08.02.2005
The Putin Strategy
№1 2005 January/March
Vyacheslav Nikonov

Doctor of History, President of the Polity Foundation,  Deputy Chairman of the Editorial Board of the Russia in Global Affairs journal.

Russian President Vladimir Putin remains a mystery for many
people. There is a popular joke in Russia that he has finally
decided on a Korean model for his countryХs development, but has
yet to decide which of the two models to choose. His opponents deny
the president and his team the ability for strategic thinking, or
view their policies as a return to the totalitarian past. PutinХs
supporters have never seen a complete strategy, yet apparently they
are ready to support the president even without the benefit of a
strategy.

DOES PUTIN REALLY HAVE A STRATEGY?
I believe that it is possible to see a strategy in PutinХs actions.
Some people may not like it, however, and I myself do not consider
it ideal. At the same time, in light of the sequential logic of his
actions, Putin is attempting to solve the top-priority problems
confronting Russian society.
I do not think that Putin had a strategy when he, quite
unexpectedly for everybody including himself, became prime minister
and prospective ТheirУ to the Russian presidency. At that time,
Russia was facing a pile of problems which were unprecedented in
scale for any country. In December 1999, Vladimir Putin, at the
time still a prime minister, published his first policy article
entitled Russia at the Turn of the Century. In it, he wrote
bluntly: ТRussia is going through one of the most difficult periods
of its centuries-old history. Perhaps for the first time in the
last 200-300 years, it is facing the real danger of finding itself
in the second or even third echelon of world states.У
Putin was not exaggerating.
Two days after the article was published, Boris Yeltsin resigned
from his presidential post.

INITIAL REALITY
Putin found himself in the position of an heir who, upon reading
the will, discovers that he has inherited a million debts.
The new Russian president was suddenly responsible for a country
which in the previous eight years had lost half of its economy;
furthermore, it had just passed through a severe financial default.
Russia was a backward country with a budget comparable to that of a
large American city, with over half of its population living below
the poverty line. Many Russians had not been paid their salaries or
pensions for months.
Finally, the economy was overburdened with many social commitments
inherited from the Communist times, which no country, not even
richest, could cope with. Big business, which had received property
worth billions of dollars from the Kremlin, ruled the country via
YeltsinХs ТFamily.У This powerful group appointed ministers,
adopted convenient laws, elected governors on the territories it
controlled, and enjoyed unlimited access to state resources, but it
never developed the habit of paying taxes.
Actually, Russia was not governed at all. It could be described as
a democracy only by a person with a very rich imagination: the
regime was a strange mixture of anarchy and oligarchy, with only
occasional democratic headway. There was no common legal space in
the country. None of the numerous Russian regions experienced any
visible economic reform or democracy, but incompetence, nepotism,
irresponsibility and embezzlement could be found with the naked
eye.
Russian society, which had suffered from the Тlost country
syndrome,У was absolutely disoriented. People were weary of reforms
and only desired some semblance of order from the authorities.
During this time, there was a real possibility that the Communist
Party would stage a comeback. The country lacked a normal system of
political parties, which is the backbone of any democratic
state.
At the time, Russia was fighting a war that it did not want. War
was declared on Russia by Wahabi radicals who wish to build a
caliphate that would stretch from the Black Sea to the Caspian.
Beginning from at least 1999, Russian federal troops in Chechnya
faced not just rank-and-file Arab mercenaries, but Arab commanders
as well. The Russian forces, responsible for providing for the
nationХs security, experienced many setbacks. These were due to the
underfunded special services, disorganized military reforms and a
ragged and demoralized army; nuclear-powered submarines were
rusting in port, while the strategic nuclear arms were alarmingly
degrading. The Gorbachev-Yeltsin breakthrough to the West had
stalled. The task required by the government, therefore, was to
rebuild a dismantled state. It would be difficult to name a more
difficult job than this.

GENERAL CONCEPT
PutinХs original strategy rested on the pragmatic goal of fighting
for RussiaХs survival. That goal outweighed all ideological
considerations. At the same time, the president understood from the
very beginning that a serious modernization breakthrough was
needed. RussiaХs main strategic goal was to become a modern great
power that would be economically strong, technologically advanced,
socially developed and politically influential.
This strategic goal could be achieved only after Russia had:
Р completed the most fundamental revolution of the late 20th
century which destroyed the Communist Soviet Union, and stabilized
the political system on the basis of democracy and free
markets;
Р created a state mechanism capable of implementing the required
reforms;
Р formed a normal economic environment that could ensure long-term
economic growth;
Р created favorable international conditions for its internal
development;
Р overcome the societal atomization and begun the process of
consolidating the Russian nation.

