Great Powers in Decline: A Russian Free-fall and A Gentle U.S. Descent: Leveraging the Nagorno-Karabakh Conflict to Ease the Pain

Daniel H. McCauley and Sadi S. Sadiyev

As the world’s only superpower, the U.S. has spent the last 25 years underwriting global security and is now feeling the strain of countering Russian, Chinese, Iranian, and other non-state actors’ actions while attempting to meet increasing domestic demands. During that same period, the Russian Federation has emerged not only as a regional challenger to U.S. hegemony in Europe, but also one that seeks to re-establish itself as a viable alternative to the U.S. in the global environment. Buoyed by vast petroleum deposits, energy sources, and easy access to needy markets, the Russian Federation has embarked on a path to challenge U.S. supremacy wherever it can. Although still easily the world’s dominant military power, the U.S. finds it increasingly difficult to translate this military advantage into the preferred political outcomes of the world’s sole superpower.

While frustrating to some, the United States’ increasing inability to dictate preferred outcomes should come as no surprise. As a natural outcome of primarily demographic and economic trends, the U.S. is no longer the global hegemon in a unipolar world; rather, it is one of several Great Powers operating in a multipolar environment. Likewise, there are those that see Russia as a rising Great Power that is once again challenging the U.S. for global supremacy. These same factors, however, that have undermined the United States’ global hegemon status will quickly reverse the recent Russian rise to Great Power status.

Through prudent strategic leadership, vision, and a change in security policy, the U.S. can still attain its long-term strategic objectives in this new multipolar world despite the demographic and economic trends. Unfortunately for Russia, its return to Great Power status will be short-lived as President Putin attempts to counter these inevitable debilitating trends with a strategic approach that may help in the short-term, but reinforces its demise in the long run.

In The Rise and Fall of the Great Powers, Paul Kennedy’s main thesis is that each of the Great Powers of the past ultimately fell because of imperial over-reach. The tendency for Great Powers is to overextend themselves economically as they face the convergence of three debilitating trends: ever-increasing security threats, increasing domestic demands, and a decreasing share of the global economy. In this downwardly spiraling scenario, defense requirements burden an already insufficient federal budget because of an increase in demands for domestic spending at a time of slower economic growth associated with mature economies.[1] For example, in the late 1980s, the Soviet Union spent between 15 and 17 per cent of its annual gross domestic product (GDP) on an armaments race with the United States and its NATO allies while its overall GDP growth rate remained flat. This unsustainable defense expenditure was a key contributing factor in the demise of the Soviet Union.[2]

Few would argue that Russia has not declined as a Great Power since the height of the Soviet Union. The U.S. Great Power decline was a theme in this year’s presidential elections. President-elect Trump’s campaign refrain to “Make America Great Again” touches on the three trends Kennedy noted above. Measuring Great Power decline, however, is typically problematic as most arguments for or against the idea are emotionally-based. Fortunately, a facts-based assessment is available—the Hillebrand-Herman Index (HHI) is a historical measure of relative national power and can be used to compare national power over time, historically since 1960 and forecasted as far into the future as 2100. The HHI is a function of population, GDP, technology, and the conventional and nuclear military expenditures of a nation and provides the best assessment of national power currently available.

Using the HHI,[3] Table 1 shows 12 nations that have been viewed either as historically great or regional powers or those that are forecast to be regional powers. In the specific cases of Russia and the U.S., a downward trend is evident for both nations. It is easy to see the dramatic downturn in Russia’s power index after 1988 with the fall of the Soviet Union and is likely no great surprise to anyone. What might be surprising, however, given President Putin’s recent actions regionally and internationally, is that Russia’s power index will continue to decline due, in large part, to its rapid population decline and associated decline in economic growth. By 2050, Russia’s power index will be less than that of Nigeria’s and by 2100, it will rank 10th out of the 12 countries listed. Unless one or more of these power index variables changes significantly, not only will Russia not regain its status as a Great Power, it will likely not even be a regional power in the next 50 years or so.

