Russia politics: No improvement in sight for US-Russia relations

Content Type
Country Data and Maps
Institution
Economist Intelligence Unit
Abstract
No abstract is available.
Topic
International Relations, Politics, News Analysis, Forecast
Political Geography
Russia

Since being elected as US president in November 2016, Donald Trump has stepped back from many of his more radical foreign policy positions. On most issues of concern to Russia, US policy has been characterised by relative continuity thus far. Allegations of Russian interference in the US presidential election, combined with an investigation into ties between Mr Trump's team and Russian officials, have severely limited the Trump administration's room for manoeuvre and prompted Congress to impose further sanctions on Russia. As a result, bilateral relations with Russia have further deteriorated in the first seven months of Mr Trump's presidency. This is likely to consolidate protectionist trends within Russia and to result in efforts to reduce dependence on the US via financial ties, use of the US dollar and strategic imports. For these reasons, there appears to be little prospect of an improvement in US-Russia relations over our forecast period (2017-21).

Mr Trump's election initially raised the prospect of an improvement in bilateral relations with Russia. These had reached a post-Soviet low under Barack Obama, Mr Trump's predecessor, following Russia's annexation of Crimea and the imposition of sectoral sanctions on the Russian economy by the US and the EU. In contrast, Mr Trump strongly advocated for improved relations with Russia during his electoral campaign. He expressed his admiration for Vladimir Putin, the Russian president, appeared to show understanding for Russia's annexation of Crimea and expressed a desire to increase co-operation with Russia in the campaign against international terrorism. Such co-operation was the central theme of Mr Putin's speech at the UN in September 2015, shortly before Russia entered the conflict in Syria.

From the perspective of the Russian leadership, Mr Trump's election is a symptom of a broader shift in the international order from a US-led unipolar system to a multipolar world in which the US acts as a more conventional great power, rather than the global norm-setter. Mr Trump's "America First" agenda appears to imply a rejection of liberal interventionism and democracy promotion that is in line with long-standing Russian positions on the future of international relations. The Russian leadership has long argued that the US-led unipolar order is fundamentally opposed to its interests and leads inevitably to instability and conflict. These principles were restated in Russia's latest Foreign Policy Concept, which was released in November 2016, after Mr Trump's electoral victory.

The Russian leadership appeared to have taken seriously the potential for an improvement in relations with the US under Mr Trump's administration. Mr Trump's victory was greeted with applause in the Duma (the lower house of parliament), and Russian federal television subsequently toned down its anti-American rhetoric in the run-up to Mr Trump's inauguration. Mr Putin declined to take counter-measures against the US in December 2016 when Mr Obama's outgoing administration expelled 35 Russian diplomats and impounded diplomatic residencies in response to allegations of Russian interference in the US election. In contrast to recent years, Mr Putin's state of the nation speech at the end of November made little reference to the US, or international affairs in general. At the same time, the position of the Russian leadership remained that responsibility for improving relations lay entirely on the US side. The Russian leadership offered no new proposals for any of the main issues of contention, such as the conflict in Ukraine or arms control, which could have created the space for a more positive dialogue.

Hacking and collusion allegations bind president

However, any plans Mr Trump may have had for improving relations with Russia have been derailed by US intelligence agency findings that the leaking of emails from the Democratic National Committee (DNC) was conducted by Russian hackers with official Russian support in order to further Mr Trump's chances of victory. This has been accompanied by a steady stream of revelations regarding meetings between senior figures in Mr Trump's administration and figures linked to the Russian government. These two issues are now the subject of overlapping Congressional and judicial investigations. Mr Trump could argue with justification that he has never hidden his desire to improve bilateral relations and was elected on a manifesto to do so. However, the suspicion that the Trump campaign may have colluded with the Russian government to influence the election has provoked a hawkish counter-reaction and significantly limited the administration's room for manoeuvre.

New sanctions

In July a bill imposing new sanctions on Russia was passed with decisive majorities in both chambers of Congress. Mr Trump described the bill as "seriously flawed", but faced with the prospect of his veto being overturned by a Congressional super-majority, he reluctantly signed the bill into law on August 2nd. The bill builds on the sectoral sanctions imposed in co-ordination with the EU in 2014 on Russia's banking, defence and energy sectors. The new bill enables the US Treasury to impose sanctions on Russian state companies in the transport, metals, railway or mining sectors; it further restricts investment in Russia oil and gas projects; allows for the introduction of personal sanctions on those believed to be involved in cyber-attacks, corruption, or human rights abuses; further reduces the maximum period lenders can provide financing to Russian state banks and oil and gas companies to 14 days and 60 days respectively; and allows the US president to impose sanctions on companies investing in the construction or maintenance of energy pipelines. These measures put in further doubt the prospects for the Nord Stream 2 gas pipeline, linking Russia to Germany under the Baltic Sea, and the Turk Stream pipeline from Russia to Turkey.

