Russia's Geoeconomic Shift from Greater Europe to Greater Eurasia

Professor Glenn Diesen

Liberal theory suggests that economic interdependence creates peace as both sides gain economically from peaceful relations. However, liberal theory is deeply flawed as it assumes states prioritise absolute gain (both sides gain, and it does not matter who gains the most). Due to the security competition in the international system, states must focus on relative gain (who gains more). As Friedrich List recognised: “As long as the division of the human race into independent nations exists, political economy will as often be at variance with cosmopolitan principles”.[1]

In all interdependent relationships, one side is always more dependent than the other. Asymmetrical interdependence empowers the less dependent state to set favourable economic conditions and obtain political concessions from a more dependent one. For example, the EU and Moldova are interdependent, but the asymmetrical interdependence results in the EU preserving its autonomy and gaining influence.

The “balance of dependence” refers to a geoeconomic understanding of the realist balance of power. In an asymmetrical interdependent partnership, the more powerful and less reliant side can extract political power. The more dependent side therefore has systemic incentives to restore a balance of dependence by enhancing strategic autonomy and diversifying economic partnerships to reduce reliance on the more powerful actor.

Geoeconomic rivalry entails competing for power by skewing the symmetry within interdependent economic partnerships to enhance both influence and autonomy. In other words, to make oneself less reliant on others while increasing the dependence by others. Diversifying economic partnerships can reduce one’s own reliance on a state or region, while asserting control over strategic markets diminishes the capacity of other states to diversify and lessen their dependence.

The Geoeconomic Foundation for Western Dominance

The centuries-long geoeconomic dominance of the West is the product of asymmetrical interdependence by dominating new technologies, strategic markets, transportation corridors and financial institutions.

Following the disintegration of the Mongol Empire, the land-based transportation corridors of the ancient Silk Road that had fuelled trade and growth vanished. Subsequently, Western maritime powers rose to prominence from the early 1500s by asserting control over the main maritime transportation corridors and establishing “Trading-Post empires”. Leading naval powers, such as Britain, have therefore historically been more inclined towards free trade as they had more to gain and risked less by controlling the trade routes. The maritime strategies of Alfred Thayer Mahan in the late 1800s were founded on this strategic reasoning, as controlling the oceans and Eurasian continent from the periphery laid the basis for US military and economic power.

The advancements in the Industrial Revolution created an even more favourable balance of dependence in favour of the West. Adam Smith noted that the discovery of America and the East Indies were the “two greatest and most important events recorded in the history of mankind”.[2] However, he also recognised that the extreme concentration of power in Europe created an exploitative and destructive relationship:

“To the natives however, both of the East and West Indies, all the commercial benefits which can have resulted from those events have been sunk and lost in the dreadful misfortunes which they have occasioned. These misfortunes, however, seem to have arisen rather from accident than from anything in the nature of those events themselves. At the particular time when these discoveries were made, the superiority of force happened to be so great on the side of the Europeans that they were enabled to commit with impunity every sort of injustice in those remote countries”.[3]

Samuel Huntington similarly wrote:

“For four hundred years, intercivilizational relations consisted of the subordination of other societies to Western civilization… The immediate source of Western expansion, however, was technological: the invention of the means of ocean navigation for reaching distant peoples and the development of the military capabilities for conquering those peoples… The West won the world not by the superiority of its ideas or values or religion (to which few members of other civilizations were converted) but rather by its superiority in applying organized violence. Westerners often forget this fact; non-Westerners never do”.[4]

Following the Second World War, the US became the dominant power due to military power, but also geoeconomic power consisting of its large share in the global GDP, technological superiority, industrial dominance, the Bretton Woods institutions, control over strategic markets/resources, and control over key transportation corridors.

From Gorbachev’s Common European Home to “Greater Europe”

Following the demise of communism, Russia aimed to integrate with the West to form a “Greater Europe”, based on the ideas of Gorbachev’s concept of a Common European Home. Economic development and prosperity required integration with the West as the main economic centre in the international system.

However, the Americans and Europeans had no incentives to accept a Greater Europe. The West aimed to construct a new Europe without Russia, which required reviving bloc politics. The ultimatum to Russia was to either accept a subordinated position as the permanent apprentice of the West or be isolated and thus become economically underdeveloped and irrelevant. The West supported only European institutions such as NATO and the EU that incrementally augmented the collective bargaining power of the West to maximise asymmetrical interdependence with Russia. Making Russia obey the European institutions where Russia does not have a seat at the table is possible under extreme asymmetrical interdependence. Cooperation then entails unilateral concessions and Russia would have to accept decisions by the West.

The alienation of Russia would not matter if it kept getting weaker. William Perry, the US Defence Secretary between 1994 and 1997, recognised that his colleagues in the Clinton Administration were aware that NATO expansionism and the exclusion of Russia from Europe fuelled anger:

“It wasn’t that we listened to their [Russia’s] argument and said [we] don’t agree with that argument… Basically the people I was arguing with when I tried to put the Russian point…. the response that I got was really: ‘Who cares what they think? They’re a third-rate power.’ And of course that point of view got across to the Russians as well. That was when we started sliding down that path”.[5]

The dream of a Greater Europe failed due to Russia’s inability to create a balance of dependence within Europe. Moscow’s Greater Europe initiative aimed to obtain a proportional representation at the European table. Instead, the unfavourably asymmetrical partnerships with the West that followed enabled Western unilateralism veiled as multilateralism, in which the West could maximise both its autonomy and influence.

