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Volume XVI, Number 4, Part I

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The ISCIP Analyst

Volume XVI, Number 4, Part I (29 October 2009)

Russian Federation

Executive Branch by Susan J. Cavan

Domestic Issues & Legislative Branch by Rose Monacelli

Armed Forces by LtCol Andrew Wallace, USAF

Energy Politics by Creelea Henderson


The ISCIP Analyst

Volume XVI, Number 4 (29 October 2009)



Russia’s rock and hard place
Mixed signals have been emanating from Russia’s diarchical clans for months, and recently, some regime-approved opposition parties apparently thought that they had picked up on a call for action and staged a demonstration against regional and local elections, and more specifically, against Putin’s party of power, United Russia.  Unfortunately, it appears either that the parties’ leaders read the signals wrong, or perhaps that they took their protest too far.  Now, Kremlin political strategist Vladislav Surkov has had to speak publicly, without nuance, to explain that there are limits to democracy in Russia and why.

The core concern is the nature and function of Russia’s transitional democracy.  It has been fewer than twenty years since the collapse of the Soviet Union, as Russia broke through the snare of the Union center, with its single party-dominated rule of the CPSU.  During that twenty years, Russia has experienced extremes of idealism and hope, disappointment, chaos, renewal, war, terrorism, an imposed vertical of power, economic regeneration, economic crisis, the re-creation of the super party state, and a sad mockery of transition in the hand-picked successor to a presidency hamstrung by its former occupant (appearing in an unforgettable role as prime minister).  The tandem partnership, sponsored by then President Putin, is a fundamentally unstable and unproductive political structure designed to allow the Kremlin’s former occupant to appear to obey constitutional injunctions on his presidential terms, and yet to position himself close enough to the center of power to allow his authority to redesign the system and recast his role in it.

Events were progressing swimmingly in the faux-transition, until economic decline, accelerated in Russia by the aftereffects of its behavior in Georgia in August 2008, was set atumble with the rest of the world in September 2008.  Suddenly, the bulging coffers of cash that smoothed economic and political bumps were disappearing.  Putin’s first response was to blame the West for initiating the crisis (ignoring the steep declines caused by Russia’s own actions in August), thus conjuring a foreign threat that allegedly attempts to keep Russia weak.  As it quickly became clear that Russia could experience dramatic social unrest caused by the economic turnabout, Putin seemed to refocus his efforts on staving off the worst effects of the crisis.  There is some speculation that Putin’s actions have been unsuccessful and that decisive action is still required on the economic front. 

It is within this context that the design of the diarchy, conceived in flush, energy-rich times, appears poised to present a challenge to the prime minister who would be president…again.

In August, President Medvedev published a “Manifesto,” which starkly portrayed the deficits facing Russia, including “its humiliating dependence on raw materials. (…) To sum up, an inefficient economy, semi-Soviet social sphere, fragile democracy, negative demographic trends, and unstable Caucasus represent very big problems….” (1)

Medvedev’s critique seemed in stark contrast to Prime Minister Putin’s steadfast approach.  Despite convivial photo sessions published for mass consumption, there appeared to be tension building in the diarchy.  The past few weeks, however, have provided the clearest glimpses of competition brewing between the teeter-tottering tandem chiefs. 

Earlier this month, regional and local elections across Russia were reported to have brought an expected strong showing for United Russia.  (For more on these elections, please see “Domestic Issues” below.)  The presumption of a United Russia victory was strong; how it might have been attained was left uncontemplated.  Until, that is, the so-called loyal opposition parties staged a walkout of parliament in protest at the conduct of the elections and, more pointedly, the vote tabulation. 

The actions of the leaders of the Communist Party, The Liberal Democratic Party of Russia (LDPR), and a Just Russia brought almost unprecedented attention to the conduct of elections in Russia.  The stunning walkout (a clear and very public assault on the party of power) fueled speculation that the Kremlin might have encouraged, or planned, the event.  If so, had the president himself proposed the action to challenge the prime minister?  There is but one real candidate in the Kremlin who possibly could have orchestrated such a protest:  Vladislav Surkov, author of the “Sovereign Democracy” concept, party politics specialist, and general ideologist both to Medvedev and Putin before him.

