Russian Strategy Research Articles

European FDI for Emerging Market: The German Firm Strategy in Russia

This case focuses on the challenge of the Knauf Group strategy development for the Russian market. Knauf's active investment policy led to the growth of its brand recognition in the construction materials market and allowed for the creation of a strong premium brand. As a result, the company acquired a highly competitive position in the Russian market. Management had plans to increase investment in Russia, especially in the North-West region of the Russian Federation. However, in the year 2005 the company got rid of one of its most successful businesses, the Pobeda Knauf Masonry Mill in Kolpino just outside of St. Petersburg. The decision to focus on the production of gypsum products and related materials was made. Up to the moment of the sale of the Masonry Mill to a major Russian construction company LSR, the management of the factory had been conducted according to the same principles as were in force in Knauf's other businesses. The management focused on a strategy of quality, active marketing and improvement of the enterprise's organizational structure. After twelve years of success in the Russian construction materials market, Knauf sold its successfullyfunctioning manufacturing facility to its direct competitor, the Lenstroyrekonstruktsiya Group. This might either be evidence of the fact that Knauf is aspiring to more narrowly define its core competency via staying away from non-core activities, or perhaps, is an indication of the loss of its control over its affiliates and the decrease of its competitive positions in the North-West market of the Russian Federation.

Why Doesn't Russia Join the WTO?

Click to increase image sizeClick to decrease image size Acknowledgements He would like to thank Julija Remeikaite for excellent research assistance and Fred Bergsten, Harry Broadman, Gary Hufbauer, Jeffrey Schott, David Tarr, and Victor Winston for useful comments. Notes 1. Peter Mandelson, “Russia, Its Future and the WTO,” Moscow, Russia, March 27, 2007, http://europa.eu/rapid/pressReleasesAction.do?reference=SPEECH/07/192&format=HTML&aged=1&language=EN&guiLanguage=en. 2. Vladimir Putin, “Poslanie Presidenta RF V.V. Putina Federal'nomu Sobraniiu Rossiiskoi Federacii” (Address of President V.V. Putin to the Federal Assembly of the Russian Federation), Rossiskaya Gazeta, April 19, 2002. 3. See Patrick A. Messerlin, Measuring the Costs of Protection in Europe: European Commercial Policy in the 2000s (Washington, D.C.: Institute for International Economics, 2001). 4. The board contained about 25 top businessmen, including Aleksandr Abramov, Vagit Alekperov, Anatoly Chubais, Oleg Deripaska, Vladimir Evtushenkov, Mikhail Fridman, Vladimir Lisin, Andrei Malnichenko, Aleksandr Mamut, Aleksei Miller, Aleksei Mordashov, Vladimir Potanin, Viktor Vekselberg, and David Yakobashvili. 5. See Michael P. Barry, “Russia, Agriculture, and WTO Accession,” Occasional Paper (Washington, D.C.: U.S.–Russia Business Council, 2004). 6. See Anders Åslund, “Russia's Economic Transformation under Putin,” Eurasian Geography and Economics 45, no. 6 (September 2004): 397–420. 7. See Anders Åslund, Russia's Capitalist Revolution (Washington, D.C.: Peterson Institute for International Economics, October 2007). 8. Vladimir Putin, “Poslanie Federal'nomu Sobraniiu Rossiiskoi Federatsii” (Address to the Federal Assembly of the Russian Federation), Rossiiskaia Gazeta, May 11, 2006. 9. Anders Åslund “The President's Turn Away from the Market,” Moscow Times, November 8, 2006, http://www.piie.com/publications/opeds/oped.cfm?ResearchID=684. 10. See Neil Buckley, Alan Beattie, and Eoin Callan, “Russia Reaches Bilateral Deal with U.S. for Entry to WTO,” Financial Times, November 11, 2006. 11. See Andrei Illarionov, “The Russian Leadership's Preparation for War, 1999–2008,” in Svante E. Cornell and S. Frederick Starr, eds., The Guns of August 2008: Russia's War in Georgia (Armonk, NY: M.E. Sharpe, June 2009), pp. 68–72. 12. See Vladimir N. Pregelj, “The Jackson–Vanik Amendment: A Survey,” CRS Report for Congress, 98–545, August 1, 2005, http://www.fas.org/sgp/crs/row/98-545.pdf. 13. See Thomas Rutherford, David Tarr, and Oleksandr Shepotylo, “The Impact on Russia of WTO Accession and the Doha Agenda: The Importance of Liberalization of Barriers Against Foreign Direct Investment in Services for Growth and Poverty Reduction,” in Thomas W. Hertel and L. Alan Winters, eds., Poverty and the WTO: Impacts of the Doha Development Agenda (Washington, D.C.: World Bank, 2005). 14. Vladimir V. Putin, speech, “Expanded Meeting of the State Council on Russia's Development Strategy through 2020,” February 8, 2008. 15. Anders Åslund and Andrew Kuchins, The Russia Balance Sheet (Washington, D.C.: Peterson Institute for International Economics, 2009). Additional informationNotes on contributorsAnders ÅslundAnders Åslund is a senior fellow at the Peterson Institute for International Economics

