Russia and relations with the UK

Recently, the promise of rising living standards has come under threat from a weakening economy, exacerbated by the impact of sanctions imposed by the West following the annexation of Crimea, the fall in the price of oil, and the fall in the value of the rouble.

Whether the Kremlin seeks to compensate for that loss of legitimacy by stoking up nationalist feelings and pursuing conflicts in other countries will be a key foreign policy question in this Parliament.

Traditional warfare

Russia's war in Georgia in 2008 served as a re-launch of the Russian military, which has been undergoing a modernisation programme, and as a demonstration to both neighbours and Western countries that Russia, unlike the West, was prepared to act with force in its 'privileged sphere of interest'; that is, former Soviet states.

Similarly, Russia's annexation of Crimea was widely interpreted as a move to prevent the West from keeping Ukraine in its geopolitical orbit, stopping the encroachment of NATO and the EU towards the Russian border.

Harsher critics of the Russian administration have argued that a democratic and economically successful Ukraine, led by a pro-Western administration pursuing EU integration, would have presented an unacceptable rival model to a "kleptocratic regime" in Moscow.

Hybrid warfare

Russia's approach to pushing back the frontiers of western influence and restoring national pride extends beyond direct military action. It has used information campaigns, special forces, economic pressure and cyber-attacks, among other tools, in a strategy dubbed "hybrid warfare".

In order to project its message abroad and bolster support at home, a big propaganda effort has been a key part of Russia's hybrid strategy.

The Kremlin has characterised the Ukraine conflict as an example of the West trying to encircle and emasculate the 'Russian Bear', while supporting 'fascists' in the Ukrainian Government who allegedly threaten ethnic Russians in the east of Ukraine.

Opinion polls indicate that this account has gone down well with the Russian public, whose support for Vladimir Putin has increased since the annexation of Crimea.

Chart 1: Poll approving of Vladimir Putin

Percentage of respondents to Levada Center poll approving of Vladimir Putin

In some ways, it is unsurprising that it is the Kremlin's account that tends to prevail within Russia. The Government has increased its control over the media; neither is the opposition, cowed further by the assassination of opposition politician Boris Nemtsov in February 2015, in a strong position to provide the public with alternative narratives.

As well as information campaigns, Russia has allegedly overseen cyber-attacks in Estonia and Georgia, and its security services amend internet content to promote perceived Russian interests. It has used the dominant position of the state gas supplier Gazprom as a political tool.

In Ukraine, it deployed military forces with no Russian insignia; and in various neighbouring states, it has provided support to separatists while forming links with anti-EU parties in Europe.

Outlook

The outlook for the Russian economy is weak: after contracting in 2015 and 2016, the IMF expects Russia to grow at an annual average rate of less than 1.5% for the rest of the decade.

Chart 2: Annual GDP growth and IMF forecasts

Chart shows the annual GDP growth (%) 1993–2014 and IMF April 2015 forecasts 2015–20

Inflation is expected to run at 18% in 2015 and 10% in 2016 and Government revenues are expected to fall by 14% in real terms by 2016, thanks to a combination of weak growth and low oil prices. This will affect ordinary Russians, who have already seen their purchasing power hit by the fall in the rouble.

Although the rouble has recovered slightly during 2015, a further prolonged depreciation, combined with sanctions that lock Russia out of international capital markets, could trigger a financial crisis as banks and businesses struggle to finance their foreign debt.

There have been limited signs of unrest in Russia already, as public services have been cut and some public sector workers have not been paid. If political instability increases, how will the Kremlin react?

It will be difficult for Vladimir Putin to back down in Ukraine, having invested so much in his image as a defender of Russia and ethnic Russians.

This leads many to think that, in the context of a worsening economic situation, there is a danger of the Kremlin raising the stakes still further by pursuing conflicts in other countries on Russia's borders: Moldova and the Baltic States are often mentioned.

The Baltic States have already seen increased Russian activity, while NATO has increased its presence in Eastern Europe.

UK relations

Among the EU Member States, the UK has some of the most difficult relations with Russia. The inquiry into the death of Alexandr Litivinenko, launched by the Home Secretary in July 2014 and expected to conclude at the end of 2015, will continue to cast a shadow over the relationship.

As one country, Britain's role in relation to Russia is limited. It is in international fora – the UN, the EU and NATO – that its contribution will be more significant.

The previous Government took a relatively tough line in discussions with EU partners on sanctions over Ukraine, and in formulating the NATO response to increasing tension.

The most immediate question may be over the endurance of the present coalition of EU Member States in favour of tough sanctions over Ukraine.

If more conflict does break out, the security threat posed by Russia is likely to be a significant factor in discussions about the UK's defence expenditure and policy, and its membership of the EU.