“Surkov runs the virtual world of Russian democracy,” according to Mikhail Kasyanov, the former prime minister and putative presidential candidate. “He is the main functionary of the imitation of politics in Russia. The imitation of political parties, the imitation of elections, the imitation of political pluralism.” (2)

The opposition leaders demanded a meeting with President Medvedev to discuss allegations of fraud in the elections.  On October 24, President Medvedev met with them, but recast the agenda as a “free discussion” in “preparation of the Presidential Address to the Federal Assembly.” (3)

The day before, Medvedev also held a meeting that reportedly involved a discussion of his draft speech to parliament and the comments received from his “Go, Russia!” manifesto.  In this case, the attendance was quite different: “Taking part in the meeting were Chief of Staff of the Presidential Executive Office Sergei Naryshkin, his deputies Vladislav Surkov and Alexei Gromov, Deputy Prime Ministers Igor Shuvalov, Alexander Zhukov, Alexei Kudrin and Sergei Sobyanin, presidential aides, Defence Minister Anatoly Serdyukov, and Deputy Foreign Minister Sergei Ryabkov.” (4)  It seems likely that in addition to the details of his speech, Medvedev, his advisers and key government ministers discussed the ramifications of the opposition walkout and allegations of fraud in the elections.

Within days, the traditionally press-reticent Surkov granted an interview to Itogi during which he plainly set out the problems of democratic and economic development in Russia, “If we remain a raw material power, we are doomed to stagnation. In principle, the problem consists not only of the primitive nature of a raw material economy, of its weakness and vulnerability. There is also a political aspect to this. (…) Our task is to prove a simple idea to ourselves: That we can modernize by relying on democratic institutions. But here, it is important not to frighten the liberal, democratic society with chaos and disorder.” (5)

“[W]e must know that unconsolidated and unbalanced power and weak democratic institutions are not capable of ensuring economic uplift. Even now, when power is sufficiently consolidated and regulated, many projects are proceeding very slowly and with difficulty. If we add to this some kind of political instability, then our development would simply be paralyzed. There will be much demagoguery, much prattle, much lobbying and rending of Russia apart piece by piece, but there would not be development.” (6)

Surkov’s comments are a straightforward indictment of Russia’s current circumstances, and therefore could be seen as a critique even of Putin.  Certainly some analysts have suggested the possibility of Surkov laying the groundwork for a clash of clans, siloviki vs. civiliki. (7) 

Nonetheless, Surkov’s appearance well may have been the result of the unintended consequences of the walkout by the Duma opposition parties.  As soon as the election results were called into question formally and in such a public way, stories proliferated about the oddities of ballot counting, including the fact that ballots counted in the Khamovniki District, where Sergei Mitrokhin, the head of the Yabloko party resides, turned up no votes for that party.  A ballot recount was ordered.  (8)

The public discussion of fraudulent elections and the details of ballot irregularities clearly damages the image and reputation of United Russia, as well as the prime minister who heads the party.  Even if a rivalry between Kremlin and government clans was leading to full battle, it seems unlikely that the Kremlin would begin the battle by such a direct attack on Putin. 

It seems feasible that any signals sent from the Kremlin to suggest action by the Duma opposition parties, were not intended to produce quite so flamboyant an action or response.  Surkov’s warning against the dangers of too much democracy and the potential for a return to chaos likely was a carefully crafted message meant to calm turbulent waters.  The problem for the Kremlin, even more so for Putin, is that the genie of criticism has been unleashed, and in the next elections, if at all legitimate, United Russia might suffer dramatically.

Surkov’s remarks in the interview indeed were pointed, but speak to a larger quandary that has bedeviled Russia and many other states.  Notably, analysts foreign and domestic seem to have heard his main thesis:  Russia needs to modernize and to liberalize, but it cannot risk the chaos of similar attempts in the 1990s.  This is not a new proposition; even during the Yel’tsin years, many voices recommended the “Chinese model” of economic reform that eschewed dramatic political reforms in favor of incremental economic moves.  The conundrum Surkov laid out is familiar both to Russians and to other transitional regimes contemplating reform:  To modernize economically requires more freedom of action to encourage entrepreneurship and innovation; more freedom of action requires looser governmental control.  What is the balance between progress and order?

