Why no one loves Russia

I have occasionally toyed with the idea of forming a ‘Friends of Russia’ club in London, but have been discouraged by the thought that its membership would be distressingly small. Nowadays the ‘case for Russia’ can hardly get a hearing in the western world; disapproval of Russia dominates the media; it rose to a crescendo with its ‘invasion’ of Georgia.

True enough, there has been some recognition that Saakashvili behaved foolishly, and some criticism of the United States for having egged him on. There is at least a minority feeling, especially in Germany and France, that the question of Georgia’s and Ukraine’s membership of NATO should not be pressed at present. But there was no support at all for Russia’s response to Saakashvili’s ‘aggression’. In fact the majority feeling among policy makers and commentators was that Russia had behaved extremely badly and would have to pay a significant cost.

This cost is already being paid: the RTS index fell by 12% in the days after Russia’s military intervention. This followed another big slide in August after Putin’s outburst against Mechel, confirming a fall of 40% in the value of Russian stocks since May, with investors losing $500bn over the period. Of course, straightforward economic factors like the fall in the price of oil contributed to the slide in the market; but political ‘bad news’ has played a part. Investment in Russian assets is now thought to carry a substantial political risk.

This is not all due to Russian foreign policy. Earlier this week I asked a well-known American investment adviser why he had not mentioned Russia in his speech on investment opportunities in emerging markets. ‘Oh, it would come at the bottom of my list’, he replied. ‘Why?’. ‘There’s no rule of law’, he replied. Russia paid, and continues to pay, a high price for the hounding of Khodorkovsky in 2003.Investors have –wrongly – interpreted subsequent disputes involving Shell and BP –in each of which the Russians had a reasonable case – in the light of the Yukos affair.

Roland Nash of Renaissance Capital posed the key question: ‘Does Russia want investment or not?’ But it is part of a larger discussion: Do Russian leaders care what the west thinks of Russia? They did seem to care, even in Putin’s first term as president, but now their attitude seems to be ‘Take us on our terms or get out’. Russian officials pay lip-service to the rule of law, but not if it interferes with their discretion to rearrange property rights. They talk of ‘partnership’ with the West, but intervene in Georgia, heedless of the risk it carries of a new ‘cold war’.

No doubt temporary oil power lies at the back of Russia’s newly inflated economic and political assertiveness, but this is not the whole story. The West, and particularly the United States, must also carry a heavy responsibility for re-igniting Russian nationalism.

With the fall of communism, America welcomed Russia as a ‘partner’ – but on its own terms. These terms included Russia surrendering its ‘sphere of influence’ in the Commonwealth of Independent States. Georgia and the Ukraine were independent: why should they not apply to join NATO? And why should NATO refuse them entry if they became suitably democratic? It is not altogether surprising that Russia should see in this disingenuous formula a plan for setting up American client states in its historic space.

Whereas the west sees in Georgia the rebirth of Russian imperialism, Russia sees itself as resisting American hegemony. Whoever is to blame for this impasse, one practical, and tragic, consequence is clear. It has become virtually impossible for anyone to be a liberal in Russia without seeming unpatriotic.