Publication: Eurasia Daily Monitor Volume: 5 Issue: 26

Russian President Vladimir Putin

The fact that Russian President Vladimir Putin was going to deliver a major address last Friday, February 8, had been kept secret until the middle of the week, when regional leaders were urgently summoned to Moscow for an expanded meeting of the State Council, a consultative body that normally deals with problems of regional development. This time, however, the 750-strong audience was treated to a 50 minute-long speech that was devoted to “one of the most important issues for Russia’s future – defining its development strategy through to 2020.” The president politely included his listeners in the process of solving this issue – “today we are deciding” – but they were allowed neither questions nor comments and expressed their attitude in the traditional Soviet way, by applauding in the appropriate pauses, 19 times in all (Newsru.com, February 8; Kommersant, February 9).

Of all the strategic matters that Russia faces at this moment in time, one that preoccupies its political class to the point of unhealthy obsession is the transfer of power from Putin to his chosen successor, Dmitry Medvedev, and the mechanics of the new duumvirate with Putin assuming the responsibilities of prime minister. Not one word was said on that systemic problem as Putin merely mentioned that he was at “the end of this second term in office.” Medvedev, who rushed to Moscow from a high-profile visit to the Far East to take a prominent place in the first row, was not mentioned once (Vremya novostei, February 8). Nobody could say with any certainty whether Putin summed up his political heritage or outlined the program for his continuing leadership (Lenta.ru, February 9).

Putin’s urge to make this “strategic” speech remains unexplained, as most of its content, including the portrayal of the 1990s as the decade of chaos and the praise for the strong economic growth of the last eight years, was recycled from many previous presentations. He tacitly admitted that his ambitious goal of “doubling GDP” would be achieved only by the end of 2009 and that the success in “breaking away from the inertia of development based on energy resources and commodities” is yet to be achieved. There was not a hint about the crisis of the global financial system or Russia’s exposure to the risks of recession. The emphasis on the growth of the stock exchange was not even slightly tempered by its 25% – and still falling – drop. The worries about inflation, which jumped by a shocking 2.3% in January, were firmly dismissed as Putin insisted that rising prices did not undermine the steady growth of real income (Newsru.com, February 5). He declared his intention to narrow the “unacceptable” 15-fold income gap and predicted that by 2020, at least 60% and perhaps up to 70% of Russians would belong to the middle class.

Besides this generous dose of economic populism, Putin added pledges to cultivate market mechanisms and a competitive environment that should secure Russia’s advance along the “innovative development path” (Nezavisimaya gazeta, February 8). His criticism of “excessive centralization” rang rather hollow, while his compassion for the plight of small business – “It is awful what federal bodies in the regions with the support of regional and local authorities do” – resembled too much the ever-truthful “I am shocked, shocked.” The main problem with this sudden conversion to economic liberalism is, however, that it runs straight against the real processes in the Russian economy, where the steady strengthening of state control now takes the form of granting new assets to the state corporations led by Putin’s hand-picked lieutenants, such as Sergei Chemizov, who is in charge of Rostekhnologii, a corporation closely linked to Rosoboronexport (Vedomosti, February 8). These conglomerates with management well connected to various special services as well as to the presidential administration operate outside any economic regulation or market competition and have few reservations about building huge external debts, which provides a large part of the explanation why the economy, in Putin’s words, remains “extremely ineffective.”

Probably understanding that this mix of hypocrisy, platitudes, and far-fetched promises can hardly be called a strategy, Putin added a rather peculiar foreign policy part, which does not belong to this genre. There was nothing said about the priority for building ties with neighbors, despite the extraordinary summit of the Commonwealth of the Independent States (CIS) scheduled for this week; not a word on the importance of the Shanghai Cooperation Organization; no clarification of Russia’s position on Kosova or Iran, not to mention global issues like climate change that are completely absent from the Kremlin’s strategic agenda. Rather, the attention was entirely focused on the West, which, according to Putin, has returned to the old “deterrence” policy and launched “a new spiral in the arms race” (Ezhednevny zhurnal, February 8). The reason for this unseemly behavior is clear – “God was generous in giving us natural resources.” It is well-known that Putin takes the resource issue very personally, but one might still expect that after all those years of “socializing” with Western peers he would acquire a slightly more sophisticated worldview than just “the whiff of gas and oil is behind many conflicts.”

Putin promised that Russia would build sufficient military might to repel these hostile attempts to “secure access to our resources,” but did not go into details, perhaps remembering that each time he picked a pet-project – like the Bulava missile for strategic submarines or the GLONASS global navigation system – embarrassing setbacks followed without fail. The report “Putin: The Outcome” released last week by Boris Nemtsov and Vladimir Milov amasses evidence that proves convincingly that these setbacks are not “temporary difficulties” or bad luck, but the natural product of the system, which, in Putin’s own words, “is weighed down by bureaucracy and corruption and does not have the motivation for positive change, much less dynamic development” (Grani.ru, February 7). This confession betrays the real intent behind the warning to the West: To shield the seemingly ultra-stable regime that might, as Putin suspects, tumble from even a slight push from outside that could suddenly resonate inside this hollow monolith.