The key to understanding Putin's foreign policy is not to dwell on foreign policy concepts or philosophies but to look at his domestic economic and political agenda. Putin is seeking to recreate Russian national strength after years of what he believes to have been stagnation and decay. In his mind there is a direct connection between creating domestic order and strengthening the Russian state and increasing international respect for Russia abroad. He sees foreign policy as a way not only to raise revenues for the state and his political allies (through arms sales and special commercial relations with China, India and Iran) but also to increase respect for the state among the Russians themselves. In this way, he uses foreign policy to shore up his drive for domestic political and economic order.

With this goal in mind, we see four pillars to Putin's foreign policy:

Pillar #1: Expand the Russian sphere of influence in the "near abroad" and create a common market in the countries of the former Soviet Union
Putin's efforts to recreate a Russian sphere of influence in the CIS are partly economic (to secure oil and other revenues); partly geopolitical (to enhance political control over neighbors and secure a buffer security zone against Islamic extremism in the South); and partly domestic politics (to enhance his popularity and to quiet communists and nationalists).

Since 1992, Russia has supported "hot spots" and de-facto independent quasi-states in several areas where they can be used to pressure sovereign governments: Trans-Dniester/Moldova; Abkhazia/Georgia; Karabakh/Azerbaijan; Tajikistan-Islamic radicals/Uzbekistan. This policy, primarily driven by the Ministry of Defense, remains in place today. However, a new policy, which combines economics and security and involves Russian companies purchasing the vital economic infrastructure (power grids; power generators; oil and gas pipelines) of countries in the "near abroad," has emerged since 2000. Combined with occasional stoppages of electricity for non-payment of energy debts, the policy drives home a clear message to the NIS leaders about Moscow's power. In addition, Russia will step up work on CIS military cooperation, as the recent meeting in Yerevan, Armenia, demonstrated, and economic cooperation, as proclaimed at the May 31 summit in Minsk.

Russia views radical Islam as a long-term, systemic threat to its security. It is concerned about the indigenous Islamic fundamentalists who may threaten regimes in Uzbekistan and other Central Asian republics. Local Islamic fundamentalists have close political, military and commercial (opium/heroin) ties to the Taliban. In the long term, Russia believes that if Islamists are not stopped in the Northern Caucasus and Central Asia, they may emerge as a threat on the shores of the Volga.

Russia has asked the President of Turkmenistan, Saparmurad Niyazov (nicknamed Turkmenbashi) to supply natural gas to Ukraine as a token of good will to President Kuchma. However, Russia is concerned about close ties between Turkmenbashi and the Taliban, and we were told that Russia is drawing up contingency plans to intervene in natural gas-rich Turkmenistan if the Taliban invades.

Russia is concerned about the desperate economic situation in Kyrgyzstan (which borders China's unstable Xinkiang province populated by Moslem Uygurs and which experienced a radical Islamic insurrection in 2000). Russia is planning to buy run-down industrial assets in Kyrgyzstan, to help revive the republic's economy, and stabilize the situation there.

Ukrainian Relations
Reports from Moscow tell us that President Putin supported the nomination of former Prime Minister Viktor Chernomyrdin as Ambassador to Ukraine and the presidential Special Representative for Economic Cooperation in Ukraine as a KGB-style "special operation." Chernomyrdin, who closely cooperated with Ukraine's President Leonid Kuchma when both served as prime ministers, is Kuchma's personal friend. Nevertheless, Chernomyrdin will take direction from the Kremlin and work hard to recover the $2 billion debt Ukraine still owes Russia for energy supplies.

It is clear that Putin is stepping up pressure on Ukraine. His administration pressured Kuchma to fire Ukraine's pro-Western Foreign Minister Borys Tarasyuk (fall 2000) and Prime Minister Victor Yushchenko (May 2001). The new Prime Minister Anatolii Kinakh is viewed as loyal to Kuchma. Kuchma will nominate state secretaries to his cabinet and individual ministries who also will do his bidding, and who will not be subject to the authority of the Rada (Parliament). Kuchma is effectively circumventing the Rada, which is dominated by the oligarchs. Thus, unlike the Prime Minister, they cannot be fired by the Rada.

In January 2001, Moscow and Kyiv reportedly signed a 52-clause classified military agreement giving Russia considerable influence over Ukrainian military planning. Reportedly, this agreement entails establishing a joint Black Sea naval force. We cannot confirm the accuracy of these reports. The Ukrainian embassy in Washington denies them, although reliable sources assured us that indeed some such documents have been signed and that Ukraine is under pressure to re-align itself more closely with Russia. If true, these agreements may place Ukraine's cooperation with NATO in the Partnership for Peace framework in doubt and jeopardize the joint naval exercises that Ukraine and NATO have held during the last three years.

On the economic front, Russian companies are on a buying spree to gain control over the electric grids, oil and gas pipelines, and aluminum refineries, which will economically further link Ukraine to Russia. Russian companies are spending hundreds of millions of U.S. dollars to acquire these assets. However, the Ukrainian infrastructure is in such as poor condition that it will require Western investment, equity participation and management skills to attain viability.

Moscow is interested in boosting cooperation between the Russian and Ukrainian military-industrial complexes. Important technological facilities in aviation and rocketry were left in Ukraine when the USSR collapsed. That could boost Russia's production and export capacities. These assets include the largest heavy ICBM factory in the world (Yuzhmash), the Antonov heavy transport aircraft design bureau and plant, and the Nikolayev shipbuilding yards. Russia may use this industrial capacity to further develop its military exports to China, India, and the Middle East.

