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The Putin Strategy

08 February 2005

Russian President Vladimir Putin remains a mystery for many people. There is a popular joke in Russia that he has finally decided on a Korean model for his country's development, but has yet to decide which of the two models to choose. His opponents deny the president and his team the ability for strategic thinking, or view their policies as a return to the totalitarian past. Putin's supporters have never seen a complete strategy, yet apparently they are ready to support the president even without the benefit of a strategy.

DOES PUTIN REALLY HAVE A STRATEGY?

I believe that it is possible to see a strategy in Putin's actions. Some people may not like it, however, and I myself do not consider it ideal. At the same time, in light of the sequential logic of his actions, Putin is attempting to solve the top-priority problems confronting Russian society.

I do not think that Putin had a strategy when he, quite unexpectedly for everybody including himself, became prime minister and prospective "heir" to the Russian presidency. At that time, Russia was facing a pile of problems which were unprecedented in scale for any country. In December 1999, Vladimir Putin, at the time still a prime minister, published his first policy article entitled Russia at the Turn of the Century. In it, he wrote bluntly: "Russia is going through one of the most difficult periods of its centuries-old history. Perhaps for the first time in the last 200-300 years, it is facing the real danger of finding itself in the second or even third echelon of world states."

Putin was not exaggerating.

Two days after the article was published, Boris Yeltsin resigned from his presidential post.

INITIAL REALITY

Putin found himself in the position of an heir who, upon reading the will, discovers that he has inherited a million debts.

The new Russian president was suddenly responsible for a country which in the previous eight years had lost half of its economy; furthermore, it had just passed through a severe financial default. Russia was a backward country with a budget comparable to that of a large American city, with over half of its population living below the poverty line. Many Russians had not been paid their salaries or pensions for months.

Finally, the economy was overburdened with many social commitments inherited from the Communist times, which no country, not even richest, could cope with. Big business, which had received property worth billions of dollars from the Kremlin, ruled the country via Yeltsin's "Family." This powerful group appointed ministers, adopted convenient laws, elected governors on the territories it controlled, and enjoyed unlimited access to state resources, but it never developed the habit of paying taxes.

Actually, Russia was not governed at all. It could be described as a democracy only by a person with a very rich imagination: the regime was a strange mixture of anarchy and oligarchy, with only occasional democratic headway. There was no common legal space in the country. None of the numerous Russian regions experienced any visible economic reform or democracy, but incompetence, nepotism, irresponsibility and embezzlement could be found with the naked eye.

Russian society, which had suffered from the "lost country syndrome," was absolutely disoriented. People were weary of reforms and only desired some semblance of order from the authorities. During this time, there was a real possibility that the Communist Party would stage a comeback. The country lacked a normal system of political parties, which is the backbone of any democratic state.

At the time, Russia was fighting a war that it did not want. War was declared on Russia by Wahabi radicals who wish to build a caliphate that would stretch from the Black Sea to the Caspian. Beginning from at least 1999, Russian federal troops in Chechnya faced not just rank-and-file Arab mercenaries, but Arab commanders as well. The Russian forces, responsible for providing for the nation's security, experienced many setbacks. These were due to the underfunded special services, disorganized military reforms and a ragged and demoralized army; nuclear-powered submarines were rusting in port, while the strategic nuclear arms were alarmingly degrading. The Gorbachev-Yeltsin breakthrough to the West had stalled. The task required by the government, therefore, was to rebuild a dismantled state. It would be difficult to name a more difficult job than this.

GENERAL CONCEPT

Putin's original strategy rested on the pragmatic goal of fighting for Russia's survival. That goal outweighed all ideological considerations. At the same time, the president understood from the very beginning that a serious modernization breakthrough was needed. Russia's main strategic goal was to become a modern great power that would be economically strong, technologically advanced, socially developed and politically influential.

This strategic goal could be achieved only after Russia had:

• completed the most fundamental revolution of the late 20th century which destroyed the Communist Soviet Union, and stabilized the political system on the basis of democracy and free markets;
• created a state mechanism capable of implementing the required reforms;
• formed a normal economic environment that could ensure long-term economic growth;
• created favorable international conditions for its internal development;
• overcome the societal atomization and begun the process of consolidating the Russian nation.

WHO ARE WE?

