After more than 15 years of decline and retreat, Russia is demonstrating a new assertiveness and upsetting the international equilibrium of the post-Soviet era. Moscow has attempted to compete with the West in Ukraine and has embraced the odious but tactically useful Lukashenko regime in Belarus. It has agreed to sell arms to Venezuela, and has not hesitated to position itself as an obstacle to U.S. policy with respect to Iran, Hamas and Hizballah. At the same time, Russia has promulgated its own vision of world energy stability, illustrating its intention to play an independent global role even at the expense of its relations with the West.

Western leaders and attentive publics alike are understandably annoyed when Russia springs surprises and threatens to kick over the international chessboard. Russia is a past-tense problem. The Cold War is over. Trouble is not supposed to come from that direction anymore. But however discomfited they may be, the Western powers cannot afford to follow the advice of Senator John McCain and Congressman Tom Lantos to isolate Russia or even to downgrade relations with it. To their credit, Western leaders haven’t taken such advice. They know that the United States needs Moscow as a partner in combating international terrorism, dealing with nuclear proliferation, solving the energy problem and, possibly, counterbalancing an ascendant China.

The Russia problem is, nevertheless, a portfolio in play, with important decisions inevitably lying before both Western and Russian leaderships. It is therefore important to assess carefully what can be expected of Russia’s domestic and foreign policies. Western leaders should especially want to know an answer to this key question: To what extent does Russia’s inclination to defy the West spring from Western policy, as opposed to internal Russian psycho-historical and structural political dynamics? Before we can answer that question, we must examine closely Russia’s political and economic realities. But this is not as easy as it may seem. As Churchill once suggested, Russia is some combination of riddle, puzzle and enigma.

Imitation Democracy

Russia presents the perfect case of a failed transition from totalitarianism to democracy, and its failure was rooted in a moment some pundits took as proof of success: the adoption of President Boris Yeltsin’s constitution in October 1993. Instead of structuring Russian politics according to a combination of the American and French models of democracy, as Yeltsin’s team had promised, the new constitution obliterated all independent institutions, creating a form of super-presidentialism. Russia missed what Ralf Dahrendorf has called the “hour of the lawyer”, failing to form the basis of liberal constitutionalism. Without that basis Russian society could not successfully move to the next stages of transformation, “the hour of the economist” and “the hour of the citizen.”¹ Russia’s mere imitation of liberal democracy inevitably brought a mere imitation of the market economy and, with it, a failure to build new cultural codes and create a new social fabric.

By endorsing Yeltsin’s policies in the 1990s—from the August 1991 coup through Yeltsin’s resignation on the eve of the year 2000—the West bears at least partial responsibility for these multiple failures. During Yeltsin’s presidency, when Russia desperately needed the economic support and assistance of the Western powers in building a genuine market economy, Western leaders could have cautioned the Russian political elite not to underestimate the role of independent institutions, neglect constitutional liberalism, or privatize state assets before establishing the rule of law. Instead, Western leaders acquiesced in the emergence of the new personified power. It was, after all, very convenient politically, kind to the exigencies of the news cycle and conducive to great photo-ops. Western advisers of near celebrity status, like Harvard’s Jeffrey Sachs, promoted what turned out to be disastrous advice about “big bang” privatization in the absence of an adequate legal structure and workable financial institutions. But it took years for disaster to manifest itself, and in the meantime, the West—especially America—was happy with Russia’s anti-communist thrust and its unproblematic foreign policy, and continued to believe in what may fairly be called its “natural” democratic potential.

