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by Keith C. Smith


President Boris Yeltsin’s imperial views on the “near abroad,” and President Vladimir Putin’s regarding Russia’s alleged “sphere of influence” has left Russia considerably weaker than it would have been otherwise, and the world much more endangered.

Many Americans and Europeans appear puzzled as to why, thirty years after the collapse of the Soviet Union, we are back in a Cold War relationship with Moscow. Russia’s actions have been enormously costly for all sides as defense spending has been ramped up, war games of unprecedented size are conducted, and NATO forces are again arrayed along Russia’s border. Trade and investment with the U.S. and EU members have decreased greatly, and cultural and academic ties have sharply diminished. Many of us were optimistic about the future in 1990, although few believed that it was “the end of history.”

There are many theories as to what happened. A mix of Russian domestic politics, traditional paranoia and inferiority certainly play a role. I am not a Russian expert. However, I spent ten years working in Warsaw Pact countries and former Soviet republics, first as political officer and later DCM in Hungary, then as chargé in Estonia, and finally as ambassador in Lithuania. After my retirement from the foreign service, I spent 16 years concentrating on issues in East Central Europe with Washington think tanks and as consultant to international energy firms.

A Messy Russian Troop Withdrawal and Continuing Distrust.

In late July 1994, Russia announced that all its military officers stationed in the Baltic States would return home. On a beautiful day a month later, I made a point of walking around Tallinn asking people how they felt by having the last Russian soldiers, who had occupied their country for almost 55 years, leave Estonian territory. I had assumed that everyone, except the one-million plus Russian civilians, would be overjoyed. But no. Each Estonian responded gloomily “the Russians will be back.”

Constant Russian occupation and repression had left Estonians, Latvians and Lithuanians with a deep distrust of Moscow’s intentions, and of Europe’s unwillingness or inability to guarantee their countries’ independence. After recent Russian actions in Ukraine, this distrust of the Kremlin’s intentions has spread more widely in Europe and America.

Before the 1994 Russian troop withdrawal, in my role as American chargé d’affaires I engaged in sporadic negotiations with the Russian Embassy in Tallinn, trying to enlist its support for a USAID program that would pay each Russian military officer $25,000 to buy a home when they returned to their bases in Russia. At least four times, I made an appointment to meet with their ambassador. On each occasion, he sent a junior diplomat in his stead, a person who had no authority, nor any knowledge of Moscow’s intentions regarding troop withdrawal. Russian officers then directly petitioned the American Embassy to exert pressure on their government to provide promised housing for their naval officers, who were not covered by the U.S. housing money.

The U.S. expectation was that the financial incentive of the $25 million program would provide political cover for a withdrawal decision by the Yeltsin government. In the end, the Kremlin only agreed on a withdrawal after Germany joined the U.S. in pressuring a reluctant Moscow to support the program. Nevertheless, thousands of Russian officers took the U.S. money and then illegally stayed or returned to Estonia and Latvia. They, and their descendants, are still there. It took several years after the collapse of the Soviet Union for Moscow to agree to border delimitations with Estonia and Latvia.

During the unusually cold and snowy winter of 1992 I visited Riga and Tallinn to help establish a U.S. assistance program in the Baltic states. I was surprised to find that Russia had stopped shipments of natural gas and of heating fuel to the region, attempting to force the new Baltic governments to accept the continued stationing of its soldiers in Estonia and Latvia. Even in the best hotels in the two capitals, I had to sleep with my clothes on to stay warm. I was surprised that “moderate” leaders like Boris Yeltsin could not willingly accept the full sovereignty of the Baltic states and Ukraine, or of the new Central Asian republics. Russia’s military attaché in Riga told me that his country’s soldiers “should never abandon the Baltic states as that would leave Russia exposed to its enemies.” In 1992, it was difficult for me to identify an enemy of Russia in that part of the world.