Source Notes:
(1) Text of Dmitry Medvedev’s Article, Go Russia!, 10 Sep 09, Russian Pesident’s Website via  See further discussion of Medvedev’s manifesto in previous ISCIP Analysts.
(2) “Politics: Influential scriptwriter directs from backstage,” By Charles Clover, Financial Times Online, 13 Oct 09 via

(3) “Dmitry Medvedev met with leaders of political parties represented in the Duma,” 24 Oct 09, Russian President’s Website via

(4) “Dmitry Medvedev discussed the drafting of the Presidential Address to the Federal Assembly (parliament) with Presidential Executive Office senior officials and Government Cabinet members,” 19 Oct 09, Russian President’s Website via

(5) Interview with Vladislav Surkov, First Deputy Presidential Chief of Staff, Deputy Chairman of the President's Commission on Modernization and Technological Development of the Economy, conducted by correspondent Aleksandr Chudodeyev: "Renew Yourselves, Gentlemen!" Itogi, 26 Oct 09 via Johnson’s Russia List (JRL), 2009-#198, 28 Oct 09.
(6) Ibid.
(7) See The Kremlin Wars (Special Series), Part 3:Rise of the Civiliki, 26 Oct 09 via JRL, 2009-#197, 27 Oct 09; also, drawing on the Stratfor report, see “A Kremlin Marriage of Convenience,” By Brian Whitmore, 27 Oct 09. The Power Vertical blog; RFE/ via

(8) “Election inconsistencies to no effect,” Russia Today, 23 Oct 09 via

By Susan J. Cavan (



A funeral for democracy?
Few were surprised when United Russia easily swept the local and regional elections that were held across Russia earlier this month, winning more than 7,000 local election contests on October 11. (1) At first, it appeared that these victories simply confirmed what many already had predicted: the Russian people continues to trust in the leaders that have navigated the country (relatively successfully) through more than a year of global economic instability. Shortly after the results were announced, however, prominent opposition leaders began to accuse Russia’s Central Election Committee (CEC) of ballot tampering and electoral fraud. These protests have continued to grow stronger and more persistent.

Accusations of election fraud would be easy to ignore if it was only the opposition that was making them. Independent election monitoring organization Golos conducted its own investigation and reported electoral irregularities across the country. The fight between the opposition parties and the Kremlin came to a head on October 14 when 135 members of the 450-seat Duma staged an unprecedented walk-out during a meeting of the lower house of parliament. The parties involved—the Communists, the Liberal Democratic Party and A Just Russia—traditionally have been considered pro-Kremlin, but their loyalty has decreased sharply recently. For the Liberal Democrats and A Just Russia, the protest only lasted two days, but the Communists refused to return until President Dmitry Medvedev agreed to a meeting. (3) The Communists (with the support of the Liberal Democrats and Yabloko) also organized protests in Russia’s largest cities. In Moscow alone, there were more than 1,500 supporters. (4) However, United Russia continues to control the Duma with 315 seats, while the next most-represented party is the Communists, with only 57 seats.

Although the various ongoing protests have done little to change the status quo, apparently they were sufficient to convince Medvedev to meet with party leaders last Saturday. This meeting was not a conciliatory gesture, however. Speaking at a pre-meeting press conference, the president was quick to clarify that the meeting’s only purpose was to diffuse the situation and convince the opposition MPs to return to the Duma. Medvedev did acknowledge that there might have been some election irregularities. According to Liberal Democratic Party leader Vladimir Zhirinovsky, the president “agreed that not everything was clean, and that there were probably violations which should be investigated … using legal procedures.” (6) He reportedly also was open to discussing how the opposition leadership could modify election law to prevent similar issues in the future. (7) Despite these apparent admissions, however, publicly Medvedev continues to contend that the elections were legal and has refused to entertain demands for any wide-scale recount. (8)

One limited, court-ordered recount of polling station 192 found that sixteen votes for Yabloko had been misplaced. They were found in piles of votes for the Communist Party along with votes for Russia’s Liberal Democratic party and the Patriots of Russia party. Interestingly, the original election results from that particular polling station had listed no votes for Yabloko. (9) The recount was ordered after Sergei Mitrokhin, Yabloko’s leader, threatened legal action when he was informed that no one in his own district had voted for the party. Mitrokhin claimed fraud on the basis that his and his wife’s votes went uncounted. (10) The results of this recount have spurred Mitrokhin to push harder for all the votes to be declared invalid. (11) As he told the press, “Our goal is to force a full cancellation of the results of the election and the appointment of a new date for polling. (12)

