March 12, 2015

By Richard Sakwa (University of Kent), Mark Galeotti (New York University), and Harley Balzer (Georgetown University)

Putin's Third Term_CoverThe year 2014 was a turbulent one for Russia, prompting questions about the country’s long-term trajectory under the leadership of President Vladimir Putin. Can Russia rebound from its current economic crisis? What, if any, vestiges of cooperation with the West exist amid the crisis in Ukraine and beyond? What is the Kremlin’s domestic policy, and how is it adjusting to the rapidly evolving world around it?

Halfway through Putin’s third term, three leading experts on Russia examine the state of Russian politics, security and economy, and evaluate the extent to which his policies have made the country — and his own regime — more or less able to withstand the latest storm.

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The key points of each author are summarized below:

Politics – Richard Sakwa

  • The central goal of Putin’s presidency is to recover Russia’s losses from the period of the 1990s. This goal has been pursued through a systemic policy of state power and asset accumulation during Putin’s first two terms, with the Medvedev presidency serving as an interlude in the broader Putin project.
  • The methods of rule that worked during Putin’s first two terms were not well-suited to his third term, as Putin now had to respond to the new demands resulting from the rise in living standards over which he had presided. Instead, Putin abandoned the modernization track to focus on the twin projects of bolstering Russian security and pursuing Eurasian integration.
  • Today the regime has entered a phase of “developed Putinism,” analogous to the period of developed socialism during the mature phase of the Brezhnev era. The system is built to sustain inertia and operates by managing competing demands within Russian society. The current crisis presents an opportunity for the rejuvenation of the Putin model, if only it can shift from a recuperative to a developmental strategy.

Security – Mark Galeotti

  • Russian security forces are significantly more sophisticated today than when Putin first assumed power. This is a result of a long-term program of defense spending and a more recent reform effort drawing on the lessons of the 2008 Russian-Georgian War. The new level of sophistication was brought home by Moscow’s expert seizure of Crimea.
  • Despite significant reforms, the Russian military remains a work in progress. The modernization program has been applied unevenly across different branches of the security forces, effectively resulting in “two armies” of varying preparedness. Russian security forces also continue to face significant problems with internal corruption, interethnic tension and public mistrust, though these have not prevented them from improving their response to domestic threats.
  • Paradoxically, the revamping of Russian security structures may have made Russia less secure overall. Its own improved security capacities seem to have encouraged Moscow to adopt an increasingly assertive policy in its neighborhood, leading to a new era of “hot peace” with the West. Russia’s decision to continue with expensive military reforms will come at the expense of increased confrontation abroad and under-investment in other important domestic sectors.

Economy – Harley Balzer

  • The present economic crisis is a result of three major factors: the steep drop in oil prices in mid-2014; rising inflation and accelerating depreciation of the ruble brought about by Western sanctions over Ukraine; and existing structural problems in Russia’s resource-based economy. The latter could have been corrected if Moscow had used the 2008 financial crisis as an impetus for economic reform.
  • The anti-crisis plan released by the Kremlin in early 2015 fails to address key problems or allocate sufficient funds for its stated goals. The plan offers a bleak prognosis for economic diversification, increased domestic and foreign investment, or the approach of import substitution advocated by the Russian government. The dearth of new ideas is partly a reflection of the increasingly narrow circle of officials involved in economic policy-making.
  • While the war in Ukraine is not a major financial burden on the Putin regime, the impact of sanctions combined with an outmoded growth model, low oil prices and pervasive corruption suggest that Russia faces a deep and protracted economic crisis. If public discontent continues to grow, the government will find it increasingly difficult to substitute rhetoric for reform.