Russian Political, Economic, and Security Issues and U.S. Interests Jim Nichol, Coordinator Specialist in Russian and Eurasian Affairs March 31, 2014 Congressional Research Service 7-5700 www.crs.gov RL33407 Russian Political, Economic, and Security Issues and U.S. Interests Summary Russia made uneven progress in democratization during the 1990s, but this limited progress was reversed after Vladimir Putin rose to power in 1999-2000, according to many observers. During this period, the State Duma (lower legislative chamber) became dominated by government- approved parties, gubernatorial elections were abolished, and the government consolidated ownership or control over major media and industries, including the energy sector. The Putin government showed low regard for the rule of law and human rights in suppressing insurgency in the North Caucasus, according to critics. Dmitry Medvedev, Putin’s longtime protégé, was elected president in 2008; President Medvedev immediately designated Putin as prime minister and continued Putin’s policies. In August 2008, the Medvedev-Putin “tandem” directed military operations against Georgia and recognized the independence of Georgia’s separatist South Ossetia and Abkhazia, actions condemned by most of the international community. In March 2012, Putin was (re)elected president by a wide margin. The day after Putin’s inauguration in May 2012, the legislature confirmed Medvedev as prime minister. Since then, Putin has tightened restrictions on freedom of assembly and other human rights. Russia’s Economy Russia’s economy began to recover from the Soviet collapse in 1999, led mainly by oil and gas exports, but the decline in oil and gas prices and other aspects of the global economic downturn beginning in 2008 contributed to an 8% drop in gross domestic product in 2009. Since then, rising world oil prices have bolstered the economy, although reduced energy exports, faltering investment and consumer demand have contributed to slow economic growth in 2013. Other factors that retard economic growth include unreformed healthcare and educational institutions and high rates of crime, corruption, capital flight, and unemployment. Russia’s Armed Forces Russia’s armed forces now number less than 1 million, down from 4.3 million Soviet troops in 1986. In the 1990s and much of the 2000s, troop readiness, training, morale, and discipline suffered, and most arms industries became antiquated. Russia’s economic growth in recent years has supported greatly increased defense spending to restructure the armed forces and improve their quality. Mismanagement, changes in plans, corruption, manning issues, and economic constraints have complicated this restructuring. U.S.—Russia Relations After the Soviet Union’s collapse, the United States sought a cooperative relationship with Moscow and supplied almost $19 billion in aid for Russia from FY1992 through FY2010 to encourage democracy and market reforms and in particular to prevent the proliferation of weapons of mass destruction (WMD). In the past, U.S.-Russia tensions on issues such as NATO enlargement and proposed U.S. missile defenses in Eastern Europe were accompanied by some cooperation between the two countries on anti-terrorism and nonproliferation. Russia’s 2008 conflict with Georgia, however, threatened such cooperation. The Obama Administration worked to “re-set” relations with Russia and hailed such steps as the signing of a new Strategic Arms Reduction Treaty in April 2010; the approval of new sanctions against Iran by Russia and other members of the U.N. Security Council in June 2010; the accession of Russia to the World Trade Organization in August 2012; and the cooperation of Russia in Afghanistan as signifying the successful “re-set” of bilateral relations. Congressional Research Service Russian Political, Economic, and Security Issues and U.S. Interests Many observers argued that the Obama Administration’s efforts to foster improved U.S.-Russia relations faced challenges during election cycles and from legislative and other actions in both countries in 2012-2013. In late 2012, Russia ousted the U.S. Agency for International Development (USAID) from the country and criticized the help that USAID had provided over the years as unnecessary and intrusive. Russia also declined to renew a long-time bilateral accord on nonproliferation assistance (although a new more limited agreement was concluded in June 2013). H.R. 6156 (Camp), authorizing permanent normal trade relations for Russia, was signed into law on December 14, 2012 (P.L. 112-208). The bill includes provisions sanctioning those responsible for the detention and death of lawyer Sergey Magnitsky and for other gross human rights abuses in Russia. A Russian bill ending U.S. adoptions of Russian children appeared to be a reaction to the Magnitsky Act. President Obama canceled a U.S.-Russia summit meeting planned for early September 2013 on the grounds of lack of progress by Russia on bilateral cooperation, and the Administration announced in December 2013 that lower-level delegations would attend the opening and closing of the Olympic Winter Games in Sochi, Russia, in February 2014. U.S.-Russia relations sharply deteriorated following Russia’s deployment of military forces to Ukraine’s Crimea region at the end of February 2014. President Obama canceled plans to attend a G-8 (Group of eight industrialized nations) meeting to be hosted by Russia in Sochi in June 2014, some bilateral trade talks were halted, the Defense Department suspended planned military-to- military contacts, a visa ban and asset freeze were imposed, and the Administration and Congress explored other sanctions against Russia. After pro-Russian Crimean elements staged a referendum on March 16, 2014, that approved joining Russia, the Russian legislature and President Putin quickly approved formal annexation. Russia’s military forces also massed on its borders with the rest of Ukraine, threatening further incursions. As Russia moved to annex Crimea, President Obama issued further executive orders sanctioning individuals and one Russian bank. A revised G-7 meeting on March 24, 2014, announced that Russia was suspended from further proceedings. Congressional Research Service Russian Political, Economic, and Security Issues and U.S. Interests Contents Most Recent Developments: Russia’s Military Intervention and Annexation of Crimea ................ 1 Post-Soviet Russia and Its Significance for the United States ......................................................... 3 Political and Human Rights Developments ..................................................................................... 3 Background................................................................................................................................ 3 Putin’s First Two Presidential Terms: Consolidating Presidential Power .................................. 5 The 2008-2012 Medvedev-Putin “Tandem” .............................................................................. 6 Putin’s September 2011 Announcement of Candidacy for the Presidency ......................... 6 The December 4, 2011, State Duma Election ..................................................................... 7 The March 2012 Presidential Election and Its Aftermath ................................................... 9 President Putin Redux ............................................................................................................... 9 Human Rights Problems and Issues ........................................................................................ 13 The Magnitsky Case .......................................................................................................... 13 The Case of Punk Rockers Mariya Alekhina, Yekaterina Samutsevich, and Nadezhda Tolokonnikova ............................................................................................... 18 Other Moves against Oppositionists.................................................................................. 18 Raids against Nongovernmental Organizations Suspected to be “Foreign Agents” ......... 19 The Post-Sochi Olympics Restrictions on Human Rights ................................................. 21 Insurgency and Terrorism in the North Caucasus .................................................................... 21 U.S.-Russia Counter-Terrorism Cooperation .................................................................... 26 Defense Reforms ..................................................................................................................... 29 U.S. Perspectives ............................................................................................................... 31 Trade, Economic, and Energy Issues ............................................................................................. 34 Russian Economic Conditions ................................................................................................. 34 Russia’s Accession to the World Trade Organization (WTO) and PNTR for Russia .............. 35 Russian Energy Policy ............................................................................................................. 35 Foreign Policy ................................................................................................................................ 38 Russia and the West ................................................................................................................. 38 Russia and the European Union