The other opposition parties have issued somewhat less drastic demands. Zhirinovsky has called for the nullification of all results from Moscow, the Tula Region, and Mari El, three polling stations at which recounts have shown voting discrepancies. His party also wants United Russia party leader Boris Gryzlov to step down. The Communist party, on the other hand, wants Vladimir Churov, chairman of the CEC, to resign, along with the governor of Mari El. Zhirinovsky also demanded that Moscow Mayor Yuri Luzhkov and Tula Regional Governor Vyacheslav Dudka be fired. However, according to Churov, none of the body’s members can be fired without a court ruling that they committed fraud or otherwise violated the election laws. (13)

The response to the opposition’s criticism has been mixed. Former Soviet leader Mikhail Gorbachev called the election “a mockery of democracy” that “discredited Russia's political system.” (14) Prime Minister Vladimir Putin, on the other hand, quickly dismissed the issue, telling reporters “losers always [feel] offended.” (15) United Russia’s Gryzlov, the current speaker of the Duma, maintains that any recount would only waste time. Gryzlov argues that there cannot be more than a one or two percent margin of error, and therefore, any power gained by the opposition as a result of a recount would be negligible. (16)

Although a thorough, unbiased recount might not dramatically alter election results, it could prove disastrous for United Russia and the government, as more and more people are beginning to compare the current government to its Soviet predecessor. (18) The opposition would gain a few more seats, but more importantly, the moral victory from proving that, yet again, the government has gone to extreme lengths to maintain control even as it attempts to pass the results off as a democratic victory. It also could use the current confusion as leverage against Medvedev, who campaigned on the promise of greater democracy and pluralism. Without a recount, the opposition parties are left with even less representation and the looming threat that they may be without a voice in Russian politics in the near future.

Source Notes:
1) Douglas Birch, “Russian president defends vote that helped Kremlin,” Associated Press, 24 Oct 09 via Last accessed 25 Oct 09.
2) “Medvedev meets faction leaders in conciliatory move,” Reuters via The Peninsula On-Line, 25 Oct 09 via Last accessed 25 Oct 09.
3) “Russia: Hundreds protest in Moscow over elections,” Israel News, 22 Oct 09 via,7340,L-3794075,00.html. Last accessed 25 Oct 09.
4) “Medvedev meets faction leaders in conciliatory move,” Ibid.
5) “Medvedev says parliamentary election results to stand – Zhirinovsky,” RIA Novosti, 24 Oct 09 via Last accessed 25 Oct 09.
6) Ibid.
7) “Medvedev meets faction leaders in conciliatory move,” Ibid.
8) “Moscow Precinct Recount Reveals Vote-Count Errors,” Radio Free Europe / Radio Liberty, 23 Oct 09 via Last accessed 25 Oct.
9) Connor Sweeney, “Call for new Moscow poll after votes disappear,” Reuters, 23 Oct 09 via Last accessed 25 Oct 09.
10) “Moscow Precinct Recount Reveals Vote-Count Errors,” Ibid.
11) Sweeney, Ibid.
12) “Medvedev says parliamentary election results to stand – Zhirinovsky,” Ibid.
13) Ibid.
14) Sweeney, Ibid.
15) “Russian Duma Speaker Says No Need For Recount,” Radio Free Europe / Radio Liberty, 22 Oct 09 via Last accessed 25 Oct 09.
16) Sweeney, Ibid.

By Rose Monacelli (



Russia’s new defense law & draft military doctrine
Over the past two months, Russia has introduced two new initiatives to bolster its options to exercise military force at home and abroad.  First, in early August, President Medvedev submitted a new amendment to the Duma proposing to expand the President’s authority to conduct military operations abroad in order to defend Russian national interests.  Second, the Russian Security Council recently unveiled a more expansive set of conditions under which nuclear weapons may be employed to include “regional” and “local” wars.  Although both initiatives appear to signal a more aggressive military posture, Russian Foreign Minister Lavrov said, “…no-one, particularly our Ukrainian friends, should have reason for concern.” (1)  Despite such assurances, these initiatives highlight Russia’s interest in maintaining a dominant presence within its “near abroad” and in maintaining an assertive military posture.

