regional agenda. However, such rhetoric is not always substantiated in practice. Russia is more comfortable with its relations with the EU than, for instance, with China, with which bilateral relations are often fraught with suspicion and efforts to balance each other’s influence in Central Asia. Moreover, at the same time as the Declaration of the BRICS summit in April 2011 upheld Moscow’s WTO bid, it also stated that “the governing structure of the international financial institutions should reflect the changes in the world economy, increasing the voice and representation of emerging economies and developing countries”. This means that Russia grants
special attention to its BRICS status, while pursuing integration in the Western economic institutions. The link between BRICS and modernization is not new. BRICS is considered one of the ‘nonWestern alliances’, which Russia supported during mid-2000 when it experienced a commoditydriven economic boom and hence considerable financial independence from the West. On the one hand, Russia’s membership in BRICS – a grouping that is symbol of economic growth – proves the country’s involvement in a model of innovative development (the BRICS is even seen as a pole of the emerging multipolar world). On the other hand, many agree that the BRICS ought to develop major joint economic projects, primarily in the field of innovation, if it is to become an engine of global economy with a strong say in geopolitics. So far, such projects are not only missing but the perspective of implementing them is hampered by BRICS countries’ technological dependence on developed countries and incapacity to create an own know-how. Consequently, in this case we are facing an image-driven identity of Russia, i.e. of a leading economy together with China and India that corresponds to its desired international stance, but does not provide any concrete resources vital to its modernization. The role of China and India Apart from BRICS, can China and India contribute to Russia’s modernization and how will that process shape Russo-Chinese and Russo-Indian relations? Both China and India are focused on hightech production and scientific upgrade. They are among the fastest-growing world economies and also the fastest-expanding oil and gas markets. It is expected that in the next decade more than half of the demand for oil and gas resources will come from them. They both promote regional integration based not so much on political or ideological principles but on financial and economic factors as well as on mutually beneficial investment projects – a type of integration that suits Russia’s interests. Primary goals of the Russo-Chinese strategic partnership are to: • Increase the economic-commercial interaction; • Attract Chinese banks’ credit resources into bilateral trade and investment projects; • Strengthen short- and long-term energy cooperation (energy interdependence is deepening due to Chinese growing consumptions, which constitute the main basis for Beijing of bilateral relations. It is worth noting that Russia is not a primary energy supplier for China); • Retain Russia’s positions in the field of nuclear energy development in China; • Develop further large-scale joint projects on military equipment; • Build up the strategic partnership in the field of information and telecommunication technologies (ensuring access for Russian companies to the Chinese telecommunication market); • Promote the concept of co-development of the border regions of Russia and China. These spheres of relationship cannot lead to a technological breakthrough in Russia, except for guaranteeing inflow of Chinese capitals. Beijing too is reducing its technological backwardness from the rest of developed countries; it tries to modernize its key industrial sectors as well as to improve the military equipment basis, infrastructure, and get closer to world scientific standards. Its foreign policy aims to ensure the proper conditions for its stable economic development. China’s regional interests do not match Russia’s modernization agenda priorities. In other words, there is a very low complementarity between the two economies and prospects to launch a natural cooperation for the purpose of innovative advancement or completion of Russia’s industrialization are rather feeble. In order to progress in its modernization drive Moscow should balance its relations with the West and with China. Siding too much with China may be perceived
as an anti-Western drift, affecting negatively its innovative growth. It is unlikely that modernization will transform radically bilateral relations, which will continue to be limited to the sectors listed above. Partnership with China will remain important in as much as it can provide Russia with capital and a market for certain products, and can contribute to the development of its Far Eastern regions. The latter require a long-term regional strategy that is currently absent. India too is obsessed with technological progress but unlike Beijing, the old cooperation between Moscow and New Delhi based on oil/weapons in exchange for tea and coffee has now apparently evolved into a modernization alliance. The documents signed during President Medvedev’s December 2010 visit to India are a telling example of the course of Russo-Indian relations. They included: • A new comprehensive long-term cooperation program in the fields of science, technology and innovation; • A joint working document on establishing a Russian-Indian technological center; • A Memorandum of Understanding on expanding scientific and technological cooperation over the peaceful uses of nuclear energy; • A Memorandum of cooperation on information technology and cooperation in the pharmaceuticals and biotechnology sector; • A contract for a preliminary design for multirole fighter planes; • Cooperation on the joint use of the Russian satellite navigation system GLONASS. Unlike China, over 50 percent of all bilateral trade between Russia and India involves innovation and technological products as well as military-technical cooperation anchored in long-term programs envisioning Russian arms exports. In the period 2006-2010 Russia exported around 67 percent of its arms to Asia with India being its largest recipient. Although India does not have the potential to shape Russia’s modernization, it is symptomatic that bilateral relations involve some of the strategic directions of modernization proclaimed by the Kremlin, i.e. nuclear, space and medical technologies. As a result, the Russo-Indian partnership may greatly benefit from Russia’s successful economic progress. It will represent a technological alliance between two modernization-taker countries leading to a new phase of strengthened cooperation for innovation. Conclusion Russia’s modernization will be a long, comprehensive, and necessary process. It is still too early to evaluate how successful and far-reaching it will be. Its rationale is to prevent the loss of the country’s power status in international affairs, so hard-earned in recent years, and to conform the country’s technological standards to those of the West – a goal Russia shares together with China and India. This is why these two countries are not a viable primary source of technological progress. Their role is a secondary one, which will eventually complement and strengthen the Western orientation. We should note, however, that an exclusively ‘Western version’ of modernization could be harmful to Russia. Simply borrowing already tested technologies and models of development may lead to the loss of the intellectual potential of the country and its identity resources. Russia’s modernization should thus combine its national identity, as it is geographically and politically determined, with its resources and economic potential for advancement.
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