It remains an open question as to whether genuine liberalism in post-Soviet Russia was possible but multiply mismanaged, or whether Russia’s historical baggage was just too heavy for a liberal destination, no matter the effort. What is clear, however, is that Russia’s political trajectory since December 1991 has undermined several scholarly beliefs about regime classifications. It has prompted Samuel Huntington to discuss “executive arrogation” as a threat to democratization and caused others to acknowledge the exhaustion of the “third wave” of democratic transitions.² Many who once saw Russia as a “democracy with adjectives” (“electoral democracy” was the most popular cliché), who believed that “immature” democracies evolve ineluctably into the full-fledged variety, have now been compelled to define Russia as an autocracy. Others perceive Russia to have fallen into a “political gray zone” between democracy and dictatorship, a view which recognizes that the political teleology presumed by the very term “transition” does not accord with an empirical reality that has turned out to be even messier than imagined.

Russia’s experience has clearly undermined a basic assumption of the transition paradigm: the determinative importance of elections. But Russia’s post-communist evolution has also proved that Francis Fukuyama was right to conclude in 1995 that “few alternative institutional arrangements elicit any enthusiasm” aside from liberal democracy.³ The political regime that has emerged in Russia confirms that democracy is the only “broadly legitimate regime form” and that, as Larry Diamond has put it, post-totalitarian regimes have felt “unprecedented pressure to adopt or at least mimic the democratic form.”⁴ This has led to what we may call “imitation democracy”, which is defined by the existence of formal democratic institutions—including multiparty electoral competitions—that conceal autocratic, bureaucratic or oligarchic practice. In imitation democracies, in other words, it is inconceivable that elections could be truly competitive because democratic forms are not actual political processes, only stage props fabricated so expertly that they often engross not just the viewers but the actors themselves.

Russia is perhaps the world’s chief example of imitation multiparty democracy today, but it is not alone: Venezuela, Egypt and Iran are also imitation democracies, as was Ukraine before the Orange Revolution. Imitation democracy is now one among the major competitors, possibly the key competitor, of liberal democracy. Imitation democracies are in a transition to nowhere; their leaders know precisely where they are and what they are doing. In the Russian case we are dealing not with the “collapse” of democracy, as many think, but with the deliberate use of democratic institutions as Potemkin villages in order to conceal traditional power arrangements. Ivan Krastev has it exactly right: “Russia is not an illiberal democracy by default; it is an illiberal democracy by design.”⁵

But what kind of illiberal democracy is Russia? It is, first of all, one that has proved that the overlap of economic growth and political freedom is not axiomatic; those who ignore Seymour Martin Lipset’s warnings not to take this interdependence without context have played fast and loose with their own ideological infatuations. Part of that context in Russia’s case clearly has to do with resource rents. Like Mexico in the 1970s, and Venezuela, Azerbaijan and Kazakhstan today, Russia has benefited greatly from its enormous oil wealth, but those benefits have reduced the chances that Russia will become a genuinely democratic polity. As in many other oil-rich states, resource rents have stoked corruption, vitiated the vital link between taxation and services that binds citizens to the state, and distorted both domestic and foreign economic investments.

If one controls, so to speak, for the effects of oil, the political regime that has consolidated itself owing to the efforts of Boris Yeltsin and Vladimir Putin closely resembles the “bureaucratic authoritarianism” of Latin American regimes in the 1960s and 1970s. It has all the major characteristics: personified power, a bureaucratization of society, political exclusion of the popular sector, the leading role of technocrats (Russia’s “Chicago boys”) in setting the economic agenda, and an active role for the secret services (in Latin America it was the military).⁶

Yet Russia’s bureaucratic authoritarianism has acquired a kind of affectation. Since previous types of legitimacy (monarchic, party and ideological) no longer work for Russians, bureaucratic authoritarianism has to be legitimized by elections. This creates a dilemma for Russian authorities: They cannot use harsh authoritarian measures because it would discredit their democratic legitimacy and their relative popularity, but they cannot actually follow democratic rules, either, because this would threaten their position. This tension of means leaves the system inherently torn by incompatible principles that undermine its sustainability. In short, the “actual existing” regime survives by imitating both democracy and authoritarianism, but the central fact of imitation prevents it from functioning effectively as either a democratic or an authoritarian system. Thus does Russia stagnate in a twilight zone of political incoherence.