Russian President Medvedev proposed the first initiative on August 10 by introducing a new amendment to the Duma expanding the Russian President’s authority to use the nation’s armed forces beyond the country’s borders. (2)  On October 23, the Russian Duma gave final approval to the President’s new amendment. (3)  According to the Head of the State Duma Committee on Defense Viktor Zavarzin, “The new law will allow Russia to react without delay to possible threats to its national security.” (4)  Chairman of the Federal Council Committee on International Affairs Mikhail Margelov said, “The bill envisages a wide range of circumstances which may require operational interference from Russian troops….the protection of our citizens, no matter how far away they may be from native borders [is] a priority.” (5)

Russian politicians and military leaders indicated that the Georgian-Russian conflict of 2008 provided a significant impetus for change, (6)  as previous legislation had limited the President’s authority to employ armed forces outside Russian territory. (7)  The new law greatly expands upon the old and authorizes the President to use the armed forces “to counter an attack against Russian Armed Forces or other troops deployed beyond Russia’s borders; to counter or prevent an aggression against another country; to protect Russian citizens abroad; to combat piracy and ensure safe passage of shipping.” (8)  Accordingly, the legal foundation for Russian intervention in armed conflicts, such as the one in Georgia last year, will be greatly expanded.

The protection of “Russian citizens abroad” clause has alarmed Russia’s closest neighbors.  Acting First Deputy Head of the Ukrainian Ministry of Defense Yuriy Kostenko expressed concern about the potential for Russian military interference on behalf of Russian citizens in Ukraine. (9)  After consulting with Russia, Ukraine’s Foreign Minister Poroshenko later indicated he was “satisfied” with Russia’s explanation of the new law. (10)  Regardless, Russian military pundits believe that the law is in line with a more “active” Russian foreign policy and provides the Russian executive with the power to go to war “whenever it wants.” (11)

In early October, Russian Security Council Secretary Patrushev proposed significant changes to Russia’s current military doctrine. (12)  The military and the Security Council currently are reviewing the draft document before submitting it to the Russian President (anticipated at year’s end).  According to Secretary Patrushev, the new doctrine will include preemptive nuclear strike options as well as “amended” conditions for large-scale, regional and local nuclear strikes. (13)  The 2000 version of Russia’s military doctrine stated, “Russia reserves the right to use nuclear weapons in response to the use of nuclear and other types of weapons of mass destruction against it and [or] its allies as well as in response to large-scale aggression utilizing conventional weapons in situations critical to the national security of the Russian Federation.” (14) 

The potential expansion of Russia’s nuclear options for use in local and regional conflicts, as well as for preemption, foreshadows a more assertive military doctrine.  It also may attest to Russia’s insecurity vis-à-vis its conventional force structure.  According to the former Chief of the Main Staff of Russian Strategic Missile Troops Col-Gen Yesin, “Russia…does not possess sufficient potential of general purpose troops comparable with NATO’s arsenal.” (15)  This perceived imbalance could be exacerbated by further reductions in Russian Army personnel and may be providing the motivation to bolster its nuclear deterrent posture. (16)

News of Russia’s draft military doctrine has caused serious concern in Georgia.  Georgian Foreign Minister Vashadze said, “Threatening with nuclear weapons in case of local conflicts is a manifestation of extreme weakness, confusion, and the lack of international policy.” (17)  In addition, members of the British parliament’s Foreign Affairs Select Committee recently asked the Speaker of the Ukrainian Parliament Volodymyr Lytvyn about the possibility of a Ukraine-Russia conflict in Crimea similar to the 2008 Russia-Georgia conflict.  Speaker Lytvyn responded, “The repetition of something similar is absolutely impossible in Crimea.” (18)  Even though Speaker Lytvyn discounts the possibility, the committee members’ question highlights the concern other states may have regarding how Russia will pursue its interests in its “near abroad.”

In a recent interview, Russia’s Foreign Minister Lavrov stated, “when Russia began to be guided by its national interests, many did not like it, especially those states which felt in the early 90’s that we would now be a mere part of the West…[that] would be naïve.” (19)  As Russia moves to assert itself militarily, the potential for increased tensions between Russia and its regional neighbors is considerable.

