As Lev Tolstoj maintained “There is nothing stronger than those two: patience and time”.

These are two of the most characteristic traits of the soul and psychology of the Russian people.

On the other hand, if you follow Sun Tzu’ strategic guidelines, whoever has time masters also space.

The fact of getting accustomed to suffering and sacrifice have always been typical of the Russian people who, as Vladimir Putin said by quoting Gogol, “have the sharp word which comes from the bottom of the heart.”

Today this is perhaps the most rational way of analyzing the state of the Russian economy and its new geopolitics, which started with the Russian armed forces’ engagement in Syria in favor of Bashar el Assad and against the very complex system of local and international jihad.

The slow but relentless increase in oil prices, organized by the oil and gas futures market during the current different, albeit parallel, crises in Iran and Saudi Arabia, is already an important sign of renaissance for the Russian Federation’s economy.

Furthermore, after the recent Doha summit of April 16, all oil market analysts predict that the oil barrel prices will increase rapidly throughout the second half of 2016 while investors, however, still cautiously maintain short term positions.

This is the result of a mix of factors such as the slow, but stable, global economic recovery and the planned decrease of oil extraction as a result of the decisions recently taken in Doha.

Certainly the Doha Summit failed because of the tension between Iran and Saudi Arabia, but all the latest OPEC projections point to a gradual increase in oil prices per barrel, although there are no explicit messages to that effect by the Vienna cartel.

Hence Russia’s accounts are stable and are bound to improve, despite the severity of its recent economic crisis.

Since the beginning of 2016, inflation has been falling as a result of lower consumption.

In March 2016, however, the Russian prices increased by 7.3% as against the previous year, after an 8.1% rise in February. Anyway the Russian consumer prices are below market forecasts, which pointed to 7.5%.

Moreover the current rate of Russian inflation is the lowest of the last two years.

Thus inflation has absorbed the ruble devaluation, by also allowing further monetary easing margins.

Nevertheless the decrease of disposable income was over 5% in 2015, with rapidly falling wages and an obvious massive impoverishment.

However, the share of the Russian population living below the poverty line is already limited compared to the data of previous years.

Russian poverty grew from 3.1 million needy people to 19.2 in 2015, the highest rate ever since 2006, and is now partially on the wane.

Again last year wages and salaries fell by 2.6% on average, while the Russian Stock Exchange index (MICEX) grew by 7.9% according to the 2015 data.

Nevertheless all Western analysts maintain that the worst is over for the Russian economy.

All Russian macroeconomic data and statistics point to a significant growth of exports throughout the second half of 2016, while the strategic link between the growth of the Iranian economy, after the JCPOA signature, and the increase in Russian oil and non-oil exports, makes us think that Russia used its military forces in Syria well, also at domestic geoeconomic level.

In all likelihood, the rational solution taken by the Russian government was the increase in oil and gas taxes decided in 2014.

This 15% increase in the oil and gas taxes allowed to reduce the tax burden on other Russian productive sectors, more oriented to the internal market and, in the future, to exports.

Another Russian rational decision was to make the ruble fluctuate, so as to save on currency reserves and better absorb the downward shock of oil prices.

Hence more rubles for oil and gas units exported, with a longer duration of the reserve fund.

All while the public deficit, already low by current Western standards, can be easily covered by the issue of government debt securities for the domestic capital market.

Basically the Russian economic crisis, which had been planned to “file Russian strategic nails” is now over and the Russians’ infinite patience mentioned by Tolstoj will do the rest.

After the sanctions imposed on the Russian Federation in 2014 and the drop in oil prices, which have delayed recovery, also the World Bank has predicted a slow improvement of Russia’s economy. Hence, a timid growth which, according to US analysts, will be based particularly on the fiscal and monetary policies of President Putin’s elite.

Moreover, despite persisting sanctions, the Russian Federation is using the weak ruble to expand non-oil exports, which are already rising especially after the agreements between Russia and China and between Russia and the Eurasian Customs Union.

However, which is the link between the Russian economic adjustment underway and its current and future geopolitics?

Perhaps the key factor lies in the creation of a new political and military entity, namely the Russian National Guard, recently established by President Putin.

In principle, it is the merger of various pre-existing armed structures and units.

As many as 170,000 soldiers from the troops of the Ministry for Internal Affairs; an unreported amount of staff coming from the Ministry for Emergency Situations; 40,000 operational units of the OMON  police forces, specialized in managing and  suppressing riots; 5,500 officials of the SOBR rapid- reaction forces, in addition to the Operational Reaction Forces and Aviation of the Ministry for Internal Affairs, selected by its Special Designation Center, including the Zubr, Rys and Iastreb Special Forces units.