WHO ARE WE?
Putin has not proposed any new national idea, but he has resolutely
abandoned the old Communist idea. Whatever the liberal critics of
Putin may say, the president is making a firm break with the
totalitarian past. Putin suggests that society look for landmark
concepts in RussiaХs history to create a new identity, and there
are examples of this taking place today: The main Communist holiday
Р November 7, the day of the 1917 October Revolution Р has been
abolished, obviously at the presidentХs suggestion. From czarist
Russia, we have inherited the two-headed eagle borrowed by Ivan III
from Byzantium; furthermore, Russia has recently re-introduced
November 4th celebrations Р the day of MoscowХs liberation in 1612,
which coincides with the day of the Kazan icon of the Mother of
God; then there was the introduction of the state tricolor,
borrowed by Peter the Great from the Dutch. From Soviet times, we
have inherited the national anthem Р or rather its music, which was
composed by Alexander Alexandrov during the countryХs liberation
from Nazi troops; the anthem now contains post-Soviet lyrics. Putin
places much more emphasis than his predecessors on traditional
civic values: patriotism, morals, family and religion. He is a
believer, and Orthodox principles are not an abstract notion for
him.
The new Russia, although changing, has established a strong
connection to its former self.

COMPETITIVE ECONOMY
Putin understands perfectly well that no Soviet recipes can help
him fulfill his primary task of implementing a qualitative leap
forward in economic development. His economic program is very
simple Р and very ambitious. Putin wants to make Russia compatible
with the global economy, and create a normal, globally accepted
economic environment which is attractive for domestic and foreign
investments into the economy. These measures must boost economic
growth and double the GDP within ten years (although Putin has
never specified the starting year for this decade). Economic growth
is the focal point in PutinХs strategy.
In fact, President Putin launched a new round of market reforms,
which had never been completed in the early 1990s. What his team
has done for reducing taxes, opening the economy for global
competition in order to meet WTO membership criteria, and for
carrying out social, pension and public utilities reforms is far
beyond the intentions of the reformers from the early Yeltsin
times.
At the same time, PutinХs strategy provides for equal, and possibly
even stronger, state control over several strategic economic
sectors, of which the fuel/energy sector is the most important for
Russia. There will be no nationalization program (incidentally, it
is only the Anglo-Saxon countries where the energy sectors are not
the property of the state). At the same time, state-owned segments
of the economy will not be reduced either; rather they will
increase, taking into account the prospects of
Yuganskneftegaz.
The relations between the state and business have been complicated
considerably by the YUKOS case and, on a broader scale, by the
relations between Putin and the oligarchs. In Russia, one often
hears the question: ТWho of the oligarchs will be the next one?У
Since his first days in office, the President has sent several
unequivocal ТmessagesУ to big business. The first one was: ТPay
taxes and display social responsibility.У The second message was:
ТThe federal policy is the KremlinХs business.У The third message
was: ТThere can be no saints among the oligarchs.У All of these
points have been ТappointedУ in one way or another by the Kremlin,
and often in violation of the law. Therefore, oligarchs can be
sacked if they ignore the first and second messages; the disfavor,
which befell Boris Berezovsky, Vladimir Gusinsky and Mikhail
Khodorkovsky, seems logical on this account. These individuals made
obvious attempts to destabilize state power, while caring little to
observe the law and pay taxes. The answer to the question ТWho will
be next?У is obvious: the one who will follow suit.

COMBATING POVERTY
Eradicating poverty in Russia is one of PutinХs most ambitious
goals. Economic growth, the reduction of unemployment, and the
repayment of overdue pensions and wages have reduced the number of
people living below the subsistence level to 18 percent. By the end
of PutinХs second presidency this figure is predicted to decrease
to 10 percent. Although Russia is still far behind the developed
countries as regards the standard of living, it has already broken
loose from the poverty trap, in which almost a majority of the
Russian population found themselves in the 1990s.
This is happening amidst a sweeping social reform, which, judging
by public reaction, has been the most painful for Russia. The
essence of this reform has been to revise the stateХs excessive
social obligations which are not backed financially. No country can
afford to pay allowances or provide benefits to two-thirds of its
population. The main principle of the new social policy is to
provide support only for those who really need it, and to increase
the size of allowances paid to such people from the money thus
saved. Another principle is the monetization of fringe
benefits.

