After the Cold War and the demise of the Soviet Union, Russia was preoccupied with domestic reforms and works of reconstruction for almost ten years. Under the leadership of President Vladimir Putin since 2000, the country first entered a period of recovery followed by a steady growth. During this period, Russia gave priority to the issue of Chechnya, which was regarded as a significant security problem. Following its victory in the Second Chechen War, Russia was able to form an authority in the region, giving momentum to internal economic and political stability. More, the new regime began focusing upon developing its military force, ensuring it became capable in defeating external threats.

Hence, Russia’s military interventions in Georgia, Ukraine and Syria are reflections of this strategy. At this point, in order to understand Russia’s strategy and what it requests from the international arena, Putin’s historical speech delivered at the Munich Security Conference in 2007 and Russia’s state doctrine must be addressed.

Putin’s Munich Speech and Doctrines

The speech Putin delivered at the Security Conference in Munich in 2007 had drawn great reactions. In fact, the speech was called the Putin Doctrine. In his harsh criticism against the unipolar world system, Putin’s words that drew the most attention were the following:

“However, what is a unipolar world? One might embellish this term, at the end of the day it refers to one type of situation, namely one center of authority, one center of force, one center of decision-making. It is world in which there is one master, one sovereign. And at the end of the day this is pernicious not only for all those within this system, but also for the sovereign itself because it destroys itself from within.”

The points emphasized by Putin in Munich can also be regarded as the priorities of the Russian state doctrine. The Russian Federation shapes its domestic and foreign policy based on three main principles:  first, the National security doctrine, which assesses internal and external threats and specifies functions of the governmental bodies in this domain.  Second, the Foreign policy doctrine, which outlines general political purposes and priorities in the international arena and finally, the military doctrine, which defines external threats to the country and ways and means of national defense.

Following the disintegration of the Soviet Union, Russia adopted four national security doctrines (1997, 2000, 2009, 2016), four military security doctrines (1993, 2000, 2010, 2014) and four foreign policy doctrines (1993, 2000, 2008, 2013). When we examine these doctrines, two main emphases come up which never change: A unipolar world cannot be accepted, a multi-polar world order is required for international stability and NATO’s expansionist policy is a national security threat for Russia.

These two main points are the backbone of the doctrines. For a multi-polar world order Russia wants to form a new power center with countries like China, India and Iran under the umbrella of International Organizations like the Shanghai Cooperation Organization (SCO)Moreover, the Eurasian Economic Union and the Collective Security Treaty Organization formed by the former Soviet bloc countries are a part of Russia’s initiative towards establishing new blocks.

While attempting to form these kinds of new power centers, Russia is also trying to prevent NATO’s expansionist policy towards its borders. Hence, the 2008 Georgia and 2014 Ukraine military interventions are significant signs of Russia’s determination on this issue. On the other hand, with the military intervention in Syria in 2015, Russia moved its power struggle with the West far away from its borders.

Military Interventions and New Cooperation

Russia has defined NATO and the EU’s expansionist strategy towards Caucasian/Eastern European countries as a national security threat. Especially the “color revolutions” taking place in Georgia and Ukraine in the 2000’s have greatly disturbed Russia. NATO’s expansion strategy towards the Russian borders created the necessity for a counter move in terms of Russia’s interests. In fact, the Russia-Georgia war had been the first indication in this regard.

The Russia-Georgia War did not bring an end to the struggle for influence in the former Soviet geography among the US-EU-Russia triangle, on the contrary, it caused the struggle to deepen further. Six years after the war, as a result of Ukraine forming closer relations with the EU, Russia first occupied Crimea and then annexed it in contradiction to international law.

The economic and political sanctions towards Russia applied by the Western countries following the occupation of Ukraine were not enough to deter Putin. With the military intervention in Syria in 2015, Russia took revenge of the Libya operation conducted during the Arab Spring, gaining the upper hand against the West. By getting involved in Syria, Russia has shifted the international attention away from Ukraine and saved itself from further pressure. Just like a player being trapped in a corner of the “go” board moving to another corner of the board in order to rescue itself from this trap, Russia which was trapped in Ukraine moved the “stone” to Syria.

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Russia has obtained significant power in international politics as a result of these three military interventions. Apart from the military interventions, it also established a security circle in the region by signing new military agreements with Central Asian countries, Armenia and Belarus. In addition to its involvement in Syria, Russia also seeks to enhance its military relations with Libya and Egypt by signing new military agreements.

