Presidential systems of government often feature an annual speech by the chief executive. In general they are carefully choreographed affairs that are less about governance than grandstanding. They tend to reflect a list of outstanding achievements, punctuated by vigorous applause, while carefully skirting over the past year's policy missteps.
Vladimir Putin's recent state of the nation address was no exception. But instead of celebrating a glorious triumph – reintegrating Crimea into the motherland while thumbing his nose at NATO – Putin instead faced an urgent economic crisis that has given even his most ardent supporters pause.
Putin's speech was typically bombastic. He claimed the West had been attempting to 'destroy' Russia for the last decade, if not for centuries. He announced Crimea was as sacred to Russians as Jerusalem's Temple Mount for Muslims and Jews. Calling his armed forces 'polite but menacing', he reminded outside powers that Russia had once stopped Hitler from obliterating it.
But the Russian economy is set for recession in 2015. It has a weak currency, experiences capital flight nearing US$130 billion, and oil prices, the main driver of growth, are now too low to be profitable. Transparency International's latest Corruptions Perception Index has just ranked Russia at 136 out of 175 states.
Responding to these economic and social pressures, Putin called for a massive reorientation towards self-reliance, flagging the creation of 'mono-towns' focused on single industries. He also announced an amnesty (with 'no questions asked') for any capital that returned to Russia, a four-year tax freeze and 'inspection holidays' for law-abiding businesses.
Those who regard Putin as an increasingly irrational dictator will see nothing unusual in his speech. After all, bad leaders have a habit of trying to deflect attention by blaming others when times are tough. Those who support tightening the screws on Russia will also be unsurprised. They will regard this as proof that US-EU sanctions over Ukraine are biting, and that Russia will come back to the table and accept a humiliating backdown.
But what if that doesn't happen? What if – out of what he perceives to be Russia's interests, its sense of pride, or his own sheer cussedness – Putin continues the drift to autocracy and rabid anti-Westernism?
The US may not need Russia, but leading EU states such as Germany certainly do. The ability of the Kremlin to threaten European end-users with gas wars has been a multiplier in its limited toolkit for diplomatic coercion.
The current West-Russia path dependency is also dangerous in broader geostrategic terms. If the US and EU lose Russia, they risk driving it completely towards China and thereby recreating bipolarism in a messy globalised environment. In the new Asian century the West already faces an uncomfortable reality: its own normative vision of democratic individualism will have to compete with other narratives seeking to shape legal, institutional and trading arrangements.
Under those conditions it makes much more sense to manoeuvre Russia into a 'pivot' position between East and West. That would allow Moscow to sell its policies to domestic audiences via exceptionalism and great power imagery; it would ensure that energy and resources continue to flow; and it will turn Russia into a massive buffer zone between China and the transatlantic space.
But what mix of carrots and sticks might bring that about? Managing post-communist Russia has been a balancing act that the West has rarely got right, and few specialists can agree on how to handle Putin. As Joseph Nye recently noted, his influential Aspen Strategy Group (which encompasses a roll-call of senior diplomats and international policy experts), was split on Russia between the 'squeezers' and the 'dealers'.
There is some cause for optimism, though. First, establishing Russia as a pivot state is precisely what the Kremlin wants too. It has no wish to become China's mine and petrol pump. In fact it wants that even less than putting up with what it sees as Western harassment via NATO expansion, sanctions and sanctimonious cant about democracy.
Second, Russia's economic woes will likely prompt some caution in foreign policy, although Western sanctions won't be the primary driver. If oil prices stay low and the ruble languishes at 54 to the US dollar, no amount of inward-turning will help. Putin knows that self-reliance in a globalised economy is impossible. North Korea's abysmal Juche philosophy is a classic example of the international pariah status and internal repression that such a posture engenders.
Rhetoric aside, Putin's gamble is that he can simply wait the US and the EU out, as Russia previously did over Kosovo and its wars in Chechnya. But blaming the West will also not work for much longer before Russian attention starts to turn on him. At some point in 2015, then, Putin will need a face-saving way out.
The West would be sensible to give it to him. But the West should go further, and re-evaluate its whole approach to Russia. This is for the simple reason that it is better to have Russia as a part-time partner than a recurring problem to be managed.
To begin with, the West should recognise that Russia is not going to become a liberal democracy any time soon. Currently there simply isn't the critical mass to inspire it. A sizeable majority, including many of the intelligentsia and most of the middle classes, blames the US for marginalising Russia in the 1990s. More importantly, Russians have had ample opportunity to turn towards liberal pluralism and have so far declined to do so.
Dropping the West's dogmatic focus on norms and liberties – much as Bill Clinton did with the PRC – would be easy to implement and would generate instant goodwill. It would also cost about the same that the West's current policy has achieved: virtually nothing.
Next, European security structures are in urgent need of renovation. It is astonishing that 25 years after the fall of the Berlin Wall, effectively the same architecture that existed during the Cold War remains in place. This is not to say that NATO should be abandoned. Yet there clearly needs to be some much more wholehearted effort put into inclusive security mechanisms that Russia can join on an equal footing.
Critics will claim that this would terrify the Baltic and East European states and help to legitimate Russian claims about a sphere of influence in the former Soviet space. This view is absolutely correct. But so what? Most East European and Baltic countries are EU members, NATO members, or both. Russia already dominates numerous former Soviet territories through the CSTO and Eurasian Union. Many of them are ruled by well-entrenched authoritarian leaders, and they are unlikely to experience democratic transitions soon either. Putin will be impossible to dislodge from Crimea and very difficult to move from Eastern Ukraine, so why not simply formalise the status quo?
Putin is wrong to claim that the West wants to destroy Russia. But neither has it done much to save it from slipping further away. Maybe now is the time for pragmatism in the relationship, rather than yet another 'reset'.
Photo by Flickr user World Economic Forum.