GOVERNABILITY
It was not unheard of for Boris Yeltsin to fail to show up in his
office for months at a time. The Family, an extra-institutional
center of power, played a much greater role than all the
constitutional institutions taken together. Thus, PutinХs strategy
is to restore the governability of the country with a heavy
reliance on those institutions Р at the expense of their
autonomy.
For the first time in the post-Soviet era, there are working
pro-presidential majorities capable of passing reformist laws in
both chambers of the Federal Assembly. This parliament has
proclaimed the right to land ownership, introduced the worldХs most
liberal tax system, which includes a flat income tax rate of 13
percent, and has begun to create a normal social
infrastructure.
The administrative reform, launched in the spring of 2004, has
proven to be the most sweeping reform ever conducted by a Russian
government since RussiaХs first prime minister Sergei Witte held
office. The obvious Westernization of the Cabinet (the number of
ministries and their functions have almost coincided with those in
the American government), the delimitation of powers between the
legislative and purely executive departments, and the tangible
reduction in the number of their CEOs has brought society closer to
the presidentХs goal of ТdebureaucratizingУ the economy. Yet, it is
too early to trumpet these achievements. Like any other
reorganization, administrative reform plunged the government into a
stupor when it was first initiated. This does not mean, however,
that this reform is not needed or that it has failed, or that the
countryХs leadership does not have enough will to carry it
through.
The president continues to emphasize the need for turning the
judiciary into a full-fledged and truly independent branch of state
power. He argues that this can be accomplished by sharply
increasing the salaries of judges, which would make them immune to
administrative and financial pressure.

THE VERTICAL
PutinХs strategy in the field of federative relations is aimed at
preventing the stateХs disintegration. Initially, the top priority
of this strategy was to bring regional legislation into line with
federal laws and the constitution. This goal was effectively
achieved by means of a new power institution Р the plenipotentiary
representatives of the president in the newly established seven
federal districts. The plenipotentiaries also helped to
re-establish MoscowХs control over local federal executive bodies,
which in the 1990s had been swayed by regional governors. The
Kremlin initiated the process of consolidating the numerous
administrative entities of the Russian Federation Р an absolutely
justified move from the administrative and economic points of view.
The latest Р and most controversial Р stage in the federative
reform has been a transition from the direct election of governors
to their election by the legislative assemblies of the Russian
Federation entities upon their nomination by the president. PutinХs
statements, in addition to what I have heard from people in his
team, suggest seven reasons explaining the logic of this
move.
First, many of the previously elected governors proved to be
incompetent and inadequate. Several failed to report to their
office for weeks because of their addiction to alcohol, while
others were directly connected with criminal clans.
Second, elections have a tendency to sharply aggravate the
situation in the multinational regions and bring ethnic conflicts
to a head. Candidates often represent individual ethnic groups, and
when one emerges victorious in an election contest it is perceived
as a defeat by the other ethnic groups. Furthermore, as the term of
office of several officials comes to a close in flashpoint regions
(for example, in the North Caucasus, where leaders such as Valery
Kokov, Alexander Dzasokhov, Magomedali Magomedov have brought
stability to the area), these individuals might have been followed
by the election of extreme nationalists. Such a scenario could lead
to the resumption of hostilities.
Third, Russia has seen no reformist or liberal-minded governor
elected after 1996. Putin is more pro-reformist than 95 percent of
the governors and 90 percent of the population.
Fourth, too many governors directly represented the interests of
individual financial groups. Only several (Alexander Khloponin in
Krasnoyarsk, for example) invested in their own regions, while a
majority redistributed resources away from the local population in
favor of the corresponding companies.
Fifth, in some of the regions, the governorsХ family clans have
taken the entire local economy under their control (or have made
attempts to do that).
 Sixth, the inefficiency of the governors has forced the
federal center to form a parallel system of executive bodies. This
aspect is directly related to the war against terrorism. Governors
nominated by the president and approved by regional assemblies will
have levers of control over the law enforcement system.
Seventh, international practices have provided arguments against
the practice of electing governors by the population. There are
three federations in the world where governors are elected in such
a way. The United States is the only successful exception, while
the record of the other two federations Р Mexico and Brazil Р
cannot be described as such.
PutinХs strategy assigns a great role to local self-government. The
1993 Constitution has created a very intricate and unviable
structure of governance; actually, the Constitution has omitted the
local government level, and bills drawn up by Dmitry Kozak are
intended to restore this function. Further reforms in this field
must create an adequate financial base for solving peopleХs vital
problems at the level where they most often arise and where they
must be addressed Р in the regions and in each individual
settlement.

