RUSSIA TO PAY HIGHLY FOR USA FRIENDSHIP

Successful politicians usually enjoy their fair share of luck along the way. With the election of Donald Trump, Vladimir Putin received the luckiest break of all. Instead of continued isolation, the Russian president will get yet another reset, with several long-term goals – a recognized zone of influence, non-interference in domestic affairs, an equal relationship with the United States – within his grasp.

If Trump truly is a dealmaker, however, Putin will have to sacrifice some of the core policies – anti-Americanism, economic protectionism – that have facilitated his consolidation of power. New complexities to old problems also are likely to arise in any rapprochement with the United States, most notably in eastern Ukraine. Before Putin counts his winnings – which could be substantial – it is necessary to consider what the consequences of success might mean for him.

Putin has built his foreign policy around one fundamental premise: the United States represents Russia’s primary, indeed only international rival. Every policy, every speech, every foreign meeting, every news program revolves around this central thesis.

But what if that enemy, or at least its most extreme caricature, suddenly disappeared? Putin has nothing to replace the propaganda gusher of an arrogant, over-reaching, and power-obsessed United States. The most obvious alternative – Russian nationalism – is just too divisive in what remains a multi-ethnic, multi-religious society. Indeed, Putin recently discussed the need for a new law on the Russian nation that addresses interethnic relations. Yet instead of focusing on unifying national ideas, the proposed legislation evidently will address the dull bureaucratic minutiae of Russian state-building.

Putin could also look elsewhere for adversaries – Europe, Islamic State-– but they are unlikely to galvanize the Russian people to the same extent as an old superpower rivalry. Putin may soften his anti-Americanism, but in doing so, he risks losing one of his few dependable sources of national unity.

Ironically, a decision by President Trump to lift sanctions (with the European Union immediately to follow suit) would also throw Putin’s current economic strategy into disarray. In response to U.S. sanctions over Russia’s annexation of Crimea and subsequent military engagement in eastern Ukraine, Putin imposed his own counter-sanctions that prohibited EU and U.S. food imports, thereby providing a huge boost to domestic producers.

Putin also embarked on a program of import substitution that privileges and subsidizes Russian manufacturers of electronic devices, software, machine equipment, pharmaceuticals and a host of other products in the name of economic sovereignty.

The economic rationale behind import substitution remains rather dubious, since it invariably will result in poorer quality, less competitive goods. But what if President Trump offers to end the sanctions program in exchange for the removal of counter-sanctions and non-discriminatory access to the Russian market? Putin would have to lift his protectionist measures as part of such a deal, thereby exposing all those new Russian producers of cheese, software, medicine and other products to Western competition. Putin’s entire economic strategy would unravel, and he would feel the backlash from domestic manufacturers who acted on the assumption that they would enjoy state protection for years to come.

The sudden end of sanctions would throw another wrench in Putin’s plans, namely in Ukraine. Sanctions have become inextricably linked to the Minsk Two peace process agreed in February 2015 by the leaders of Ukraine, Russia, France and Germany. The Europeans insist that the sanctions stay in place until there is progress toward implementing the agreement, which requires specific actions from both Russia and Ukraine. The Russians are responsible for overseeing the implementation of the ceasefire by the separatists, including the withdrawal of heavy weapons from the front. The Ukrainian concessions are much more painful: Kiev must potentially recognize local elections in Donetsk and Lugansk and provide these districts with significant regional autonomy.

If, however, President Trump decides to remove sanctions before Minsk Two is fully implemented, Ukraine would have a much freer hand in dealing with the separatists. Indeed, some Ukrainian commentators have proposed just letting the Donetsk and Lugansk regions go their own way, thereby releasing Ukraine from having to pay for the costly process of political re-integration.

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Any decision by Kiev to walk away from eastern Ukraine would present Putin with a major dilemma. The Kremlin would lose leverage over Kiev while assuming the long-term administrative and financial responsibility for governing the eastern provinces.

Rather than accommodate such a move by Kiev, Putin most likely would feel compelled to renew military pressure on Ukraine, no doubt denying at all times that Russian troops were involved. It may be a good bet that President Trump and his “realist” advisors would adopt a non-interference policy in Russia’s self-declared zone of influence, but a renewed war invariably carries new risks – especially if Putin wants to conceal Moscow’s involvement from the domestic audience.

So Trump’s victory potentially may pose some difficult choices for Putin. The Russian president remains a flexible politician, and he may gladly accept improved U.S.-Russian relations as a necessary pause to allow his country time to recover from a devastating economic recession. Putin’s popularity, however, is directly linked to his confrontational foreign policy and protectionist measures. Without an external enemy, Putin will have to find other means to rally support for his policies. He won't be able to turn to any economic successes; the Ministry of Economic Development announced in October that Russian living standards won’t rise until 2035.

While the Kremlin clearly is smiling, it also has tried to lower expectations regarding what to expect from a Trump presidency. This may be a sound negotiating tactic, but it also might indicate that Putin needs time to re-arrange his priorities, especially if a deal upends the main pillars of his foreign policy, economic strategy, and base of domestic support.