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Credit rating downgrade dims Russian future

By Yang Cheng (Global Times)    09:58, February 11, 2015
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Illustration: Liu Rui/GT

Since the beginning of this year, the West has accelerated the imposition sanctions on Russia due to the Ukrainian crisis. Internationally used Western credit rating agencies such as the US-based Standard & Poor's have cut Russia's sovereign rating to BB+, leaving it below investment grade for the first time in a decade. This can be seen as part of the West's new economic cold war toward Russia. The Russian authorities slammed such moves, believing the ratings are a "purely political instrument" to harm Russia's national interests.

Valery Gerasimov, chief of the general staff of the Armed Forces of the Russian Federation, once noted, "this is a hybrid, 21st-century conflict, in which financial sanctions, support for oppositional political movements and propaganda have all been transformed from diplomatic tools to instruments of war." Russian Foreign Minister Sergey Lavrov has more than once condemned the West, saying its aim is not only to pry Ukraine from Russia's traditional sphere of influence but also to topple the regime of Russian President Vladimir Putin. From this viewpoint, the downgrade of the sovereign rating seems to be part of the Western plot.

That the downgrade in the ratings was deliberate cannot be excluded. Moscow's sovereign debt only makes up 13 percent of GDP and its gold and foreign currency reserves remain at $400 billion. Some European countries have their debt levels over 100 percent of GDP with little foreign currency reserves, but their ratings are much higher than that of Russia's, which can easily raise doubts.

Nonetheless, this reflects the negative views of foreign investors toward Russia's economic prospects. The accelerating Western sanctions, the fluctuation of low oil prices and the poor growth rate of the Russian economy since 2012 have further exposed the weaknesses of the Russian economy and posed enormous challenges to the Putin regime, especially amid the Ukrainian crisis.

More precisely, the rating downgrade has propelled Moscow to admit that in the process of the global power shift, the rivalry between the West and Russia has not turned the way it wants. On the contrary, Russia's deep-rooted problems have erupted under both internal and external pressures. Based on the theory of structural power in the international political economy developed by British scholar Susan Strange, we can draw the conclusion that Russia has leverage over the US-led West in security, but is in an inferior position in production, finance and knowledge.

In this unavoidable game, Russians' anti-West mentality and Russophobia in the West have started to be mutually reinforced. The Russian people are not as willing as before to cooperate with Western countries and even the Commonwealth of Independent States. They believe that viewing their country as an adversary and attempting to weaken its strength has become a mainstream view in the West.

US policies have gone beyond the spectrum of economic sanctions. Rather, Washington prefers more direct confrontation with Moscow. Recently, US politicians and think tanks proposed the idea of providing military support to Ukraine. The real intention of Washington is to strengthen the military clout of Kiev and sacrifice more rebels in eastern and southern Ukraine and more Russian forces, so as to force Putin to come to the negotiation table.

When the US wooed its European allies to form a united frontline to impose sanctions on Russia, the EU reached an agreement despite some internal divergence of views.

The spiraling sanctions and Russia's anti-sanction campaigns have also cost the EU. Realizing that the situation will go out of control, some countries such as Germany and France cannot bear to sit still.

Even when German Chancellor Angela Merkel admitted in the G20 Brisbane summit that there was little room for dialogue with Moscow, she and French President Francois Hollande visited Kiev and Moscow in early February, trying to solve the Ukrainian crisis peacefully. During her meeting with US President Barack Obama on Monday, Merkel briefed Obama on a peace plan to end fighting in eastern Ukraine.

This can be a chance for reconciliation. A hotter war may be ruled out. Let's trust that vigilance, calculation, rivalry or even confrontation will not mean such hopes are in vain.

The author is an associate professor at the School of Advanced International and Area Studies, East China Normal University. opinion@globaltimes.com.cn 

(For the latest China news, Please follow People's Daily on Twitter and Facebook)(Editor:Yuan Can,Yao Chun)

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