Putin has not proposed any new national idea, but he has resolutely abandoned the old Communist idea. Whatever the liberal critics of Putin may say, the president is making a firm break with the totalitarian past. Putin suggests that society look for landmark concepts in Russia's history to create a new identity, and there are examples of this taking place today: The main Communist holiday — November 7, the day of the 1917 October Revolution — has been abolished, obviously at the president's suggestion. From czarist Russia, we have inherited the two-headed eagle borrowed by Ivan III from Byzantium; furthermore, Russia has recently re-introduced November 4th celebrations — the day of Moscow's liberation in 1612, which coincides with the day of the Kazan icon of the Mother of God; then there was the introduction of the state tricolor, borrowed by Peter the Great from the Dutch. From Soviet times, we have inherited the national anthem — or rather its music, which was composed by Alexander Alexandrov during the country's liberation from Nazi troops; the anthem now contains post-Soviet lyrics. Putin places much more emphasis than his predecessors on traditional civic values: patriotism, morals, family and religion. He is a believer, and Orthodox principles are not an abstract notion for him.

The new Russia, although changing, has established a strong connection to its former self.

COMPETITIVE ECONOMY

Putin understands perfectly well that no Soviet recipes can help him fulfill his primary task of implementing a qualitative leap forward in economic development. His economic program is very simple — and very ambitious. Putin wants to make Russia compatible with the global economy, and create a normal, globally accepted economic environment which is attractive for domestic and foreign investments into the economy. These measures must boost economic growth and double the GDP within ten years (although Putin has never specified the starting year for this decade). Economic growth is the focal point in Putin's strategy.

In fact, President Putin launched a new round of market reforms, which had never been completed in the early 1990s. What his team has done for reducing taxes, opening the economy for global competition in order to meet WTO membership criteria, and for carrying out social, pension and public utilities reforms is far beyond the intentions of the reformers from the early Yeltsin times.

At the same time, Putin's strategy provides for equal, and possibly even stronger, state control over several strategic economic sectors, of which the fuel/energy sector is the most important for Russia. There will be no nationalization program (incidentally, it is only the Anglo-Saxon countries where the energy sectors are not the property of the state). At the same time, state-owned segments of the economy will not be reduced either; rather they will increase, taking into account the prospects of Yuganskneftegaz.

The relations between the state and business have been complicated considerably by the YUKOS case and, on a broader scale, by the relations between Putin and the oligarchs. In Russia, one often hears the question: "Who of the oligarchs will be the next one?" Since his first days in office, the President has sent several unequivocal "messages" to big business. The first one was: "Pay taxes and display social responsibility." The second message was: "The federal policy is the Kremlin's business." The third message was: "There can be no saints among the oligarchs." All of these points have been "appointed" in one way or another by the Kremlin, and often in violation of the law. Therefore, oligarchs can be sacked if they ignore the first and second messages; the disfavor, which befell Boris Berezovsky, Vladimir Gusinsky and Mikhail Khodorkovsky, seems logical on this account. These individuals made obvious attempts to destabilize state power, while caring little to observe the law and pay taxes. The answer to the question "Who will be next?" is obvious: the one who will follow suit.

COMBATING POVERTY

Eradicating poverty in Russia is one of Putin's most ambitious goals. Economic growth, the reduction of unemployment, and the repayment of overdue pensions and wages have reduced the number of people living below the subsistence level to 18 percent. By the end of Putin's second presidency this figure is predicted to decrease to 10 percent. Although Russia is still far behind the developed countries as regards the standard of living, it has already broken loose from the poverty trap, in which almost a majority of the Russian population found themselves in the 1990s. This is happening amidst a sweeping social reform, which, judging by public reaction, has been the most painful for Russia. The essence of this reform has been to revise the state's excessive social obligations which are not backed financially. No country can afford to pay allowances or provide benefits to two-thirds of its population. The main principle of the new social policy is to provide support only for those who really need it, and to increase the size of allowances paid to such people from the money thus saved. Another principle is the monetization of fringe benefits.

GOVERNABILITY

It was not unheard of for Boris Yeltsin to fail to show up in his office for months at a time. The Family, an extra-institutional center of power, played a much greater role than all the constitutional institutions taken together. Thus, Putin's strategy is to restore the governability of the country with a heavy reliance on those institutions — at the expense of their autonomy.

