Will COVID-19 change the political map of the world?
It is already clear that the challenges brought by the coronavirus extend well beyond the sphere of public health. The pandemic came as a blow to the world economy, seriously changed oil prices, and provoked the growth of unemployment. In some countries, it has already influenced the social and even the criminogenic situation.
Ukraine still has to go through a tough ordeal. The country faces some existential challenges, like the physical survival of millions of her citizens, the struggle to avoid default and prevent the precipitous impoverishment of her population, and the effort to prevent the above-mentioned criminogenic situation. However, there remains one more challenge, one that never disappeared – Russia, and its armed aggression against Ukraine. Although President Zelensky has shared his plans to end the Russian-Ukrainian war before the end of his presidential term, it remains absolutely unclear, just how is he going to do that.
It is obvious that nobody in the office of the President, nor the government, or the parliament bothers to give a careful thought about what can happen to the Russian Federation in 2020-2021, and what consequences will it have for Ukraine, and whether or not our state will be able to mitigate these consequences. What challenges might Ukraine meet in this regard? Or, more precisely, why is it not possible to pretend that “this is not our problem since we have many other problems of our own” and avoid serious consequences for Ukraine and Ukrainians?
How Do Oil Prices Rock the Russian Federation?
For the Russian economy, the situation that has developed in the world oil markets is very unfavorable. According to Mykhailo Honchar, the President of the Strategy XXI Globalistics research center, the agreement about reducing the production of oil reached between the OPEC countries, Saudi Arabia, and Russia on April 10 had been, even beforehand, not adequate for reducing the excess of oil in the world. Back then, OPEC mentioned 14.7 million barrels of surplus oil, and the International Energy Agency mentioned 25 million. The agreement stated that the surplus was 14.7 million barrels a day; however, we can now see that when its term starts on May 1, it will be of no effect. The government of Russia cannot agree with the Russian oil companies on the issue of reducing oil production. There is already a 30-million-barrel surplus of oil, and one should also consider the impact of the recession of the economy due to restrictions related to the quarantine. If the agreement about 14.7 million is not working, it is hard to imagine that any talks about a 30 million-barrel reduction will be successful. Honchar also notes that unlike in the US, where oil is often produced by shale drilling (fracking), in Russia an oil well cannot be conserved because of the design of the drill: it either is working or is shut down with no economically profitable way of restoring its activity. Thus, it is difficult for Russia to preserve its share of the market. Russia’s oil is also poorer in light fractions than the Saudi oil, which makes the former less suitable for making gasoline. Overall, this situation can provoke Moscow and Tehran to act jointly against the Saudis, and even – possibly – against Azerbaijan and Kazakhstan to remove them as competitors on the oil market at the time when the Russian budget is suffering the loss of petro-dollars.
The oil price issue is not merely theorizing about the global economy and about possible aggravation in the relations between Moscow and other oil market actors. It is a significant factor in the internal political situation within the Federation. Oil revenues are the main part of currency flowing into the budget of Russia. The budget of the Russian Federation for the year 2020 states that minimal profit from the Urals brand of oil (the Russian oil trademark) is set at $42.4 a barrel. According to Anton Siluanov, the Minister of Economy of Russia, the decrease of oil prices will make Russia lose up to $40 billion in the current year. Just over the month of March, Russia lost almost $300 million, which was covered from the budget of the National Welfare Fund. At the beginning of March, the NWF kept a budget of $150.1 billion. The Russian Ministry of Treasury stated that this money would be enough to compensate for low oil prices for the next 5 to 10 years. However, their estimates were done three weeks before the COVID-19 outbreak.
What Changes Does the COVID-19 Pandemic Introduce?
