Eyes on the Kremlin: Russia and the World in 2016

Photo: AP

Editor’s Note: Over the coming days, The Cipher Brief presents some of our most incisive coverage on key issues of 2016 and a look ahead at what is yet to come in 2017.

Just before Christmas, Russian President Vladimir Putin strode onstage to field more than four hours of questions from 1,400 journalists in his annual marathon press conference.

From lauding economic gains and improved oil prices to briefly dismissing American “paranoia” concerning Russian interference in the U.S. election, Putin’s performance was relatively sedate compared to previous news conferences. Instead, his demeanor and measured tone reflected a new confidence in his and Russia’s place in the world.

That confidence is not ill-placed. During the past year, Moscow has achieved a series of striking foreign policy successes around the world. In Syria, Russian air support and military advisors have turned the tide of the war and helped Syrian President Bashar al Assad drive rebel forces out of their last major urban stronghold in Aleppo. In Europe, Russia’s annexation of Crimea remains largely unchallenged, while Brexit and the rise of anti-establishment populist parties across the European Union have helped draw the bloc’s attention away from Russian interest in Ukraine and the Baltic states. Finally, Donald Trump’s election as U.S. President – allegedly with the indirect aid of a sophisticated Russian cyber campaign – has presented Putin with the prospect of a far friendlier, and inexperienced, counterpart in Washington.

However, it is important to recognize the limits of Russian success in 2016. Flashy accomplishments on the international stage are impressive, but the domestic challenges Putin faces are grim. The economy, in particular, has taken a ferocious beating since the bottom fell out of oil prices in the summer of 2014. With the price of Brent crude hovering near $50 – less than half of previous highs – Moscow has had to institute severe austerity measures, which are projected to continue into 2017 and 2018 budgets. Meanwhile, low oil prices, Western sanctions over Crimea, and capital flight from the country prompted the Russian Central Bank to float the ruble in 2014, leading to an immediate decline of roughly 50 percent and fueling recession throughout 2015 and 2016.

For the most part, Putin’s government has responded to the crisis well by instituting sensible macroeconomic policy. For instance, floating the ruble has hurt consumers, but it has made Russian businesses more competitive. Similarly, a recent deal with the Organization of Petroleum Exporting Countries to reduce oil production and bolster prices has helped stabilize the economy and restore foreign investor interest.

However, when Putin speaks of Russia’s economic revival over the past year, he means only that the country’s GDP is not falling quite so fast – 0.5 percent this quarter as opposed to a 4 percent drop at the height of the 2015-2016 recession. He has claimed that the country will return to growth in 2017, but this will probably look like 1 percent growth in annual GDP, a far cry from Putin’s 2012 election campaign promise of 6 percent per year from 2011 to 2018. Now that President Obama has begun to levy new sanctions against Russia for its alleged intervention in the U.S. presidential election, even this modest growth may fail to materialize. 

To a certain extent, these troubles at home help explain Russian posturing abroad. In an article for The Cipher Brief earlier this month, retired CIA officials John Sipher and Steven Hall wrote that Putin “has framed himself as the leader of a global anti-U.S. movement.” By thwarting U.S. foreign policy in a spectacular fashion, Putin is able to bolster that image, thus trading a new sense of national pride and geopolitical importance for his people’s tolerance of economic hardship and civil repression. Putin, writes Sipher and Hall, “needs to hold up the U.S. as an enemy to his own people. If they stop blaming the U.S. for all their ills, they might start to blame Putin himself.” Boasting 80 percent approval ratings at home, Putin’s strategy appears to be working.

The war in Syria provides a perfect example of this type of showmanship. Of course, Putin does have material interests in the country. The Russian naval base at the Syrian port of Tartus is a valuable warm water supply depot and the Assad regime has deep historic ties to Russia as a regional ally and customer for Russian arms. Even more important, according to Rob Dannenberg, former Head of Security at Goldman Sachs, “Putin’s military intervention in Syria has served to strengthen Russia’s relationship with its most important ally in the region, Iran.” In addition, Russia’s commitment to its beleaguered Syrian ally serves as a demonstration of the values of Russian friendship to frustrated U.S. allies in the region such as Saudi Arabia and Egypt.

However, write Hall and Sipher, “this is all small beer for Putin. Instead, his real objective is to challenge the United States wherever he can.” This greater purpose of reigniting Cold War rivalries and reestablishing Russia as a great power competitor with the United States is hardly limited to Russian intervention in Syria, or even the continued destabilization of Ukraine through Russian-speaking proxy militias in the country’s east. Putin has now expanded this war of imagery and disinformation to the United States itself.

In recent months, reports have emerged that CIA and FBI analysis indicates Russian hackers were responsible for the hacking of Democratic National Committee emails, as well as the subsequent data dump of those emails and other incriminating information. What’s more, they apparently report “with high confidence” that this effort was directed at the highest levels of the Russian government.

Many of Trump’s close advisors and Cabinet-level nominees –  such as former Exxon boss and Trump’s pick for Secretary of State Rex Tillerson – have had close business and personal ties to the Putin regime, and Trump is widely regarded as friendly to the Russian government, speaking often of his desire to “normalize” ties with Russia. What’s more, the President-elect has dismissed the intelligence community’s reports on Russian hacking, calling them an attempt to undermine his “landslide” victory.

The idea that a foreign government might have successfully swayed a U.S. presidential election in favor of their preferred candidate is disturbing – former Acting Director of the CIA and Cipher Brief contributor, Michael Morell, has even called it “the political equivalent of 9/11.” The fact the President-elect continues to dismiss intelligence agencies’ analysis on the issue is even more so. Still, the sincerity of President-elect Trump’s affinity for Mr. Putin is by no means clear, and his behavior in office could be completely different than his campaign rhetoric.

However, to Sipher and Hall, one thing is clear: “Putin’s interests are not going to change simply because there is a new occupant in the White House.” 

Fritz Lodge is an international producer at The Cipher Brief. Follow him on Twitter @FritzLodge.