THE CREATION OF POLITICAL PARTIES
Putin is sincerely convinced that Russia needs large, full-fledged
political parties. The creation of such parties will be built along
two major avenues. First, it will be necessary to restore the
authoritiesХ affiliation to a particular political party. During
those years that were committed to the eradication of the Тdamned
legacy of the Soviet Communist PartyУ unprecedented laws were
adopted, such as prohibiting top state officials from joining any
party. After the executive office, together with the State Duma,
are made party-based, it will become possible to noticeably
increase the incentives for the consolidation of the political
parties.
The second avenue is the transition to elections to the State Duma
solely by party lists, which has recently been proposed by the
president. For all its disadvantages, the proportional
representation system permits the creation of major political
parties within a short period of time; and large, nationwide
parties will consolidate the stateХs unity and prevent regional
separatism.
Obviously, the president sees no problem in having a large dominant
party that can consolidate the core of the pro-Putin electorate and
the administrative elite, as well as carry out reforms and ensure
the continuity of his policy. It seems that Putin would like to see
the transformation of the Communist Party of the Russian Federation
into a modern social democratic party. Yet, while the Communist
leaders continue to resist the changes, the chances are growing
that the Communist electoral niche will be gradually filled by
other leftist and national-patriotic groups. The president has
never created problems for liberals at elections; The Union of
Right Forces (SPS), Yabloko and other liberal parties are the
authors of their own failures as they have never been able to
unite. The liberal electorate in Russia is too small to support
more than one serious liberal project, and if the liberal parties
come to understand this, they will undoubtedly have a future.
Presently, it is the advocates of Chechen extremists and their
patrons Р regardless of their political slant — who the Kremlin
administration cannot tolerate.

NATIONAL SECURITY
Putin has been emphasizing the need to strengthen the national
security organizations Р the armed forces, special services, and
law enforcement agencies. The top priority of the defense reform is
increasing the professionalism of the armed forces. This means
increasing the number and improving the quality of the permanent
readiness units. Conscription will be preserved, but the mandatory
term will be reduced to one year. The main emphasis is on compact
and mobile special units, and the development of deterrence forces
as an absolute guarantor of the security of the country; Russia
still has relatively weak conventional armed forces and
armaments.
Only consolidated special services and law enforcement agencies can
protect the country from the threat of terror and organized crime.
The government is planning to drastically overhaul the security
organizations by re-equipping them, better coordinating their
efforts, and eradicating corruption in their ranks. The arrests of
Тwerewolves in police uniforms,У which many have described as a
populist campaign, in reality reflect a long-term policy. Finally,
there are plans on the table for increasing officer salaries.
Chechnya remains RussiaХs most acute problem Р and will continue to
be so for some time. MoscowХs strategy consists in combining
antiterrorism operations with measures to create and broaden a
sphere of influence for the legitimate secular authorities. This
move will aim to improve their coordination under the aegis of the
governing bodies of the Southern Federal District, rebuild
destroyed houses, and create jobs for the population of the
war-ravaged region. The invasion of Ingushetia and the seizure of a
school in Beslan serve as reminders that we are still very far from
the real completion of the counterterrorism operation, not to
mention genuine peace. Nevertheless, progress has been made: last
year, human rights activists recorded dozens of times less human
rights violations in Chechnya, which means that life there is
becoming calmer. The operation in Chechnya will continue until
final victory has been achieved, whatever effort this may require
and despite whatever objections the West may have. To this end, I
can definitely say there will be no more Khasavyurt-like deals.