Imitation democracies like Russia’s invariably produce misleading impressions to those oblivious to its imitative essence. Thus, Putin’s current policies look authoritarian to some, but in reality the president is hostage to the bureaucracy, which survives by using the super-presidency as a means to pursue its own interests. Perhaps a far harsher authoritarian rule in Russia, but with a modernizing tendency, would be preferable to the Byzantine bureaucratic rule that has ever been the gravedigger of serious reforms. But this option is unavailable, both because imitation democracy prevents it and because the apparently strong Russian state is in reality far too weak to operate it.

Imitation produces still other confusions. According to conventional wisdom, it is the siloviki, the representatives of the power structures, who have presided over Russia’s backsliding on political pluralism. In reality, liberal technocrats, among them Western darlings such as privatization czar Anatoly Chubais, were the first to endorse authoritarian styles of governance. They manipulated elections during Yeltsin’s tenure and have crushed independent television during Putin’s presidency: How else, after all, could they pursue reforms that are so broadly unpopular and still retain their power?

A Bureaucratic Coup d’État

The economic foundation of contemporary Russia is bureaucratic, state-run capitalism, which has replaced Yeltsin’s oligarchic capitalism. That bureaucracy includes federal and local apparatchiki, representatives of the power ministries and quite a few well-known liberals. Having gained self-confidence, the bureaucracy no longer requires intermediaries to run the economy and is busy restoring its Soviet-era control over the nation’s wealth. This does not necessarily imply the direct nationalization of property, as happened with Yuganskneftegaz and Sibneft, the jewels of the Khodorkovsky financial empire. The bureaucratic “corporation” has come up with other ways to take control of assets, in particular by installing its representatives on the boards of major private companies.

The ruling elite will undoubtedly continue to strengthen its grip on the economy. There are signs that the bureaucratic corporation may elect to redistribute assets that passed from Yeltsin’s oligarchs to the bureaucracy in a fresh round of privatization. The re-nationalization of assets, followed by another round of privatization, would lead to the former bureaucrats turning into a new oligarchy. The regime has created a serious problem for itself, however: If the bureaucracy seizes control of other people’s property in the name of the state, it places its own future property rights at risk. Who, after all, can guarantee that a new ruling team will not undermine privatization again, and yet another ruling team again, and so on? Those who characterize the initial Yeltsin-era privatization as an insider formula for stealing state property are thus confronted with the prospect that the very same property can be stolen, not once, but many times. This is not a formula for economic stability or growth, to put it mildly.

It is worth remembering, too, that just as Western political leaders once welcomed the personified power of Yeltsin at the expense of genuine democratic development, Western business and some political circles—for instance in Germany—have endorsed the redistribution process in Russia. Indeed, they have participated in it, helped finance it, and even legitimized it by participating in the IPO and serving on the boards of companies that are not exactly icons of corporate ethics. (Globalization, it seems, sometimes acquires highly unexpected manifestations.)

In seeking to justify bureaucratic capitalism in Russia, some—insiders as well as outsiders—stubbornly point to the seemingly successful development of state capitalism in China and Southeast Asia. Russia will grow out of this “intermediate” phase, they claim, and like much of Southeast Asia today and China tomorrow, it will move toward liberal economic and political institutions. But China is in the same trap as Russia, in which economic growth allows the regime to disregard its crisis of governance, decaying state capacity and growing tension between the regime and society. As for state capitalism in Southeast Asia, it has created a level of industrialization that Russia achieved already under Stalin. And as the experience of South Korea’s chaebols shows, at a certain point state capitalism feeds the decline of the state itself. No country that marries power and property has been able to meet the challenges of the post-industrial age.⁷

The limits of Russian bureaucratic capitalism are difficult to ignore. Despite extremely favorable conditions on the world market, economic growth in Russia is slowing down, from 7.3 percent growth in 2003 to 6.4 percent in 2006. The Russian ruling elite seems not to understand that the country, as presently organized, is approaching the natural limits of the “petro-economy.” State-owned energy companies have proven far less efficient than privately owned companies: Oil output has grown by 47 percent in the private sector over the past six years, compared to just 14 percent in the public sector. Independent producers of natural gas have doubled their output, while state-controlled Gazprom has increased output by just 2 percent.

