Perspectives on Geopolitics, History, and Political Economy

The Putin Question

Commentary from Project Syndicate

Russian President Vladimir Putin attends a joint news conference with Armenian President Serzh Sargsyan (not pictured) following their meeting at the Kremlin in Moscow, Russia, 10 August 2016. Serzh Sargsyan is on a working visit in Moscow. EPA/VASILY MAXIMOV/POOL

Russian President Vladimir Putin attends a joint news conference with Armenian President Serzh Sargsyan (not pictured) following their meeting at the Kremlin in Moscow, Russia, 10 August 2016. Serzh Sargsyan is on a working visit in Moscow. EPA/VASILY MAXIMOV/POOL t

By Anders Åslund

WASHINGTON, DC – Russian President Vladimir Putin has at times garnered as much attention in the US presidential campaign as Hillary Clinton and Donald Trump. By having his minions hack into Democratic Party computers and pass the results to WikiLeaks, as credible security experts believe, Putin appeared to be trying to tilt the election Trump’s way. And Trump, besides calling on Russia to hack Clinton emails, seems to have returned the favor by accepting Putin’s reasons for annexing Crimea and denying the presence of Russian troops in eastern Ukraine. In Putin, many observers see Trump’s ideal of leadership: autocratic, unconstrained, and very idiosyncratic.

Back in Russia, Putin outdoes even Trump in dominating the news. Of course, he has the Kremlin’s mighty propaganda machine at his fingertips, one that ceaselessly projects his image as an omniscient, omnipotent Czar in a new-model televised cult of personality. Yet despite the presence of this wise Czar, Russia’s economy has nearly imploded, and appears on course for Leonid Brezhnev-style stagnation, if not worse.

Given his record of international adventurism and economic bungling, it is no surprise that Putin has fascinated, and appalled, Project Syndicate commentators for the 16 years of his rule. Ivan Krastev of the Center for Liberal Strategies in Sofia, may capture their point of view best: we are fascinated by Russia’s president “not because Putin is right, or even because he is stronger, but because he is taking the initiative,” while leaders in the West seem too timid and/or paralyzed to act.

A Perverse Rationality

Who is Vladimir Putin and what motivates him? When Putin came to power in 2000, so little was known about him that people tended to see what they wanted. Former US President George W. Bush said that, after looking into Putin’s eyes, he could “get a sense of his soul,” seeing “a man deeply committed to his country and the best interests of his country.” But Chris Patten, who was then dealing with Putin as the EU’s commissioner for external affairs, came away from their encounters with a much darker impression: Putin “looked us in the eye and lied, almost certainly aware that we knew he was lying.”

Today, the positive assessment of Putin that Bush conjured has vanished among world leaders, many of whom, such as German Chancellor Angela Merkel, have had experiences similar to Patten’s. But this more dubious assessment has only raised other questions. Is Putin a master strategist who consistently wrong-foots his rivals, most recently by seeking a rapprochement with Turkish President Recep Tayyip Erdoğan while simultaneously stoking renewed tensions with Ukraine? Or is he a serial bumbler, who fails to see that tactical victories in Ukraine and Crimea, or in signing energy deals at a discount with China, are strategic defeats that have gravely damaged Russia’s long-term national interests?

Adam Michnik, a leader of the Polish anti-Communist opposition before 1989, sees Putin’s international aggressiveness as emerging from his “odd view that the whole world has discriminated against Russia for the last three centuries.” Nonetheless, Michnik emphasizes that, in view of Western inaction, this distorted view of history has led Putin to embrace policies that could be construed as rational. In invading and annexing Crimea, “extortion has worked – and Putin knows it.”

One of Putin’s most scathing domestic critics (who has recently been forced to flee Russia), the political analyst Andrei Piontkovsky, goes much further in underscoring the president’s rationality. Putin, he argues, is “guided by a single goal.” And that objective is not “imperial ambition.” Rather, “every policy is subordinate to Putin’s goal of ruling Russia for as long as he lives.” His actions are not driven by a pathological lust for power, but are “based on entirely realistic concerns for his personal safety,” Piontkovsky insists. Simply put, Putin “understands the laws of the autocratic system that he has helped to rebuild in Russia.”

The New School’s Nina Khrushcheva agrees, arguing that Putin’s fear for his personal safety is well justified. Because “Putin has shown little restraint in going after his rivals,” despite “unwritten agreements among the ruling elite,” he understands that he “can never relinquish power voluntarily without fearing for” his “future safety.” So the strongman’s fate is a kind of permanent paranoia that demands that he stay in power until the end of his life.

To achieve this end, Putin has hollowed out Russia’s infant democracy and even concocted a sham ideology – “sovereign democracy” within which, says former NATO Secretary General Anders Fogh Rasmussen, “the president eliminates all opposition, restricts media freedom, and then tells citizens that they can choose their leaders.”

