Foreign and Domestic Risks for Russia

The key foreign risk for Russia is the so-called "parting" with Europe. Currently, Europe and Russia cannot find common ground even on mutually beneficial issues. The key domestic risk is the continued unrest in the Caucasus.

On October 21-25, 2012 Valdai Club experts will tackle scenarios for Russia’s economic development at the Club’s 9th annual summit. Leading economists and analysts who will participate in expert discussions answered the most vital questions on Russian economy in the global framework in a series of interviews for the Valdai Club website. Special attention was paid to the global and internal risks, leadership, investment issues and Russia’s competitive advantages. interview with Alain Délétroz, Vice President (Europe), International Crisis Group.

Which foreign and domestic risks do you see for today’s Russia?

I think the key foreign risk for Russia is the so-called "parting" with Europe. Currently, Europe and Russia cannot find common ground even on mutually beneficial issues. This is dangerous both for Russia and Europe, since neither side can continue developing without the other.

The key domestic risk, I believe, is the continued unrest in the Caucasus. It is quite possible that the situation in the North Caucasus will not calm down unless the region secedes from Russia. That will be dangerous not only for Russia but for the entire Caucasus as well as for Europe.

Which is the lesser of two evils for Russia: record-high oil prices or record-low prices?

This is a very good question. I believe there should be a right balance, a golden mean. If oil is too expensive, the economy can come to a standstill, and if it is too cheap, it could negatively impact exporter countries. A golden mean is a dream that can only exist under a global government or some kind of a global committee that sets prices.

Budget priorities: Saving or investing?

I believe in times of crisis like the one we are experiencing today the best policy is to invest in the future. We don’t know what results the current political and economic policies of the European Union and especially its southern member-states will have. I am afraid they will be negative.

In this sense, we should emulate the policies of the New Deal implemented by President Roosevelt during the Great Depression in the U.S. in 1930s. It involved government investment in infrastructure and society and ultimately saved the country. The best time for investment is times of crisis, and therefore, I am afraid that everything that is currently happening in the European Union is a mistake.

What is more important to Russia - social stability or the development of governing institutions?

Both are important. Obviously, social stability is a very important factor. If a country has good public institutions and no unemployment, people will be satisfied with their lives and won’t be interested in terrorist and extremist movements.

Where do you see the Russian economy’s competitive advantages for the next 10-15 years?

Russia has its nature, its vast territory, and natural resources. Oil, gas, and other mineral resources are obviously very important, but equally important is agriculture. Before the revolution, Russia was Europe’s largest grain producer.

In 15 to 20 years, the world’s population will total around 10 billion people and the issue of food scarcity will be even more acute. In this regard, Russian agriculture can become a great asset for the world. The second but no less important factor is science. It suffered significantly following the collapse of the Soviet Union and, therefore, Russia has to invest in the development of science and technology of the future.

How would you assess the quality of Russian leadership inside and outside the country, as well as the quality of global leadership in general?

Currently, there is a certain lack of leadership in the world. The world is in search of new leaders, but there are very few of them, particularly among great powers. Considering the situation in the world, it is impossible to identify a single dominant power that can solve global issues.

Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.