Along with the failure of the public energy sector, Russian economic reforms are now completely stalled—and the reasons are clear. Who would risk initiating painful measures when the country is awash with oil money that acts as a tranquilizer? Who would commence destabilizing reforms before the new election cycle, when the government needs to create the impression of success and stability?

Yet even with reforms, it is not clear that Russia will ever become an energy superpower. Today, the fuel and energy sector accounts for 54 percent of Russian exports, and more than 70 percent of investment flows into the natural resources sector. But how can Russia aspire to become the world’s energy provider when Gazprom’s output grew by just 0.8 percent in 2005; when oil output growth is not expected to exceed 2 percent this year, the smallest increase in five years; when half of the country’s gas pipelines are more than 25 years old; when 80 percent of the equipment used by the oil industry is out of date; when 75 percent of proven Russian oil and gas reserves are already in production; and when the country’s oil reserves are expected to run dry in 25 years?

Even if the economic predicates of energy superpower status could be established, could Russia survive the political implications? The debilitating characteristics of a petro-state are becoming ever more pronounced in Russia: the fusion of business and power; the emergence of a rentier class and the associated endemic corruption; the predominance of large monopolies; the vulnerability of the economy to external shocks; the threat of “Dutch disease”; and a large and growing wealth gap between rich and poor. Just having a lot of money in state coffers cannot long prevail over such structural debilities.

The Leadership: One Step Forward, Three Steps Back

Whatever its economic prospects, the Russian bureaucratic petro-state differs from similar systems in important ways. The more Russia becomes a natural-resources appendage of the West, the more its elite tries to overcome its inferiority complex by promoting Russia’s ambitions as a global actor. A nuclear petro-state is a new phenomenon, and such a state—an imitation democracy with an inferiority complex—may throw up a form of political logic no one can predict. This brings us to the directly political, and in Russia that means the leadership.

The leadership is still the principal Russian political institution. Vladimir Putin influences Russia’s future the most, even if he leads his bureaucratic regiment from the rear. He has defied expectations. Having started as a minor bureaucrat without political experience, and having been installed by the Kremlin to safeguard Yeltsin’s political family fortunes, he cut the leash with the previous ruling team. He dismantled old networks, rejected the spin doctors who had brought him to power, and swam on his own in the turbulent waters of Russian politics as he built an independent political profile. Putin has been extremely successful as a stabilizer, having closed Yeltsin’s chapter of revolutionary convulsions and secured the support of the majority of the Russian people. His approval rating is over 70 percent.

Vladimir Putin has projected conflicting images: on the one hand, a pragmatic and pro-Western politician and economic liberal; on the other hand, a statist relying on “hard power” and despising “soft power” instruments as symbols of weakness. What is he—a consolidator, a stabilizer, a modernizer? None of these: He is a survivor.

The ambiguities of Putin’s policy and his attempts to appeal to various constituencies have been above all methods of political survival. Survival, too, has led Putin to build a post-communist system that relies on past images and future prospects simultaneously. Putin’s leadership thus evinces market innovations and state expansion, populist politics and the neglect of social needs. Putin is the first Russian leader to begin the deregulation of the economy and to launch administrative reforms that, if successful, could rebuild the very foundation of the Russian state. But each time Putin has taken a step to open up Russian society, he has hedged his bets and turned in the opposite direction. After partially relaxing bureaucratic control over the economy, he undermined the institution of private property by his handling of the Yukos affair. He has frequently spoken out against corruption, yet by increasing the centralization of power in the bureaucracy, he has expanded prospects for endemic corruption. Putin speaks the language of the market, but his campaign against the more politically active oligarchs has left intact the huge financial-industrial groups whose business practices limit competition. Putin is thus more than the vanguard figure of Russia’s great imitation; he is also the Janus-faced juggler of irreconcilable political energies.