Using the same index, the United States also sees a decline in power relative to other global and regional actors although its decrease is less precipitous than that of Russia’s. By 2050, the U.S. will see a global power drop of approximately 50%, and by 2100 will rank 3rd in the world behind India and China. The sense that the U.S. has lost its preeminent position in the world is confirmed and a continued slow decline relative to other actors is inevitable according to this index.

If the declines in power indices for the U.S. and Russia are true, then the question for each becomes is there a way to stop or reverse the trend or are the forecasts inevitable? Although current American and Russian actions are renewing historical friction points between the old antagonists, harkening back to a bipolar world, each is attempting to reverse their Great Power decline in a way that best serves its citizenry in the short-term. Inevitable Great Power decline, however, is not necessarily a zero-sum game between the two nations as many observers assume. Rather, understanding each nations’ security imperatives and the potential flashpoints where those imperatives mutually merge provide insights into potentially decreasing current tensions between the two nations thereby slowing their decline.

Table 1. Power Index

The purpose of any government is to provide for the safety and security of its citizenry. Nations have historically sought advantages over other actors within the environment to do just that, leveraging their diplomatic, economic, military, and information instruments of power.[4] In the case of the United States and the Russian Federation, each has a national security strategy that provides a broad approach for enhancing national safety and security. Given the current friction points between the two nations, it should come as no surprise that the two strategies are remarkably similar. The tension between the two nations is a result of those similarities and a direct outcome of the different audiences they serve.

The U.S. has had essentially four enduring interests since national security strategies have been written: security (securing the homeland, U.S. citizens, allies and partners), prosperity (a strong, innovative growing economy in an open economic system), universal values (based upon American values), and stability (a rules-based international order advanced by U.S. leadership that promotes peace, security, and opportunity).[5] In addition to these four interests, there have been three unique traditions of American foreign policy that have shaped U.S. actions. The first is that because of distance, the U.S. has always had the ability to remain isolated from world politics; as a result, American economic strength could be maintained and enduring prosperity and growth facilitated while maintaining internal political stability. The second tradition is that while the U.S. seeks democratic change within the world, it does not want to do so at the risk of global disorder. Finally, the U.S. has always relied upon alliances to mitigate the global challenges of the day. Over the past three decades, the U.S. has strayed from these traditions by underwriting global security that has contributed to a sense of Great Power decline by policies that are shifting and increasingly ineffective.[6]

Some experts in the West believe that no one except Vladimir Putin really understands what Russia wants from its recent excursions into Ukraine and Crimea.[7] Still others call him an ‘opportunist’ and suggest that even Putin doesn’t know his ultimate end state.[8] Unfortunately, assuming Putin lacks an understanding of the criticality of the power index variables on the current and future state of Russia is disingenuous at best. Through the analysis of the Russian National Security Strategy insights into Putin’s actions and potential future actions can be gleaned.

The current Russian strategy seeks to consolidate the efforts of the federal, state, and local organs of power as well as its social civil institutions to create internal and external conditions that enable the Russian Federation to realize its national security interests. The strategy’s paradigmatic assumption is that there is an unbreakable interconnection and interdependence between Russia’s national security and its socioeconomic development. The state has the responsibility to protect the rights and freedoms guaranteed by the Russian Federation’s Constitution, which includes “a decent quality of life and standard of living, sovereignty, independence, state and territorial integrity, and sustainable socioeconomic development.”[9] The specific national securities are state, public, informational, environmental, economic, transportation, energy, and individual, and must be safeguarded by the state.[10]

The instruments of Russian national power leveraged to ensure its national security are the organs of state and local power, along with its political, military, organizational, socioeconomic, informational, and legal institutions. Within this security strategy, Russia has vowed to defend the sovereignty, independence, and territorial integrity of the state, and “to protect the rights of compatriots abroad.”[11] To accomplish this, Russian long-term strategic interests are served by a strong national defense; enhanced national accord; higher living standards, improved health, and stable population demographics; the preservation of Russian culture; increased economic competitiveness; and the consolidation of the Russian Federation’s status as a leading world power with the intent to maintain global stability.[12] To achieve these strategic interests, Putin has determined that a buffer zone keeping NATO and the U.S. away from its immediate borders best serves its national interests. To support this effort, for example, Russia recently signed a treaty forming a joint military commandant with Armenia, which puts NATO aspirant Georgia in a potentially untenable position.[13]

