In GDP terms, the Russian economy is much smaller than that of the EU, yet from a political and military perspective, Russia is a major player in global affairs. Paul De Grauwe argues that Europe grants Russia this power by leaving defence as a matter for each of its constituent nations, instead of having a combined army.

Moscow, Credit: greg westfall (CC BY 2.0)

A few days ago I saw a surprising statistic: the GDP of Russia is of the same order of magnitude as the combined GDP of Belgium and the Netherlands. In 2017 Russian GDP was 1 469 billion dollars (according to the International Monetary Fund). Belgium had a GDP of 491 billion dollars and the Netherlands 824 billion dollars; together $ 1 315 billion. In GDP terms, Russia is only 12 per cent larger than Belgium plus the Netherlands.

This perplexing statistic prompted me to ask why politically Russia weighs so much more in the world than Belgium and the Netherlands, while economically that country is hardly stronger than these two countries bordering the North Sea.

Before answering that question, first some other figures that illustrate how much of an economic lightweight Russia is. US GDP reached US$ 19 362 billion in 2017. With GDP as a yardstick, the US is 13 times bigger than Russia. In the same way, other countries can be compared with Russia. China is economically 8 times larger than Russia; Germany 2.5 times more, France 1.8 more, and the European Union as a whole is 12 times bigger than Russia.

The economic size of a country is one of the most important factors that determine its military and political importance in the world. A large economy is needed to provide the means that gives the country military and political weight in the world. So it is clear: Russia is boxing above its economic weight on the international scene.

The fact that Russia means so little economically implies that the country must exert extraordinary efforts to create a strong military potential. In 2017, Russian military spending amounted to 61 billion dollars (according to the International Institute of Strategic Studies). The US spent nearly 10 times more, namely $ 603 billion. China spent $ 151 billion on defence. France and Germany together spent 90 billion dollars on defence, 50 per cent more than Russia. And yet all these countries spent a much smaller proportion of their GDP on the military than Russia.

Russia is not a major player in the field of military spending. To have a certain military weight, that country must reserve a much larger share of its GDP for defence than the other countries. To mean something militarily, Russia has to put a heavy burden on its own economy. I come back to my question: why is it that Russia, which economically is a lightweight, has such importance politically and militarily? Here is an attempt to answer that question.

First there is the fact that, at the time of the Soviet empire, Russia built up a nuclear arsenal that, together with the USA, gives this country a unique position in the world. This is the position of “Mutually Assured Destruction” (MAD). This means that the country has the capacity to completely destroy the opponent in the event of a nuclear attack on its own territory. No other nuclear power (outside the US) has that capacity today. As long as Russia has such a terrible MAD capacity, it will be politically heavier than its GDP suggests.

Russia is also an important supplier of raw materials, including oil and gas. This gives the country a political lever with regard to Western Europe. It is possible by turning the tap (or threatening to do so) to exert pressure on a number of European countries. However, that effect should not be overestimated. Russia also knows that the use of this weapon will in time encourage European countries to find other sources of supply. The power of Russia is limited in this domain because the country does not have a monopoly in oil and gas.

Finally, and this is my most important point, Russia is powerful because Europe grants that power to Russia. Europe has built up an economic union but not a defence union. The European Union is economically 12 times larger than Russia; a huge potential power. However, this economic power is not converted into military and political power because defence has remained a national matter. By merging their military capabilities, it would be possible for France and Germany to build a credible defence against Russian threats, without having to spend more. The combined military spending of such a Franco-German defence union would be 50 per cent higher than Russian military spending. Enough to offer a counterweight to a Russian dictator whose political and military ambitions in Europe remain unknown.

“Si vis pacem, para bellum” said the Romans. If you want peace, you should prepare for war. Translated to the European situation of today this means that Europe should build a credible defence union. This by itself would reduce the military and political power of Russia.

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Note: This article was originally published at Paul De Grauwe’s personal blog and is reproduced with permission. It gives the views of the author, not the position of EUROPP – European Politics and Policy or the London School of Economics.

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About the author

Paul De Grauwe – LSE, European Institute
Professor Paul De Grauwe is the John Paulson Chair in European Political Economy at the LSE’s European Institute. Prior to joining LSE, he was Professor of International Economics at the University of Leuven, Belgium. He was a member of the Belgian parliament from 1991 to 2003. His research interests are international monetary relations, monetary integration, theory and empirical analysis of the foreign-exchange markets, and open-economy macroeconomics. His published books include The Economics of Monetary Union (OUP, 2010), and (with Marianna Grimaldi), The Exchange Rate in a Behavioural Finance Framework (Princeton University Press, 2006).

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