In short, Putin’s leadership has tested the limits of the bureaucratic authoritarian system, but he has backed away from pushing the test to the limits. He has behaved like a politician wary of upsetting the traditional order: At first perceiving the centralization of power as a means, he has come to make it a goal. Putin has thus chosen not to break with the four founding principles that hold the post-communist Russian system together: personified power, the dominance of the bureaucracy, great power ideology, and state control of all significant property. By reverting to neo-patrimonial practices in technocratic disguise and with a democratic veneer, Putin has isolated reformist elements. At the same time, while relying more on conservatives and conformists, he has stopped short of giving them carte blanche. He has made his agenda clear: to build a strong and economically effective Russia with the state in charge. And he has succeeded in strengthening the state, which has now acquired a logic of its own so strong that he could hardly change it, even if he wished to do so.

Did Putin really have a choice? If Mikhail Gorbachev inadvertently undermined Soviet control through perestroika and glasnost, could Putin have purposely undermined Yeltsin’s “pseudo-democracy” when he came to power? To have reached for real democracy, three factors would have been required: the existence of influential liberal democrats in society, a broad public demand for democracy, and an understanding of the need for reform within the political class. But when Putin became Kremlin boss, all these preconditions were missing. Even Russian liberals favored the prospect of a “firm hand” on the tiller of state, apparently hoping that an authoritarian leader would resume the economic reforms that had stalled under Yeltsin. So Putin chose to play it safe. He focused on control and started to build his presidential “verticality”—that is, his reliance on highly centralized executive power to reassert state influence over society. Perhaps he craved power for its own sake, but just as likely he lacked faith in the Russian people. He apparently believed, and continues to believe, that Russia cannot modernize itself without the guidance of a “strong man.” And the country’s relative economic growth and stability achieved during his tenure, combined with broad support of his leadership in Russian society, almost certainly persuade him that he has been right.

Unfortunately for Russia, this is not really so clear. Emerging signs of stagnation, lack of vision and the government’s inability to deal with accumulating problems indicate that something has gone terribly wrong in Putin’s “New Russia.” And now he has no time to dismantle what he has created—besides, no one has ever created personified power and then set out consciously to destroy it. He has time only to transfer personified power and bow out. He has to play the difficult role of pretending simultaneously that he is leaving and staying, because a lame-duck president cannot control Russia.

In the end, then, Vladimir Putin may enter history with a dramatic legacy, but one of a peculiar kind. If he leaves Russia relatively stable and satisfied, that will mean a strengthening of personified power that sooner or later will lead Russia into a dead end. A stagnant Russia or one in crisis may force Russians to start thinking about alternatives. In this case, Putin will be the leader who demonstrated to Russia that effective czarism is a 21st-century oxymoron. So if by his own limited lights Putin succeeds, he fails; and if he fails, he succeeds. Gorbachev’s failure to renovate the USSR showed that Soviet Russia could not be reformed. Putin’s destiny may be to confirm that Russia cannot be modernized from above, even by a strong man.

Why is this so? Apart from vested interests, private ambitions, ignorance, apathy and cynicism, several structural constraints hinder Russia’s transformation. Some are vestiges from the past, some are inherent in the logic of post-Soviet development and its deficiencies, some result from the failures of the elite, and some have been produced by external circumstances. Taken together, they show that Russia is trapped in not just one classical Batesonian double bind, but several.

First, no political elite has ever tried to build a new state, democratize the political regime, form a market economy and restructure itself as a global superpower simultaneously. It takes tremendous political energy to do any one of these things, and the first three imply repeated bouts of deliberate destabilization. But both elite and society in Russia are weary and do not want to begin new experiments now. Besides, the seduction of great power status trumps all else, and works against serious domestic reform. The superpower mentality of the Russian political class obviates the dismantling of bureaucratic authoritarianism. Even Russian liberals doubt that Russia can survive as a “normal country.” Superpower ambitions continue to be the key consolidating factor in Russian society.