Russian Suspicion After Soviet Collapse

The collapse of the Soviet Union and the breakup of the Warsaw Pact had been greeted with relief and pleasure in the West, and the changes ushered in a period of positive feeling in the U.S. and Western Europe toward Russia and Russians. Nevertheless, there is a widespread perception among Russians – fueled by Putin’s narrative of Western hostility – that the U.S. and the EU were engaged in a major effort after 1990 to permanently weaken Russia. Actually, U.S. and EU financial and technical assistance to a struggling Russia in the 1990s was substantial, even if some programs were more relevant for market economies. To blame the West for the chaos after the collapse of the Soviet Union is wrong headed, as if Russians were only passively involved in their own development.

The U.S. and the EU supported Russian membership in the WTO (World Trade Organization), in the EBRD (European Bank for Reconstruction and Development), and in the G-8 and G-20 in the decade after the fall of the Soviet Union. Several arms control agreements were reached with the U.S., allowing for major reductions in nuclear and conventional weapons, thereby freeing up funding on both sides for development and social welfare projects.

Finding the correct formula to quell the chaos of the early 1990s was a challenge for all sides, but blaming the West became an excuse not to implement needed domestic economic or democratic reforms. It is apparent that Putin and his people have still not found the courage to adopt reforms needed for rapid modernization, nor have they taken the path that would lead to closing the economic gap with Western Europe.

Natural resource exports were quick and easy sources of state income. They also provided tens of billions in “non-transparent” hard currency revenue for “the friends” of the Kremlin. Under Putin, the less efficient state sector of the economy has doubled as a percentage of GDP, while government-supported kleptocracy only increased during Putin’s almost twenty years in power. The foreign beneficiaries are banks in Cyprus, Panama, Estonia, and estate agents in Britain and the U.S.

NATO Enlargement and Near Abroad.

Too many people in Europe, however, continue to believe that Russia’s wars in Georgia and Ukraine were aberrations, and that accepting former Warsaw Pact and former Soviet Republics into NATO was the cause and not the result of the Kremlin’s sterile relationship with East Central Europe. My ten years working in Warsaw Pact and former Soviet republics convinced me otherwise. Russia’s leadership missed an historic opportunity to develop “normal” relations with their closest neighbors. Deep inside the heads of too many influential Russians lingers the belief that the country’s security and international prestige rests on control of what Yeltsin termed “the near abroad” and what Putin calls Russia’s “sphere of influence.”

Putin appears to believe that Russia cannot remain safe unless it has the upper hand in dealing with his country’s western neighbors. He is playing to a popular perception among his countrymen. The wars in Georgia and the seizing of Crimea were wildly popular among Russians and approved by 80-90% of the public. Following Putin’s take-over of Crimea, he began telling the world that Russia wanted to acquire a much larger slice of Ukrainian territory; one called Novarussia. Only the rapid and effective defense by Ukrainian military forces stopped greater Russian seizure of Ukrainian territory. It is worth remembering that Russia also has active territory disputes with Japan and Moldova. Russia is the only WWII ally that emerged from the war with more territory. The other allies gave up most of their colonies. This Russian fixation on territory is extremely damaging for itself and for the rest of the world.

Source: Wikipedia

It is worth remembering that the only two European countries attacked by Russia in the post-Soviet period had earlier been denied NATO membership during the Alliance’s April 2008 Summit Meeting in Bucharest. Does anyone really believe that Russia would have initiated war with, and seized territory from Georgia and Ukraine had these countries been NATO members? I think not. The belief that NATO enlargement has endangered the peace in Europe is nonsense. NATO membership enlargement was done under pressure from those nations still suspicious of Russian intentions, not at the initiative of the U.S. or the other founding Alliance members.

