Putin’s Fourth Term: New Faces—Old Politics

June 2, 2018 Topic: Security Region: Eurasia Tags: PutinRussiaPoliticswarMilitary

Putin’s Fourth Term: New Faces—Old Politics

Putin has set a goal of turning Russia into a “modern and vibrant country” capable of achieving breakthroughs in all areas of life.

After President Vladimir Putin appointed his new government and issued his first decrees and orders in early May 2018, the basic outline of what we could expect from his new term in office became clear. While his inaugural address and initial decrees established specific objectives, the composition of the new government and the initial statements made by his new ministers reveal how he plans to achieve them.

In his inaugural address on May 7, President Putin set the goal of making Russia a “modern and vibrant country” that would achieve breakthroughs in all areas of life. He explained that only a “free society that is open to all new and cutting-edge advances, while rejecting injustice, ignorance, crass conservatism and bureaucratic red tape, is capable of achieving these breakthroughs.” In his decree “On national goals and strategic objectives for the development of the Russian Federation through 2025” that he signed the same day, Putin urged the government to do everything possible “to achieve breakthrough scientific, technological and socio-economic development.” This, he said, would make possible sustainable and natural population growth and an average life expectancy of seventy-eight years—and of up to eighty years by 2030. It would also ensure the sustainable growth of real incomes; an increase in pensions beyond the rate of inflation; a halving of the poverty rate; the improvement of living conditions for at least five million families annually; an acceleration of the country’s technological development; the ability of at least 50 percent of all organizations to accomplish technological innovations; the accelerated introduction of digital technologies into the economy and social sphere; the Russian economy growing to become one of the world’s five largest; an economic growth rate higher than the world average coupled with economic stability and an inflation rate of 4 percent or less; and the use of modern technologies and highly qualified personnel to create high-performance export-oriented output in the basic sectors of the economy.

Many of these objectives sound rather vague and their implementation will largely depend on how leaders define such things as the poverty level and technological innovation, among others. Overall, however, the program clearly calls for enormous capital investment. But where would such funding come from, and where would it be spent? Several development programs—put forward by various groups of economists with the support of influential politicians—addressed these questions even before the presidential elections. And because the result of those elections was a foregone conclusion, the real struggle concerned not who would be the next president, but which economic development program for the next six years would be selected.

Heading that program would be the next prime minister, thus making that post the epicenter of the struggle. The assumption was that, if Dmitry Medvedev retained his post, he would continue his policy of ensuring stability with the help of various one-time measures without implementing any cardinal reforms. Such a course largely coincided with the conservative philosophy of Vladimir Putin, who believed everything was going well in Russia and that the country needed only a long period of stability without upheavals or excessive vicissitudes.

Recently, however, the impression arose that economic difficulties had persuaded the president of the need to implement some type of reform. This seemed particularly evident from the attention he lavished on former Deputy Prime Minister and Finance Minister Alexei Kudrin. In 2016, after his appointment as Chairman of the Board of the influential Center for Strategic Research—that had developed the country’s economic program during Putin’s first term—Kudrin began actively proposing reforms.

 

Kudrin is a supporter of the “liberal” reforms that the then de facto head of government Yegor Gaidar designed and implemented during the Yeltsin presidency, and he supports a new version of that approach now. Essentially, he proposes pursuing a strict monetarist policy that would spur economic growth. However, he also incorporates lessons learned from the failures of the 1990s. He augments the Gaidar program with increased investment for education and science, and with effective institutions for a state governed by the rule of law—including an independent court. Kudrin proposes funding those goals by raising both income tax and the retirement age.

Presidential advisor for regional economic integration Sergey Glazyev has opposed that approach with his own isolationist program. Glazyev, who once served as the Foreign Economic Relations Minister in the Gaidar government but who has since abandoned and condemned such a “liberal” philosophy, proposes ending Russia’s dependence on foreign markets and the dollar by returning to partial convertibility of the ruble, prohibiting free capital transfers abroad to stop flight, and achieving a mobilization breakthrough at home. Business ombudsman Boris Titov and presidential economic aide Andrey Belousov have put forward a different and interesting “Keynesian” program that calls for stimulating economic growth through greater investment in individual innovation-intensive sectors and by boosting business through lower taxes and the elimination of various bureaucratic barriers—even while allowing a certain level of inflation.