Another country with which Russia deepened its relations during this period is Turkey. After the aircraft crisis, relations between the two countries returned to its former level.  There are still numerous areas of conflict between the parties, particularly the Syria crisis. First of all, Russia’s cooperation with the terrorist organization PYD in Afrin disturbs Turkey. In addition, the Russian occupation of Crimea is a security threat for Turkey in the Black sea region. More, Russian sanctions are still in effect on certain Turkish products despite the agreement between the two governments. These are only the apparent problems that the two countries have to deal with at first. Nevertheless, the two countries continue working together in the Turkish Stream Project and the Akkuyu nuclear power plant project, which are strategically important. The talks held between the two countries on Turkey’s purchasing of S-400 air defense system from Russia is also quite significant. Russia by acting mutually with NATO-member Turkey in some certain strategic projects in energy and military areas is sending a message to the West.

The Obstacles to the Goals

The prospect of Russia being able to prevent NATO and the EU’s expansionist policies depends on several factors. At this point, Russia should first of all overcome domestic structural problems. Firstly, it needs to speed up economic modernization and address the issue of corruption in governmental organizations. In the report entitled Theses on Russian Foreign Policy, prepared by the Center for Strategic Research (CSR) and the Russian International Affairs Council (RIAC) in 2017, the following inference is highly important as quoted: “The underdevelopment of the Russian economy and its governance institutions poses a much more significant threat to the country’s sovereignty and territorial integrity than realistic military threats that Russia is already well protected from.”

Russia’s extreme economic dependence on energy revenues is another important problem. The share of petroleum and natural gas in Russia’s budget revenue is approximately 45 percent. Despite the high energy revenues gained between 2003 and 2013, the Russian industrial structure has not been revived yet. Furthermore, the economic and political sanctions of the West following the Crimea occupation have placed the Russian economy in a difficult situation. Alongside these domestic issues, Russia’s dependence on China is also an important factor in its quest to become one of the important power centers of the multi-polar world system.

Although Russia is an important military and political power, its economic deficiency prevents it from fulfilling its long term global policies. This is where China comes into play. Russia is the largest crude oil and natural gas supplier of China. In the past where Russia has experienced problems with its western counterparts on energy security, it automatically turned to China and secured new energy agreements. Russia also exploits SCO against the West in the international politics. Not only Russia but also China has influence on SCO countries. Indeed, China has greater influence on SCO than Russia. While China and Russia may be perceived as strong allies, their political interests do not always coincide and this can be displayed by the economic rivalry over Central Asia. Ultimately, Russia’s place within the global power structure. Although the two countries seem like strong political allies, political interests of China and Russia do not always coincide. The economic rivalry over Central Asia is a good example of this. One way or another, Russia’s place in international power politics will depend on the course of Sino-Russian relations.

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Turkey is another key country for Russia, whose success is related to aligning its political interests with Turkey’s interests in the Caucasus, Central Asia, the Black Sea and Middle East. A similar situation is also true for Turkey. If Russia wants to solve disputed problems with Crimea, Abkhazia and Nagorno-Karabakh, it has to consider Turkey’s interests as Turkey has historical, cultural, and political links with the region. Another topic is energy. Instead of Russia, Western consumers support Turkey as an alternative energy route from the Caspian to Europe, as Turkey has been considered a reliable partner for Caspian producers and their exports. All of these factors force Russia to take into consideration the geopolitical importance of Turkey. The two countries may coordinate their policies to ensure security and stability in the Black Sea and continue their efforts to stabilize Syria and the Middle East. The “aircraft crisis” has shown both sides that an enmity between Turkey and Russia would only lead to a lose-lose situation.

A unipolar world order is not an option for Russia, which considers Western powers at its borders a potential national security threat. The real challenge for Russia is tied to her ability in dealing with internal structural problems and its relationship with China and Turkey, which will be decisive in determining Russia’s position in world politics.

Sovereign Wealth Funds (SWF), which are referred to some cases as National Funds, are the savings of countries outside their official reserves. Historically, central banks in many countries that hold foreign exchange reserves in their hands for urgent needs have started to set up various funds to use their savings profitably, and therefore SWFs have emerged. Especially since the 1950s, the swift increase in oil revenues and SWFs, which manifested themselves in the practices of the Gulf countries, have also been adopted by Asian countries that have achieved a budget surplus over time.

Today, the 15 largest national SWFs in the world have nearly $11 trillion in assets. Looking at the world average, revenues from oil and gas sales constitute 56.60% of these funds, while income from other sources is 43.40% of the funds. In the beginning of the 1990s, SWFs collectively were worth for $500 billion, and by 2015, they were worth $12 trillion. It is expected that the total size of SWFs, which are continuing to be invested in all over the world, will reach close to $15 trillion within a few years.

National Asset Funds are funds under the ownership and management of the state that aim to increase their income by investing in various financial assets, and the revenue of these funds is usually composed of budget surplus. Countries that transfer the budget surplus to these funds generate income by purchasing local and/or global financial assets through these funds, with the goal of passing on this wealth to future generations. However, having a budget surplus does not constitute a necessity for the countries in the process of establishing the asset fund. Asset funds have been successfully established in countries with many high performing, income generating institutions and facilities such as Turkey.

