Putin 4.0: Tough Times Ahead
Last Sunday, Vladimir Putin won his fourth term as the ruler of Russia. (Count ineffectual Dmitri Medvedev's tenure as Putin's third term.) Today, decision makers and analysts are asking what the next six years will look like.
A lot of Putin's preelection rhetoric harkened back the nineteenth-century nationalism and imperialism. But Russia's problems are twenty-first-century problems: lack of good governance and the rule of law have made citizens uncomfortable and discouraged domestic and foreign investment; the rise of Islamic minorities threatens domestic security; relations with the West remain difficult; and the rising powers of China, India, Turkey and Brazil represent a real challenge.
Costs of the New Empire
Putin bet his political farm on creating an image of Russia under attack from Western enemies—and it worked. He accused Hillary Clinton and the State Department of "giving the signal" for recent mass demonstrations and paying to instigate an Arab Spring in Moscow. He called opposition leaders "jackals scavenging near Western embassies" and, taking a page from Rudyard Kipling, "monkey packs." On Monday some of the most prominent young activists, including Alexei Navalny, Ilya Yashin and Sergei Udaltsov, were detained during a postelection protest at Moscow’s Pushkin Square and will appear before the notorious antidissident judge Olga Borovkova.
Anti-Americanism is rampant. The Kremlin-controlled media launched a Soviet-style propaganda attack against U.S. ambassador Michael McFaul, the same man who was ironically the architect of the Obama reset policy. Yet this approach seems to be working—for now.
Putin's geopolitical vision for the former Soviet Union (aka the Russian Empire, mutatis mutandis) can be characterized as a trifecta of supranational structures under Russian leadership: the Joint Economic Space, the Customs Union and the proposed Eurasian Union. Pressure on Georgia and Ukraine is unrelenting, with a view toward bringing Kyiv into Moscow's fold. But such an arrangement, a quasi empire, will come at a cost.
The nation's Soviet-era infrastructure—roads, airports and power stations—is falling apart. Even trillions of petro-rubles are insufficient for the volume of capital investment needed to bring Russia up to twenty-first-century standards. And this is not where Putin will be spending the money. Instead, he has chosen to confront the West and the Arab world over Syria and Iran. He announced a $700 billion rearmament program, including nuclear-missile modernization. So much for traveling on Barack Obama's "road to zero" nuclear warheads.
Yet Russia is increasingly integrated into the global trade flow. International business views Russia as an unsaturated market for housing, durable and consumer goods, oil and gas services, and yes, even infrastructure.
Investors still pay a high price for the Kremlin's domestic heavy-handedness. When Russia joins the World Trade Organization, U.S. corporations may gain access to the organization's dispute-resolution mechanisms, provided the U.S. Congress lifts the obsolete 1974 Jackson-Vanick Amendment. Yet given the sorry state of the rule of law in Russia, members of Congress are unlikely to remove the Jackson-Vanick roadblock without gaining a legislative tool to address Russian corruption and human-rights violations.
One such bill is the bipartisan Sergei Magnitsky Rule of Law and Accountability Act, proposed by Senators John McCain (R) of Arizona and Benjamin Cardin (D) of Maryland. It is named after a lawyer who exposed a $230 million corruption scheme and died in detention, apparently as a result of torture, beatings and denial of medical care. The Magnitsky Act would ban most notoriously corrupt foreign officials from entering the United States and allow their ill-gotten property to be seized and confiscated by U.S. courts. Similar legislation is being debated in Canada and some European countries.
Prospects for Liberalization
As a last hurrah, outgoing president Dmitri Medvedev sent the case of Mikhail Khodorkovsky, a businessman turned imprisoned political activist, back to the Russian attorney general's office for reexamination. Thus Medvedev signaled that he does not agree with the two lengthy jail terms for the YUKOS oil company founder and former owner. A human-rights panel under Medvedev's presidential office also recommended review of the case. Will Putin seize this opportunity to tack to the middle? In a highly symbolic gesture, he could release the tycoon and signal a new beginning for a dialogue with the opposition. But don't hold your breath.
Years of observing Putin and all his preelection essays suggest that his fourth term will be dedicated to circling the wagons, not to reform. He likes to quote the nineteenth-century Russian foreign minister Count Gorchakov: "Russia is focusing." Another slogan from the same era, oft heard in Moscow policy circles, belongs to Czar Alexander III: "Russia has no allies but its Army and Navy." This is a prescription for a prickly foreign policy, tightening the belts and tough times ahead. That holds not just for the opposition but also for the Russian people, its leaders and its international partners—including Washington.