Russia’s frozen power structures condemn it to crisis. The adage about power and corruption going hand in hand fits the case, but there is a more ancient one that fits Putin and his immediate colleagues even better, in the Talmud: “Power buries those who wield it.”
The Power Vertical
When he succeeded Yeltsin, Putin did not have to choose top-down governance through what he called a “power vertical.” True, the roots of such a system were there in the 1990s, but so too was the potential for a more effective division of powers at the center, a better regional system, an improved judiciary, continued development of independent media, and the further evolution of civil society. The diversification and growth of Russia’s nascent market economy might have accompanied such possibilities. The point is not to suggest that Russia would necessarily have proved able to follow these difficult paths as Putin assumed the Presidency in 2000; it is to say that Putin’s construction of his “power vertical” ruled those other choices out and established a different dynamic.
The result is that Russia today is in a condition of latent anarchy, held in check by personalized and arbitrary dominance from the Kremlin. The wealth that came to Russia as the oil price rose, at least until 2008, encouraged the comforting illusion in the West that Russia was on a path, however rocky, leading toward some form of convergence with European norms. But in truth there were warning signs from the very beginning of Putin’s rule that centralization and the personalization of power were to be the increasingly dominant strains. His association with corruption and criminal circles as Deputy Mayor in St. Petersburg was the precursor of his unacknowledged use of similar forces today, in Russia, Ukraine, and beyond. The brutality of the assault on Chechnya he initiated as Yeltsin’s Prime Minister foreshadowed Russia’s onslaught in Syria today. The vicious treatment of an inconvenient Russian journalist reporting the truth of what was happening in Chechnya in late 1999 and early 2000 was a clear sign of the virtual elimination of the independent press that was to come. Regional Governors and hitherto independent business figures were taught their dependent place more gradually, but it did not take much to warn them of what was coming. They had after all known what it was to live in the Soviet Union, and had bent the rules in their own interests while securing their local power or building up their business positions. The judiciary had always deferred to the interests of the powerful.
The authoritarian current has by now overwhelmed the possibility of gradual evolution toward a more liberal system on Putin’s watch. It is in the nature of the present regime that the personalized authoritarian current should be self-reinforcing. It results from and over time builds itself up by reason of the regime’s priority interest, to preserve itself. The pursuit of short-term stability at the top as a primary aim of policy is to increase the risks of longer-term instability, and hence the need to buttress central control. Economic reforms mooted during the Medvedev interlude, which aimed at weaning the Russian economy away from its risky dependence on natural resources, became still more unlikely in the light of the street protests of 2011-12. Their unspoken political implications were already by then unwelcome to the ruling cabal. Putin’s return to the Kremlin in May 2012 meant consigning them to oblivion. The story of the past four years—which would once have been the best part of a full Presidential term—has instead been a story of increasing domestic repression and growing international isolation. It has also been the story of a refusal to face up to difficult choices.
The Economy and the State
Russia’s present economic troubles have been long in maturing. They stem from the country’s inability to complete its transition from the Soviet inheritance to the market and fixed investment flexibility needed to underpin its future prosperity. The preservation of Gazprom much as it was in the USSR is one illustration of the results. The contrast with the development of the steel, coal, and oil sectors—at least until the Putin doctrine of the state’s need to dominate strategic sectors of the economy took root—made it a test case. Gazprom has been a source of wealth to its insiders, whether under Yeltsin or over more recent decades, and exploited as such by the Russian state, including as a weapon in international affairs. But few would argue that Gazprom has been effectively managed as an engine of Russian prosperity. It is more or less a commonplace that the development of a modernized economy, meaning one with long term prospects of timely evolution in a changing and competitive world, not one just spruced up by temporary wealth, requires: accountable governance of the state; the independent adjudication of clear laws, protecting property rights in particular and binding on all, however powerful; and a vigilant society supported by free and if need be critically offensive media. All these provisions have been eroded on Putin’s long watch.
Russia’s average annual GDP growth between 2000 and 2008 was 6.9 percent, thanks in considerable part to rising commodity prices, with the price of oil being the key determinant. The country’s fiscal policies were sensible. The reserves then built up helped Russia to live through the trauma of the global crisis of 2008-09, which struck it unusually hard (GDP fell 7.8 percent in 2008-09).1 The recovery thereafter was anemic: GDP growth between 2009 and 2013 averaged 1 percent a year. GDP declined in 2015 by some 3.7 percent. Some hope for a lesser pace of decline this year, but it is as reasonable to expect a similar rate of loss in 2016. The real income of the Russian population was 11 percent lower by the end of 2015, and in dollar terms mean incomes were what they had been a decade before. Present projections suggest that the National Reserve Fund will be exhausted by mid 2017, if not by the end of the year.
The Russian economy has been and remains essentially as described by Gaddy and Ickes, one based on rents from natural resources subject to bestowal by the Kremlin.2 The model in many ways did the country well from 2000 to 2008, enabling Russia’s rulers to enrich themselves and their acolytes, and to share enough with the general population to content the latter with their subordinate role. But there were prices to be paid. First, even the natural resources sectors, which fed Russia’s then-growing prosperity, failed to keep up with their international competitors. Second, nothing sufficiently effective was done to resolve the hangovers from Soviet times. And third, the intertwining of business and the state made for complacency and corruption. If after all your principal aim is to get as much as you can while you can, you are not going to risk difficult or uncertain innovation or investment, for you might not be there long enough to enjoy its fruits.