U.S. policymakers need to be aware that the Ukrainian military and national security establishment suffers from split loyalties. The Ukrainian armed forces include many ethnic Russians who worked for the Soviet military or the KGB, and who may see Russia as a successor to the Soviet State. Ethnic Ukrainians are more committed to the cause of an independent Ukraine and often suspicious of Moscow's intentions. Any activities that boost Ukraine's sovereignty and independence may enjoy more support from ethnic Ukrainians than from the ethnic Russians in Ukraine's armed forces.

NATO is an important partner in building Ukraine's military and security potential as a counterbalance to Russia. Ukrainian military leaders do not want to cooperate exclusively with Russia. They should be encouraged to capitalize on the Partnership for Peace, and to enter cooperative ventures with NATO as a group, and bilaterally with its members. It is extremely important that the next generation of Ukrainian military officers and security officials receive their education in the West, and that they are not denied promotions or pushed out of service upon their return to Ukraine.

Pillar #2: Develop the European Union as a major energy market and principal source of technology and foreign investment
In addition to the economic benefits, Putin sees closer European ties as valuable in enhancing his leverage with the United States. He has no illusions that NATO will abandon the U.S. over critical issues like BMD merely because Russia objects. However, at the same time, he believes that European qualms about BMD give him influence and leverage that he can exploit not only in talks with the Americans but in dealings with the Europeans.

The economic incentive is critically important. Leaders of the Russian business community who are already involved in energy exports and have floated ADRs in the US believe that Russia's future lies in exports to the West (particularly Europe) and in raising Western capital. They say they reject neo-Soviet or anti-Western positions and are willing to play a more prominent role to move Russia towards closer integration with the West. They also claim that they are capable of working with Duma deputies and Kremlin staff to facilitate a more pro-Western position. They suggest developing channels to work more closely with the Russian business community.

This means that this politically influential community will encourage Putin's outreach to the European Union. Again, there is a domestic and economic interest driving foreign policy in this area. Given the strong political, economic and business interests of Europeans-particularly in Germany-to cooperate with Russia, we can expect closer ties in the future.

Pillar #3: Develop China, India and Iran as an arms market
Russians have strong but ambivalent views about these countries. Some Russians dream of bringing these countries into a coalition to counterbalance the United States. Those who espouse this "Eurasian" position (such as Alexander Dugin, the chief ideologist of Eurasianism) see Russia as the nucleus of the future anti-American bloc in the Eastern Hemisphere. They are strong supporters of Putin, who some Russian analysts believe supports this "Eurasian" orientation. However, we think that Putin's main motivation is less ideological and more economic and geopolitical. In short, he is looking for cash and for ways to maximize his international leverage, which the special relationships with these three countries provide.

The most interesting relationship is with China. Russians are profoundly ambivalent about China. Russia and China will sign a Treaty on Friendship and Cooperation during Chairman Zhiang Zemin's visit to Russia in July. Nevertheless, almost all of our Russian interlocutors expressed concern about the growing economic and military power of China and claimed that they see limits to Russian-Chinese cooperation. Russian experts on China are particularly adamant: they claim that the Chinese view Russia with disdain, and that historic claims of injustice in the relationships may lead to territorial claims in the future. The Russians were particularly indignant about China's refusal to include in the treaty an explicit clause about the finality of borders. They dislike the "extra-territorial" villages populated by Chinese on Russian soil, and they protest Chinese embassy officials coordinating the activities of Chinese businessmen.

Pillar #4: Develop a pragmatic relationship with the United States that maximizes the perception of Russia's great power status
Putin's attitude toward the United States is unlike that of Boris Yelstin, who adhered emotionally to the hope of a close relationship with the United States. Putin has no such emotions or expectations.

Putin's foreign policy is like a Russian form of Gaullism-ever seeking independent actions to maximize his ability to maneuver and keep opponents from coalescing against him. This means that Putin is neither pro-American nor anti-American. He will act on his perception of national interest, which is rather narrowly (and sometimes contradictorily) defined. Hence, he will sell arms even though it angers the U.S. Yet he may be open to cooperation with the U.S. on counter-terrorism, particularly against radical Islamic groups. He will cooperate with China militarily because he wants their money for arms and because he wants a counterbalance to the U.S. Yet, he may be open to the suggestion of a Russian-Western cooperation against China if he were given sufficient financial and geopolitical incentives (most of which we would not be willing to give).

His global strategy appears to be to develop a multipolar set of relations with China, Middle Eastern states and the European Union to maximize Russia's international influence, prestige and leverage-not to mention its finances (which explains Russia's role in proliferation and its relations with some rogue states). Very often this will put Russia at odds with the United States. Moreover, there is a strong psychological desire to preserve the perception of Russia as a great power. Hence the need to appear independent from and equal to the United States, particularly in strategic matters.

Moreover, Putin is interested in seeking economic cooperation with the United States in certain areas: e.g., civilian space exploration; fossil fuel exploration; nuclear energy cooperation; and possibly cooperation in developing missile defense technologies and systems.

Kim R. Holmes, Ph.D.is Vice President of Foreign and Defense Policy Studies and Director of the Kathryn and Shelby Cullom Davis Institute for International Studies at The Heritage Foundation.