Neomercantilism and Energy Interdependence: Russian Strategies in East Asia

This article examines the potential for Russia's Siberian and Far East energy projects to create webs of interdependence with the major energy-importing countries of East Asia. Energy policy toward Asia is analyzed with reference to Europe's problematic energy dependence on Russia, where Moscow has supported attempts by state-owned companies like Gazprom to extend control over energy supply and distribution. This analysis finds that Moscow's neomercantilist energy strategy, designed to advance Russian state power, has been marginally more successful with the weaker, more energy-dependent states of Japan and South Korea. China, Asia's major rising power, is more sensitive to the prospect of becoming too dependent on Russia as a supplier of oil and gas, because dependence could constrain Beijing's global ambitions.

Problems of regional innovation strategy forming

The author considered problems and contradictions of modern innovation policy in Russia. It is shown, that at present time regions are removed from management of science-technical complex and spatial priorities are not produced. It is a serious factor of risk for conservation perspectives of innovation development for Russia. With taking into account of world experience main districts of rise effects regional police were formulated. It is underlined, that creation conditions for transformation of regional authorities in active subjects of innovation policy is necessary condition for building vital innovation system. It is shown, that state innovation policy must be constructed at combination of next principles: a) support science-technical potential of regions — generators of innovation and creation conditions for its realization; b) using of innovations for evening-out disproportions of social-economic development between regions; c) widening powers and financial possibilities of regions at management of innovation climate. Methodical approaches for making effective mechanisms of management of innovation processes of territory are opened. Typology of Russian regions with high and middle degree of innovation climate is proposed, which takes level of science and innovation potential of territory and also degree of comfort of social-economic conditions for development of innovation activity are offered. Peculiarities of innovation strategy for different types of regions are defined. This typology may be used for substantiation spatial priorities of innovation strategy of Russia.

Энергетическая стратегия России на период до 2030 г. (“ЭС-2030”)

The “Energy Strategy of Russia for the period up to 2013” warrants a significant buildup of oil and gas extraction. However, the actual state of things in these branches does not even point to the maintenance of their present level, quite apart from their increase. There are several reasons for it, but the main are violations in the management structure of the national geological survey. It is long past time to promptly restore the Ministry of Geology with all its divisions able to perform the green-field exploring over the vast domain of the country.

The Russian economy and the current crisis

The article describes the measures taken by government officials to aid Russia's economy in emerging from the depths of the financial crisis. The authors describe the complexity of this task by focussing on how objective policy-making is complicated by the personal interests of Russian political and business leaders. The political considerations involved in Russian recapitalisation schemes serves as the main political focus in the creation of a desirable recovery strategy. Elements crucial to the recovery of the Russian economy are discussed, including government efforts to support medium and small business, and the unique Russian strategy of dealing with system-forming enterprises.

Monitoring of the progress achieved in 2007–2008 in implementing the Energy Strategy of Russia for the Period Up to 2020

Progress achieved in implementing the main statements of the Energy Strategy for the Period Up to the Year 2020 is analyzed, and the indicators achieved in 2007 and 2008 are compared with their predicted values.

Dilemmas of the ‘Middle Continent’: Russian Strategy for Eastern Eurasia

Russia did not join the West, nor did it join the East. Russia's commitment to its strategic autonomy and independent foreign and security policy requires the preservation of a ‘middle continent’ that bridges and transcends Europe and Asia. Russia pursues a restorationist strategy for Eurasia but faces a three-way struggle: for its own autonomy as a great power; for resistance to absorption within the US-centred system of common strategic space; and for management of the dynamics between the emergent powers through negotiation between strategic partnerships and regionalisms. These dilemmas are even more complicated in relation to Eastern Eurasia, and in particular the Sino-Russian relationship.