Source Notes:
(1) “Russia’s military doctrine, law on defense pose no threat to anyone – Lavrov,” ITAR-TASS, 23 Oct 09 via Lexis-Nexis Academic.
(2) “Dmitry Medvedev submitted to the State Duma a draft law establishing a legal mechanism allowing the President to use Russian Armed Forces in operations beyond the country’s borders,” President of Russia – Official Website of the Russian Federation President, 10 Aug 09 via
(3) “Russian law on use of troops abroad gets final approval from Duma,” Interfax, 25 Oct 09 via Lexis-Nexis Academic.
(4) Ibid.
(5) “Senior Russian senator supports bill on use of Russian armed forces abroad,” ITAR-TASS, 11 Aug 09 via Lexis-Nexis Academic.
(6) “Russian defense minister welcomes bill on use of troops abroad,” ITAR-TASS, 10 Aug 09 via Lexis-Nexis Academic; “Senior Russian senator,” ITAR-TASS, Ibid.; “Kremlin drafts law on use of military,” The Boston Globe, 11 Aug 09; via Lexis-Nexis Academic.
(7) “Russian law,” Interfax, Ibid.
(8) “Dmitry Medvedev,” President of Russia – Official Website, Ibid.
(9) “Ukraine initiates talks with Russia on amended defense law,” Gazeta, 6 Oct 09 via Lexis-Nexis Academic.
(10) “Russia’s New Military Doctrine,” ITAR-TASS, Ibid.
(11) “Russian pundits divided on bill for deploying troops abroad,” Echo Moskvy Radio, 10 Aug 09 via Lexis-Nexis Academic; “Pundits assess presidential bill on use of armed forces outside Russia,” Vremya novostey, 29 Sep 09.
(12) “Russia to change military doctrine grounds for using nuclear weapons – official”, Interfax, 8 Oct 09 via Lexis-Nexis Academic; “New Russia doctrine not to rule out preventive nuclear strikes – security chief,” Interfax, 13 Oct 09 via Lexis-Nexis Academic.
(13) “Russian security supremo interviewed on new military doctrine,” Izvestiya, 14 Oct 09 via Lexis-Nexis Academic.
(14) “Russia’s Military Doctrine,” Nezavisimaya gazeta, 22 Apr 00 accessed via
(15) “Russia, USA can agree nuclear cuts only as part of general disarmament – pundit,” Interfax, 17 Oct 09 via Lexis-Nexis Academic.
(16) “Russian security supremo interviewed on new military doctrine,” Izvestiya, 14 Oct 09 via Lexis-Nexis Academic; “Russian military chief give update on conscripts, army reform as call-up begins,” RIA Novosti, 1 Oct 09 via Lexis-Nexis Academic.
(17) “Russia’s threats sign of “extreme weakness” – Georgian foreign minister,” Rustavi-2 TV, 16 Oct 09 via Lexis-Nexis Academic.
(18) “Ukrainian speaker rules out conflict with Russia over Crimea,” Interfax, 20 Oct 09; OSCE Translated Excerpt via World News Connection.
(19) “Russia foreign minister interviewed,” Ministry of Foreign Affairs website, 22 Oct 09 via Lexis-Nexis Academic.

By LtCol Andrew Wallace, USAF (

The thoughts and opinions expressed in this article are those of the author and do not necessarily reflect the official position of the United States Air Force, Department of Defense, or the United States government.



Gas on paper
On 13 October, as Russian Prime Minister Vladimir Putin and Chinese Premier Wen Jiabao looked on, Gazprom’s Chief Executive Alexei Miller and China National Petroleum Corporation’s President Jiang Jiemin signed a formal framework agreement for the supply of huge volumes of Russian natural gas to China. (1) The agreement set the major terms and conditions for natural gas deliveries, and included a multi-billion dollar provision to build two natural gas pipelines to China from gas fields in Russia’s Far East. (2) The terms of the agreement anticipate Russian gas exports of up to 70 billion cubic meters annually, starting as soon as 2014, a volume that would make China the biggest customer of Russia’s natural gas. (3) Putin touted the framework agreement as forging a new stage in the two countries’ strategic partnership, founded primarily on energy relations, noting that: “China is a colossal market. The diversification of supplies is a very important direction for Gazprom.” (4) But the upbeat rhetoric surrounding the deal could not disguise the fact that the two sides are still left holding something less than a legally binding contract.

In fact, this agreement was only the latest in a series of Agreements of Strategic Cooperation dating back to 2004, when the two sides opened discussions aimed at securing Russian natural gas deliveries to China. (5) Each new accord, in turn, has run up against seemingly intractable disagreements over price. Gazprom insists that its gas should be priced according to a formula based on the crude oil index, a virtual guarantee that Gazprom will receive the same high price it charges its European customers. China has held out for a deep discount. Now, under the new framework, the two sides have committed to come to an agreement by the beginning of next year. (6) There are a number of compelling reasons why Russia might want to push ahead with the deal, but whether those reasons are compelling enough to overcome several stubborn obstacles, remains to be seen.

