Is Putin going soft?

'The Valdai Club' is an annual public relations exercise for the Russian leadership. A group of international think-tankers, academics and journalists gathers in a Russian region and then meets President Vladimir Putin and his senior ministers. This forum has not been particularly successful PR: in recent years much of the world’s press has written critically about the Kremlin. Last month, however, when the club gathered for the tenth time, by the shores of Lake Valdai in Northern Russia, some of the discussions were positive for Russia’s image.

Putin had a clear message for the outside world: Russia’s political system is starting to open up, at least at the local level. He also spoke gently about the US. Only on the fraught question of Russia’s relations with neighbouring Ukraine and Moldova did Putin appear – to a western audience – somewhat harsh.

What accounts for Putin’s softer approach to domestic politics and to Washington? Russia’s mounting economic problems, the opposition’s surprisingly strong showing in September’s local elections and the emerging US-Russian consensus over Syria’s chemical weapons are probably relevant.

In the final session of the Valdai Club, broadcast live on Russian TV, a relaxed and confident Putin sat on a panel with three European grandees: François Fillon (former French prime minister), Romano Prodi (former Italian prime minister) and Volker Rühe (former German defence minister). They urged him to listen to young Russian protestors and to take seriously ‘the responsibility to protect’ Syrians. In the audience were opposition leaders who questioned Putin on electoral fraud and the imprisonment of activists. He answered calmly that Russia was “on the way to democracy” and reminded everyone that the recent elections in Moscow, where Alexei Navalny scored 27 per cent, and in Yekaterinburg, where Yevgeny Roizman (another opposition politician) became mayor, had been free and fair.

Given Putin’s track record, one should treat his words with scepticism. But an earlier session with one of his chief advisers had surprised participants. “The trend for fair elections will be more pronounced; there will be more political competition in future”, said the adviser. “Yekaterinburg and Moscow were successes that should be repeated elsewhere.” The adviser urged opposition parties to focus on municipalities, hinting that it was too soon for them to win regional governorships or national elections. I asked opposition politicians what they made of all this. Vladimir Ryzhkov (a liberal) and Ilya Ponamarev (a leftist) told me that the Kremlin really had taken a new approach – though it could still use the courts to clobber anyone considered a threat.

One reason for this modest political opening may be the economic slowdown, which is likely to fuel unrest. Perhaps Putin and his advisers want to create channels for peaceful protest that they can control. Having grown at about 4 per cent a year in the previous three years, the Russian economy may not achieve 2 per cent growth in 2013, despite a favourable oil price. Foreigners and Russians are investing less. The brain drain and capital flight continue. The technocrats running the economy know that politics is holding it back. One former minister told the Valdai Club that “the keys to improving the economy are independent courts and the protection of property.” Investment would suffer so long as the courts remained subject to the whim of the executive, he said.

Putin and his ministers were uncharacteristically polite about Obama, welcoming co-operation with him over Syria’s chemical weapons. Yet very recently their relations with Washington had been toxic, with rows over the Syrian civil war, Russia’s granting of asylum to Edward Snowden and US plans for missile defence. Obama cancelled a summit that had been due in September.

The reasons for the Kremlin’s shift of tone towards the US are unclear. The Russians worry a lot about their citizens fighting in Syria and Afghanistan, and then returning to infect Russia’s Muslim regions with Islamic extremism. They want the Americans to help to manage the situation in both war-zones. Perhaps the Russians think they can be magnanimous to those who misread the Middle East: they always said that the Western response to the Arab spring was naïve, that Arab countries were incapable of democracy and that it would all end in tears. They feel vindicated by events in Egypt, Libya and Syria.

Notwithstanding the politeness, Putin’s entourage can still be hostile, if not paranoid towards the US. I asked one minister if NATO remained a threat to Russia’s security. “Of course, why else does it try to creep as close as possible to our borders?” he answered. “It has punished regimes it dislikes – Yugoslavia, Iraq and Libya – without any regard to the UN Security Council.” He accused NATO of deceiving Russia by enlarging after promising it would not (which is partly true) and said that Russia could not be a friend of NATO unless it renounced further enlargement.

Most Russians share this suspicion of NATO. And they believe that NATO wants to absorb Ukraine – though in fact that idea that has virtually no support in Kiev or the major western capitals. It is true that the EU hopes Ukraine will sign both a ‘deep and comprehensive free trade agreement’ and an ‘association agreement’ in Vilnius in November, as part of its ‘Eastern Partnership’. The EU also hopes that Moldova, Georgia and Armenia will sign similar deals. Putin wants to stop these countries signing as they could then not join the Customs Union established by Russia, Belarus and Kazakhstan. Putin is keen for the Customs Union to expand into much of the former Soviet Union and to evolve into a more powerful ‘Eurasian Union’.

Russia is using bully-boy tactics to prise countries away from the Eastern Partnership. In August it blocked imports from Ukraine for several days, saying this was a ‘dress rehearsal’ for the measures it would have to take if Kiev went with the EU. And it told the Moldovans that they would have their gas cut off, their exports blocked and their migrant workers expelled from Russia (Moldovan exports of wine to Russia were stopped in September, but the EU, to its credit, said that it would import an equivalent number of bottles). What the Russians told Armenia is unclear, but in September it decided to join the Customs Union rather than the Eastern Partnership. Countries in the EU have also been targeted by Russia: earlier this month, Lithuania – presumably because it is hosting the Vilnius summit – found its dairy products excluded from the Russian market for a week.

The Russians have genuine concerns about the Eastern Partnership, since it will affect their trade with their neighbours. Putin told the Valdai Club that EU goods would flood into the countries of the Eastern Partnership; Ukraine and Moldova would therefore have to dump the goods that they produced on the Russian market; and then Moscow would be forced to take protective action. The Russians may have a point that the EU should have made more effort to talk to them about the impact of the Eastern Partnership. Nevertheless Ukrainian and Moldovan participants in the Valdai Club reported that Russian bullying is damaging the appeal of the Customs Union in their countries. Armenia is a special case: it dare not cross Moscow, since only Russian troops prevent Azerbaijan from invading the territory of Nagorno-Karabakh, currently occupied by Armenian forces.

Besides Armenia, Russia cannot count any neighbour as a true friend. It has been slow to understand that ‘soft power’ – the appeal of a country’s social, economic and political system, and of its behaviour – may achieve as much as machismo. Russia’s leaders appear to see the value of treating the opposition, and possibly the Americans, with a little more courtesy. They should try the same with their neighbours.

Charles Grant is director of the CER. A different and shorter version of this article appeared in the print edition of the New Statesman of October 11th to 17th.