We should also keep in mind that as NATO took in more post-Cold War members, total Western troop presence and defense budgets were cut substantially, along with the dismantling of much of NATO’s infrastructure. At the time the Soviet Union collapsed, the number of U.S. troops in Europe was approximately 350,000. Fifteen years after that, only 30,000 American soldiers, sailors or airmen remained in Europe. Germany’s uniformed military went from almost half a million in 1990 to 180,000 today. How do those numbers jibe with the view that additional NATO members posed a greater threat to Russian security? One must be incredibly naïve or a willing purveyor of Russian propaganda to agree with the Kremlin’s narrative on NATO.

Weaponizing Energy Exports.

Russia’s post-cold war use of energy exports to coerce and/or control the security policies of its neighbors is another example of the Kremlin’s missed opportunity. In addition to my experience in Tallinn and Riga, I observed first hand as ambassador to Vilnius Russia’s interruption nine times of oil and gas shipments to Lithuania. From 1997 to 2000, Russia attempted to force the Vilnius government to turn over to a Russian company Lithuania’s oil pipelines and their large refinery at Mazeikiai. When this tactic failed, Russia stopped shipping any oil to Lithuania and Latvia through the large Druzhba pipeline. Ukraine has been a particular target of the Kremlin’s energy imperialism. In 1994, Russia used the threat of an energy cutoff to Ukraine in an attempt to gain greater territorial control over the Crimean Peninsula. This was the first of several interruptions of supplies to Ukraine.

Natural gas prices and availability were set annually based on Ukraine’s “behavior” toward Russia over the previous year. Several Ukrainian oligarchs benefited from non-transparent supply deals in a cozy relationship with Russia’s Gazprom, but the average Ukrainian did not. Dummy gas companies were set up by Gazprom and Ukrainian oligarchs to syphon off profits that went to shadow bank accounts in Austria and Cyprus. The Kremlin willingly gave up tax revenue for the Russian treasury in order to enrich insiders and a small number of friends abroad. For over twenty years, from 1990 to 2014, Western European businesses and home owners paid substantially more for Russian gas because of these sleazy deals, and as a result of the EU’s acceptance of Russia’s supply monopoly.

Only when the disruption in natural gas supplies to Ukraine in 2009 directly affected millions of EU members did the EU Commission embark on a series of measures designed to make Europe less dependent on Russia’s energy monopolies. Unfortunately, the EU’s anti-monopoly effort was undercut by Germany’s support for the Nord Stream I gas pipeline, sending gas under the Baltic Sea to northern Germany from Russia. Germany is now again helping to build a second Nord Stream pipeline. This will weaken Europe’s energy independence, undermine the Commission’s anti-competitive laws. It will allow Russia to apply greater economic and political pressure on its East Central Europe’s neighbors. It is not by chance that the deals were put together by a former East German intelligence officer who was Putin’s Cold War-era handler in Dresden, East Germany.

On an October 2007 trip to Budapest for the Center for Strategic and International Studies (CSIS), I described on Hungarian television the corruption involved in the Russian/Ukrainian gas trade. I was shortly after threatened with a serious law suit in London and Washington by a billionaire oligarch, the major beneficiary of these non-transparent deals. He is now under an extradition request by the FBI, and an additional extradition request by Spanish authorities. After the suit against me was dropped, he had me followed and harassed in Eastern Europe by two of his employees, one of whom was his company director in London. Russian and pro-Russian “businessmen” in Ukraine and Russia have the financial means to curb criticism of their shady operations and to buy protection from willing Western governments.

Missed Opportunities

What would the global security situation look like today if Russia had turned itself into a “normal European country,” by rejecting the historical paranoia about post-Cold War threats from its Western neighbors? What if Moscow had immediately extended the hand of friendship to the many countries that had been under its control for fifty to seventy years; reached border demarcations by mutual consent, shut down major intelligence operations designed to weaken neighboring states and refrained from using energy exports as a tool of coercion? Has the seizure of territory in Georgia and Ukraine, or maintaining unresolved disputes with Japan and Moldova added to Russia’s security and/or led to an improvement in the country’s standard of living? Of course not.