If that were not bad enough, serious economic reform requires strong leadership and intervention from above, but the consolidation of democracy requires the state to abandon at least some of its power. Hence the second double bind: The Russian leadership and the state continue to monopolize the levers of power on behalf of economic reform, but effective reform cannot be implemented owing to the lack of independent institutions sustained from below in civil society. The more the presidency weakens all other forces and institutions, the more it loses touch with society and becomes a hostage of the ruling bureaucratic class. And there is a third double-bind. Even the institution of the presidency is not really stabilizing under Russian circumstances because, to consolidate power, any successor must reject elements of the previous regime. That is why the Russian political elite, by cracking down on political pluralism and competitiveness in its eagerness for order and certainty, has now created precisely the opposite result: Neither Putin nor Russia knows what lies beyond the 2008 presidential election. At best Russia enjoys imitation stability.

Imitation Partnership

Not everyone believes it, but a nation’s foreign policy tends to be a projection of at least the style and structure of its internal political arrangements, if not always the values embodied in those arrangements. This brings us back to the question we asked at the beginning: To what extent is Russia’s inclination to defy the West a product of its own peculiar internal character, rather than Western policy?

The Russian political elite, trapped in the contradictions of imitation internally, cannot help but project its imitative character abroad. The essence of it is this: The Russian political elite wants to look civilized, but it does not know how to rule an open society. The result is that Russia imitates partnership with the West while engaging in adversarial policies; yet, as with its domestic arrangements, it can be neither a fully effective partner nor a particularly effective adversary.

Thus, what is true at home for Russia is also true for its foreign policy—not least its policy toward the West. Putin has been a man both of pro-Western inclinations and anti-Western rhetoric. He has engaged with the West, nurturing a close personal relationship with Western leaders, including George W. Bush. He is the first Russian leader to start unprecedented cooperation with the West in the area of security by providing material and intelligence assistance to the American military in Afghanistan in the wake of the 9/11 tragedy. He has moved much closer to the West than his predecessor in helping Russian officialdom to get accustomed to the idea of partnership with the liberal democracies. But having moved closer to the West in 2001, several years later he allowed the Russian elite to resume its anti-Western stance, and now he himself counters the West on several fronts. After rejecting claims to hegemony over the Soviet successor states, Putin’s Kremlin brazenly intervened in the Ukrainian electoral process in 2004, used natural gas as a political weapon in an attempt to exert pressure on the Ukrainian leadership in 2005, and bullied Georgia and Moldova using energy and trade as political tools to trigger distrust in the West.

Regardless of how it might be spun, Russia’s relationship with the West in practice is now one of “partner-opponent”, which means cooperation in some areas and mutual restraint, at best, in others. So on the one hand, Russia takes part in the NATO-Russia Council, undertakes joint military exercises with NATO troops, and cooperates with Western leaders within the framework of the G-8. On the other hand, the Kremlin attempts to eradicate Western influence in the former Soviet republics and to consolidate Russian society on the basis of anti-Western sentiment. Russian Defense Minister Sergei Ivanov has stated that the greatest threat to Russian national security is “interference in Russia’s internal affairs by foreign states, either directly or through structures that they support”—“foreign states”, of course, meaning Western powers.

Such bellicose statements should not be interpreted as a return to Cold War with the West. They should be viewed as an attempt to persuade the West to endorse a bargain with Russia recognizing its influence in the former Soviet space and its role as an energy superpower in defining Western commitments as energy consumers. Putin has offered the world an energy security bargain: a kind of asset swap in which Russia will give foreign investors access to its upstream reserves in return for allowing Russian companies access to their resources, technology, capital, distribution network and power generation. In addition, Russia wants the West to legitimize its fusion of power and business by letting Russian state companies such as Gazprom act as transnational majors. Logical as the offer seems, both goals undermine key principles of the free market.