For the first time in the post-Soviet era, there are working pro-presidential majorities capable of passing reformist laws in both chambers of the Federal Assembly. This parliament has proclaimed the right to land ownership, introduced the world's most liberal tax system, which includes a flat income tax rate of 13 percent, and has begun to create a normal social infrastructure.

The administrative reform, launched in the spring of 2004, has proven to be the most sweeping reform ever conducted by a Russian government since Russia's first prime minister Sergei Witte held office. The obvious Westernization of the Cabinet (the number of ministries and their functions have almost coincided with those in the American government), the delimitation of powers between the legislative and purely executive departments, and the tangible reduction in the number of their CEOs has brought society closer to the president's goal of "debureaucratizing" the economy. Yet, it is too early to trumpet these achievements. Like any other reorganization, administrative reform plunged the government into a stupor when it was first initiated. This does not mean, however, that this reform is not needed or that it has failed, or that the country's leadership does not have enough will to carry it through.

The president continues to emphasize the need for turning the judiciary into a full-fledged and truly independent branch of state power. He argues that this can be accomplished by sharply increasing the salaries of judges, which would make them immune to administrative and financial pressure.

THE VERTICAL

Putin's strategy in the field of federative relations is aimed at preventing the state's disintegration. Initially, the top priority of this strategy was to bring regional legislation into line with federal laws and the constitution. This goal was effectively achieved by means of a new power institution — the plenipotentiary representatives of the president in the newly established seven federal districts. The plenipotentiaries also helped to re-establish Moscow's control over local federal executive bodies, which in the 1990s had been swayed by regional governors. The Kremlin initiated the process of consolidating the numerous administrative entities of the Russian Federation — an absolutely justified move from the administrative and economic points of view. The latest — and most controversial — stage in the federative reform has been a transition from the direct election of governors to their election by the legislative assemblies of the Russian Federation entities upon their nomination by the president. Putin's statements, in addition to what I have heard from people in his team, suggest seven reasons explaining the logic of this move.

First, many of the previously elected governors proved to be incompetent and inadequate. Several failed to report to their office for weeks because of their addiction to alcohol, while others were directly connected with criminal clans.

Second, elections have a tendency to sharply aggravate the situation in the multinational regions and bring ethnic conflicts to a head. Candidates often represent individual ethnic groups, and when one emerges victorious in an election contest it is perceived as a defeat by the other ethnic groups. Furthermore, as the term of office of several officials comes to a close in flashpoint regions (for example, in the North Caucasus, where leaders such as Valery Kokov, Alexander Dzasokhov, Magomedali Magomedov have brought stability to the area), these individuals might have been followed by the election of extreme nationalists. Such a scenario could lead to the resumption of hostilities.

Third, Russia has seen no reformist or liberal-minded governor elected after 1996. Putin is more pro-reformist than 95 percent of the governors and 90 percent of the population.

Fourth, too many governors directly represented the interests of individual financial groups. Only several (Alexander Khloponin in Krasnoyarsk, for example) invested in their own regions, while a majority redistributed resources away from the local population in favor of the corresponding companies.

Fifth, in some of the regions, the governors' family clans have taken the entire local economy under their control (or have made attempts to do that).

Sixth, the inefficiency of the governors has forced the federal center to form a parallel system of executive bodies. This aspect is directly related to the war against terrorism. Governors nominated by the president and approved by regional assemblies will have levers of control over the law enforcement system.

Seventh, international practices have provided arguments against the practice of electing governors by the population. There are three federations in the world where governors are elected in such a way. The United States is the only successful exception, while the record of the other two federations — Mexico and Brazil — cannot be described as such.

Putin's strategy assigns a great role to local self-government. The 1993 Constitution has created a very intricate and unviable structure of governance; actually, the Constitution has omitted the local government level, and bills drawn up by Dmitry Kozak are intended to restore this function. Further reforms in this field must create an adequate financial base for solving people's vital problems at the level where they most often arise and where they must be addressed — in the regions and in each individual settlement.