So, how can the coronavirus pandemic change these calculations? What we see happening in Russia is a steady worsening of the epidemiological situation, and a substantial weakening of federal control over the situation in its regions. In order to maintain a stable internal political situation, Moscow needs to continue financing of the federal social programs rather than to cut the financial aid to the regions. This will be very difficult to do because the number of regions in the Russian Federation that receive financial aid from the center is much bigger than the number of regions that fill up the budget of the country. Besides, Moscow is already forced to revise its policy toward migrants; the so-called “patent” (financial aid) to “migrant laborers” has been temporarily stopped, which, according to the Jamestown Foundation estimate, means that between 7 and 8 million individuals, mostly from the Central Asia countries, are not paid. Of course, this is merely a temporary measure not enough to solve the main problem with migrant laborers – which is, how to keep them on the labor market under the conditions of the crisis. Millions of citizens of Uzbekistan, Tajikistan, and Kyrgyzstan did not rush to buy train tickets back to their homes because they know that things at home are, at best, not simple, and they do not want to become a financial burden to their families which is the reason they migrated to Russia in the first place. Millions of migrants will thus require expenditures from the Russian budget. Any attempt to ignore their needs might bring unpredictable consequences because people need food and shelter regardless of plans made by the government. So, there will be, again, a need to tap the NWF. The government will need to save money and to cut federal spending. At the same time, there will be increasing pressure on Russian regions that are budget donors, such as Tatarstan, which are already experiencing difficulties.
What Consequences Will It Have?
The events that took place recently in the city of Vladikavkaz give a rich material for modeling the future development. Vadim Cheldiyev, a North Ossetian opera singer, called his compatriots to boycott the restrictions of the coronavirus quarantine, defining the pandemic as a “purely imagined threat.” Late in the evening of April 17, the police arrested Vadim Cheldiyev in his St. Petersburg home, charging him with spreading fake news about COVID-19, according to a new law adopted in Russia. However, in spite of the singer’s arrest, his fans in his native city of Vladikavkaz, took Cheldiyev’s words seriously and made it to the city’s main square on April 20. In addition to the demand to free Cheldiev, the crowd of two thousand people insisted on lifting the self-isolation rules and urged the North Ossetia governor Vyacheslav Bitarov to resign. This time, things ended favorably for Moscow and for the local administration. There were minor clashes with the police, but then the law enforcement managed to disperse the protesters.
However, even those Russian political analysts who are the most loyal to Putin’s government admit that the incident in Vladikavkaz can be just a prelude to the future events. The thing is, the republics of the Northern Caucasus that are parts of the Russian Federation are especially vulnerable in the current situation. The wellbeing of the local population depends on financial injections from the center, which are now under scrutiny, and on the services industry that gives jobs to most people in the region. In Northern Caucasus, there are no industrial giants or powerful enterprises capable to bring monetary profit enough to secure a certain welfare package for the workers during the quarantine. So, if the quarantine continues, there is always the issue of a future rebellion. And here, another problem appears: the problem of keeping Russia’s control in the regions by Russia’s law enforcement. The demographic picture in this region differs dramatically from the picture in the rest of Russia. The region has a high birth rate, which means that it has a sizeable fraction of its population that is young. In addition, the peoples of North Caucasus are known to be passionate by their character, and volatile. No doubt, a mass unrest of the Ingush, Circassian, Avar, or Koomyk people – not to mention the Chechens – will differ from rallies of the retired people of Ulyanovsk or businesspeople of Yekaterinburg. If the riots, massive as they are, are limited to Vladikavkaz, or even to Vladikavkaz and Magas, then the problem could be solved by the local police and the Rosgvardiya (the Russian National Guard), maybe enhanced by reinforcements from Chechnya. But how will the situation develop if the riots begin simultaneously in North Ossetia, Ingushetia, Chechnya, Dagestan, Kabardino-Balkaria, Karachayevo-Circassia, and Adygeya? And what if the unrest occurs simultaneously in other regions, for example, in Idel-Urals? Will there be enough reinforcements? And how will Zolotov, the head of the Rosgvardiya, and the Mayor of Moscow, interact? Whether the first will submit to the commands of the second, is, even now, a subject of doubt of the Russian political analysts who discuss it publicly.