For the first time since perestroika, Russia has offered the West its own terms of cooperation, threatening to redirect the supply of energy from Europe to Asia in case the West rejects the trade-off. Its gambit immediately alarmed Western governments and raised concern about a renewal of Russian expansionism. Europe responded immediately to the threat of Russia’s energy blackmail by resolving to diversify its energy supplies. Its concerns are understandable, but Europe probably cannot avoid dealing with Russian state energy companies. Although these companies are hardly free-market role models, integrating them into the Western economy may nevertheless prove to be the most efficient way of bringing them, and the Russian system, closer to Western standards and rules.

How far is Russia prepared to go in pursuing its ambitious agenda? Is the elite prepared for confrontation with the West over influence in the former USSR? The paradox is that a significant portion of the Russian elite is trying to have it both ways: integration with the West on the personal level, while attempting to close off the West to the rest of Russian society. This is not the first time: As Sir Isaiah Berlin commented in 1946, “Russia is ready to take part in international relations, but she prefers other countries to abstain from taking an interest in her affairs; that is to say, to insulate herself from the rest of the world without remaining isolated from it.”⁸

Those members of the ruling class who live in the West with their families, hold accounts in Western banks, and even manage their Russian assets and perform their jobs from abroad, make a big show of nationalism when they are back in Russia. They have to, because the current elite can maintain its status only in a society that is hostile to the West. This section of the elite would scarcely welcome an increase in tension between Russia and the West, which would threaten its comfortable existence. At the same time, some members of the elite have failed to integrate with the West and may be prepared for more overt conflict. This group has not yet emerged as a major political force in Russia, but who can predict how the balance of power may shift in the future, especially in a crisis in which the elite, having no mechanisms of crisis management, could easily revert to using hostility toward the West to aid it in its struggle for power?

The West has succeeded well in getting along with a weak Russia, but it is not sure how to handle a stronger, assertive but still non-democratic Russia on which the West itself is more dependent. And it has a narrow range of options in managing its relations with Russia: Both pressure and complacency may increase the Kremlin’s cockiness, and a travesty of a partnership would only increase mutual dissatisfaction. The Russian political class faces a no less formidable challenge: to understand how vulnerable the country is in relying on natural resources as the basis for its ambitions, and to realize that it cannot build a diversified economy without a constructive partnership with the West. Where is all this likely to lead? And given the deeply etched internal sources of Russian foreign policy conduct, just what can U.S. and Western policies hope to accomplish?

Alternative Futures

Developments in Russia depend on how the Russian elite succeeds in transferring power in 2008, which could generate a defining moment of instability. The most rational scenario for it is to pick a new Putin and guarantee his election. But what will the real Putin do? He is the first Russian leader since the czars who has come to power without having to claw and fight for it. Will this make it easier for him to step down gracefully?

Putin seems to understand what it would mean for him to stay beyond his constitutional term: He would turn into a lapdog of his court and lose both the legitimacy of power and the respect of the world leaders club whose membership he so cherishes. But Russian political roulette may become perilous for the current political team and its economic interests should a new ruler seek legitimacy through a gradual rejection of the previous regime. This is how the logic of personified power works, and it is what makes prediction about Russia so difficult.

Even though we do not know the face of personified power in Russia after 2008, we do know the problems any new president will encounter. All of the reforms that have been put on the back burner—pensions, military, banking and administrative reform, and reform of “natural monopolies” and the social infrastructure—will demand action. Will the new leader have the courage to deal with them, or will he prefer to follow Putin and rely upon the status quo? There are three possibilities: a Russia that continues its current course of stagnant stability; a Russia that faces crisis and social turmoil; and a Russia that makes a systemic breakthrough and starts to build a state based on the rule of law. The first two possibilities could result in decay, and in the end could lead to the fragmentation of the country. The third possibility could turn out well, or not.