In the latter case we speak of at least 800 military men available for the new structure.

Therefore the total number of the National Guard military staff will range between 250,000 and 300,000 units.

The Guard’s tasks and functions will be managing and preventing problems of public order, combating terrorism and taking actions against “extremist” groups, namely the Chechen gangs and the future protesters in the future “orange revolutions” almost certainly planned by the West against Russia.

Then, the Guard will be responsible for homeland defense and security; the protection of State structures and special internal and foreign transport; the protection of the assets and companies of Russian citizens and organizations approved by the Government; the support to border troops, that are traditionally an integral part of the Russian Intelligence Services; the fight against arms trafficking; the command of all National Guard troops and finally the protection of men and means of the Guard itself.

Hence the whole internal security will be entrusted to the National Guard and this will obviously relieve the Russian internal and foreign Intelligence Services of a whole range of traditional and routine tasks.

President Putin wants a more geostrategic intelligence, less overburden with public order tasks, and this is a lesson we should learn also in Italy and in the West.

Some people think that President Putin wants to create a “personal army”, but the Russian President’s power  is such that it is thought that he does not certainly need this new Guard only to strengthen his personal power, which is already pervasive and without any credible internal opposition.

Conversely, in all likelihood, with this new military organization, President Putin wants to avoid the coalescence of two dangers he sees looming over the Russian Federation’s near future.

These dangers are the imported jihad and the sequence of the various orange revolutions which, even combined with Islamist terrorism, could destabilize Russia permanently and make it viable for the financial and strategic interests of the West.

Probably President Putin is convinced that the United States and some US allies may make Russia pay a very high price for its ongoing engagement in Syria and the Middle East, which is the real game changer of contemporary geopolitics.

Not to mention the fact that, by opening its Syrian-Mediterranean front, the Russian Federation knocks out and bypasses the whole military network that NATO and the United States are placing along the Russian Federation’s land borders, from Estonia to Poland and the Czech Republic, up to Romania.

Certainly Putin thinks that this is a challenge which is worth a slow and relentless internal destabilization of the Russian society and politics.

This would also explain the “free hand” given by the Russian leader to the internal Services with the creation of the new Guard.

Hence the Services would now find it much easier to take actions to face external and internal threats to the Russian Federation’s political (and economic) system.

The designated Head of the new National Guard is General Viktor Zolotov, former Head of the President’s Security Service.

A man certainly trusted by Putin and a great intelligence expert.

Zolotov was born in 1964 and is a member of the Russian Security Council, an advisory body to the President, reformed in 1996, which meets at least once a month and coordinates the Russian Federation’ security, in close cooperation with the Services’ leadership.

In the past he was the bodyguard of Anatoly Sobchak, the mayor of St. Petersburg, who protected President’s Putin first steps in the very complex post-Soviet era.

Member of the KGB “active reserve”, as Putin, Zolotov was given up for dead several times but, as often happens in the great Russian intelligence game, he is obviously alive and “operational.”

In the 2000 “siloviki war” (the siloviki are the former KGB members), which was a war between some groups of agents of the old Services and the inner circle of the already powerful Putin, Zolotov stood with the losers, the men of Viktor Cherkesov against the siloviki Nikolai Patrushev and Igor Sechin.

Zolotov was later “forgiven” by Putin, as the General never made public his positions of “liberal siloviki” who supported Dimitri Medvedev as Putin’ successor in 2008.

Later Zolotov took command of the forces of the Ministry for Internal Affairs, now led by General Ragozhin, who has fewer ties with President Putin, while the President of the Judo Federation of St. Petersburg, a longtime friend of President Putin, who is a well-known judoka, has been appointed Head of the Military Police.

Zolotov’s appointment is also an action of President Putin who intends to bring peace to the vast community of the siloviki, a highly fragmented group as early as his return to the Presidency in 2012.

The fight between the former KGB agents regards power, the relationship with the economy and, above all, the struggle for the succession to Vladimir Putin.

And this will be the new scenario for which the National Guard seems to be already prepared, although Vladimir Putin has recently indicated that he is likely to run again in the next presidential election.

Giancarlo Elia Valori
Giancarlo Elia Valori

Giancarlo Elia Valori * (twitter-logo@GEliaValori)

* Presidente della merchant bank “La centrale Finanziaria Generale S.p.A.”
– Presidente della “Cattedra sugli studi della pace, la sicurezza e lo sviluppo internazionale presso la Facoltà di relazioni internazionali della Peking University, nonché “professore straordinario” di economia e politica internazionale nello stesso Ateneo
– Honorable dell’Académie des Sciences dell’Institut de France