Tuesday, 29 April 2014

Russia and the context of the hi-tech sanctions

Thus a new round of sanctions have appeared against Russia and Russians, on behalf of the USA and of the EU. Plus ça change, it is tempting to say. While it is inherently difficult to conduct counter-factual history, it seems reasonable to say that Western sanctions so far have had little impact on Russian policy in relation to Ukraine. And as Western military intervention in Ukraine would be both very difficult and probably counterproductive it may be feared that the USA and the EU are running out of options to keep Russia from threatening the integrity of the Ukrainian state.

Yet there is a fine balance to be trod here, between raising the cost for the Russian regime while ensuring that ordinary Russians are faced with a minimum of difficulties. This is why personalised sanctions have been directed against Russians and Ukrainians deeply involved in the Ukraine crisis, in Vladimir Putin's regime, or both. And it is why the EU, in particular, and to some extent the USA is careful imposing sanctions that may further disrupt the Russian economy. Certainly, the latest round of sanctions may have been inadequate: the Moscow stock market rose 1% on the news that more serious and wide-ranging sanctions were not imposed. Yet the Rouble continues to perform very poorly, and Russia is judged by some analysts to have witnessed $60bn capital flight already in 2014, equivalent to the total for all of 2013. Hence the amount of personalised sanctions can also be seen as a Western indication that no collective economic punishment of Russians or Russia is sought.

The personalised sanctions are only one side of the story, though. Although some American politicians, in particular, continue to clamour in vain for widespread sanctions on Russian financial institutions and energy companies, other industry sectors are being severely hit by the USA, in particular. Previously, the White House had banned NASA from having any contact with the Russian government, apart from issues concerning the International Space Station (which is currently only accessible with Russian rockets). Now, the USA is denying export licences to Russia for any high-technology items that may contribute to Russian military capabilities. Existing licences of this kind are being revoked. This is unlikely to hamper Russia's military ability in the short run. Russia remains a globally significant arms exporter in its own right, does currently have some sophisticated military hardware, and can probably buy more from China if required. What these sanctions will do, however, is to prevent Russians from learning from their cooperation with American colleagues in a range of spheres, including space technology where the two countries have previously cooperated extensively on the development and deployment of sattelites.

More fundamentally, by sanctioning high-tech cooperation with Russia the USA is putting Russian development on the spot. Under the previous Russian President, Dmitry Medvedev (currently Russian Prime Minister) technological development officially became a high priority for the state, most obviously exemplified in the Skolkovo innovation centre. The fetichising of technological development as a symbol of success, and perhaps even a symbol of civilisation, has deep roots in Russian and Soviet history. And always a Western connection appears. Peter the Great drags Russia definitively into the European system of states by copying techniques of shipbuilding and administration assessed during his extensive stay and even work in the Dutch Republic and in England. Emperors following in his wake were mostly only too keen to obtain and implement for their own uses Western technologies that could improve Russian infrastructure, industrial production and, indeed, arms. Even the Bolshevik leadership, so ready straightaway to announce its departure from everything to do with the "bourgeois" system of states, happily invited American engineers, architects and other technological developers to teach and develop the first generation of Soviet technical experts. And the Russian Federation has similarly taken advantage of technological cooperation with the West.

All this does not mean that Russia and Russians had no technological developments of their own. As the space race showed, when the Soviet state put its mind to something results did follow. Today, Russian technical experts, not least in the computer industry, remain sought for all over the world. What Russia does lack, however, is a sustainable infrastructure helping to support, maintain and develop its high-tech industries. It is all very well that President Vladimir Putin now obliquely threatens the West with possible future energy disruptions; or that Finance Minister Anton Siluanov foresees no immediate danger for Russian companies from the sanctions. If the repercussions from the current crisis drag into the far future, and they most likely will, then the Russian regime has to adjust its policies and mentality to technological autarky, as well as autarky in a number of other spheres. Russia may have the resources to do this, for a while anyway. Whether its regime has the will to do so is a different matter.

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