Considering Russian strategic interests in light of the enduring U.S. strategic interests, the similarities are fairly obvious. Each nation’s security depends upon a robust and growing economy and the preservation of its culture and values. Strong militaries are needed to protect and promote these interests and each seeks to be a global leader to maintain stability and, by extension, prosperity and security. The friction points, unfortunately, are multiple as each nation sees its interests attained only at the expense of the other. Therefore, each nation appears to be purposefully antagonizing the other through their actions and reactions. In reality, the U.S. and Russia are merely attempting to fulfill its strategic interests. Each nations’ current approach seeks to maintain a concept of a global steady state, but with different benefactors.

The U.S. is the quintessential Great Power as described in Kennedy’s book. The U.S. has been a part of the global economic system since its independence—it has been a Great Power since the latter half of the 19th century, a superpower since the 1940s, and the global hegemon since the early 1990s. For the past 60 years, the U.S. has had the power and influence to not only dominate the global environment, but to make the rules, too. The U.S. domestic environment, however, has undergone significant changes over the past 30 years marked by the slowing of population and economic growth. The relative power advantage the U.S. has maintained over the rest of the world has been primarily through its development and use of technology.

In a bid to capitalize on its unique hegemonic position in the world in the 1990s, U.S. leadership sought to make the world more prosperous, and thus more stable and secure, by facilitating the global economy. The key assumption was that as the global economy grew, the U.S. economy would reap equal, if not greater, benefits thereby allowing the U.S. to maintain its relative economic, political, and military advantages.[14] Unfortunately, over the past few decades, as prosperity around the world has increased, the U.S. economy has not benefited as assumed. As other global actors’ economies and populations have increased, the U.S. has found itself in an increasingly inferior position within a system it has promoted. Ironically, as the U.S. position has declined, it finds itself in an environment in which increasingly influential regional actors want to change the traditional U.S. rule set for one that benefits them even greater. As a result, to maintain its current relative position, the U.S. had no choice but to defend and maintain the traditional power system—the primary factor Kennedy identifies in traditional Great Power decline.

Recent Russian expansionist actions have been the result of a number of internal trends that are driving Putin’s actions, particularly the economy and demography, which form the cornerstone of the Russian state. In early 2001, oil and gas accounted for about 30 per cent of the Russian federal budget. By 2015, that figure reached 44 per cent. With the recent plunge in oil prices and the conflicts in Crimea and Ukraine, along with the resultant sanctions by the West, the value of Russian currency has been cut in half. With the global demand for oil is predicted to remain low, Russia’s ability to secure and expand its position and influence in the world, buttressed by a strong, modern defense, is threatened.[15]

Coupled with its economic decline, Russia is overlooking a population precipice. In the late 1990s, fertility rates plummeted to 1.2 births per women and has currently improved only slightly to 1.7 births per women.[16] Far below natural replacement birthrates, the Russian population is expected to be approximately 125 million by 2050, which is similar to the level in 1960, and will decrease to around 100 million in the year 2100. Russia’s power index is currently 3.53 and is expected to drop to 1.65 by 2015 and to 1.21 by 2100.[17] In addition, Russia's labor force is projected to shrink by approximately 15 percent[18] further exacerbating its economic problems.

For Putin, the path to solving both the demographic and economic decline is to expand its population or to recapture some of the ethnic Russian populations lost in the breakup of the Soviet Union. This approach also fits nicely within Russia’s stated strategic objective of protecting the rights of compatriots abroad. Recent incursions into Georgia, Crimea, and Ukraine serve this strategic objective well. Also, by challenging the U.S. leadership role internationally, Russia creates international instability, thereby creating opportunities to maintain and strengthen its leadership and economic potential.[19]

