December 9, 2014 | Konstantin Avramov

Despite the lack of bombastic revelations in Vladimir Putin’s latest speech to the Russian Federal Assembly, largely targeted at the domestic audience of the elites and regular people, the address provided plenty of insight into the Russian leader’s state of mind. The President’s main goals were to address and alleviate Russians’ uneasiness about the recent economic downturn and encourage unity in the face of what Putin called sustained American aggression against Russia.


With the Russian economy sinking to a low not seen since the Yeltsin years, it is no surprise that economic issues were at the forefront of Putin’s address. His main economic proposals included:

  • A call for limiting bureaucratic interference with businesses. Here the focus was on small and medium business where Putin proposed giving enterprises so-called “inspection holidays,” exempting them from official inspections for three years after three years of good standing.
  • Development of domestic technologies, including machine building, in order to reduce reliance on imports in these areas.
  • Increased integration of domestic enterprises by requiring state companies to purchase a certain amount of products from domestic small and medium businesses.

None of these ideas suggest a new approach to economic policy by the Kremlin. Dmitri Medvedev declared small business development to be the centerpiece of economic policy during the 2014 Gaidar Forum back in January. Certainly the idea of “inspection holidays” is a move in the right direction, and will be welcomed by Russian businesses. The plan for “inspection holidays” is to be drafted by July 2015 and expected to go into effect in January 2016, yet it remains to be seen whether this will stimulate small business growth in Russia. While bureaucratic red tape is certainly a problem, the lack of rule of law is a much bigger hurdle to overcome in all sectors of the Russian economy.

Two other solutions proposed by Putin once again highlight a major weakness in Putin’s economic vision – top down innovation. As I pointed out before, innovation cannot simply be dictated from the top across the entire expanse of the economy. Meanwhile, reducing reliance on imports and requiring state enterprises to use more domestic products will likely result in less competition and low quality to meet short-term demand. In short, Putin’s economic message was less about substance and more about showing the Russian people that he is aware of the economic problems and doing something about it. Curiously, the recent drop in oil prices and devaluation of the ruble were left out of the speech.

Foreign and Domestic Policy

Putin’s foreign and domestic policy messages contained similarly few new insights, mostly calling for unity among the Russian people in the face of sustained and planned American attempts to weaken Russia. Echoing one of his main messages at Valdai, Putin once again sought to distance the United States and Europe while demeaning the European Union by suggesting that a loss of sovereignty within the EU is tantamount to a loss of identity. “If for some European countries national pride is a long-forgotten concept and sovereignty is too much of a luxury, true sovereignty for Russia is absolutely necessary for survival. Primarily, we should realize this as a nation. I would like to emphasize this: either we remain a sovereign nation, or we dissolve without a trace and lose our identity,” he stated.

At the same time, Putin emphasized that “Under no conditions will we curtail our relations with Europe or America”. This is consistent with his longstanding message that while it will pursue its own goals, Russia will not isolate itself from the international community. It is unclear how this translates into real policy, however, considering the pursuit of what Putin perceives as Russia’s goals is precisely what has pushed the country away from the U.S. and Europe. And it appears that altering his goals is not something Putin plans to do in the short term.

On the subject of Ukraine, Putin mentioned that, while eager to blame Russia for Ukraine’s problems, the West has not been as forthcoming in material assistance. Recent calls by Anders Aslund of the Peterson Institute for a Marshall Plan for Ukraine have not materialized. Putin’s message may continue to resonate with many in Russia and even Ukraine until the West gets serious about helping Ukraine.

Usable History

On display was Putin’s penchant for using selective history to justify his actions. In explaining Russia’s annexation of Crimea, he pointed out that Grand Prince Vladimir was baptized in the former Greek city of Chersonesos in Crimea (in 988 AD). As a result, Putin asserted that Crimea is as important to Russia as the “Temple Mount in Jerusalem for the followers of Islam and Judaism.” Conveniently omitted was the fact that according to historical texts, Prince Vladimir held the Orthodox Greek city of Chersonesos hostage and threatened to destroy it unless the Byzantine princes agreed to give him their sister in marriage. Furthermore, for much of early Russian history Crimea was settled primarily by Crimean Tatars, who had a complex relationship with the Slavic states around them. In several instances, Ivan III – the founder of the modern Russian state – actively encouraged Crimean Tatars to loot the Slavic city of Kiev, which was then part of the Lithuanian state. Therefore, any argument that paints Crimea as a Slavic heartland does so with the aid of glaring historical omissions.

Overall, the speech did not signal any new approaches on the part of the Kremlin. We are unlikely to see any major changes in Russia’s short term foreign or domestic policies despite recent setbacks in both. Either Putin is genuinely satisfied with his performance in the first half of his third term, or simply doesn’t want to alarm the Russian people. At the same time, Putin will apparently continue the selective use of history to justify his actions–something that could have serious repercussions as Russia moves closer to adopting a single history textbook.