08/12/2014 05:27 am ET Updated Oct 12, 2014

Will Russia bring down the global system

12. August 2014.
Topic: Will Russia bring down the global system?
By: Joergen Oerstroem Moeller

The crisis about the future of Ukraine is nowhere near a solution. It will get worse without any certainty that ultimately it will turn to the better - maybe with luck, but do not count on it. The major fallout may be a Russian assault on the international rule based system casting doubt over global governance.

President Putin is defending two core interests (foreign policy and domestic policies); it is thus unlikely that he will back down or soften his approach. The Western sanctions may harm somewhat - one or two percentage points of Gross Domestic Product (GDP) - a small even negligible price to defend a core national interest.

Foreign policy wise Putin sees himself as the protector of all Russians irrespective of whether they live inside Russia or abroad. Being Russian is unique forged by history, culture, attachment to the soil, and identity. It is intolerable that Russians living in other countries are forced to conform to non-Russian attitudes. Having casts himself in that role, political suicide looms if he succumbs to sanctions and weak ones at that. History would depict him as a traitor. According to reports he classifies Tsar Nicolas II and Gorbachev as exactly that because they shied away from using power, giving in to pressure from the outside.

Russia has always been suspicious of its Western neighbours and for good reasons invaded over the last 200 years by France and Germany (twice). Russia's geography lays it open to invasions having few natural defence lines. The solution invariably popping up before the eyes of every Tsar and communist leader is to establish a cordon of weak states. Alexander I did that after the Napoleonic Wars. Stalin did that before and after Wold War II. The end of the Cold War deprived Russia of this cordon exposing the country to potential invasion. It is no use telling Russian leaders being it Putin or somebody else that nobody plans to invade them. They do not believe reassurances recalling history. When Putin speaks about the fall of the Soviet Union as the biggest geopolitical catastrophe in the 20th century, he means that it turned Russia into an indefensible country.

Domestically Putin may know that his economic model is not viable in the long run. It rests on a high oil price and even if that continues - doubtful - it will not make Russia a modern state. It serves, however, his purpose being good for his supporters and so far delivering an acceptable living standard for the majority of Russian. The opposition comes from a relatively small group of people attracting attention in the West because they are vocal and apparently worship 'Western' values. Beware, however, they are Russians and not Westerners and consequently look to defend Russia's interests, the core of which does not depend on who is in power. The blunt truth is that outside the small circle of dissidents, Putin and his political and economic model does not face much opposition. There may be people around him that dispute the wisdom of annexing Crimea and put Russia on confrontation with the West, but it is unlikely they are powerful enough to stage a revolt.

The defence of Russia's core interests at the periphery is exactly what his predecessors ruling Russia for centuries have done and resonates with every Russian.

The shooting down of MH 17 has become a spanner in the works bringing the world to realise that without Russian active involvement Ukraine's army would have crushed the rebellion long ago. Being exposed the policy answer will be to lie low for some time and wait for the storm to subside while still keeping the rebellion afloat. Full scale support can be resumed at a later stage when the world has grown tired of hearing about the horrible consequences of arming the rebels. This is also in conformity with Russian subversive actions fine-tuned in sophisticated use of espionage and 'dirty' tricks over centuries.

Massive sanctions might change Putin's equation, but so far there is not the slightest evidence that this will happen. The sanctions activated are 'respectable' and will exact a price, but be more of a nuisance than do real harm. Russia and Putin will not back down - harbour no doubt about that. Western sanctions are like a Mensur rapier inflicting pain and making a scar, but leaving it at that. Russia will retaliate in the same manner. Selected Western companies will suddenly find life extremely difficult, but the majority will do business as usual. Neither Russia nor the West has the stomach for genuine sanctions.

But something else, more dangerous, will happen. Russia will backpedal from the international rule based system built since 1945 withdrawing into its own shell accusing the rest of the world, in particular the West, for demonizing it, making it a victim, and forcing it to discard traditional Russian values. The Kremlin is feeding this message to the Russian population and it is believed. The enlargement of NATO and the EU, the conflicts in the former Yugoslavia, the UN approval of intervention in Libya, and events in Georgia plus Ukraine - the evidence piles up on the desk in the Kremlin. At the Russian Ministry of Defence's third Moscow Conference on International Security, May 23, 2014, the main theme was a Russian perception of 'colour revolutions' engineered by the US and its allies to destabilize regimes in North Africa, the Middle East, Central Asia and South Asia. Such a power vacuum can and will, runs the argument, be used to curb Russian influence and ultimately fit into a strategy directed against Russia.

In Putin's eyes the only reply is cutting links to the American global system, seek allies and partners in doing so and if necessary fend alone believing in Russia's just course.

Omens of what is coming surfaced end of July. The International Court of Arbitration ruled that Yukos Oil Company should pay former leading shareholders USD50bn in damages. A few days later the Russian Finance Ministry stated that 'The Hague's arbitration court was not legally empowered to view the case of Yukos Oil Company v. Russia, and the court's "one-sided" ruling disregards previous Strasbourg court decisions on the issue'. According to press reports G-7 countries are planning to block World Bank loans to Russia to the tune of USD 1.5bn. The European Bank for Reconstruction and Development has already decided to stop lending to Russia.

It is not difficult to guess how the Kremlin will react. 'What is the virtue of adhering to these institutions when they apparently are used by the West to harm us?' A first glimpse of what is in store came when rumours surfaced that Russia planned to ban Western airlines from using Siberian airspace. A step that, if implemented, will be harmful to economic globalization and thereby punish the American led global system.

The world can expect a major Russian offensive directed against the existing global system - the International Monetary Fund, the World Bank, the World Trade Organisation and organisations like the arbitration court accusing them to deliberately act as a stooge for American and Western political and economic interest. Add to this a recalcitrant - at best - Russian policy in efforts to solve or defuse global crises like Syria, Gaza, Iran, and North Korea. Russia cannot shape events, but are powerful enough to act as a spoiler.

China, India, and Brazil will be courted to join. Hopefully they will not be taken in relying much more on a global system than Russia, but the challenge constitutes a major test for those who want to preserve global governance and a rule based global system.

This is the first attempt to castrate the global steering system as we know it. The problem for the West is that it is seen more and more as the West's system and less and less as a global system.

Joergen Oerstroem Moeller
Visiting Senior Research Fellow, Institute of Southeast Asian Studies, Singapore.
Adjunct Professor Singapore Management University & Copenhagen Business School.
Honorary Alumnus, University of Copenhagen.