THE CREATION OF POLITICAL PARTIES

Putin is sincerely convinced that Russia needs large, full-fledged political parties. The creation of such parties will be built along two major avenues. First, it will be necessary to restore the authorities' affiliation to a particular political party. During those years that were committed to the eradication of the "damned legacy of the Soviet Communist Party" unprecedented laws were adopted, such as prohibiting top state officials from joining any party. After the executive office, together with the State Duma, are made party-based, it will become possible to noticeably increase the incentives for the consolidation of the political parties.

The second avenue is the transition to elections to the State Duma solely by party lists, which has recently been proposed by the president. For all its disadvantages, the proportional representation system permits the creation of major political parties within a short period of time; and large, nationwide parties will consolidate the state's unity and prevent regional separatism.

Obviously, the president sees no problem in having a large dominant party that can consolidate the core of the pro-Putin electorate and the administrative elite, as well as carry out reforms and ensure the continuity of his policy. It seems that Putin would like to see the transformation of the Communist Party of the Russian Federation into a modern social democratic party. Yet, while the Communist leaders continue to resist the changes, the chances are growing that the Communist electoral niche will be gradually filled by other leftist and national-patriotic groups. The president has never created problems for liberals at elections; The Union of Right Forces (SPS), Yabloko and other liberal parties are the authors of their own failures as they have never been able to unite. The liberal electorate in Russia is too small to support more than one serious liberal project, and if the liberal parties come to understand this, they will undoubtedly have a future.

Presently, it is the advocates of Chechen extremists and their patrons — regardless of their political slant — who the Kremlin administration cannot tolerate.

NATIONAL SECURITY

Putin has been emphasizing the need to strengthen the national security organizations — the armed forces, special services, and law enforcement agencies. The top priority of the defense reform is increasing the professionalism of the armed forces. This means increasing the number and improving the quality of the permanent readiness units. Conscription will be preserved, but the mandatory term will be reduced to one year. The main emphasis is on compact and mobile special units, and the development of deterrence forces as an absolute guarantor of the security of the country; Russia still has relatively weak conventional armed forces and armaments.

Only consolidated special services and law enforcement agencies can protect the country from the threat of terror and organized crime. The government is planning to drastically overhaul the security organizations by re-equipping them, better coordinating their efforts, and eradicating corruption in their ranks. The arrests of "werewolves in police uniforms," which many have described as a populist campaign, in reality reflect a long-term policy. Finally, there are plans on the table for increasing officer salaries.

Chechnya remains Russia's most acute problem — and will continue to be so for some time. Moscow's strategy consists in combining antiterrorism operations with measures to create and broaden a sphere of influence for the legitimate secular authorities. This move will aim to improve their coordination under the aegis of the governing bodies of the Southern Federal District, rebuild destroyed houses, and create jobs for the population of the war-ravaged region. The invasion of Ingushetia and the seizure of a school in Beslan serve as reminders that we are still very far from the real completion of the counterterrorism operation, not to mention genuine peace. Nevertheless, progress has been made: last year, human rights activists recorded dozens of times less human rights violations in Chechnya, which means that life there is becoming calmer. The operation in Chechnya will continue until final victory has been achieved, whatever effort this may require and despite whatever objections the West may have. To this end, I can definitely say there will be no more Khasavyurt-like deals.

STRATEGY FOR PEACE

Putin's foreign policy strategy at the beginning of his second presidency was marked by a high degree of continuity. The developments in Ukraine, however, may introduce drastic changes into it.

From the very beginning, Putin has been conducting an independent and active multi-vector policy of a pragmatic "father of the nation" who is concerned, at the same time, about the greatness of his nation. While perceiving that the general weakness of the country remains the greatest threat to Russia's security, he regards foreign policy, first and foremost, as an instrument for creating favorable conditions for economic development, improving the investment climate and promoting Russian business interests abroad. His pronounced pragmatism presupposes setting foreign-policy tasks that the country is able to fulfill. The President is undoubtedly an integrationist, which has been adequately demonstrated by Russia's participation in the international organizations it has already joined (the United Nations, G8), or entry into organizations to which it may be admitted in the future (the World Trade Organization, the Organization for Economic Cooperation and Development). Putin will not orient himself to one particular pole of the contemporary world, but will keep his hands free for contacts in all directions.

In Putin's system of priorities, the countries of the Commonwealth of Independent States have held — and will continue to hold — a prominent place. Putin's favorite brainchild of recent time is the Common Economic Space embracing Russia, Ukraine, Belarus and Kazakhstan. The prospects for this project, however, may be seriously threatened now that Victor Yushchenko has come to power in Kiev, as he is a strong opponent of this project.