Rebranding Russia: Norms, Politics and Power

This working paper argues that Russia is in the process of re-branding itself internationally, with a variety of normative arguments increasingly creeping into its wider international discourse. By appealing to norms, Russia tries to reformulate the key messages it sends to the world and implant the concept of its power worldwide. Yet given that Russia’s normative messages are often met with scarce enthusiasm in Europe, it is of utmost importance to uncover how the normative segment in Russian foreign policy is perceived, evaluated and debated both inside Russia and elsewhere. Within this framework, this paper focuses on a set of case studies highlighting the normative and non-normative dimensions of Russian foreign policy. These include Russia-EU transborder cooperation, Moscow’s policies towards Estonia, Poland, Ukraine/Georgia and the UK, Russian strategies in the ‘war on terror’ and energy issues. CEPS Working Documents are intended to give an indication of work being conducted within CEPS research programmes and to stimulate reactions from other experts in the field. Unless otherwise indicated, the views expressed are attributable only to the author in a personal capacity and not to any institution with which he is associated.

Russian Strategy for Cross-border Gas Pipelines

To cope with continuous growth in the world demand for gas, it is not enough to make simply continue investments on new gas field developments. At the same time the gas pipeline network has to be extended to new markets whenever a new gas producing region is created, since gas has no alternative transport measure from fields to market. The nature of pipelines is to form a "natural monopoly" because of the large investments required and the exclusiveness of competition. However, at the planning stage plans of cross-border gas pipelines are facing various types of competition. Russia, the largest gas producing country in the world, confronts competition of gas suppliers set by Turkmenistan and Azerbaijan for the market of China and the South Europe respectively, on the other hand Russia made China a gas-market competitor against the traditional European market, which allowed Russia to win a series of long-term sales and purchase agreements from European gas distributors. As the gas demand soars, Russia may notch a stronger position against both East and West due to its magnitude and flexibility of deliveries, which is being accomplished not through geopolitics but rather through competition in the market.

Russia's Declining Oil Production: Managing Price Risk and Rent Addiction

Two prominent American specialists on the Russian economy re-examine two key political explanations commonly advanced for the slowdown in Russian oil production after 2007, namely the high tax regime and increasing state control. The authors' objective is not to question the validity of these explanations, but rather to argue that the outcome (i.e., the slowing rate of oil output and revenues derived from it) was an intentional response to rising world prices rather than an undesired, negative consequence of Russian policies. More specifically, the authors outline the elements of a Russian strategy designed to avoid: (a) the launching of long-term investment programs in a high-oil-price environment, in which future world oil prices and the costs of lifting "new" East Siberian crude cannot be reliably predicted (thereby reducing price risk) and (b) expenditure of windfall profits to support noncompetitive enterprises in other sectors of the economy (curbing rent addiction). Journal of Economic Literature, Classification Numbers: E600, O130, Q430. 5 figures, 19 references, appendix.

