The National Interest’s publisher, Dimitri K. Simes, recently interviewed Sergey Glazyev, who has a reputation for forthright and blunt speaking and is a close adviser to Russian president Vladimir Putin. Glazyev’s portfolio has included Ukraine and he is an expert in economics. In 2004 he ran for President of Russia. He was placed on the sanctions list by President Obama this March. The interview has been translated from Russian by Milena Tercheva.
Dimitri Simes: President Putin said that Russia was not planning to use force in Ukraine outside of Crimea. Under what conditions do you think Moscow might use force in Ukraine in any way?
Sergey Glazyev: First, I would like to say that Russia did not use force in Crimea; fortunately, there was no need of that because the Crimeans handled the situation themselves. There wasn’t a single death, excluding two women who had fallen victim to radical Islamic protesters during the Simferopol protests before the referendum in Crimea. All work on the proclamation of independence of Crimea, all sessions of the Supreme Council and the referendum itself passed without the use of the Russian armed forces, without even the need for their intervention, without any victims or shots fired, which proves that the Crimean population managed everything on its own.
D. Simes: How about the people murdered by snipers?
S. Glazyev: The tragedy of the sniper murders happened after the referendum, when Crimea was signing the treaty to join Russia. As far as we can tell, these were Right Sector (Ukrainian nationalist paramilitary) snipers who had illegally entered into Crimean territory.
D. Simes: When we talk about the use or non-use of force in the rest of Ukraine, do you envision a scenario under which Russia would send its military into eastern Ukraine? In your opinion, is there anything that could lead to such actions?
S. Glazyev: I cannot give you a definitive answer to this question, because our President still has the authorization given to him by the Council of the Federation in accordance with our Constitution to use the armed forces in Ukraine as a last resort to save people. At the moment, there is no necessity to resort to that, and I am confident the President is not presently planning such actions. I can furthermore tell you that, even in Crimea, about two weeks before the referendum, there were no plans to use the military among the Russian leadership, and even among our Crimean colleagues. The application of Putin to the Council of the Federation to use force was a reaction to two things— the shooting at a delegation of Crimeans coming back from Kiev who were ambushed and shot at by neo-fascist paramilitaries that stopped the five busses of the delegation, shot several people who protested, and stripped and taunted the rest; and to further threats by Maydan activists to Russians and Russian speakers. The paramilitaries burned the busses, and when Crimea learned of this disgrace, there was nothing that could stop its further course towards independence.
Should such events happen in other parts of Ukraine, people would obviously fight for their rights and safety, and call not just on Russia, but also on the international community, for help. This would be a direct consequence of the fact that, at present, neo-fascists in the South-East of Ukraine are committing outrages, resorting to armed violence, to lynch law, to the burning of houses of people they don’t like, and these aren’t just isolated cases. They began with the secret murder of an old woman on whom they put a sign “Jew and communist.” Such murders have now evolved to square gunfire in open daylight. People are being intimidated and shot at with sub-machine guns as arms have now been moved out of the barracks and kept in the suburbs of Ukrainian cities. Among the army forces stationed there are neo-fascists come from Western Ukraine who were readily accepted into the ranks. The situation is inching closer to civil war, and in a civil war, or in mass cases of armed vigilantes shooting people, regardless of whether the perpetrators wear a police or military uniform, it will be not just Russia, but also the international community that would protect people.
D. Simes: Two more questions. The first is about the economic sanctions that the U.S. imposed on Russia. As I understand, Putin said today that Russia is not going to retaliate to the latest round of sanctions. But is there going to be any response to them; perhaps not an economic, but an asymmetric one? Or did Moscow just reach the conclusion that it will not play the game of economic sanctions?
S. Glazyev: We see that the main victims of the sanctions are the countries that imposed them. The only serious repercussion of the U.S. sanctions was the undermining of trust in the United States on the part of Russian business.
Russian business was literally shocked that, in the U.S., irresponsible officials, political activists, and radically-inclined political analysts can work to impose sanctions on foreign banks and corporations. No one here ever imagined that in a country such as the United States, there could be the most egregious violation of civil law and business relations. Russian business could not imagine that any businessman in America can be frivolously deprived of his or her money; that corporations of sovereign countries can be arbitrarily blocked, accounts frozen or transactions canceled. The main consequence of the American sanctions on Russia is the loss of trust in America as a business partner by Russian business. If earlier the U.S. symbolized reliability for doing business, and many people aimed to insure and protect their business by working in the United States, used American banks for their savings, and invested in America, including by buying property, because they thought the U.S. was very reliable. This trust has now evaporated. The sanctions have completely shattered the illusions of Russian businessmen and anyone who had any business relations with the U.S. It turned out that in the U.S., a person could be deprived of all property, even of civil rights, because some State Department appointees took to heart the statements of political analysts and journalists, and could authorize such decisions. We are indeed very shocked.
Now, on the question of EU sanctions. Their imposition was an even stranger initiative opposed practically by all European businesses. But European politicians pressured by journalists who have created a myth of some Russian threat to Europe in Ukraine are ready to adopt sanctions that would victimize first and foremost their own countries. For instance, if we assume that they would adopt sanctions against Russia similar to those against Iran, according to our calculations, this would cost the EU 1 trillion euro. The sanctions would disproportionately affect the Baltic republics: for example, the potential losses for Estonia are estimated at the size of Estonia’s annual GDP; Latvia and Lithuania would incur losses the size of half of their annual respective GDPs; Germany would incur a loss of 200 billion euro. More than anyone else, the sanctions would punish Ukraine, for whose good, ostensibly, they are being adopted, according to all those political analysts and journalists. Considering Ukraine depends on Russia more than the other European countries, it would take the hardest hit. So we are very skeptical when looking at the hysteria coming from European Union politicians demanding sanctions against Russia, especially those from the Baltic republics that would end up in the worst economic pain.
D. Simes: And how much will Russia suffer? In Washington, in some official circles, and especially in Congress, there is the hope that Russia has done the math not just with regard to how much sanctions would hurt Europe, but with regard to how much they will hurt the Russian economy and that ultimately this math will force Moscow to change its course. Did you do this math? What were your conclusions?
S. Glazyev: The extent to which the Russian economy will suffer will depend on the extent to which it is involved in trade with the NATO countries. We are not looking at potential sanctions from China, India, Brazil, the CIS, or Turkey. If sanctions are imposed on Russia by the NATO partners of the U.S. excluding Turkey, which leaves the European Union, we are talking about potential losses in the size of hundreds of billions of dollars. But these losses will have a boomerang effect. In other words, if Russian accounts in dollars and euros are frozen, this will mean that the Russian borrowers who have taken credit, mainly Russian businesses who have borrowed from the EU and partly from the U.S. and other countries, will not be able to make payments on their debt, and presently this debt is worth about $700 billion. Our financial reserves are half a trillion dollars, but our debt is larger still at $700 billion. We will of course lose hundreds of billions, but Europe will lose even more. We are therefore confident that Europeans, being rational and valuing business, will after all listen to their business sector when it explains to the politicians that these sanctions will hurt Europe more than Russia, and will in the long run weaken Europe because, after all, Europe cannot give up Russian gas. And if Europe does impose sanctions, this means that it will have to pay for gas in Russian roubles because it will have banned transactions in dollars and euros. This will ultimately strengthen our financial system. We are thus optimistic about sanctions because with them, the EU would stimulate rouble transactions and the use of Russian financial instruments in trade, while the volume of trade with us that Europe is unable to give up is pretty high.