By Andrew C. Kuchins
Russia’s President Vladimir Putin is due to step down in spring 2008 after a remarkable eight years in the Kremlin. While a controversial figure in the West, Putin is wildly popular in Russia. Few would have predicted that this diminutive former intelligence officer would emerge as one of the world’s most notable and successful politicians of the new century. No honest Russia watcher today can predict with much certainty what the future holds for Putin’s successor, let alone his identity.
At first glance, it would appear the risk of political instability in Russia has declined dramatically since Putin became the surprising successor to Boris Yeltsin at the end of 1999. At that time, Russia had just experienced a financial crash, was the target of a series of large-scale terrorist attacks and had undertaken a new war in Chechnya. Putin’s predecessor, Yeltsin, seemingly had little political authority to transfer, as his own popularity ratings for most of his second term were below 10 percent. Russia’s future looked bleak and uncertain.
Now, more than seven years later, Putin’s popularity among Russians has never been higher—over 70 percent—and the Russian economic boom is into its ninth year (anybody who placed money in the Russian stock market in 2000 would have experienced returns about 20 times their investment). The political opposition has been neutered, and Russian national TV, the most powerful means of political communication, is controlled by the government. Compared with the daunting challenges it faced in 1996 and 2000 to engineer successfully managed elections, the Kremlin in 2008 will enjoy far more felicitous conditions to control the outcome.
Controlling the outcome certainly seems well within the Kremlin’s grasp, but just what is the desired outcome? Will Putin step down as he is constitutionally mandated to do and has repeatedly said he would do? Most likely yes, but powerful incentive structures will push him to stay on. The key figures in Putin’s court, most of whom have been around for his entire tenure, are more apt to see their interests best served by their patron staying in position. The stakes involved are immense: Clifford Gaddy, an economist at The Brookings Institution, estimates “Kremlin and Company” manages an annual cash flow of up to $500 billion. Wealth is highly concentrated in Russia, and the Kremlin’s reach has grown along with the size of the prize.
Looking to the 2008 Election and Beyond
Putin will be only 55 years old at the time of the 2008 elections, and most of the key advisers around him are 40 to 55 years old. Certainly this ruling circle must look upon Leonid Brezhnev’s 18-year tenure or Joseph Stalin’s nearly 30 years in power with envy. The Kremlin’s chief ideologist and political manager, Vladislav Surkov, in a speech to the leading party, United Russia, in February 2006 spoke openly about the need to remain the party of power for a generation or two like the Liberal Democratic Party in Japan or the Socialists in Sweden during the last century. The Institutional Revolutionary Party of Mexico is another example of essentially one-party rule in ostensibly democratic conditions.
Putin probably will step away from the presidency but, if he wants to stay on, he will have no problem getting support in the upper and lower houses of the Russian Federal Assembly or in the majority of regional legislatures as mandated by the Russian constitution. Western governments would not react positively, but after an uproar they probably would adjust, with few alternatives to dealing with Russia as it is, whether a dictatorship or a mature democracy. The great majority of the Russian people would receive this news positively as they are still inclined to value stability and order first and look more skeptically toward democracy, which the Kremlin encourages them to associate with the chaotic 1990s. And at least for the time being, Putin’s leadership is closely associated with stability and order. The combination of the relative youth of Putin’s Kremlin and Russia’s ruling political and business elites and the current political apathy of the Russian population supports the status quo or little deviation from it.
That is certainly what Putin and his team are banking on; stability and preemstvennost’ politiki (continuation of policy). Whatever Putin decides to do after his constitutionally mandated term expires, the more important point is that from a policy standpoint we should expect Putinism, with or without Putin. Another variant that has attracted attention since Putin announced on October 1 that he would lead the United Russia party list is that Russia would have a relatively weak figurehead president with a very powerful Prime Minister Putin leading a powerful ruling party, United Russia. That would seem a tall order, given how little Putin has done in his tenure to prepare for such far-reaching change. This in effect could turn Russia from a super-presidential to a parliamentary system. The easiest and most risk-averse option is to change the constitution to allow Putin to run for a third term. Putin, however, could surprise us once again by walking away from power and retiring from politics.
This current aura of authoritarian stabilization is at best only partially due to Putin’s leadership; another key driver of Russia’s future will be the price of oil. For at least the first three years of Putin’s leadership, he approached structural economic reforms more assertively and successfully than most analysts expected. But beginning in the second half of 2003, the dynamism of his administration diminished as oil prices began to rise. In fact, one can correlate high oil prices in Russia for the last 35 years with less economic reform, less political openness and a more aggressive foreign policy (Brezhnev and Putin) and low oil prices with more reform, more openness and more pro-Western foreign policy (Mikhail Gorbachev and Yeltsin).