STRATEGY FOR PEACE
PutinХs foreign policy strategy at the beginning of his second
presidency was marked by a high degree of continuity. The
developments in Ukraine, however, may introduce drastic changes
into it.
From the very beginning, Putin has been conducting an independent
and active multi-vector policy of a pragmatic Тfather of the
nationУ who is concerned, at the same time, about the greatness of
his nation. While perceiving that the general weakness of the
country remains the greatest threat to RussiaХs security, he
regards foreign policy, first and foremost, as an instrument for
creating favorable conditions for economic development, improving
the investment climate and promoting Russian business interests
abroad. His pronounced pragmatism presupposes setting
foreign-policy tasks that the country is able to fulfill. The
President is undoubtedly an integrationist, which has been
adequately demonstrated by RussiaХs participation in the
international organizations it has already joined (the United
Nations, G8), or entry into organizations to which it may be
admitted in the future (the World Trade Organization, the
Organization for Economic Cooperation and Development). Putin will
not orient himself to one particular pole of the contemporary
world, but will keep his hands free for contacts in all
directions.
In PutinХs system of priorities, the countries of the Commonwealth
of Independent States have held Р and will continue to hold Р a
prominent place. PutinХs favorite brainchild of recent time is the
Common Economic Space embracing Russia, Ukraine, Belarus and
Kazakhstan. The prospects for this project, however, may be
seriously threatened now that Victor Yushchenko has come to power
in Kiev, as he is a strong opponent of this project.
RussiaХs relations with the West have revealed naturally limiting
factors. The main one remains the fundamental impossibility of
RussiaХs entry into the major European and Transatlantic
organizations Р the European Union and NATO. These organizations do
not care to see Russia among their members, and, most likely,
Russia has no need to seek its membership. Moreover, the emphasis
that the West places on the human rights issue, as well as the Тgap
in valuesУ between the West and Russia, serve as more stumbling
blocks in Russia-West relations. Putin does not believe that he has
any problems with building a democratic society, and he will not
accept criticism on human rights. Meanwhile, the development of
Russian democracy will not correspond to Western ideas about this
process for quite some time.
The developments in Ukraine represent the latest complication for
Russia. Moscow views what has happened there not only as an
unconstitutional coup, but also as a large-scale geopolitical
operation to overthrow the regime of a CIS country which is an ally
of Russia. It seems that relations between Russia and the West may
be in for the most serious crisis in recent years.
Under the circumstances, Russia is destined to remain an
independent center of power and one of the few global actors that
have preserved their sovereignty, as well as their personal view on
global developments.
WHAT IS TO BE DONE
There are flaws in PutinХs strategy, however, and its
implementation is going to face many difficulties. One of the flaws
is the lack of a clearly formulated long-term strategy, and this
factor sets a rather narrow time horizon for PutinХs policy.
The main factors for economic development are a climate of
confidence between the authorities and businesses, an increased
capitalization of Russian companies, and the freedom of the
peopleХs energy and initiative. Many of the necessary reforms Р for
example, in the banking and public utilities sectors and natural
monopolies Р have stalled, as has the introduction of a mortgage
system. Much more investment must be made in education (above all,
in the secondary schools), public health, and human capital where
quality is a decisive factor in the global competitiveness of the
state.
The main problems in politics are the following:
Р improving the mechanism for preparing, making and implementing
decisions;
Р corruption;
Р the quality of the administrative elite;
Р stepping up the work of the government;
Р explaining state policy to the people;
Р ensuring the representation of regional interests in the federal
bodies of power.
Russia must start a real integration of the post-Soviet space,
wherever possible, and think of a new agenda for its relations with
the leading Western countries and their allies.
The Russian presidentХs job is still one of the most difficult ones
in the world. But Russia is no longer the country it was five years
ago. It is a more consolidated country with a much more effective
state.
What is PutinХs strategy?
How can PutinХs strategy be described from an ideological point of
view? Liberals criticize this strategy for not being liberal,
whereas the Communists criticize it for not being leftist. Both are
right.
PutinХs strategy is built on the principles of the free market, a
strong state and its security organizations; on an open,
independent and active foreign policy; and on respect for
traditions, continuity and patriotism. According to any of the
classifications accepted in the world, such a set of principles is
rather characteristic of right-wing politicians and conservatives.
There are many respectable people among them Р from Winston
Churchill, Charles de Gaulle and Konrad Adenauer to Ronald Reagan,
Margaret Thatcher and Jacques Chirac. Like Putin now, these
politicians were also often accused of having anti-democratic and
authoritarian tendencies.
Personally, I donХt think there is a threat of authoritarianism in
Russia, and this is not simply because there are numerous critics
of Putin who defame him in the media without risking their freedom,
health or wellbeing. Authoritarianism, in its classical forms, is a
rigid legal or quasi-legal regime which requires absolute
subordination. Figuratively speaking, the man in the center pushes
buttons which activate signal lamps throughout the country, and
then everyone hurries to fulfill his orders. In Russia today, the
button-pushing does not have such an obvious effect. The signal
lamps have burned out a long time ago, or someone has removed them,
the wires have been sold as non-ferrous scrap, and there is no
saying about the Тdiligence of incorruptible officials.У All these
factors allay fears that authoritarianism can be built in Russia in
the foreseeable future Р even if the president had such a goal.
Moreover, Russian society has begun its development from a state
which some people describe as complete chaos. The contemporary
Russian regime is an unconsolidated democracy with elements of the
still continuing chaos. Democracies never emerge already developed.
Considering RussiaХs record of the last 1,000 years, it seems that
we are expecting too much from the 13-year-young Russian
democracy.
PutinХs strategy is not authoritarianism or anarchy, but a
well-functioning and effective democracy, which is developing in
line with an unchanged Russian Constitution.