How might these possibilities become manifest in the international arena? There is a broad range of scenarios, from a Russia that throws in its lot with the Western democracies to, at the other end of the spectrum, a Russia that becomes increasingly alienated from the West and tries to regain its strength as a hostile superpower. The most likely course for the next few years is a continuation of Russia’s current foreign policy of being simultaneously partner and opponent of the West, but at some point the Russian elite may come to understand how difficult it is to slalom with skis pointing in opposite directions. Then it will have to make a choice. No one knows what that choice will be, but we have a good idea of the question, and this question firmly links Russian domestic politics to its international role.

The key challenge for Russia is to form a new pattern of modernization. The old one, based on militarism and war as exemplified by Peter the Great and Stalin, demanded the militarization of everyday life. By bringing the standoff between the Soviet Union and the West to an end, Mikhail Gorbachev eliminated the traditional Russian stimulus of modernization. The current ruling elite, however, has failed the test of peace. Unable to devise a new impulse to spur modernization, it has fallen back on the spirit of militarism. The regime has attempted to preserve the rudiments of a militarist mindset in society by swelling the defense budget and trumpeting the advances of the Russian defense industry.

Russia’s history as a militarist superpower came to an end when it was deprived of both the necessary resources and its chief foreign foe. But the elite continues to artificially cultivate historical phantoms in the public consciousness, even though the elite long ago ceased to believe in them itself. In today’s Russia, therefore, even its militarism is an imitation. The cynical self-preservation of the regime, which poses as pragmatism, amounts to a capacity for mimicry. It is also a formula for failure. Imitation militarism can frighten other countries, but it cannot protect against those other countries’ responses.

In the end, any new pattern of modernization is likely to come from the business community. That community will probably be the first to realize that the current model leads to a dead end, but it will come to this realization only in the presence of manifest discontent in society and a clear danger that the situation will spin out of control. When the limits of the modern petro-state and the dangers of militarism come together, Russian businessmen, with liberal allies in the bureaucracy, may finally realize that only in partnership with the West can Russia find a new and positive equilibrium. Russia’s true opening up will not necessarily be the result of a consolidation by democrats. Nor does it require the Russian elite to have a normative commitment to democracy—so it would be foolish if not counterproductive for Western leaders to insist otherwise. Besides, as Juan Linz has pointed out, “Non-democrats of yesterday can become democrats.”⁹ Further in the future, a democratic transition may happen when part of the Russian elite realizes that it needs democracy to lock in its new path.

Does the West have any real leverage on Russia’s transformation? It did in the 1990s during Yeltsin’s presidency, when Western powers could at least have tried to persuade the first Russian president to endorse the kind of constitutional order that would have been conducive to democratic development. But they failed to do this. Now the West lacks serious influence on the situation in Russia. Moreover, the Kremlin is intent on not letting the West repeat the dual-track “basket three” diplomacy that Ronald Reagan pursued in the 1980s: offering cooperation on strategic matters while promoting democracy in Russia through NGOs and civil society groups.

The West can encourage the development of a more liberal Russia indirectly, however, first of all by respecting its own principles. A liberal alternative will be much more appealing to Russia if the West rejects double standards and finds a more effective balance between freedom and justice, not least in the War on Terror. Western leaders also have ample opportunity to remind their Russian counterparts about the standards that Russia has committed itself to uphold as a member of various international organizations—and they can do so privately, without humiliating the Kremlin. The question is why they so rarely take advantage of this opportunity. The integration of Ukraine and, if possible, Belarus into Europe would depress the Russian elite in the short run; but in the long run, it would help Russians to discard the belief that their country is genetically unsuited to democracy.

Above all, the West must be patient and more subtle in its appreciation for how liberal institutions actually develop. In the next decade the post-Soviet elite in Russia will be a thing of the past. A new generation will be in charge that may opt for an open Russia basically at peace with the West. For this to happen Russia must discard the hopes it associates with its “elected monarchy” and the false promise of authoritarian modernization that goes with it. That may be the only route from an imitation Russia to a real one, and eventually a democratic one.