Ukraine Since the War in Georgia

Click to increase image sizeClick to decrease image size Notes Dominique Arel, ‘Orange Ukraine Chooses the West, but Without the East’, in Ingmar Bredies, Andreas Umland and Valentin Yakushik (eds), Aspects of the Orange Revolution III – The Context and Dynamics of the 2004 Ukrainian Presidential Elections (Stuttgart and Hanover: ibidem-Verlag, 2008), pp. 35–53. Ukraine has a mixed presidential-parliamentary system, but one in which the powers of the president and the prime minister are constitutionally ill defined, in effect TSURting a dual executive and repeated political crises, with little respect on either side for the power of the court to adjudicate disputes. Yushchenko's chief of staff, Viktor Baloha, alleged that Tymoshenko had refrained from criticising Russia in public over Georgia in return for Russian financial support of her 2009 presidential bid. The prosecutor-general dismissed the charges. The constitutional crippling of the presidential office was later undone by Tymoshenko in an attempt to stave off new elections. Pavel Korduban, ‘Kyiv on Georgia: Diplomacy Awkward, Parties Divided’, Eurasia Daily Monitor, vol. 5, no. 157, 15 August 2008. Tony Halpin, ‘Nato Membership Vital to our Security, says Ukraine's President Yushchenko’, Times Online, 25 August 2008, http://www.timesonline.co.uk/tol/news/world/europe/article4602509.ece. Yulia Tymoshenko, ‘The Battle for Ukraine’, Project Syndicate, USA, 30 November 2004, available at http://www.tymoshenko.com.ua/eng/exclusive/publications/2490/. ‘Tymoshenko Bloc Draft Resolution in the Rada’, The Ukraine List, no. 430, 9 October 2008, http://www.ukrainian studies.uottawa.ca/pdf/UKL430.pdf. Council of the European Union, Extraordinary European Council, Presidency Conclusions, Brussels, 1 September 2008, available at http://www.ue2008.fr. ‘Our Ukraine Draft Resolution in the Rada’, The Ukraine List, no. 430, 9 October 2008. Taras Kuzio, ‘Party of Regions Splits over Georgia and NATO’, Eurasia Daily Monitor, vol. 5, no. 167, 2 September 2008. Stenographic report of the Ukrainian parliament (Verkhovna Rada), Second Session (Zasidannia druhe), 2 September 2008, available at http://portal.rada.gov.ua/. ‘Excerpts from Two Representative Surveys by the Kyiv International Institute of Sociology (KIIS) on Popular Perceptions of the War in Georgia’, The Ukraine List, no. 43, 9 October 2008. KIIS is one of the oldest and most respected polling organisations in Ukraine, known for the accuracy of its survey data. Respondents to this question were given the choice between ‘Joining NATO’ (17.4%) and ‘TSURting in Europe a new system of collective security with only EU members’ (10.6%). In another question, on ‘How would you vote, if a referendum were to take place next week on NATO’, 22.2% were in support (without the option of an EU security alliance). In other polls, support for NATO has been marginally higher. ‘Russia's Strategy: “What's Looming in Ukraine Is more Threatening than Georgia”’, Spiegel Online, interview with Vyacheslav Nikonov, 16 October 2008, http://www.spiegel.de/international/world/0,1518,584631,00.html. This stance is fairly representative of Russian discourse over Ukraine since Bucharest and Georgia. I am grateful to Keith Darden of Yale University for articulating this point to me. Joshua A. Tucker, ‘Next Stop, Ukraine?’, The New Republic, 13 October 2008. Dominique Arel, ‘Russian-Speakers, Autonomy, and Violence in Crimea and Transnistria’, unpublished manuscript. Since Crimea belonged to the Russian Soviet Republic until 1954, many among the older generation of Russians were technically born in ‘Russia’. Many more emigrated from Russia. Writing shortly after its signing, James Sherr foresaw that it would not constrain Ukraine's aspirations towards NATO. See James Sherr, ‘Russia-Ukraine Rapprochement?: The Black Sea Fleet Accords’, Survival, vol. 39, no. 3, Autumn 1997, pp. 33–50. A clause indicated that the treaty would be automatically renewed, unless a party objected by October 2008. The clause does not technically pertain to the Black Sea Fleet agreements, which established a uninterrupted 20-year lease. ‘Ukraine: No Russian Black Sea Fleet Lease Extension’, Associated Press, 23 October 2008. Roundtable on The War in Georgia and Its Implication for Ukraine, Fourth Annual Danyliw Research Seminar in Contemporary Ukrainian Studies, Chair of Ukrainian Studies, University of Ottawa, Canada, 24 October 2008. Adrian Karatnycky, ‘Ukraine and NATO on the Eve of the December 2008 Summit’, Roundtable on The War in Georgia and Its Implication for Ukraine. Taras Kuzio, ‘Ukraine's Security Vacuum’, Ukraine Analyst, vol. 1, no. 3, 14 October 2008. ‘Excerpts from Two Representative Surveys’. To the question ‘Does a military threat exist in Ukraine in case of an aggravation of the conflict between Russia and Georgia, taking into account the fact that the Black Sea Fleet is based in Sevastopol?’, 14.4% answered ‘yes’, 20.4% ‘probably yes’, 26.9% ‘probably no’, and 25% ‘no’. Additional informationNotes on contributorsDominique ArelChair of Ukrainian Studies at the University of Ottawa.