Unfortunately, Putin’s approach to mitigating the trends undermining the health of the Russian Federation directly counters U.S. strategic objectives. Furthermore, in a bid to offset her demographic and economic challenges, Putin has taken a page out of the U.S.’s playbook by investing in technology. Russian has made significant investments in their military capabilities, modernizing existing systems, including long-range conventional strike and nuclear capabilities as well as developing robust cyber electronic warfare and undersea capabilities.[20] These modernized military capabilities are viewed by the U.S. as a way to undermine their ability to project power.[21] In fact, U.S. Secretary of Defense Ashton Carter and the Director of National Intelligence, James Clapper, recently stated that Russia now constitutes a greater threat to U.S. security than ISIS.[22] As well, Chairman of the Joint Chiefs of Staff, General Joseph Dunford, echoed that sentiment by calling Russia the U.S.’s top threat.[23]

Responding to Putin’s drive to consolidate the Russian peoples and his military modernization efforts, NATO member states on its northeastern and eastern peripheries sense an imminent threat to their own independence.[24] As a result, the West has countered by supporting former Soviet states congruent to Russia’s border by forward deploying U.S. and other NATO troops, and increasing regional exercises that enhance readiness. With an increase in the U.S.’s presence on its borders, Putin senses that the U.S. is attempting to create flashpoints of tension in Europe posing a direct challenge to Russian national interests and Putin’s power structure.[25] One can see that this current punch-counterpunch approach from both antagonists results in an escalating scenario that can easily spiral into direct conflict between the U.S. and Russian militaries. In any scenario, if conflict were to occur neither nation would benefit. In fact, direct conflict only accelerates each nation’s decline.

From the U.S.’s perspective, recognizing these negatively reinforcing actions and the reasons behind Putin’s activities is the first step in understanding the U.S.’s own contribution to its Great Power decline. The U.S. must accept that the world is changing and America is, too. American leaders must work to manage or shape actors and events rather than fight them everywhere around the world. Underwriting global security is an unsustainable approach to maintaining the status quo. As much as the U.S. would like to turn back the clock to a post-WWII strategic environment in which it dominated the world economically, it cannot do so. It can, however, do a better job of managing its role in the world while maintaining a highly influential, if not the preeminent, leadership role in the world. With a growing population, albeit slowly through immigration, a growing economy, and still the world’s leading technology innovator, by leveraging these three key components within the power index the U.S. can choose its place in the new world order rather than crashing into it. Realizing that underwriting global security is a losing proposition will help relieve pressure on the U.S. economic engine, the output of which must be used to address the pressing domestic issues.

From a Russian perspective, there are no good solutions at this point. There are not enough ethnic Russians living outside of the current Russian state to compensate for the steep decline in population, nor can the Russian economy expand enough to offset the population decline. Investment in technology can only provide a short-term partial solution, but will not stem the inevitable tide of decline. So, if pressed, Russia will likely resort to conflict to create instability, using any combination of soft and hard power as required to create as much uncertainty as possible for any rival or rivals to decrease their national power relative to their own.

Given that Russia has an arsenal of nuclear weapons and advanced military technologies, and that President Putin is not the type of leader to accept his nation’s inevitable decline without a fight, the primary question for the U.S. becomes how to manage a ‘soft landing’ for a proud nation and people that spans two continents? In addition, how does the U.S. manage this without further contributing to its own relative decline? Analyzing the Russian National Security Strategy provides some clues. The first is to appropriately manage the Russian desire for national security along its immediate borders. The second is to provide Russia with a modicum of international prestige and national pride through a prominent leadership role in solving regional or even global conflicts.

At first blush, there does not appear to be any opportunities for cooperation between the U.S. and Russia. However, one long-simmering issue in a region that is important to both nations is in the Caucasus. The decades-long Azerbaijani and Armenian conflict over the Nagorno-Karabakh region could prove to be the mutually beneficial opportunity that addresses concerns of both the U.S. and Russia.