Putin’s concern for his personal safety also goes a long way toward explaining why he has incited nationalist fervor at home. Vladislav Inozemtsev of Moscow’s Higher School of Economics, sees in Putin and his governing methods a hint of fascism, as defined by the historian Robert O. Paxton: “obsessive preoccupation with community decline, humiliation, or victimhood and by compensatory cults of unity, energy, and purity.”

This perspective supports the assertion by Princeton’s Harold James that it is a grave error to turn “Kremlin policy into a psychodrama that can be understood only through a deep exploration of the Russian soul.” The result of such a search has only been “rampant misconceptions about what drove Putin’s shift from what seemed to be a modernizing, conciliatory, and even pro-Western stance” early in his presidency into “aggressive revisionism” today.

Responding to the Menace of a Declining Power

Harvard’s Joseph S. Nye, a leading voice in the US foreign policy community, sees a Russia “in long-term decline,” but one that “still poses a very real threat to the international order in Europe and beyond.” The problem transcends Putin: “States in decline – think of the Austro-Hungarian Empire in 1914 – tend to become less risk-averse and thus much more dangerous.” Indeed, for Nye, the threat Russia poses “extends far beyond Ukraine,” where Putin’s annexation of Crimea and incursion into the eastern Donbas region have posed one the most severe challenges to world order since 1989. Thus, the West must stand up to Putin’s challenge, and yet not “isolate Russia completely.”

Shlomo Ben-Ami, a former Israeli foreign minister, takes this reasoning a step further. “For some countries, military or political defeat is so intolerable, so humiliating that they will do whatever it takes to overturn what they view as an unjust international order.” Though Putin may be driven by self-preservation, Ben-Ami argues that he genuinely feels aggrieved. Russia’s “new revanchist strategy” seems almost a natural response to the humiliations of its defeat in the Cold War and the impoverishment that came with the country’s economic collapse in the 1990s.

What can be done to rein in a country and leader motivated by feelings of humiliation? A “revisionist power,” Ben-Ami continues, “can be opposed with equal fervor” or one can wait for it to “reach the limits of its military and economic strength” and implode like the Soviet Union. The Russia of Putin’s dreams “retains the vocation and characteristics of a major power: a rich culture and history, vast size, formidable nuclear capabilities, strong influence across Eurasia, and the capacity to be a spoiler in many conflicts.” But Putin seems blind to the limits to Russian resources.

For Richard N. Haass, President of the Council on Foreign Relations, Putin’s decision to send troops into Crimea and then eastern Ukraine resulted not only from a desire to vex the West, but as part of his ongoing efforts to strengthen “his grip on power at home.” Haass does not favor incorporating Ukraine into NATO, but he proposes a multipronged approach. “Western policy should seek to frustrate” Putin’s strategy, by strengthening Ukraine politically and economically, providing substantial security assistance, and imposing more economic sanctions on Russia.

The Kremlin’s Ukraine and Syria Gambits

As Sweden’s foreign minister, Carl Bildt was one of the architects (together with then-Polish Foreign Minister Radosław Sikorski) of the European Union’s Eastern Partnership in 2009. Since Russia’s aggression against Ukraine, the Eastern Partnership has been criticized as a naïve initiative. Bildt is unapologetic. “While the EU’s vision of ‘wider Europe’ relies on soft power, economic integration, and long-term institution building, Putin’s ‘wider Russia’ policy depends on intimidation and violence.” Unfortunately, an asymmetry persists as “it is easier for Russia to fuel short-term volatility than it is for Europe to help build long-term stability.”

Such stability, says Yuliya Tymoshenko, twice prime minister of Ukraine, cannot depend on placing trust in the Kremlin’s goodwill. For Tymoshenko, Putin acts according to a simple credo: “what he can divide, he can rule.” That is why her country’s fate is so important. “What happens in Ukraine,” she believes, “will be the ultimate test of whether European and transatlantic unity endure” in the face of the traps that Putin is setting before them.

But Jeffrey Sachs of Columbia University’s Earth Institute believes that Putin’s credo is out of step with twenty-first-century realities. “Putin seems to believe that Russia can offset any worsening of economic relations with the West by strengthening its economic relations with China,” Sachs notes. “But technologies and business are too globally intertwined to divide the world into economic blocs.” Whereas “China knows that its long-term economic prosperity depends on good economic relations with the US and Europe,” this point apparently is lost on Putin, who seems not to understand “that the Soviet economy collapsed as a result of its isolation from technologically advanced economies.”

Russia’s recent incursion in the Middle East exhibits both the audacity, and the limits, of Putinism. Anne-Marie Slaughter, a former director of policy planning at the US State Department and current president of New America, argues that “Putin acted for domestic reasons – to distract Russians’ attention from their country’s failing economy and to salve the humiliation of watching pro-European demonstrators oust the Ukrainian government he backed.”

And from the start, he was confident that Russia would incur few costs. For a leader who measures himself “in terms of crude machismo,” the fact that “the US, the world’s largest and most flexible military power, has chosen to negotiate with its hands tied behind its back,” was an open invitation to mischief-making.