Our gas is your gas! Or, why the deal may go forward:
The reasons why a supply contract with China may be attractive are fairly obvious. China is famously cash rich at a moment in history when Russia is cash poor. Declining demand for Russian gas in Europe in combination with depressed oil prices has left Russia in straightened circumstances at a time when the country’s energy industry is desperately in need of a giant capital infusion, just to meet its existing supply commitments. (7) Also, European countries are not the valued customers for Russian gas that they were prior to the onset of the global economic crisis, meaning that Russia would do well to start diversifying its markets. With an unmatched eight percent economic growth this year, China is set to be one of the first countries to recover from the economic downturn, and is on track to become the world’s biggest energy consumer within five years. (8) Arguably, by partnering with China, Russia has everything to gain; even after European economies recover, Russia will be able to play interests in the West against those in the East.

The deal also makes sense geographically. Unlike most European countries, China shares a common border with Russia so that, unlike in Europe, Sino-Russian gas pipelines need not run through intermediate transit countries. Transportation from the Siberian Kovykta gas field to China’s northwestern Xinjiang province would be relatively convenient. (9) The regions where the gas fields are located and through which pipelines may pass are politically stable, ensuring secure production and transportation.

And finally, a major energy deal is politically expedient for two powers eager to issue a rebuff to western nations. Russia and China have joined forces on the UN Security Council to block sanctions against Iran in the dispute over its nuclear program. Both countries continue to operate in the Iranian energy sector and to support Iran militarily. Putin pointed to the two countries’ anti-Western posture in comments delivered at the signing of the framework agreement: “A shared stance of Russia and China on certain issues helps restrain some of our more hotheaded colleagues.”  (10) A long-term energy contract could provide a secure political platform with which to counterbalance Western influence.

Back to the drawing board! Or, why the deal is unlikely:
Europe, historically the locus of Russia’s cultural and economic ambitions, remains so. Evidence of this sustained European orientation can be found in two major new gas pipeline projects, Nord Stream and South Stream, which Gazprom has committed to build, in order to bolster its dominance in the European gas market. Unlike the gas transport system that Gazprom promised China back in 2004, the Europe-bound pipelines actually are being built.

Russian preference for European energy markets also may reflect its discomfort with regional realignments occurring on the country’s southern border. China did what no western country has managed to do when it stepped into Russia’s sphere of influence and struck energy deals directly with Central Asian gas producers. In December, gas shipments are scheduled to flow from Turkmenistan to China via Uzbekistan and Kazakhstan through a Chinese-built pipeline, one of the very few in the region that does not belong to Gazprom. Miller signaled his company’s displeasure at the erosion of its regional export monopoly with an emphatic refusal to accept Chinese assistance in constructing new pipelines: “Gazprom will independently build gas transportation facilities on the Russian territory,” he said. (11)

And finally, Russia may once again put off a gas supply deal with China for the same reason that makes such a deal seem almost inevitable: China is growing fast. While the country offers lucrative new markets for Russian energy resources, it also threatens to strip Russia of its power to control regional affairs. Reluctant to feed the growing giant across its border, Russia may continue to sign agreements interminably without ever committing itself to deliver.

Source Notes:
 (1) “Gazprom delegation visits China,” Gazprom company website, 13 Oct 09 Via (
(2) “Russia, China Closer to Mammoth Energy Deal,” AP, 18 Oct 09 Via (,2933,566220,00.html).
(3). “Russia and China: An Old Alliance Hinges on Energy,” Time, 15 Oct 09 Via (,8599,1930344,00.html).
(4) “China, Russia bolster ties with gas, trade deals,” Reuters, 13 Oct 09 Via (
(5) “Gazprom delegation visits China,” Gazprom company website, 13 Oct 09 Via (
(6) “Russia and China will determine a price for gas only in 2010,” Vedomosti, 13 Oct 09 Via (
(7) “Gazprom’s investment crisis,” Barents Observer, 27 Jul 09 Via (
(8) “Russia and China: An Old Alliance Hinges on Energy,” Time, 15 Oct 09 Via (,8599,1930344,00.html).
(9) “Gazprom delegation visits China,” Gazprom company website, 13 Oct 09 Via (
(10) “Gazprom Strikes Preliminary Gas Deal With China,” The New York Times, 13 Oct 09 Via (
(11) Ibid.

By Creelea Henderson (



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