Following a string of foreign policy victories for Russia and its President Vladimir Putin over the last few months, many observers began to ponder on the sources of Russia’s newfound clout. While Putin appeared to be the ultimate power broker, with Forbes magazine recently naming him the most powerful person in the world, Russia’s comeback cannot be attributed strictly to his mastery of the art of diplomacy and realpolitik.
Putin clearly used his usual shrewd and cunning judo-influenced technique of behind-the-scenes negotiations both when pressuring Barack Obama to avert a military strike against Syria and also when outmaneuvering the EU by making Ukraine’s President Viktor Yanukovich back off on the Association Agreement at the eleventh hour.
Nevertheless, without the capital that he earned at home, it would be much more difficult for Putin to win these tug-of-war diplomatic tussles. Russia appeared to have the money and influence to both support Syria’s President Bashar al-Assad and also to convince Yanukovich to be careful about his choices.
As this situation was not predicted either by the press or by most Russian analysts (there is even a recent book about Russia’s “dangerous implosion” which talks about “the end of Russia and what it means for America”),[1] it is worth taking a closer look at where Russia stands now.
Following 13 years at the helm of Russian politics, Vladimir Putin has carried the country to a level of prosperity it has never enjoyed before, despite the negative factors captured by various “quality of life” indexes. According to the World Bank, in 2012 Russia had the fifth largest economy in the world standing at $3.37 billion GDP (PPP).
The average gross salary over the course of the last 14 years has risen more than tenfold. Russia’s rate of unemployment has also been historically low, standing at 5.4% in June 2013 according to official sources. One of the recurring myths about Russia is that its demographics are among the worst in the world. It is true that the Russian population rapidly declined in the 1990s and early 2000s, but in 2006 it began to stabilize and modestly grow. Today the Russian population is larger than it was in 2006 despite its low fertility rate. Overall, according to some estimates, Russian demographics are now better than in many countries of the European Union.[2]
Russian demographic indicators will inevitably deteriorate once the current generational cohort of the last Soviet baby boomers of the 1980s will eventually be replaced by the generation of the “Russian cross” of the 1990s.[3] Nevertheless, Russian demographics are in much better shape than is often believed to be the case. For instance, overall life expectancy in Russia has grown from 65 in 2005 to 70.3 years in 2011. In addition, in defiance to many stereotypes, Russian alcohol poisoning, murder, suicide and abortion rates have been in steady decline since the beginning of the 2000s – according to official sources.
This data suggests that any meaningful analysis of what Russia is today and what it is to become in the future has to be built on solid statistical premises. In this context it is much easier to explain how Vladimir Putin has managed to hold a firm grip on Russian political life for more than 13 years.
It is true that a lot of these achievements can be attributed to the skyrocketing prices of raw materials – which are found in great abundance in Russia’s Siberia and the Far East. However, a fundamental problem is that the country’s economy has become even more oil-addicted over the last decade. In 2013, the Russian economy began to sputter with the growth rate now predicted to stay at 1.5%, down from 3.4% percent in 2012. Despite the slowdown, the Russian economy is still performing better than many other countries in the region (for example Poland, Slovakia and Ukraine, among others).
The Russian government appeared very conservative in November 2013 when it predicted its economic growth to under-perform the global average for the next 20 years. Many Western analysts have also predicted that Russia will face a steep economic decline. One analysis suggests that Russia will be confronted with a fiscal debt of 8.4% of each future year’s projected GDP.[4] The projection, however, is based on the assumption that oil revenues will plummet, while demographic challenges will soar.
Many research institutions are more blunt in their predictions and assessments, especially when it comes to the state of Russian democracy.
The Economist’s Intelligence Unit ranks Russia 122nd among the most democratic countries out of 167 measured states. Freedom House ranks it among the “non free” ones, but also describes it as a “highly flawed democracy” rather than as an outright autocracy.
The Heritage Foundation, an American conservative think tank, measures Russia’s economic environment as “mostly unfree” ranking it as the 139th freest economy in the world. Among the usual array of measurements, property rights and freedom of corruption got the worst scores.[5]
At the same time, it should be noted that when the 1998 financial crisis hit Russia, the idea that the country would not only recover, but would greatly increase its wealth by paying off most of its public debt and accumulating an excess of hundreds of billions of dollars in reserves, was viewed as unrealistic or naïve.The truth is that Russia’s future is uncertain, as it is uncertain for most other countries. The government faces tough challenges, and even some members of Putin’s inner circle, such as the architect of Russia’s economy, former Finance Minister Alexei Kudrin, have become skeptical of some current policies like rising military expenditures and chronic procrastination of necessary structural reforms.
The widespread view about Russia is that despite the need for reform, the Kremlin will never dare to execute it, as doing so would put its own grip on power at risk. At the same time, just in the last few years, Russia actually saw some structural improvements with the World Bank lauding it as one of the “most improved” countries in its 2013 Ease of Doing Business Index.[6]
Russia does have an issue with its image, as the Western press is often overwhelmingly negative about it and Putin in particular. Major news agencies regularly refer to Putin as “the former KGB agent”.Russia’s attempts to avert the situation with state-run English-language TV channels, news agencies and other PR stunts have been largely ineffective.
In the absence of a solid source of soft power, both in the world at large and in its immediate vicinity, the Kremlin is often forced to act in a crude way. Russia’s image is unequivocally unattractive, and the crowds in central Kiev and Yerevan are a graphic illustration of the point.
In a sense then, the situation becomes a self-fulfilling prophecy. As Putin is aware that he failed to win people’s hearts, he is now less concerned about what his actions will look like. What matters is the result, which in recent months has been mostly positive.
The fact that Putin is not fettered by public opinion at home, which is still overwhelmingly supportive of him due to the economic achievements of the last decade, is the source of his greatest strength.[7]
This analysis in no way suggests that Putin and his government are democratic defenders of human rights or freedoms of ordinary Russians, but it seems fair to say that in today’s turbulent world, realpolitik can still give a leader strong levers. The reason why this is the case for Putin is impossible to understand without being aware of the real situation with the Russian economy and society. It is true that the current upward trend can crumble like a house of cards, but we have to acknowledge that Russia’s recent diplomatic victories were based on the country’s achievements of the last decade.
[1] http://www.heritage.org/events/2013/09/implosion
[3] The Russian cross is the name of a demographic trend in Russia in which the number of deaths greatly surpassed the number of births, with the resulting cross-like graph giving the phenomenon its name.
[4] http://www.nber.org/papers/w19608.pdf?new_window=1
[5] http://www.heritage.org/index/country/russia
[6] Along with Rwanda http://www.worldbank.org/en/news/feature/2013/10/28/doing-business-report-economies-step-up-reform