For all of Russia’s bluster, and however much they might dominate our news cycles, they are nothing like as big and powerful as they make out to be. In fact, their economy is almost the same size as Australia’s, except Australia has a population of a bit over 24 million, and they almost 145 million, and Russia is the biggest country by landmass in the world. Outside their top half dozen towns, they look more like a third world country with very much run-down infrastructure, and a failing agriculture sector. They have a miniscule SME sector: this is surprising particularly when one considers their population, their sophisticated universities and their advanced technologies, especially in Defence and advanced manufacturing such as their advanced jet fighters which compare very favourably with the latest US models.
Their economy is dominated by defence industries, oil and gas, and mining. They spent an estimated 5.3% of their GDP on defence, by far the highest in the top 30 economies in size in the world. This compares with the US 3.3%, even though the US spends more than the next eight biggest economies in their annual defence budgets combined. The next biggest is China which had defence budget in 2017 of about a third that of the US at $215B or 1.9% of GDP, although a number of analysts suspect the China figure is substantially understated.
Just because Russia has relatively small economy, it does not mean they are not dangerous. They of course have the biggest nuclear arsenal in the world, a legacy of the Soviet era, and so long as that exists, the plutocracy which is the Putin regime knows it will not be provoked by the West.
Another legacy of the cold war, is their highly developed skills in the “dark arts” of subversion, information manipulation, and what used to be called propaganda. Putin himself started his career as a field officer in the KGB, and in fact during when the Berlin Wall was being torn down in 1989, Putin headed up the KGB in east Berlin – not one of his finest moments! It is as if he has been seeking revenge on the West ever since, particularly the US and Western Europe. By demonstrating chaos in Western democracies, he also demonstrates to his own population that maybe democracies are not as attractive as they first thought, particularly following Russia’s own chaotic democratic experiment under Yeltsin. A worrying side effect of this, is the relatively low support for democratic norms amongst millennials in many western democracies – a concerning development, and one not unrelated to Putin’s shenanigans.
When Boris Yeltsin chose Putin as his immediate successor in 1999, he did so thinking he would continue Yeltsin’s democratic reforms, albeit in an already highly corrupt State. Instead, over the next decade and a half, he cemented power, rigged elections, and enriched himself and his friends to such an extent that many now regard him as the wealthiest person on earth. He did so by applying the dark arts learnt in the KGM to the running of a sovereign state, and to no-less than subvert and disrupt the democratic institutions of the west, democratic elections, economic institutions such as the EU. To have a pro-Russian President of the US in the White House in Trump (seemingly beholden to Putin for some unexplained reason), and EU states arguing amongst themselves of which Brexit has just been the most spectacular, is just about a dream come true for Putin. He does not need a huge defence budget if he can get these outcomes via manipulation, corruption and deceit. So how does he do this?
Given his limited economic power, he has been using his KGB skills, but updated ones now adopted to digital environments, AI and social media. He uses this to directedly interfere in the democratic and economic processes of the West. Donald Trump is simply his most public success, but there is strong evidence he has also interfered with elections across the EU, with the Brexit vote in Britain, and particularly his near neighbours like the Baltic States and the Ukraine.
The only way to stop this is to strengthen existing laws in the west, closely regulate elections, and use the rule of law as personified by the West’s Intelligence agencies (like the CIA, MI6, and the “five eyes” intelligence alliance), and to encourage and support institutions like the FBI and the Justice department in the US so that when mischief has been uncovered, that the law takes its course.
It remains to be seen whether this will occur in the US, but if it does not, the West and the US may well begin descending into the criminality and corruption of modern day Russia. The stakes are now very high indeed.
 Fortune Magazine, July 2017.
World BanK Yearly survey 2017 and the Stockholm international Peace Institute Data