Ben-Ami thinks Putin has achieved his objective in Syria, even if President Bashar al-Assad’s government eventually falls. “After years on the sidelines, Russia is back at the center of the Middle East geostrategic game” and “has consolidated its position as a power to be reckoned with.” By asserting itself in the conflict, Russia has forced the US to follow its lead. As a result, “Middle Eastern leaders now head to Moscow, not Washington, to advance their interests.”

Potemkin Russia

Putin’s main problem in Syria has not been Western objections, but the fact that Russia’s economy is too weak to support his grand designs over the long term. Within a half-year of his intervention, the high costs of deploying Russian troops had already caused Putin to withdraw many of his forces.

As newly elected Governor of Tokyo Yuriko Koike rightly points out, Putin’s Ukraine intervention exposed that weakness as no previous action had. “The soft underbelly of Putin’s imperial ambitions,” she argues, “is Russia’s brittle and undiversified economy, and the expectations of ordinary Russians for improved living standards.”

Indeed, in March 2014, just after Russia occupied Crimea, Sergei Guriev, the now exiled former rector of the New Economic School in Moscow, tallied the vast economic damage incurred by Russia as a result of Putin’s Ukraine misadventure. This includes not only the “direct costs of military operations and of supporting the Crimean regime and its woefully inefficient economy,” but also the “much more painful” costs of trade sanctions. The result of both has been to “undermine Russian and foreign investors’ confidence and increase capital flight.”

Tactician that he is, Putin has used the West’s response to his own advantage. Former German Foreign Minister Joschka Fischer and Henrik Enderlein, a professor at Berlin’s Hertie School of Governance, predict this. “If the West’s response to Russian aggression toward Ukraine is effectively limited to economic sanctions,” they write, “Putin will more easily be able to blame the West and its alleged hostility toward Russia for the collapse in ordinary Russians’ living standard, thus enabling him to double down on aggressive nationalism.”

But the idea that sanctions are the cause of Russia’s economic misery is but another piece of regime propaganda. The sanctions only compound the Russian economy’s long-term weakness, reflected in huge net outflows of capital each year. The cause of this, say Guriev and Aleh Tsyvinski of Yale University, is clear: “Although investment opportunities in Russia abound, they are outweighed by the risks of expropriation.” As a result, “private shareholders prefer to sell to the state, and why foreign companies prefer to do business only with state companies.”

Partly for this reason, IE Business School Professor Simon Commander and I believe that attempts to diversify the economy away from oil and gas have failed. Moreover, under Putin, the public sector has expanded rapidly, to 70% of the economy, essentially reversing the bold privatizations and free market reforms of the 1990s. Making matters worse, Putin loyalists manage state-owned enterprises poorly and with minimal transparency. “Putin’s Russia,” we argued, “is increasingly reminiscent of President Suharto’s Indonesia – an intricate system of crony capitalism without real property rights.”

But Charles Wyplosz of Geneva’s Graduate Institute of International Studies warns against exaggerating Russia’s economic troubles. “Russia is no economic basket-case-in-waiting” he argues. “The situation today is very different from that in 1998,” when Russia’s large budget deficit and public debt forced the government to defaults.

Wyplosz emphasizes that, in recent years, Putin’s governments have pursued a conservative macroeconomic policy with a small budget deficit and a limited public debt, whereas the ruble’s exchange rate has depreciated with the oil price, making it possible for Russia to maintain a large current-account surplus. The absence of financial vulnerability has enabled Russia to weather sanctions longer than it otherwise could. And while “Putin’s decision not to implement the unpopular reforms that would have created a strong non-oil sector may have been bad for the economy’s long-term health,” he continues, “it has allowed him to maintain widespread public support.”

Vladimir Brezhnev?

That choice, however, merely postpones the inevitable. Putin is a skillful opportunist, quick to derive short-term advantage when he senses an opponent’s weakness or inattention. But, apart from his concern about macroeconomic stability, he doesn’t seem to have a clue about how to reform the Russian economy to make it competitive.

Indeed, although Putin has often offered big promises and plans for a radiant Russian future, even vowing in 2003 that GDP would double in a decade, he “has not signaled any concrete plans to tackle Russia’s economic weaknesses,” says the Polish economist Jan Winniecki. “Russia faced a similar challenge in the 1970’s and 1980’s – and, like Putin today, its leaders failed to do what was needed.”

As a result, George Soros argues, the “Putin regime faces bankruptcy in 2017, when a large part of its foreign debt matures, and political turmoil may erupt sooner than that.” Given this forecast, the fundamental “Putin question” today is this: will his regime, thanks to its rigidities, over-emphasis on military investment, and estrangement from the West end in the same sort of collapse as the Soviet Union?

If it does collapse, Michnik’s prediction will be vindicated. “Mafia bosses often meet an unhappy fate,” he reminds us, “and I do not think that Putin will fare much better in the end.” In the meantime, however, many people – within Russia and beyond – are likely to suffer.

Anders Åslund is a senior fellow at the Atlantic Council in Washington, DC, and the author, most recently, of Ukraine: What Went Wrong and How to Fix It.

© 1995 – 2016 Project Syndicate

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