Background
“Given this history, it would be tempting, especially for a strong nationalist government, to divert attention from domestic economic problems by embarking on foreign military adventures. But, the grim truth is that … modern Russia does not have the economic wherewithal to sustain foreign military action.”
Written in the InterAction Council’s Chairman’s Report in 2000, these words may prove equally true today. Russia’s Prime Minister Dmitry Medvedev has indeed admitted to the Gaidar Economic Forum that, “Russia’s GDP does not match its capacity or ambition.”
Economic indicators for Russia are troubling. The World Bank expects Russia’s GDP to drop 2.9 percent in 2015; inflation hit 11.2 percent in December; interest rates were raised from 10.5 percent to 17 percent; and the ruble is down 50 percent against the U.S. dollar. Standard & Poor’s has warned that Russia will likely have its debt downgraded to “junk” early in the year. At the same time, oil prices, which drive the Russian economy, have dropped below $45 per barrel for the first time since 2009.
As a result of its economic downturn, Russia’s Minister of Finance has announced that they will cut budgets in all departments by 10 percent. The sole exception is defence. Russia has also announced that it will continue a major rearmament plan with additional resources going to Crimea, Kaliningrad and the Arctic.
The United States, European Union, and Canada have imposed sanctions on the export of goods and technology to Russia, as well as sanctions on several Russian individuals. The Canadian ban includes technology used in the oil and gas industry. Russia is turning to its neighbour China to fill the gap in terms of both products and capital.
While relations with China may be stable, the situation in Ukraine remains volatile. Pro-Russian forces took control of the Crimean peninsula in February. A referendum led to the breakaway territory re-joining Russia, from which it became independent in 1991. The European Union, Canada, and the United States condemned the vote as illegal, but Russia maintains that the vote was fair, reflecting the democratic wishes of the people of Crimea.
The situation in Crimea remains an ongoing source of diplomatic tensions, difficult to isolate from other major areas of concern where Russia is also involved, such as Syria and Iran. Russia’s cooperation is needed to move ahead on multilateral issues like small arms and light weapons and especially in the United Nations Security Council. Even the remote Arctic is not immune to impact of the events in faraway Crimea with Canadian officials boycotting Arctic Council (an intergovernmental forum of Arctic states that mostly addresses environmental issues) working group meetings in Russia. How then will important global issues be impacted by the Crimean crisis?
If the American public is to believed the world may be on the precipice of a new Cold War. In a Gallup Poll in March 2014 half of respondents told the polling firm that they believe the United States and Russia were heading back into a Cold War.
The 2000 Chairman’s Report asserted that: “reforms have previously been enacted when the oil price was low and sense of crisis imminent.” Today Russia finds itself in a situation where the price of oil is low and diplomacy is strained. This gives us pause to ask, “Is Russia at the point where there is a sense of imminent crisis?”
Meeting Outline
The experts will be asked to deliberate:
- What does the future hold for Russia?
- How should the world respond to Russia’s actions in Crimea?
- What course will the Russian economy take as it faces sanctions and a low price of oil?
- What effects will the Russian economy have on the global economy and how can negative effects be contained?
- How will economic challenges impact Russia’s political system?
- What effects will the current situation with Russia have on its neighbours, its allies, and global diplomatic affairs?
- What impact will deteriorating relations between Russia and other countries have on other important issues, such as Syria, Iran, Arctic, the United Nations, etc.?
List of Participants
InterAction Council Members
1. The Rt. Hon. Jean Chrétien, Co-Chairman (former Prime Minister), Canada
Secretary-General
2. Dr. Thomas S. Axworthy, Distinguished Senior Fellow, Munk School of Global Affairs, University of Toronto (Canada)
Special Guests
3. Ms. Katherine Balabanova, Toronto Regional Director and National Coordinator, Canada Eurasia Russia Business Association (Russia)
4. H.E. Ambassador Mona Elisabeth Brøther, Ambassador of the Kingdom of Norway to Canada (Norway)
5. Prof. Tony Burman, Distinguished Visiting Professor of Journalism, Ryerson University; Former Head CBC News and Al Jazeera English in Qatar (Canada)
6. Ms. Heather A. Conley, Senior Vice President for Europe, Eurasia, and the Arctic; and Director, Europe Program, Center for Strategic and International Studies (U.S.A.)
7. The Hon. Irwin Cotler, Emeritus Professor of Law at McGill University; former Minister of Justice and Attorney General of Canada; International Human Rights Lawyer (Canada)
8. Mr. David Crane, Founder, Canada in the 21st Century (Canada)
9. Dr. Brian Lee Crowley, Managing Director, Macdonald-Laurier Institute (Canada)
10. H.E. Ambassador Alexander N. Darchiev, Ambassador and Plenipotentiary of the Russian Federation to Canada (Russia)
11. Dr. Piotr Dutkiewicz, Professor of Political Science and the Director of the Centre for Governance and Public Policy, Carleton University (Poland)
12. H.E. Ambassador Teuku Faizasyah, Ambassador of the Republic of Indonesia to Canada (Indonesia)
13. Mr. Robert Fotheringham, Managing Partner, Fotheringham & Fang (Canada)
14. Dr. Fen Osler Hampson, Chancellor’s Professor, Carleton University; Distinguished Fellow & Director, Global Security & Politics, Centre for International Governance Innovation (Canada)
15. Dr. Randall Hansen, Director of the Centre for European, Russian, and Eurasian Studies, Munk School of Global Affairs, University of Toronto (Canada)
16. Mr. Grant Kippen, Chief of Party, International Foundation for Electoral Systems (IFES) in Yemen (Canada)
17. Mr. Andranik Migranyan, Director, Institute for Democracy and Cooperation (Russia)
18. Dr. Roland Paris, Director, Centre for International Policy Studies, University of Ottawa (Canada)
19. The Hon. Roy J. Romanow, former Premier of Saskatchewan (Canada)
20. Mr. Marko Shevchenko, Chargé d’Affaires a.i. of Ukraine to Canada (Ukraine)
21. H.E. Ambassador Werner Wnendt, Ambassador of the Federal Republic of Germany to Canada (Germany)
22. Mr. Borys Wrzesnewskyj, Former Member of Parliament for Etobicoke Centre (Canada)
23. Mr. Konstantin Zatulin, Director, Institute of CIS Countries in Moscow (Russia)