The failure of Russia's experiment with sovereign globalization encourages pessimism about Russia’s prospects but optimism about globalization.
- Two major goals have driven Vladimir Putin’s presidency: a controlling state and a prosperous economy. His central dilemma has been to manage the tension between those objectives. He has had to consider how Russia could reap prosperity through globalization while maintaining domestic control and great-power autonomy.
- To achieve that end, Russia evolved a strategy of ‘sovereign globalization’. Initially, this involved managing the terms of economic engagement to limit external influence by reducing sovereign debt, circumscribing foreign ownership rights and maximizing the balance of benefits over obligations in global economic governance.
- As Russia’s confidence grew, it sought to exert broader political influence by economic means, using its position as the major market of the former Soviet Union and dominant energy supplier to Europe.
- A series of adverse developments undermined that strategy: the decline of energy-export-led growth, global energy market developments and EU responses to Russian policy. Those changes led to a sharp and unfavourable shift in the balance between opportunity and risk in Russia’s engagement with the global economy.
- The unravelling of Russia’s strategy propelled events in Ukraine and triggered the present crisis in Russia–West relations. As a consequence, Russia’s distorted political economy is now under strain; its regional influence is waning; and Western sanctions are depriving it of goods, capital and technology.
- Russia’s experiment with ‘sovereign globalization’ was a highly ambitious attempt to harness interdependence to the pursuit of power-political ends. For the first time, Russia used economic relations – its traditional weakness – as a source of strength. The failure of that strategy encourages pessimism about Russia’s prospects but optimism about globalization.