The SCO provides Russia an outlet to meet the challenges and imperatives of globalization. Under Putin’s leadership, Russia has charted a new foreign policy agenda “dictated by domestic concerns, an awareness of the systemic crisis … and a sense of competitive pressures of globalization.”161 Putin’s approach is clearly based on the
linkage between domestic and foreign policy.162 Evidence of Russia’s energy policy
cooperation within the SCO institutional framework would demonstrate Russian commitment to the SCO as an international economic regime. However, Russia’s use of bilateral sidebar agreements during SCO annual summits or the use of Russian state mechanisms, such as Gazprom in a hammer-anvil energy policy strategy shows a weakness in the international regime approach to the SCO from the Russian perspective.
Russia’s goal of achieving great power status is complicated by the twin challenges of finite resources and the reality that its traditional assets (e.g. strategic rocket forces), have lost their traditional significance. Medvedev contends, “[f]or the first time in her modern history Russia does not have the resources to match her traditional global role.”163 Overall, Russian foreign policy has become more associated with domestic
imperatives. Psychologically, the crises in the FSU during the 1980s and 1990s influenced the historically sacred outlook toward territorial thinking, which began to be viewed “in functional terms: is it useful, cost-effective and sustainable?”164 Regime
change, also gave rise to economic interests which, if “not always directly translated into foreign policy acts … create a pragmatic de-ideologized context for policy- making.”165
161 Medvedev, “Russia at the End of Modernity: Foreign Policy, Security, Identity,” 50. Medvedev argues that at the turn of the millennium two major factors are primarily shaping relations between Russia and the West: the rise of Vladimir Putin as Russian president and the events of September 11th and the subsequent Global War of Terrorism.
162 For another perspective of Putin’s economic and security agendas, see Bobo Lo, Vladimir Putin and the Evolution of Russian Foreign Policy (London: Blackwell Publishing, 2003), esp. chs 4 and 5, pp 51-96.
163 Medvedev, “Russia at the End of Modernity: Foreign Policy, Security, Identity,” 42. 164 Ibid., 43.
165 Ibid. Medvedev uses the Russian gas giant, Gazprom, as one example of a company whose strategic interests which might not shape Russian foreign policy, but he paraphrases the old adage about U.S. firm General Motors: “what is good for Gazprom is good for Russia.” Ibid. 44
Medvedev insists that since the collapse of the USSR “the economic variable has become much more closely, indeed intimately, integrated into the global market at various levels. Russia’s integration into the world economy is primarily driven by gas and oil exports.”166 Russia “has 33 percent of the world’s natural gas reserves and provides 40
percent of Europe’s natural gas needs.”167 The final imperative Russia faces in
globalization is with respect to international and regional institutions.168 The SCO is just
one example.
Moscow’s first attempts to establish the Eurasian Economic Community, on par with and as an EU counterpart, failed to materialize.169 Later attempts to form a
Common Economic Space among Russia, Belarus, Ukraine and Kazakhstan also failed to develop on the eve of the 2004 Ukrainian presidential elections. These unsuccessful attempts forced Moscow to reconsider its multilateral approach to its relation with its former republics as all were transitioning in the post-Soviet space. In the end, Russia realized it needed to shift its policy focus of its economic efforts from multilateral arrangements toward stronger bilateral relations to jump-start its modernization and increase its economic sovereignty.
166 Russia also has other interfaces with the global economy including: institutions which hold Russia’s external debt and Westerner investors in the Russian Stock Market (RTS). For other factors and dilemmas Russia faces while continuing to integrate into the world economy, see Yevgengy Gavrilenkov and Wolfram Schrettl, “Integration into the World Economy: Russian Dilemmas,” in Russia and the West at the Millennium: Global Imperatives and Domestic Politics, eds. Sergei Medvedev, Alexander Konovalov, and Sergei Oznobishchev (George C. Marshall European Center for Security Studies, 2003): 125-135.
167 Peter Rutland, “Shifting Sands: Russia’s Economic Development and Its Relations with the West,” in Russia and the West at the Millennium: Global Imperatives and Domestic Politics, eds. Sergei Medvedev, Alexander Konovalov, and Sergei Oznobishchev (George C. Marshall European Center for Security Studies, 2003): 116.
168 See Medvedev, “Russia at the End of Modernity: Foreign Policy, Security, Identity,” 45.
169 For coverage, see: Olga Tarasova, “Vladimir Putin Travels to Astana: Leaning on a Neighbor's Shoulder; Russia and Kazakhstan Work New Integration Programs,” Nezavisimaya Gazeta in Russian, 3 October 2000, FBIS Document ID: CEP20001003000177; Yelena Lashkina, “Transformation of Customs Union. Eurasian Economic Community Wishes To Intensify Integration,” Nezavisimaya Gazeta in Russian, 6 October 2000, FBIS Document ID: CEP20001009000155; Yelena Lashkina, “Moscow and Astana Struggle for Leadership; The Eurasian Economic Community Will Soon Be Set Up,” Nezavisimaya Gazeta in Russian, 7 October 2000, FBIS Document ID: CEP20001010000078; Andrey Sharafov, “Russia Could Derive Benefit From Eurasian Economic Community,” Nezavisimaya Gazeta in Russian, 14 October 2000, FBIS Document ID: CEP20001017000318; and Yekaterina Tesemnikova, “Kiev and Tashkent Continue Their Rapprochement. Presidents Kuchma and Karimov Do Not Believe in the Future of the Eurasian Community,” Nezavisimaya Gazeta in Russian, 13 October 2000, FBIS Document ID: CEP20001016000290.
The 1998 Russian crisis and associated “financial collapse highlighted the overall systemic crisis in Russia and indicated the limited domestic resources for the protection of ‘national interests’ in foreign policy.”170 The quick retreat of portfolio investors from
the emerging markets and the sharp fall of world oil prices to levels far below Russia’s production costs demonstrated the true limits of Russia’s economic sovereignty.171 The
financial “crisis defined the parameters of decreasing state capacity in Russia, but also underscored Russia’s growing dependence on the global financial and raw materials markets.”172 For the first time, Russia found itself integrated into the world economy to a
far “greater, and riskier, extent than had been envisaged by the masterminds of the Soviet oil policy in the 1970s and 1980s, and the architects of the Russian financial markets in the 1990s.”173 In the final analysis, the 1998 crisis accentuated “the fact that Russian
foreign policy is staged under the conditions of limited economic sovereignty of the nation.”174