The most significant element of the bill is that it prevents the president from lifting either the new or pre-existing sanctions on Russia without Congressional approval. Previous rounds of sanctions on Russia were adopted by executive order, in principle giving the president the power to lift or amend them at any time. Historically, sanctions written into law by Congress have been very difficult to remove, even when the international context has substantially shifted. This has further reduced the chance that US sanctions on Russia will be relaxed in 2017-21, even in the unlikely event that progress is made in resolving the conflict in eastern Ukraine.

Russian reaction

From Russia's perspective, the sanctions bill confirms the fundamentally adversarial nature of its relations with the US. Responding to the bill, Dmitry Medvedev, the Russian prime minister, said: "Firstly, this is the end of hopes for an improvement in relations with the new American administration. Secondly, a full-scale trade war against Russia has been declared." In response, Mr Putin ordered the US to reduce staff at its embassy and consulates in Russia to 455 people, leading to a cut in personnel of over 700. The US has in turn reduced the provision of consular services for non-immigrant visa applicants outside Moscow.

The second part of Mr Medvedev's statement appeared to imply that Russia would adopt further counter-sanctions against US commercial interests. No measures have yet been announced; however, there is an increased risk that Russia will adopt regulatory or protectionist measures that specifically target US companies trading with or operating in Russia. More broadly, the additional US sanctions are likely to consolidate protectionist trends within the Russian elite, and the "securitisation" of Russia's economy. The key elements of this policy include minimising dependence on imports in strategic sectors such as food, defence, pharmaceuticals, and oil and gas; the diversification of international financial ties away from Western sources; a reduction in the role of the US dollar in transactions; and active participation in non-Western economic structures, such as the China-led Asian Infrastructure Investment Bank.

Outlook

The prospect for an improvement in relations between the US and Russia in 2017-21 now appears very low. US-Russia relations have become a key battleground in which opponents of Mr Trump have sought to disrupt his presidency. The domestic context makes it virtually impossible for the president to attempt any kind of fundamental reset. The issue is likely to become even more contentious as the Department of Justice inquiry led by Robert Mueller into links between members of Mr Trump's inner circle and Russian officials continues. It is possible that Mr Trump may attempt to interfere in or stall the process. Moreover, as is the case with the Russian government, Mr Trump's administration has provided no indication of how bilateral relations could be reshaped. On many foreign policy issues, Mr Trump has been forced to follow a more conventional path, despite his inflammatory rhetoric. Following the departure of Michael Flynn, Mr Trump's national security adviser, in February, and of Steve Bannon, the US president's chief strategist, in August, more conventionally minded officials such as General H.R. McMaster, Mr Flynn's successor, and James Mattis, the secretary of defence, have sought to re-assert US commitment to NATO and European security guarantees, which Mr Trump had put in question during his electoral campaign.

As a result, on many areas of key concern to Russia there has been little practical shift in policy. The US secretary of state, Rex Tillerson, has maintained dialogue with Russia over the conflict in Syria, and raised the possibility of joint stability operations, including no-fly zones and ceasefire observers. However, fundamental disagreements remain over the role to be played by the Syrian president, Bashar al-Assad, and his regime in any future peace settlement. There has also been no significant shift in US policy regarding the conflict in Ukraine. In July Kurt Volker, a former NATO ambassador, was appointed US special representative to Ukraine. Mr Volker has close ties to John McCain, a US senator and noted Russia hawk, and has previously advocated providing lethal aid to Ukraine. Mr Trump's administration is also unlikely to respond positively to Russian concerns over ballistic missile defence, increasing US conventional weapons capability, or its nuclear development plans, all of which Russian officials believe represent a threat to Russia's nuclear deterrent and the strategic nuclear balance. As we have noted previously, if Russia's concerns are not assuaged, it may decide that the only way to restore its deterrent power vis-à-vis the US is to have a nuclear force larger than that permitted by the existing new Strategic Arms Reduction Treaty (START), potentially leading to the unwinding of cornerstone nuclear agreements.

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