Writing in the Globe & Mail Aurel Braun, a professor of political science and international relations at the University of Toronto and author of NATO-Russia Relations in the Twenty-First Century, calls upon the West to stop being fooled by Potemkin Russia’s incompetent leadership:
Huge cranes at enormous construction sites in Moscow stand idle as investors walk away. Russian auto workers are confronting mass unemployment just as the stock market and the ruble plunge precipitously. Protesters, in small but growing numbers, are demonstrating across Russia, demanding economic relief. And a distinguished group of Russian economists meeting with President Dmitry Medvedev warned him of impending economic catastrophe.
Russia is certainly not the only state facing significant difficulties but the crisis here is multidimensional and particularly daunting. Worse, the leadership is extremely ill-equipped to deal with it. Several factors are at play in an alarming widening of the gap between reality and official rhetoric.
First, the authoritarian leadership structure, what the Russians call the “power vertical,” is not transparent or adaptive. Mr. Medvedev’s constitutional supremacy belies the reality that crucial decisions are, in fact, made by Prime Minister Vladimir Putin and his tightly controlled group of security men, the siloviki. Even the occasional impression of a diarchy is mistaken, for Mr. Medvedev lacks a true powerbase. His liberal-sounding statements and expressed desire for genuine democracy, rather than Mr. Putin’s hyphenated euphemisms for authoritarianism – “sovereign democracy” or “directed democracy” – may raise Western hopes but, so far, mean little in practice.
Far from institutionalizing decision-making and engendering a true succession, Mr. Putin seems bent on making himself the one indispensable ruler. An impressive policy wonk, able to rattle off the most arcane facts about energy exploration and transportation, he has shown little understanding of the most fundamental political and economic issues, has little patience for differing views, and brooks no opposition. Though he has been most effective in centralizing power, he has rendered decision-making both intrinsically fragile and opaque.
Second, Mr. Putin has helped foster a culture of blame and conspiracy, rather than encouraging realistic solutions. He has recentralized not only power but also coercion and corruption, constantly blaming external sources for Russia’s current problems and warning against attempts to “weaken or destabilize” the country.
Mr. Putin has been particularly angered by domestic dissent and fears that whiffs of protests will presage winds of change. When a relatively small group of protesters demonstrated in Vladivostok following an unpopular increase in tariffs on imported cars, the Kremlin sent riot police more than 9,000 kilometres across the country to confront them. The Putin-controlled state Duma issued a report from its analytical department that claimed the demonstrations were part of a plot by foreign powers to detach the Far East from Russia. There seems to be little understanding by Mr. Putin and his associates that protests are a normal part of democratic societies or that dialogue and debate are crucial to finding economic solutions.
Third, despite putting more than $200-billion (U.S.) into its “anti-crisis program,” the Putin regime does not appreciate the character and true depth of the crisis. It is not resolvable just by increasing regulation, nationalization, coercion and concentration of power.
Unfortunately, Mr. Putin has learned the wrong lessons. Initially a pragmatist, apparently he became seduced by the vast windfall that skyrocketing energy prices brought, by the faux prosperity, by the adulation of sycophants, and the seeming public approval into believing there were shortcuts to success. Yet, his own former economic adviser, Andrei Illarionov, warned him years ago about the dire consequences of building a unidimensional economy.
What Mr. Putin has created is an extraordinarily vulnerable, energy-dependent, trickle-down economy where the oligarchs acquired phenomenal wealth but where vast numbers of Russians, despite some improvements in their standard of living, have remained wretchedly poor.
The latter group are now greatly at risk. The recession is a worldwide phenomenon, but the deep Russian crisis is largely of the Kremlin’s own making.
The anti-crisis program fails to address the basics. The oligarchs (and their corporations), who have lost hundreds of billions of dollars in wealth and who form the very narrow base of investors in Russia’s drastically contracting stock market, are first at the government trough. The military will be given $141.5-billion in the next couple of years just for the purchase of new weapons, while one-fifth of the tuberculosis hospitals function without running water, 70 per cent of newborns suffer complications, and the population faces demographic disaster and may contract by as much as 20 million in the next two decades.
In the meantime, overall economic growth has come to a standstill: The budget deficit is moving to more than 6 per cent of the GDP, according to official figures, and capital outflow/flight is likely to pass $100-billion this year. Currency reserves have contracted by more than one-quarter, due to a futile attempt to support the ruble. Further, in 2008, Transparency International ranked Russia 147th among 180 states on perceived corruption, and Freedom House has listed the country among the “Not free.”
A sharp and sustained rise in energy prices could conceivably buy Moscow extra time but it will not resolve the basic problems. For that, Mr. Putin’s government would truly have to confront reality and recognize, to paraphrase James Carville, that “it’s the fundamentals …”