The fourth price to be paid for the rentier model and the Putin regime which lives by it has been particularly serious: the progressive degradation of the Russian state. The infrastructure of the Soviet Union was impressive by comparison, if also murderous under Lenin and Stalin. It had a workable system of managing change at the top as well as at lower levels. It had an established if latterly enervated idea of what it wanted to achieve, along with a reasonably stable idea of how to do it, at home as well as abroad. None of that is to suggest that the USSR was a success or that its outlook and policies were well founded. But there is a contrast to be drawn between it and Putin’s Russia today. The essence of the Russian state is a small group of long-term Putin trusties, some of whom he consults as occasion demands. There appears to be a clear division within that inner circle between those entrusted with managing economic assets and those who might be involved in political decision-making. There is room for speculation, even informed speculation, as to who may form the political core of the regime, but secure knowledge of who they may be is absent.
Putin has moreover failed to set up effective organs of executive authority in the place of the institutions that he inherited. He has instead created layers of self-interested power conditional on loyalty to the wider system. The incumbents know that their status beyond the law is conditional and therefore at arbitrary risk, even as they also know that no guesses as to who or what will follow Putin can be well founded. They can see that others squeeze money and privilege from their positions, high or low, and are rarely punished for it. Corruption in its widest sense, including for many the right to use violence on behalf of themselves, their families, or their clients, is endemic and has its own growth dynamic. Retribution is more likely to come from resisting malfeasance than from exposing it. To criticize or question policies or pronouncements endorsed by the Kremlin is to risk being labeled a member of the fifth column. Those with a background in the security organs have a particular weight, but they too have their rivalries. In the end, none of Putin’s people can take responsibility for anything, or are either well situated or inclined to give him well-argued advice. He cannot rely on a “vertical of power” in the sense of an orderly structure of command. He is as much the prisoner of the opaque and in the end arbitrary system that has grown up over the past couple of decades as he is its director.
The Regime’s Bases of Support
Despite a growing sense that Russia faces an imminent social and economic crisis, the present system nevertheless has solid bases of support. That goes well beyond the fact of Putin’s poll ratings, buttressed as they are by the unanswerable question as to who or what might take his place at some unknown date, by his customary privilege as President to deflect responsibility by looking in the first place to Prime Minister Medvedev’s government to address Russia’s economic problems, and by traditional Russian ideas as to the quasi-sacral status of the head of state. There is also the fact that those in positions of power by and large do well out of it—those at the very top and their families, of course, but also all the way down the system. It is the case, too, that the regime has until recently had the resources to take increasing care of vulnerable and conservatively minded swathes of the population. Sheer habit, and a feeling that political debates are not for ordinary people, are powerful forces. The supposition that Putin will fix things again, somehow, still works in his favor.
One must, lastly, also bear in mind the sheer difficulty of managing significant change in any country, even for the most determined and efficiently staffed state apparatus working to agreed, understood, and ethically based strictures. Russia has no such state structures. It is rich in interlinked problems that need to be addressed if it is not to fall further behind its international competitors. One example—and there are plenty of others—is the defense sector, which Putin looks to as a motor to promote diversification and innovation in the economy as a whole. A comprehensive analysis by Susanne Oxenstierna for the Swedish Defense Research Agency of Russia’s defense spending and economic decline quoted the Russian Audit Chamber reporting in 2012 that 30 percent of companies in the defense industrial sector were loss making, and that while 20 percent could be modernized, 50 percent were beyond restructuring.3 The military industrial sector is not alone in this, though favored by the Russian budget. Subsidies to keep obsolescent companies alive are widespread. Three hundred or so Russian towns still exist that are dependent on one company —and there are plenty of others similarly set up in Soviet times that rely on two. Many of them are no longer economically viable, if they ever were. A recent official poll disclosed that 59.8 percent of their inhabitants found that life in them was unbearable, or hardly bearable, but that they were unable to find work elsewhere. Some 80 percent of machine tools and around half of industrial machines are more than twenty years old. The transport network is inadequate. And so on.
The Russian state now has no effective answer to such mounting problems. On the contrary, many of the Kremlin’s actions since Putin’s return in 2012 have exacerbated them, increasing the role of the personalized state in the economy, suppression of forces seen as subversive, the thoughtless introduction of sanctions and counter-sanctions, and the militarization of the country among them. Putin’s repeated assurances to his public that the growing economic crisis has peaked have not been justified by events. Even a stable and significant return to higher oil prices would not resolve Russia’s economic or social difficulties. The $100-plus oil-price cushion was not enough to hide them after 2008, or even to make them reasonably easy to live with. There is no reason to believe that a leap now in commodity prices, which few in any case predict for the quantifiable future, would by itself soon restore an adequate scale of fixed investment and a sense of optimism in Russia’s future. The Kremlin would welcome an easing, or better still lifting, of Western sanctions, but that too would not answer Russia’s difficulties. But the fear of change at all levels, and the uncertainty of what such change might be or how it could be managed, plus the hope that something may turn up to make life easier, are enough for now at least to contain what the polls show to be a rising sense of concern about the Russian economic and hence social future.