So regardless of who is in the Kremlin beyond 2008, if oil prices remain high and history is a guide, it is unlikely we will see a more democratic Russia invigorated to structurally reform and diversify its economy rapidly. We also can expect the state to continue to consolidate greater control over the commanding heights of the economy, the natural resource and especially the energy sector, although this trend could abate if there were growing evidence of incompetent management on the part of the state champions, Rosneft and Gazprom in particular. However, if oil prices drop, perhaps to $30 to $40 per barrel, this could bring on more reform without crashing the budget. A drop to $10 to $15 per barrel, the level in the financial crash in 1998, could have far more destabilizing macroeconomic and fiscal effects in the near term, but even after the crash in 1998 we saw the Russian economy recover quickly because of the benefits of the devaluation of the ruble.
A great deal of the current Russian government’s legitimacy derives from the fact that it has been able to deliver, or was present during the delivery of, economic growth, rising incomes and a booming consumer economy. The expectations of the Russian people for improved housing, health care, higher quality and often foreign-produced consumer goods and chances to travel abroad are rising, and any Russian government will seek to ensure that the standard of living continues to rise. This may or may not be associated with greater political freedoms. The paradox of Putin’s Russia is that steady economic growth has correlated with consistent erosion of political freedoms. The burden of proof now is on those who make the soothing argument that continued prosperity will inevitably result in expansion of political freedoms.
Implications for the United States
We can be certain, however, that the personality and even more so the policies of the next Russian leadership team will be of considerable consequence for their counterparts in the White House in January 2009. Russia is one of the most important countries in the world for U.S. foreign policy interests. This was true even when Russia was weak in the 1990s because of its huge arsenal of nuclear weapons, vast hydrocarbon and other natural resource wealth, geographical location bordering on East Asia and the Greater Middle East and finally its U.N. Security Council veto. But now Russia matters all the more because of its economic recovery which, while greatly fueled by the high oil price, was unexpected in its magnitude and speed. Russia’s nominal dollar gross domestic product has grown by more than six times in less than 10 years, and it now holds the third largest foreign currency reserves in the world after China and Japan. Just five years ago Russia was a major debtor, and today it is one of the largest creditors of U.S. deficits.
As Russia has emerged from its troubles of the 1990s and regained its confidence, the desire to integrate into the West has diminished. As Putin demonstrated in his watershed speech in Munich in February 2007, Russia sees itself as an independent great power in an international system that is replacing an ephemeral unipolar order with a rapidly emerging multipolarity. In Soviet parlance, the term was a shift in the “correlation of forces,” or what realist and neorealist scholars would call the balance of power.
In this shifting context, today and in the future we will be dealing with a Russia far more assured and ready to defend its national interests as it defines them, not necessarily as Washington would like. This does not mean the next U.S. president should anticipate the danger of another Cold War; no important segment of the Russian political elite desires a return to an across-the-globe confrontation with the United States. That was a losing proposition in the second half of the 20th century, and from Moscow it looks even less promising today. Nor is Moscow inclined to enter any serious anti-U.S. coalitions of great powers such as China as that scenario is not in any potential partners’ interests. Russia can be expected to remain kind of a strategic “loner,” but an increasingly vocal and at times contentious loner if we extrapolate from current trends. It is also probably not realistic to expect the current anti-democratic trend in Russia to reverse itself at least in the next five years.
The current administration’s Russia policy—which amounts to pursuing engagement with Russia where we can (North Korea, Iran, nuclear cooperation, etc.) and confronting Russia on issues counter to our interests (Russia’s relations with near neighbors including Ukraine and Georgia, democracy promotion)—has been severely hampered by the tremendous erosion of our credibility and widespread perceptions of double standards. Russia has been quick to take advantage of weak links in the transatlantic alliance, whether caused by differences over Iraq and Iran or European energy dependencies on Russia. Russian leadership also exploits the current perception of relative U.S. financial and military weakness, in other words, the issues that are weakening our global standing vis-à-vis other countries are particularly acute in ties with Russia because of its rapid recovery. The likely reality is that Russia is not as strong as it is acting now nor are we as weakened as Moscow might like.
Finally, as the default position of Russian nationalism is anti-Americanism, and the Kremlin-controlled national TV has been fueling a negative image of the United States, it will be especially difficult for Putin’s successor to quickly reverse the deterioration in U.S.-Russia relations. Any successor will have less political authority than Putin for some time to come, so this will weaken his hand in pursuing a more pro-Western foreign policy. Just as in domestic policy, we should expect more continuity than change in Russian foreign policy.
But we are probably past the time when it makes sense to describe Russian foreign policy as pro- or anti-Western or American. We can expect Russian foreign policy to continue to be driven by a cold calculation of its national interest, which is most often aligned with commercial interests. That means further Russian “integration” will be manifested primarily through commercial, trade and investment ties. Increasingly, Russian companies will look to diversify their portfolios through equity investments in the United States. In principle, this is a good thing both for Russia and the United States, but as we have seen with the Dubai ports sale and the Sinopec bid for Unocal, larger deals—especially in strategic sectors such as energy—will be highly controversial.
Of course, when one considers the state of our relationship 25 years ago, the fact that we will be arguing about market access rather than missile throw weights is remarkable progress.
Andrew C. Kuchins attended the Bologna Center in 1983–84, graduating from SAIS in 1985. He is senior associate and director of the Russia and Eurasia Program at the Center for Strategic and International Studies.
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