Russia's relations with the West have revealed naturally limiting factors. The main one remains the fundamental impossibility of Russia's entry into the major European and Transatlantic organizations — the European Union and NATO. These organizations do not care to see Russia among their members, and, most likely, Russia has no need to seek its membership. Moreover, the emphasis that the West places on the human rights issue, as well as the "gap in values" between the West and Russia, serve as more stumbling blocks in Russia-West relations. Putin does not believe that he has any problems with building a democratic society, and he will not accept criticism on human rights. Meanwhile, the development of Russian democracy will not correspond to Western ideas about this process for quite some time.

The developments in Ukraine represent the latest complication for Russia. Moscow views what has happened there not only as an unconstitutional coup, but also as a large-scale geopolitical operation to overthrow the regime of a CIS country which is an ally of Russia. It seems that relations between Russia and the West may be in for the most serious crisis in recent years.

Under the circumstances, Russia is destined to remain an independent center of power and one of the few global actors that have preserved their sovereignty, as well as their personal view on global developments.

WHAT IS TO BE DONE

There are flaws in Putin's strategy, however, and its implementation is going to face many difficulties. One of the flaws is the lack of a clearly formulated long-term strategy, and this factor sets a rather narrow time horizon for Putin's policy.

The main factors for economic development are a climate of confidence between the authorities and businesses, an increased capitalization of Russian companies, and the freedom of the people's energy and initiative. Many of the necessary reforms — for example, in the banking and public utilities sectors and natural monopolies — have stalled, as has the introduction of a mortgage system. Much more investment must be made in education (above all, in the secondary schools), public health, and human capital where quality is a decisive factor in the global competitiveness of the state.

The main problems in politics are the following:

• improving the mechanism for preparing, making and implementing decisions;
• corruption;
• the quality of the administrative elite;
• stepping up the work of the government;
• explaining state policy to the people;
• ensuring the representation of regional interests in the federal bodies of power.

Russia must start a real integration of the post-Soviet space, wherever possible, and think of a new agenda for its relations with the leading Western countries and their allies.

The Russian president's job is still one of the most difficult ones in the world. But Russia is no longer the country it was five years ago. It is a more consolidated country with a much more effective state.

What is Putin's strategy?

How can Putin's strategy be described from an ideological point of view? Liberals criticize this strategy for not being liberal, whereas the Communists criticize it for not being leftist. Both are right.

Putin's strategy is built on the principles of the free market, a strong state and its security organizations; on an open, independent and active foreign policy; and on respect for traditions, continuity and patriotism. According to any of the classifications accepted in the world, such a set of principles is rather characteristic of right-wing politicians and conservatives. There are many respectable people among them — from Winston Churchill, Charles de Gaulle and Konrad Adenauer to Ronald Reagan, Margaret Thatcher and Jacques Chirac. Like Putin now, these politicians were also often accused of having anti-democratic and authoritarian tendencies.

Personally, I don't think there is a threat of authoritarianism in Russia, and this is not simply because there are numerous critics of Putin who defame him in the media without risking their freedom, health or wellbeing. Authoritarianism, in its classical forms, is a rigid legal or quasi-legal regime which requires absolute subordination. Figuratively speaking, the man in the center pushes buttons which activate signal lamps throughout the country, and then everyone hurries to fulfill his orders. In Russia today, the button-pushing does not have such an obvious effect. The signal lamps have burned out a long time ago, or someone has removed them, the wires have been sold as non-ferrous scrap, and there is no saying about the "diligence of incorruptible officials." All these factors allay fears that authoritarianism can be built in Russia in the foreseeable future — even if the president had such a goal. Moreover, Russian society has begun its development from a state which some people describe as complete chaos. The contemporary Russian regime is an unconsolidated democracy with elements of the still continuing chaos. Democracies never emerge already developed. Considering Russia's record of the last 1,000 years, it seems that we are expecting too much from the 13-year-young Russian democracy.

Putin's strategy is not authoritarianism or anarchy, but a well-functioning and effective democracy, which is developing in line with an unchanged Russian Constitution.

© "Russia in Global Affairs". № 1, January - March 2005