In the 1920s, the U.S.S.R. included the Nagorno-Karabakh region within Azerbaijan and repeatedly affirmed that decision over the years despite multiple petitions by Armenia. During the last four years of the Soviet Union, Armenia renewed efforts to influence the weakening Soviet political leadership to restate their claim. A distracted Soviet leadership failed to provide clear guidance on the issue thereby increasing the tensions between the two Soviet Republics. In the late 1980s, the pro-Armenian majority in southwestern Azerbaijan held a referendum, boycotted by the Azerbaijani population, voting in favor of independence. In early 1988, the ethnic Armenian majority demanded to unite with Armenia and, as the Soviet Union’s disintegration approached, increasingly violent conflict occurred between ethnic Armenians and Azerbaijanis.[26] On February 20, 1988, the region voted to unify with Armenia. Four days later, ethnic Armenians and Azerbaijanis engaged in open conflict as ethnic Azeris fought the region’s secession from Azerbaijan. In the end of the standoff there was a death toll of 26 Armenians and 6 Azerbaijanis.[27]

On July 12, 1988, the Regional Soviet of Karabakh adopted a bill on the secession of Karabakh from Azerbaijan SSR and its incorporation into the Armenia SSR. The bill was in violation of Article 78 of the Constitution of USSR in which it states that the territory of any Union Republics could not be altered without each republics’ consent. The borders between Union Republics could only be altered by mutual agreement of the Republics concerned, and was also subject to approval by the USSR.[28] The bill was an open violation on the territorial integrity of the Soviet Azerbaijan and Moscow shut its eyes to the facts. During the next two years, the ethnic conflict worsened and Azerbaijanis living in Armenia were forced to flee the country. As a consequence, at least 216 Azerbaijanis were killed and 1,154 people were wounded. The number of refugees from Armenia reached 200,000 with another 600,000 Azeris displaced from the Karabakh region. With upwards of 230,000 Armenians displaced from Azerbaijan, there are well over one million displaced persons in the region.[29]

As a result of this conflict, Armenia occupies over 20 percent of the Azerbaijani territory protected by Armenia’s well-formed army and backed by a Russian combat brigade. Despite the ceasefire that was achieved in 1993, the Armenians and Azerbaijanis again engaged in open conflict as recently as April 2016, each accusing the other of provocation and attacks. Unlike other clashes took place throughout the ceasefire, this time heavy weapons were used. Severe casualties are reported from either side.[30]

In addition to the former Soviet Union’s Constitutional Article regarding disputed territories, Azerbaijan’s assertion that it has been the aggrieved party has been supported by multiple international organizations over the past two decades. The U.N. Security Council passed four resolutions (822, 853, 874 and 884) in 1993 for purpose of developing a peaceful settlement of the conflict. Each of these resolutions demanded the unconditional withdrawal of the Armenian forces from the whole occupied territory of Azerbaijan. Armenia has ignored these demands.[31]

At the Lisbon Summit of the Organization for Security and Cooperation in Europe (O.S.C.E.) in early December of 1994, the co-chairmen of O.S.C.E. advised principles toward the solution of the conflict. The statement released by all 53 O.S.C.E. members, except Armenia, agreed on three principles for the settlement of the conflict. The principles are:

- The territorial integrity of the Republic of Azerbaijan and the Republic of Armenia; - The legal status of Karabakh defined in an agreement based on self-determination which confers on Karabakh the highest level of self-administration within the territorial integrity of Azerbaijan; and - The guaranteed security for Karabakh and its whole population, including mutual obligations to ensure compliance by all the parties with the provisions of the settlement.[32]

In the May of 2002, under the Chairmanship of the OSCE Minsk Group, talks were organized between the Azerbaijani Deputy Foreign Minister, Araz Azimov, and the Personal Representative of President of Armenia, Tatoul Markarian, in Prague. A second session of the talks took place in late July of 2002. The Prague Process, as it was later called by the U.S. State Department in September 2002, would serve as a vehicle for sustained communications between the both parties. The process was later continued by the Foreign Ministers of Armenia and Azerbaijan, Vartan Oskanian and Elmar Mammadyarov, who had the first meeting in Prague in April 2004. The process was mediated by France, Russia, and the United States. The first round of Prague Process culminated in Warsaw on May 15, 2005 by a meeting of the Presidents of Azerbaijan and Armenia, Ilham Aliyev and Robert Kocharyan. The four meetings between the two leaders allowed the methodical re-examination of all negotiation parameters. Both Azerbaijan and Armenia agreed that if a settlement is achieved, five of the seven occupied regions by Armenia would be returned to Azerbaijan and international peacekeepers would be deployed. Despite these political efforts, the issue remains unsettled.[33]

Given this specific regional issue, why would solving this smouldering conflict on Russia’s southern border be of interest to Russia and the United States? More importantly, how can solving this conflict be used to enhance each country’s national interests, provide an opportunity for mutually beneficial interaction, and either soften one nation’s decline or contribute to halting the other’s decline?