“Cooperation” was subsequently conceptualised by the West within a teacher-student/subject-object format, in which the West would be a “socialiser” and Russia would have to accept unilateral concessions. Russia’s decline would be managed as expanding the EU and NATO sphere of influence in the east gradually diminished the role of Russia in Europe. “European integration” became a zero-sum geostrategic project, and states in the shared neighbourhood were presented with a “civilizational choice” of aligning either with Russia or the West.

Moscow’s “Greater Europe” project was always destined to fail. The “leaning-to-one-side” policy by Yeltsin was not rewarded and reciprocated by the West, rather it made Russia vulnerable and exposed. Russia neglected its partners in the east, which deprived Russia of the bargaining power required to negotiate a more favourable format for Europe. Brzezinski noted that cooperation with the West was “Russia’s only choice – even if tactical”, and it “provided the West with a strategic opportunity. It created the preconditions for the progressive geopolitical expansion of the Western community deeper and deeper into Eurasia”.[6]

Putin Reforms the Greater Europe Initiative

Yeltsin conceded by the end of the 1990s that the “leaning-to-one-side” policy had been exploited by the West and called for diversifying Russia’s economic partnerships by becoming a Eurasian power. However, there were no powers in the East with the intentions or capabilities to challenge Western dominance. Putin attempted to revive the Greater Europe Initiative by ending the era of unilateral concessions and instead strengthening Russia’s negotiation power. Russia would not integrate into the West through unilateral concession, but integrate with the West as an equal.

Moscow began to embrace economic statecraft as the principal tool for restoring Russian power, and pursue incremental integration with the West. Re-nationalising energy resources ensured that the strategic industries of Russia worked in the interest of the state rather than oligarchs, who were courted by the West and tended to use these industries to impose their control on the state. However, the West resisted energy dependence on Russia as it risked creating more symmetry in relations and even giving Russia a voice in Europe. The narrative of the Russian “energy-weapon” was born as Europeans were told to reduce all dependence on Russia as the requirement for a more obedient Kremlin.

The Greater Eurasia Initiative

Russia’s Greater Europe Initiative eventually died when the West supported the coup in Kiev in 2014 to pull Ukraine into the Euro-Atlantic orbit. By making Ukraine a frontline instead of a bridge, it was evident that any incremental integration with Europe had been a utopian dream. Furthermore, the anti-Russian sanctions made it necessary for Russia to diversify its economic connectivity. Rather than seeking to resolve the Ukraine crisis by implementing the Minsk peace agreement, NATO began to build a Ukrainian army to change realities on the ground. Russia began to prepare for a future clash by making its economy sanctions-proof.

With the rise of Asia, Russia found a solution. Russia began to diversify away from excessive reliance on the West and embrace the new Greater Eurasia Initiative. Instead of being isolated at the periphery of Europe, Russia acquired economic strength and influence by developing new strategic industries, transportation corridors and international financial institutions in cooperation with countries in the East. While Russia is met with hostility in the stagnant West, it was embraced in the more dynamic East. Not only has the ambitions of Gorbachev’s Common European Home been abandoned, but the 300-year-long Western-centric policy since Peter the Great has also ended.

A strategic partnership with China is indispensable to construct a Greater Eurasia. Yet, Russia has learned the lessons from the failure of Greater Europe by avoiding excessive dependence on an economically stronger China. The asymmetrical interdependence that emerges in the framework of such a partnership enables China to extract political concessions, which would make it untenable for Russia in the long term. Moscow seeks a balance of dependence in its strategic partnership with Beijing, which entails diversifying economic partnerships across Greater Eurasia. As China does not seek a hegemonic role in Greater Eurasia, it has welcomed Russia’s efforts to diversify its economic partnerships.

Under the Greater Europe Initiative, the Europeans had access to cheap Russian energy and enjoyed a huge Russian market for exports of manufactured goods. Furthermore, Russia’s geoeconomic strategy to integrate with the West resulted in preferential treatment for Western corporations. Under Greater Eurasia, Europe will undergo deindustrialization as the cheap Russian energy and market opportunities go to Asia, which also enhances the competitiveness of Asia vis-a-vis Europe. The Europeans continue setting their own house on fire with reckless sanctions, in the hope that it will also hurt the Russian economy. However, while Europe cannot diversify away from Russia, Russia can diversify away from Europe.

Ideally, Europe would be one of Russia’s many economic partners in the Greater Eurasia Initiative. The revival of militarised dividing lines on the European continent makes the Europeans excessively reliant on the US and Russia becomes too dependent on China. It is therefore strong systemic incentives to restore some economic connectivity between the Europeans and Russians after the Ukraine War, although it will be within a Greater Eurasian format as Greater Europe can no longer be revived.

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[1] List, F. 1827. Outlines of American Political Economy, in a Series of Letters. Samuel Parker, Philadelphia.

[2] A. Smith, An Inquiry into the nature and causes of the Wealth of Nations, Edinburgh: Adam and Charles Black, 1863, p.282

[3] J. Borger, ‘Russian hostility 'partly caused by west', claims former US defence head’, The Guardian, 9 March 2016.

[4] S.P. Huntington, The Clash of Civilizations and the Remaking of World Order, New York, Simon and Schuster, 1996, p.51.

[5] Ibid.

[6] Z. Brzezinski. The Choice: Global Domination or Global Leadership. Basic Books, New York. 2009. P. 102.

[Many thanks to Matthew Alford for the audio reading of this article.]

The article is based on excerpts from my previous article with the same title: Glenn Diesen, ‘Russia, China and the "Balance of Dependence" in Greater Eurasia’, Valdai Dicussion Club, March 2017