The Consolation of Glory
There comes a point in any attempt at analysis, let alone a guess at the future, when value judgments and subjective assumptions have to be brought into play. I have, for my part, no faith in nationally defined values, whether Russian or for instance English. Values are values. There are national traditions and inherited assumptions that can be judged against those values. The Nobel Prize winner Svetlana Alexievich’s acceptance speech of December 7, 2015, was a notable instance of such judgment, and a powerful indictment of the idea that still prevails in the higher reaches of the Russian system, that the citizen owes bounden service to the state, not the state to the citizen. Alexievich’s contention that the choice made in the 1990s between Power or Decency as the fundamental aim of government within the former Soviet Union would determine the future, and that the bet placed on Power would lead to the return of past travails, has been fully justified.
The dominant objective of Russia’s present rulers is now the restoration, as they would see it, of their country’s status as a Great Power. Hence the priority given to defense and internal security spending over social expenditure on, for example, health or education. Hence, too, the insistence on Russia’s glorious past and the malevolence of its rivals, or better, enemies. The roots of this preoccupation lie in historically inherited assumptions as to Russia’s past power yet eternal vulnerability, an understandable but distorting refusal to come to terms with the realities of the Soviet past, myths as to how and why the country lost authority after the collapse of the Soviet Union, and a fear within the ruling group of the capacity of the Russian people to turn against their rulers. When the leadership warn of color revolutions or the determination of the United States on regime change, they believe it.
There is a certain gratification among Russians at the way that Putin and his closest acolytes have threatened their way onto the international reckoning. But overall, the results are perverse. NATO enlargement is seen exclusively as directed against Russia out of a will in Washington to preserve or achieve world dominance, with no thought being given to the possibility of its reflecting fear or apprehension of Russia among new adherents or would-be adherents. The more the leadership insists on Russia’s need to defend itself against encirclement, and the consequent need for its neighbors to be forced to accept its right to determine their policies, the more it reinforces their fear of Moscow. The Kremlin’s policy decisions are at least as much determined by emotion as by cunning. Seizing Crimea in February 2014 was a tactical success that impressed many in the West and that reflected, one must assume, well laid military planning, but it was not argued through as a policy. The adventure in eastern Ukraine was surely even more such an instance. Russian intervention in Syria may be successful in propping up an Assad or Assad-type regime for a time, but how considered has it been? Does Moscow want to depend too much on Tehran? Was it wise to make an enemy of Turkey? Or to antagonize Sunnis in Tatarstan and further deepen Putin’s dependence on Ramzan Kadyrov in Chechnya? All for what, in the end?
There is nevertheless a tendency in the West to accept the Russian definition of its national interest as being to dominate its neighborhood in order to defend itself against the West, and the United States in particular. The questions as to whether or not regional dominance is truly in Russia’s interests, whether the sorts of pressure that the Kremlin has exercised are the best way to achieve it, or if it is really the case that Washington can dictate the policies of the countries of Europe and wishes to do so in pursuit of world dominance and the undoing of Russia, are often assumed away in response to the vehemence of the present Russian regime’s insistence that the answer to all such questions is very much “yes.” The further question, as to how long the Russian public will continue to find the search for foreign glory to be an adequate consolation for domestic tribulation, is less addressed. The reality is that Washington will not and indeed realistically cannot treat the Kremlin as its natural analogue. The East/West contest of the past century no longer exists. The West’s problem is a Russia existing in a past narrative, a problem it shares with most of the rest of the world.
The Kremlin under Putin has locked itself into a triple dynamic of failure, which the Russian people do not deserve. He himself may appear still formidable but is nevertheless the prisoner of his past. Those around him are of little independent account. The state beyond the President’s immediate reach has atrophied. It does not have the inner strength to deal with the debilitating and self-reinforcing corruption at its heart. The state has neither the power nor the executive ability to revive Russia’s economic or societal fortunes. The search for legitimacy in a Russia adrift, by means of establishing the country as a Great Power, is beyond the Kremlin’s reach. Putin bears the ultimate responsibility for these failures. Perhaps he knows it. It is beyond his powers now to change the course he has chosen. An eventual successor will surely have to try to do so, maybe at first in some small degree, whatever his or notionally her understandable fear of what such change may unleash.
1Philip Hanson, “An Enfeebled Economy,” The Russian Challenge (Chatham House, June 2015). See also Nigel Gould-Davies, “Russia’s Sovereign Globalization: Rise, Fall and Future,” Chatham House paper (January 2016).
2See for instance “Putin’s Rent Management System and the Future of Addiction in Russia” in The Challenges for Russia’s Politicized Economic System (Routledge, 2015).
3Oxenstierna, “Russia’s Defense Spending and the Economic Decline,” Journal of Eurasian Studies (January 2016).