If Russia’s leaders had channeled their country’s recent defense spending increase into civilian R&D, and into greater investment in health and education, it would have closed much of the development gap with the rest of Europe. The relatively small Russian economy during the Cold War was a science and technology powerhouse. With better policies the Kremlin could have turned the country into a serious high-tech competitor. Unfortunately, a transparent private sector was turned over to a group of predators and former intelligence officers.

A somewhat more “modern” Russian leader, perhaps such as Dimitri Medvedev, might have relied less on the traditional power ministries, such as the FSB, the GRU and Defense sectors. The Kremlin could have opted for greater privatization and decentralized government, and for greater integration with its European neighbors. Unfortunately, the weak reaction of the West to Russia’s war against Georgia left the impression in Moscow that war against non-NATO neighbors would go unchallenged. The war did result in more Europeans accepting the idea that Russia was on a path to imperialism rather than cooperation. On leaving Moscow in 2013, I was told by the airport border guards that people like me, who were probably “supporting revolution in Ukraine” should stay away from the region. They had seen the numerous Ukrainian entry stamps in my passport and concluded that I was actively undermining Russian security. Ironically, I had just had a pleasant business trip to Moscow and was until the airport encounter still somewhat hopeful about change in Russia.

Following the poor performance of Russian soldiers in Georgia in 2009, Putin embarked on a substantial buildup of military forces. At a time of declining defense spending in the West, the Russian military modernization was watched nervously, but not with alarm in Europe and the U.S. The military take over of Crimea, however, brought on a heightened level of apprehension in NATO capitals. The seizing of much of the Donbass in eastern Ukraine raised the perceived threat to pre-Cold War levels. Russian military exercises jumped in size to over 100,000, a figure overwhelmingly greater than any NATO exercise since the collapse of the Soviet Union. Even today, the Alliance has difficulty putting together joint exercises of 30,000 soldiers, seamen and airmen. Ukrainian attitudes to Russia have soured dramatically, and the Ukrainian Orthodox Church has broken with the Moscow Patriarch. The festering sore of Crimea will impede Moscow’s ties with the West for decades to come. And NATO’s reaction to Russian military action has been to station troops in the three Baltic states and Poland, and to conduct exercises in Romania and Bulgaria. We are all paying an enormous price for the Kremlin’s shortsighted policies. Putin’s foreign policies have left Russia weaker, rather than stronger.

What to do?

U.S. and EU sanctions have had some deterrent effect on Kremlin policies, but there is little chance that they will result in an early Russian military withdrawal from Eastern Ukraine or from Crimea. Additional sanctions by EU members may be a non-starter, now that there is a group of member states, such as Greece, Cyprus, Hungary, Austria and Italy, that are unenthusiastic about maintaining even the present trade and investment restrictions. Nevertheless, a core group of NATO members, led by the U.S., should work to preserve the present sanctions. The EU and U.S. need to more vigorously interrupt the flow of illegal money from Russia to the West. The USG could take steps to stop various American jurisdictions from hiding foreign ownership of property and other assets. Our ability to lecture others is undercut by our weak enforcement of money laundering laws, and the continued lack of transparency in parts of the U.S. banking system.

Present U.S. policy of quarreling with allied and friendly nations over trade policies and military spending plays into the hands of an already subversive Kremlin. The U.S. rejection of the Trans-Pacific Partnership Agreement (TPP) strengthened not only China’s economic clout with our Asian partners, but indirectly helped Putin in his efforts to weaken American economic ties to the Pacific region. The Trump administration should reverse its position on TPP. Polling demonstrates that international respect for American policy has nosedived as a result of the lack of diplomacy in our trading, environmental and security missteps with our European and Asian allies.

The U.S. should stop citing “national security” reasons when bypassing the WTO mechanism for dispute resolution. China and Russia are now more likely to use the same rational in its sanctions with its neighbors. Instead of circumventing the WTO, the U.S. should set shorter time limits for the organization’s decision making. Too much blunt talking about trade retaliation has moved important allies to question the need to follow U.S. leadership in areas that are critical to our national security.

