RUSSIA in GLOBAL AFFAIRS Vol. 6•No. 2•APRIL – JUNE•2008 Contents Choosing a Path Fyodor Lukyanov 5 Transition in Progress The Fork in the Road in 2008 Dmitry Furman 8 Putin’s decision marks a step toward the modernization of Russian mental- ity that was fashioned by centuries of tsarist autocracy, which suggested that “once a Tsar, always a Tsar.” Second, it implies divesting supreme power of the sacral and personified properties. Third, it sets a precedent whereby a ruler submits himself to “a piece of paper” – the Constitution. Transition Without a Destination Alexander Lomanov 20 Russia and China have vehemently rejected the model of external “man- agement by objectives.” They have been quite successful in effectuating a “transition without a destination” or, in other words, a type of transforma- tion that does not envision a merger with already existing organizations on terms set forth by the latter. A Special Case? Arkady Moshes 35 Ukraine may simply remain an exceptional case in the territory of the for- mer Soviet Union – an interim transitional type, a country treading after its Central European neighbors, but never catching up with them as regards the development of democratic institutions or the degree of economic modern- ization. And yet it may implement the declared “European choice” in one form or another. Russia and Global Inflation: The Unanticipated Crisis Martin G. Gilman 51 We should recall what Keynes wrote in 1919: “Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency… Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency.” Contents Foreign Policy – From the Past Into the Future About the Past That Still Continues Anatoly Adamishin 60 It is becoming increasingly obvious that decisions made by the end of the Cold War still shape the international situation. Since there is not much optimism about the current state of affairs in the world, there are many dis- cussions as to whether politicians missed some rare chances at that time. In its actions toward Gorbachev in 1989-1991, the U.S. administration was guided by the rule “Give nothing, take everything, demand more.” A Time to Cast Stones Timofei Bordachev & Fyodor Lukyanov 78 Russia’s gradual but irreversible return to the global economy and politics opened up new opportunities – and simultaneously set new requirements and structural restrictions to the national foreign policy. Russia emerged a full-fledged player in global politics in the first years of this century and dis- played a conduct completely proportionate to that politics. Strategic Pursuits: Ups and Downs The Gains and Failures of the Energy Superpower Andrei Denisov & Alexei Grivach 96 Russia failed to choose the correct tone that would facilitate building a steady system of mutually beneficial barter relations (energy resources for technologies and access to mineral wealth for access to markets). This is due in no small degree to major changes in the global situation that occurred after Putin’s election as president. Breakthrough Into the Global Arms Market Alexander Rybas 109 Russia’s present capabilities in promoting its armaments on the global mar- ket exceed the defense industry’s ability to fulfill current and potential con- tracts. The further growth of military exports is mainly limited by produc- tion capacity. The technological modernization of the Russian defense sec- tor and a marked improvement in the quality of its management must be a top priority task for the country in the next few years. Dictatorship of Law: Interim Results Vladimir Ovchinsky 120 The years of the Putin presidency saw controversial processes in the law enforcement system. The team of the new president will have no other choice other than to step up attacks on corruption and organized crime. The authorities will have to fight with embezzlers and gangsters at an outpacing rate. Otherwise not a single national project or program will ever bring the expected benefits. Nation-Building The Power Vertical and the Nation’s Self-Consciousness Ivan Sukhov 134 It is difficult to imagine how a country that has a huge and ethnically diverse population that does not feel united can experience stable development. Russia has not been “Soviet” for a long time and is gradually becoming an increas- ingly non-Russian country; however, the governing officials often behave as if they do not see the tectonic shifts that spark open conflicts and clashes. RUSSIA IN GLOBAL AFFAIRS VOL. 6 • No. 2 • APRIL – JUNE • 2008 Contents Russia – A Society Without Traditions Facing Modern Challenges Emil Pain 149 Any hopes to resolve the problems facing Russia today by derelict methods of state mobilization are a sheer illusion. Russia has lost its traditionalism and the goal it faces today is not so much to move forward, but, rather, to restore a balance between the elements of state and society that have already been reformed and those that still remain intact. It cannot be ruled out that ethnic consolidation in Russia could open up the road to the rise of a polit- ical nation – the way it happened in most European countries. The European Choice? Options for the EU-Russia Strategic Partnership Agreement Vladimir Pankov 172 From the point of view of the vital and long-term interests of Russia and the EU, it would be more preferable for them to conclude a Strategic Partnership and Cooperation Agreement than a modified and improved PCA in the form of PCA-2. However, in the last three to five years, Brussels has been less inclined to look for mutually acceptable compromise solutions. How to Undo the Gordian Knot in EU-Russia Relations Kari Liuhto 185 If all customs checkpoints between the EU and Russia are taken into account, we have – at every minute around the clock – lines of trucks stretching for tens of kilometers. A common goal should be that no truck is forced to wait more than four hours in a line before customs formalities begin. Economics as a Catalyst for Politics? Susan Stewart 193 It has become fashionable to speak of a “crisis” in relations between the EU and Russia. However, this language obscures the fact that developments in the political and economic spheres have been proceeding in quite different ways. It is possible, if not necessarily likely, that the new constellation of the political elite in Russia will take a more cooperative line toward the EU and the West in general. How to Rescue the Partnership? Sabine Fischer 199 It is difficult to call Russia and the EU strategic partners. However, due to the many interdependencies, the EU and Russia have considerable potential for fruitful cooperation on all levels of their relationship. If both sides make use of this potential, there is a realistic chance that a substantial strategic partnership might develop in the future. RUSSIA IN GLOBAL AFFAIRS VOL. 6 • No. 2 • APRIL – JUNE • 2008 Published quarterly RUSSIA IN GLOBAL AFFAIRS BOARD OF TRUSTEES EDITORIAL BOARD Sergei KARAGANOV, Chairman Vladimir POTANIN (Chairman) Martti AHTISAARI Andrei KOKOSHIN Vladimir POZNER Interros Holding Company (Finland) Mikhail KOMISSAR Sergei PRIKHODKO Sergei GENERALOV Graham ALLISON (U.S.A.) Vyacheslav KOPIEV (in a personal capacity) Industrial Investors Ltd. Alexei ARBATOV Mikhail KOZHOKIN Yevgeny PRIMAKOV Andrei KUZYAEV Lev BELOUSOV Yaroslav KUZMINOV Vladimir RYZHKOV LUKoil Overseas Holding Ltd. (Deputy Chairman) Boris KUZYK Horst TELTSCHIK C. Fred BERGSTEN (U.S.A.) 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