There might be different scenarios of the development of events in the RF. Today, it is difficult to model them. The Prometheus Center considered these as the most important and probable:
A) Weakening of the federal powers. Growth in the power of the regions. An increase in the power of regions. An increase in the influence of the local political actors: regional elites, civic movements. An increase of the activity of the regionalist and nationalist moods, with the “voice of the streets” becoming louder. A weakening of the influence of Russia on the international events, and a stronger focus of the Russian government on internal problems, including welfare. It is possible that in certain regions the local administration will soon act in accordance with the demands of street protesters rather than with the federal center.
B) Mass unrest and riots because of the escalation of social and economic problems in the Russian Federation. A loss of control over whole regions. Emergence of alternative power centers both at the federal and local levels. A communication breakdown within the law enforcement block (police+Rosguard+FSB+regular army). Possibly, a “parade of sovereignties.” This scenario can be accompanied by armed conflicts within the territories that are subjects of the Russian federation, for example, conflicts between Nationalists and Salafites within some republics of the North Caucasus, or between the subjects and the federal center, or even between the subjects themselves.
C) Moscow switching to an aggressive external politics with the goal to improve their economic and political situation. For example, they can start a new hybrid war with Saudi Arabia (forming an alliance with Iran, whose oil industry is already knocked down by the Western sanctions), and/or an aggression (in its various forms) against Azerbaijan and Kazakhstan, which will involve combat operations and political sabotage rather than just diplomatic pressure. These measures are supposed to weaken the oil-producing competitors and to rise the oil prices, which is thought to improve the economic situation in the RF.
D) A sudden normalization of the epidemiologic situation. Rapid renewal of the federal control over regions. Taming of the forces that demonstrated disloyalty to Putin during the crisis and passing the blame for the failures and miscalculations on the direct performers.
E) Replacement of Putin due to his loss of control over the situation: his removal by his inner circle, or his voluntary resignation (for example, because of poor health).
Neither of these scenarios excludes a whole chain of variables that can affect the situation. For example, the USA might intervene because of its desire to preserve the Russian Federation as a stabilizing factor in Eurasia and a restraint for China. Washington might decide that it is better to “put Russia on a ventilator,” be it even on the US expense, than to let new conflicts develop into “another Syria.”
Also, the possibility that Moscow will escalate its war against Ukraine cannot be dismissed. This escalation can take forms of man-made ecologic and technogenic catastrophes, or provoking and financing the anti-government protest movements, organizing acts of terror and sabotage in the Ukrainian heartland.
So, what should the leadership of Ukraine contemplate right now?
- How to act in each of the above scenarios?
- Prepare operational plans for each of the scenarios, according to the principle, “if A happens, we will do B.”
- Decide on the line of conduct in case new power centers, ones parallel to the existing power centers, appear. How will Ukraine react to attempts of these new power centers to establish contacts with Kyiv?
- How will Ukraine act if in the Russian Federation, some centrifugal movements will be activated, or the movement for autonomization, or even attempts to proclaim independence of certain regions?
- We should also prepare for possible unrest and even armed conflicts in European Russia (including North Caucasus), and, as its consequence, a humanitarian crisis and emergence of a large flow of refugees.
The events may develop very rapidly so that one of the scenarios could be followed by another. For example, the activation of the centrifugal movements can result in a sudden normalization of the epidemiological situation, as well as in a change in the energy carrier markets (especially because of a growth in the carriers’ consumption and the renewal of the demand). This, in turn, might be followed by a renewal of the control of the federal center. If the events develop according to this pattern, there might be a rush of the Russian political emigrants to Ukraine, including the Russian opposition figures and the representatives of the national and regional separatist movements. How will Ukraine act if this happens? What will be our politics regarding the political emigrants, given that they exist as groups that are different and, possibly, hostile to each other?
There is no doubt that our Ukrainian rulers might choose for themselves the position that is the most convenient for themselves, which is, “something is going to happen, because it never happened before that something did not happen.” But this is the scenario that is the worst one for Ukraine. It is like to stand under a balcony of a collapsing high rise and imagine that you are watching its collapse from a remote position. Of course, “we have the right to make a mistake…”