Davos Day 4: An Impressive Russian Delegation

Russia sent an impressive delegation to Davos this year. After good representation in the Yeltsin years, the level of participation had slipped somewhat. This time they sent the first team. With higher oil prices, they are feeling their oats. I was asked to comment on US-Russian relations at a dinner with top officials from the government and Gazprom. I said that Americans had too many illusions about democracy in Russia in the 90s, and we were now going through a stage of disillusionment. Nonetheless, the idea of turning our backs on Russia and excluding them from the G-8 as Senator McCain has suggested is a mistake. We have serious business which requires cooperation regardless of how we feel about their internal backsliding. For example, we need to cooperate on stopping nuclear spread to North Korea and Iran, halting the leakage of nuclear materials from former Soviet arsenals, combating terrorism, increasing energy production outside the Persian Gulf, and working together on global challenges like climate change and pandemics. But I said cooperation should not prevent friendly criticism, and I offered the following four reasons why I thought Russia will not remain a major power in 2020 unless it changes.

1. They are failing to diversify away from energy and develop a broad based economy rapidly enough.

2. They need a rule of law that protects entrepreneurs and helps foster a middle class that will support a democratic market economy.

3. They have a terrible situation in demography and public health, and have not invested in an adequate social safety net.

4. Their current bullying attitudes in the energy area are destroying trust and undercutting their soft power in other countries.

Most participants seemed to ignore these criticisms, but it was interesting to hear one important participant admit that reform might progress faster if oil prices dropped, and another accept the point that friendly criticism should be welcomed as long as it is a two-way street. And the fact that they have reappeared in Davos to defend themselves may be a small but healthy sign.