From a Russian viewpoint, a settlement undercuts other regional territorial claims, such as Armenia with Georgia, thereby reducing the potential for other conflicts. Leveraging the earlier U.N. and O.S.C.E. resolutions, Russia could enhance its reputation as a global leader while stabilizing a portion of a volatile area on its southern flank. Russia could benefit economically from increased trade with Iran and Turkey while also providing it with a sense of national pride as a major regional actor. Finally, Russia could also reduce military expenditures by removing its 102nd Military Base in Gumru, Armenia, consisting of about 5,000 troops.[34] The removal of the base would also ease tensions with Georgia and Azerbaijan. As there are no large Russian ethnic populations in Georgia, Armenia, or Azerbaijan, the likelihood of future Russian annexation is remote. Solving this regional conflict addresses a number of Russian national strategic objectives.

For the U.S., solving the Nagorno-Karabakh issue requires little expenditure of national resources other than diplomatic energy. It would not be a drain on the U.S. economy as it would be solving a long-term problem through means other than militarily. The U.S. would enhance its global reputation by providing leadership on an issue that is of peripheral interest to it, but of important or vital interest to the antagonists and surrounding nations. The U.S. would enhance both the U.N. Security Council’s and O.S.C.E.’s images as legitimate and effective regional and international organizations. A stable Caucasus region would provide regional destabilizers, such as nation states, regional actors, or transregional actors less opportunity to exploit the conflict and associated instability for their own purposes.

In addition, as Azerbaijan is a key provider and hub for energy to Europe, a stable region offers greater certainty for our European allies and partners making them less prone to disruptions and influences from elsewhere. The Caucasus also serve as an important transportation thoroughfare for the new Silk Road from Asia minimizing the cost of transportation of global shipments. A stable Caucasus region could potentially draw Iran into an economic partnership with Azerbaijan by allowing Iranian oil exporters the use of Azerbaijani energy transportation networks. An even longer-term outcome could directly benefit Armenia by extending the transportation network through Armenia and directly to Europe thereby shortening the route. In helping to solve this conflict, the U.S. enhances its global and regional leadership, maintaining or even slightly enhancing it Great Power status, while sustaining the economic status quo with little outlay of resources.

Identifying a cooperative opportunity that benefits Russia and the U.S., such as Nagorno-Karabakh, is a small step in the right direction for both nations. First, it provides an issue where U.S. and Russian interests merge and thus an opportunity for cooperation on this and potentially other issues. Second, providing Russia with a sense of stability on one of its immediate borders will increase its sense of security. Third, the U.S. finds that it can influence international order through the protection and advancement of U.S. values instead of through the military instrument of national power. Fourth, finding common ground that will relieve some of the suspicion between the two antagonists will allow the U.S. to keep an eye on the rising economic powers of China and India. Fifth, and most important, any increase in Russian prestige will be short-lived as the powerful trends of a decreasing Russian population and associated economy make Russia’s long-term demise inevitable.

Make no mistake, the U.S. is engaged in a battle for global power. However, it appears more and more that the greatest foe it faces is itself. Locked in a paradigm that requires the maintenance of the status quo, the U.S. is expending its valuable and finite resources in a futile attempt to live in yesterday’s world. The long-term trends of the five variables that make up the power index—population, GDP, technology, and conventional and nuclear military expenditures—support the theory of Great Power decline. Fortunately, all is not lost. Astute U.S. civilian and military leadership can understand the relationship and effects of these variables on power and develop an approach that best leverages American advantages in the current global system.

End Notes