Of course, it would help if America’s president showed more respect for our European allies and would act less confrontational when it comes to issues such as defense spending and tariffs on steel and aluminum. EU and Russian leaders are rightly confused as to what the administration’s “red lines” are regarding Moscow’s conduct toward its western neighbors. Russia’s ability to freeze in place its seizure of territory belonging to Japan, Ukraine and Moldova should not stand. If the U.S. doesn’t lead, who will?

The U.S. should explore whether formally inserting itself into the four-power Minsk Agreement on Ukraine would stiffen the spine of the European negotiators. In four years of talk and war, it appears that Moscow has not felt enough Western pressure to abandon its seizure of Ukrainian territory. The U.S. has assigned excellent diplomats to the Ukraine portfolio, and the administration’s supply of Javelin missiles may have helped prevent greater Russian military gains. Nevertheless, Western sanctions and sporadic talks in Minsk have done nothing to restore Ukrainian sovereignty over its national territory. Putin appears to believe that he can wait out Western opposition to his Ukraine policies. He can see the cracks that have developed in European support for continued sanctions on Russia. A core group of the U.S., France, Germany and the UK should announce that their sanctions would continue, even if the EU cannot muster unanimous support for the present sanctions.

The enormous economic costs of the war and loss of Ukrainian territory, already the poorest large country in Europe, is in the hundreds of billions of dollars. Perhaps the U.S. could join with Ukraine in its lawsuits against Moscow for its stealing of tangible assets in Crimea, including war ships given by the U.S. to the Ukrainian Navy.

While the U.S. is right to oppose construction of the Russian/German Nord Stream II gas pipeline, our politicians should stop publicly making the case that American LNG supplies are ready to replace Russian gas. Putting a commercial spin on our position weakens our case that we oppose the project on security grounds.

Areas where the U.S. should seek to work more closely with Russia include academic and cultural exchanges, arms control and counter terrorism. We should expect some Russian intelligence collection would be attempted by means of educational exchanges. Nevertheless, youth exchanges should be put back on the table. Arms control negotiators should be encouraged to explore Russian readiness to deal with intermediate-range missiles, including stronger verification regimes, and possibly a new round of strategic missile reduction talks. It might help to work more closely with our European allies on U.S.-Russian disarmament. The U.S. president should stop having private meetings with Russia’s leader where top national security officials are not present. These types of meetings accomplish little, if nothing. They result in increased suspicion among Americans and our European allies as to what was agreed to, and makes it even more difficult to make progress on areas of bilateral concern.

With Putin more securely in office, he may be looking for a way to make some concessions on Ukraine, especially if the Kremlin-preferred candidates for president of Ukraine appear to be doing poorly.

Nevertheless, Putin shows a stronger indication that he believes that time may be on his side, particularly in light of the political turmoil in the U.S., the forthcoming Ukraine elections and the political changes in Germany, Italy and Poland. In my view, he has seriously miscalculated regarding the willingness of major Western powers to weaken sanction without some concrete steps toward military withdrawal from Ukraine.


There may be further steps that the U.S. and its allies can take to increase the cost to the Kremlin of its imperial ambitions. Nevertheless, based on past behavior, Russia will likely continue to follow the adage that “it never misses an opportunity to miss an opportunity.” Russian democratic and economic reform, if combined with major steps to “normalize” relations with Europe and the U.S., would benefit the entire world. The chances of this occurring under President Putin, however, are slim at best.End.

Keith Smith

Ambassador Keith C. Smith retired from the Foreign Service in 2000 after 38 years of service. He was a Senior Associate at the Center for Strategic and International Studies from 2002-2012. Since 2013 he has been an Adjunct Fellow with the Center for European Policy Analysis. He has written extensively regarding Russia’s coercive use of its energy exports. From 2000-2017 Ambassador Smith was also a consultant to several U.S. and European energy companies.




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