Over the past month, as U.S. politicians busily undermined the country’s economy and the global financial system in an ideological fight over the debt ceiling, Russia quietly awaited its fate. According to a survey by the Public Opinion Fund, some 70 percent of Russians believe that any new global economic crisis would hurt Russia. The experience of the Great Recession 2008 has sunk in: Russia suffered more in the Great Recession than any other large economy.
True, other nations had no way of influencing decision making in Washington, and they are now also being dragged into the current stock market sell-off. But over the long term and behind the scenes, most U.S. allies and trading partners have considerable leverage. For example, China owns $1.2 trillion in U.S. government bonds. Beijing avoids open confrontation and prefers to act quietly, but as the United States’ largest creditor, it has a way of making its views heard. European allies, despite being often frustrated by U.S. unilateralism in recent years, also have some influence on the U.S. government. India and Brazil, too, are acquiring political weight in proportion to their recent economic growth.
Foreign influence in Washington will only increase in coming years. The unseemly fight in Washington over raising the debt ceiling and the near default has shown that the world’s only remaining superpower is in a deep crisis. The United States has lost its national purpose, and its political elites are either divided along ideological lines or in the pocket of the highest bidding lobbyists — or both. This climate is tailor-made for quiet, behind-the-scenes meddling in U.S. domestic affairs from foreign powers that might try to skew U.S. national policy to their benefit.
But not Russia. It, too, lacks a national purpose. Earlier this year, when the Middle East was thrown into turmoil, Russia had an opportunity to become a responsible oil supplier and a true member of the Group of Eight. It should have taken a lead in calming world markets. But the opportunity was missed. Russia remains the troubled teenager of global politics. It is more likely to pointlessly criticize and provoke the United States than work within the framework of the international community.
Yet, while it claims to dislike the existing economic system, it relies on global markets to sell its commodities and buy imports. Russia relies on capital markets to borrow funds and uses the free movement of capital to allow oligarchs and bureaucrats to hide their wealth in foreign banks and buy property abroad.
In late July, the U.S. government took time out of the debt debate to approve visa restrictions on dozens of Russian officials connected to the death of lawyer Sergei Magnitsky. Russia responded by threatening to impose sanctions on Americans.
It is a largely symbolic gesture, but a dangerous one — primarily for Russian elites. So far, U.S. President Barack Obama has shown himself lacking one political skill: allocating blame and creating “enemies of the people.” But the Republicans are far less scrupulous in these areas, and Obama’s successor will likely be much nastier. On the international scene, Vladimir Putin’s Russia, which is both economically inconsequential and unreliable, is a perfect candidate to replace the depleted al-Qaida as the United States’ top enemy. With the U.S. economy sliding into a new recession, a suitable foreign enemy will be an economic and political necessity.
By raising the ante in the fight over the Magnitsky list, Russia has left itself open for more retaliation, possibly also involving Washington’s European allies. This is something that the Russia’s elite certainly won’t like.
Alexei Bayer, a native Muscovite, is a New York-based economist.