SWFs are an important source of financing for the public, as well as a shield against speculative waves in economies in the long-term. SWFs, which also consider community welfare, can attract state savings to more sheltered ports and allow a safer investment path. About 80 countries have SWFs today, meant to ensure the sustainability of important public investments such as education, health, and infrastructure.

In Turkey, a bill called the Asset Fund law was enacted on 20 August 2016. With the Law No. 6741, the Turkish Wealth Fund (TWF) is meant to contribute to overcoming the structural problems of the economy and help Turkey have more influence in the international arena. By law, the fund will be managed by a corporation, TWF Joint Stock Company. The initial capital of this company was 50 million TL, provided by the Privatization Fund. As of February 2017, the current amount of funds in TWF has exceeded 31.3 billion TL, together with 14 companies transferred to its control, 46 fixed land assets exceeding 2.2 million square meters, as well as 3 billion TL obtained from the Defence Industry for three months.

In the short term, this fund size is estimated to be 200 billion dollars. The Prime Minister will appoint the Board of Directors, Chairman and members of the TWF. Other companies and sub-funds to be established by TWF will be subject to independent auditing. Consequently, the Court of Auditors will not monitor them. This is mainly based on the principle that this company will provide financing for major infrastructure projects. TWF’s activities are carried out within the framework of the principle of accountability, which requires a structure in which responsibilities are clearly defined and areas of authority and governance are drawn with certain lines.

Accordingly, TWF under the Prime Ministry is subject to independent external auditing. This structure is therefore strengthened by internal systems and control mechanisms in the form of policies, procedures and guidelines in the areas of risk management and investment approvals, corporate values and ethical standards. It also provides information required by the law and relevant authorities and ideas raised in various platforms to internal and external stakeholders. The organization structure of TWF is an institutional identity strictly connected to performance criteria, including all the above-mentioned processes.

As a vision, TWF is committed to creating sustainable growth of the country’s economy by adopting a pioneering, efficient, innovative, transparent corporate culture based on corporate governance principles. By contributing to the sustainable growth of the country’s economy and making strategically important investments, it aims to play an important role in socio-cultural development, economic capital and human capital development as well as to transfer economic wealth to future generations.

Together with TWF, incentives, customs exemptions, corporate tax reductions, and insurance premium exemptions will be offered to attract potential investors to the country and provide convenience for current investors. The companies that will obtain credits under the asset fund will be included in the scope of strategic investments and the debt will not be increased because the funds will be provided with appropriate terms. Furthermore, the funds will not be obtained from the Treasury. Since these transactions will be carried out from another fund, the functioning of the SWF will have worked with this mechanism.

TWF is expected be able to make capital market transactions such as foreign, public, private sector and public debt instruments, issuer shares, time deposits, participation accounts, all allocated Treasury real estate and deposit certificates, gold and other precious metals and capital market instruments based on mines. In addition, funds participations, repo and reverse repo, lease certificates, real estate certificates, warrants and certificates, money market transactions of the settlement and custody bank, cash guarantees and premiums of derivative instruments, specially designed foreign investment instruments, loan participation certificates, national investments and investments made by foreign companies and other states in the international arena and issuance of other investment instruments make up the other transactions of TWF. Without prejudice to the Turkish Commercial Code, the articles of association, liquidation, transfer, merger, dissolution, organs, committees, their formation, duties and responsibilities, accounts and distribution of profits shall be directly registered and announced.

TWF is a fund that holds and manages selected commercial assets of the state and its main duty is to undertake strategic investments on behalf of the nation. TWF primarily plays a key role in maintaining various strategic industries and national initiatives and in helping to improve Turkey’s long-term economic interests. TWF is an organization capable of providing direct or indirect investment both in domestic and overseas sectors in a broad perspective from the growth targets of financial markets to the infrastructural projects of Turkey. TWF supports the economy by providing opportunities for innovations such as Islamic finance and considering developments like the growth in the scale of financial markets, the level of transactions and financial deepening.

In addition to these, TWF is of great importance in terms of creating additional jobs in all sectors, developing the defence industry, supporting projects in areas of strategic importance for Turkey, especially energy, information and software technologies, and ensuring gains that will create a competitive advantage. Financing will be provided for large-scale projects such as Canal Istanbul, the third airport in Istanbul, the three-storey high Istanbul tunnel, high-speed train projects, a nuclear power plant, and new employment areas will be created.

Turkey, which wants to decrease its external dependency on energy, attaches a great deal of importance to TWF. The fund will also support strategic investment projects such as oil, natural gas, and renewable energy and nuclear power plants. It will open a front for domestic companies to operate, especially in industries such as defence, aviation, software and medicine. TWF is expected to reach a size of $200 billion in the near future. TWF is expected to contribute an annual average of 1.5 percent to the nation’s economy over the next 10 years.