Northern Light

Putin’s regime

While we are waiting for the final results of the so called election to a new Russian parliament I have been reading Anders Aslund’s important book Russia’s Capitalist Revolution: Why Market Reform Succeeded and Democracy Failed. It may be surprising that the Russians so easily seem to be giving up their hard gained freedom in the nineties, but the fact of the matter is that President Putin is presiding over an economic boom comparable to what Germany and Japan experienced after World War II.

The Kremlin has been intimidating the media, state controlled TV is a propaganda tool for Putin and NGO’s critical of the government have been harrassed, corruption is worse than ever, so how can a President who deliberately has limited the freedom of Russians be so popular?

Of course, Putin wouldn’t get this kind of support, had the free media, NGO’s and the opposition had the opportunity to challenge him and his government in the news and parliament. But still, the growth of the economy is an important factor, though not the only one.

Aslund convincingly argues that Putin is in fact benefiting from the policies of the reformers after the fall of the Soviet Union. They were the ones who liberalized the Russian economy and instituted private ownership. Putin is strutting in borrowed plumes.

Here are some figues indicating the expansion of the economy under Putin: Since 1999 average growth has been 6.9 percent a year, and it is now the 10th biggest economy in the world. When Putin moved into the Kremlin eight years ago GDP amounted to close to 200 billion dollars, now it’s five times bigger, more than 1.000 billion, and that means that Russia’s GPD per capita is four times bigger than China’s. The number of private enterprises increases 7 percent every year, and has reached 9 million, which according to Aslund is comparable to the figures of Western Europe per capita.

In 2003 Goldman Sachs published a much-talked paper projecting that Russia’s GDP by 2028 would overtake Germany’s and become the fifth biggest economy in the world after the US, China, Japan and India. That was before the current oil boom that has boosted the Russian economy further, though it would be a mistake to think that oil is the only factor behind the Russian boom. If the oil price stay at 50 dollars per barrel (right now it’s close to 100 dollars), Russia would become the fifth biggest economy in the world before 2020.

This begs the question: How come the Russians are getting better and better off and at the same time freedom is decreasing? Usually it’s the other way round. Economic growth and well-being increases the pressure for democracy. Aslund identifies a growing tension between Putin’s authoritarian regime and the booming econnomy and concludes:

”Russia is simply too rich, too economically pluralist, too educated, and too open to be so authoritarian. This contradiction between an increasingly obsolete political system and a swiftly modernizing economy and society is likely to be untenable even in the medium term. No modern society can function without unbiased information of checks and balances. Putin cannot make decisions of high quality about everything after having abolished all feed-back and concentrated so much decision making to himself. His regime is too rigid and centralized to handle crises, which always occur in Russia. Therefore, it can hardly be very stable.”