Environmental Issues in Russia

This review examines the literature available on the state of the environment and environmental protection in the Russian Federation. As the largest country on Earth, rich in natural resources and biodiversity, Russia's problems and policies have global consequences. Environmental quality and management are influenced by the legacy of Soviet economic planning and authoritarian governance, as well as by Russia's post-Soviet economic recession and current strategies of economic development. Russia achieved a reduction in some pollutants owing to the collapse of industrial production in the 1990s, but many environmental indicators suggest growing degradation. Russia has signed on to a number of international environmental agreements, but its record on implementation is mixed, and it discourages environmental activism. Scholarship on the Russian environment is a limited, but growing, field, constrained by challenges of data availability, yet it offers great potential for testing scientific and social scientific hypotheses.

Environmental Issues in Russia

This review examines the literature available on the state of the environment and environmental protection in the Russian Federation. As the largest country on Earth, rich in natural resources and biodiversity, Russia's problems and policies have global consequences. Environmental quality and management are influenced by the legacy of Soviet economic planning and authoritarian governance, as well as by Russia's post-Soviet economic recession and current strategies of economic development. Russia achieved a reduction in some pollutants owing to the collapse of industrial production in the 1990s, but many environmental indicators suggest growing degradation. Russia has signed on to a number of international environmental agreements, but its record on implementation is mixed, and it discourages environmental activism. Scholarship on the Russian environment is a limited, but growing, field, constrained by challenges of data availability, yet it offers great potential for testing scientific and social scientific hypotheses.

Property Rights Strengthening: Transformation without Destruction

The appeals to minimize state intervention in the Russian economy are counterproductive. However the excessive involvement of the state is fraught with the threat of building nomenclature capitalism. That is the main idea of the series of articles by prominent representatives of Russian economic thought who formulate their position on key elements of the long-term strategy of Russia’s development. The articles deal with such important issues as Russia’s economic policy, transition to knowledge-based economy, basic directions of monetary and structural policies, strengthening of property rights, development of human potential, foreign economic priorities of our state.

From Freezing to Investing: New Approaches to Monetary and Currency Policies

The appeals to minimize state intervention in the Russian economy are counterproductive. However the excessive involvement of the state is fraught with the threat of building nomenclature capitalism. That is the main idea of the series of articles by prominent representatives of Russian economic thought who formulate their position on key elements of the long-term strategy of Russia’s development. The articles deal with such important issues as Russia’s economic policy, transition to knowledge-based economy, basic directions of monetary and structural policies, strengthening of property rights, development of human potential, foreign economic priorities of our state.

On a New Concept of Long-term Strategy

The appeals to minimize state intervention in the Russian economy are counterproductive. However the excessive involvement of the state is fraught with the threat of building nomenclature capitalism. That is the main idea of the series of articles by prominent representatives of Russian economic thought who formulate their position on key elements of the long-term strategy of Russia’s development. The articles deal with such important issues as Russia’s economic policy, transition to knowledge-based economy, basic directions of monetary and structural policies, strengthening of property rights, development of human potential, foreign economic priorities of our state.

On Economic Development and Other Issues in the Context of Future Achievements in Science and Technology

The appeals to minimize state intervention in the Russian economy are counterproductive. However the excessive involvement of the state is fraught with the threat of building nomenclature capitalism. That is the main idea of the series of articles by prominent representatives of Russian economic thought who formulate their position on key elements of the long-term strategy of Russia’s development. The articles deal with such important issues as Russia’s economic policy, transition to knowledge-based economy, basic directions of monetary and structural policies, strengthening of property rights, development of human potential, foreign economic priorities of our state.

Foreign Trade Priorities

The appeals to minimize state intervention in the Russian economy are counterproductive. However the excessive involvement of the state is fraught with the threat of building nomenclature capitalism. That is the main idea of the series of articles by prominent representatives of Russian economic thought who formulate their position on key elements of the long-term strategy of Russia’s development. The articles deal with such important issues as Russia’s economic policy, transition to knowledge-based economy, basic directions of monetary and structural policies, strengthening of property rights, development of human potential, foreign economic priorities of our state.

The Strategy of “Social Imperative”

The appeals to minimize state intervention in the Russian economy are counterproductive. However the excessive involvement of the state is fraught with the threat of building nomenclature capitalism. That is the main idea of the series of articles by prominent representatives of Russian economic thought who formulate their position on key elements of the long-term strategy of Russia’s development. The articles deal with such important issues as Russia’s economic policy, transition to knowledge-based economy, basic directions of monetary and structural policies, strengthening of property rights, development of human potential, foreign economic priorities of our state.