Russia Profile
February 15, 2008
Russia Profile Weekly Experts Panel:
Unveiling Putin’s Plan
Introduced by Vladimir Frolov
Contributors: Stephen Blank, Vlad Ivanenko, Eugene Kolesnikov, Anthony Salvia
President Vladimir Putin, who will leave his post after the March 2 presidential election, addressed a session of the State Council in the Kremlin on Friday to make his vision for Russia’s new development strategy until 2020 public.
Although set up as Putin’s final address to the nation as president, and a sort of a “political will” of the outgoing head of state to his successor Dmitri Medvedev, Putin’s body language and the speech itself clearly signaled that this was actually Putin’s inaugural address, laying out the agenda for a Russian government that Putin himself would lead in less than two months.
Putin unveiled “Putin’s Plan for Russia,” that turned out to be very ambitious, as he wants Russia to be the “best place to live.”
Admitting that Russia had so far failed to get rid of an “inert” dependence on natural resources and that it had become trapped in the role of a crude exporter, Putin described innovative development as the only alternative to dependence on natural resources. "The strategy of innovative development...relies on human potential and the effective use of knowledge and individual skills," Putin said.
It is this strong emphasis on developing Russia’s human capital potential and drastically improving the quality of life for Russian citizens, coupled with some progressive ideas as to how this mission can be accomplished, that make Putin’s plan so interesting.
“The transition to the innovative way of development will require heavy investments in human resources. The development of the person is the prime goal and an essential condition for progress in modern society. This is our absolute national priority today, and it will remain as such in the long term. The future of Russia, our success will depend on the education and health of the people, their determination to perfect themselves and to display their skill and talent,” he said.
Putin sees the demographic situation as one of the most acute social problems in Russia, “One in two men has no chance to live to the age of 60 and this is a disgrace.” He pledged that “in several years” it will be possible to overcome the demographic decline. The mortality rate must be reduced by 30 percent or more, and the average life expectancy by the year 2020 should be 75 years.
As if heeding the advice of the previous Russia Profile Experts’ Panel, Putin called for a comprehensive reform of Russia’s health care system and promotion of healthy lifestyles and pro-family government policies.
To achieve this goal, Putin wants the expenditures of companies and citizens on education, co-financing of pension savings and on health insurance to be made exempt from taxes – a sound liberal economic policy.
The president urged for at least a four-fold increase in the economy’s effectiveness by the year 2020, and promised a new regional policy that would seek to eliminate the existing stark discrepancies in the quality of life between Russia’s different regions, by creating new regional social and economic development centers, establishing a network of innovative industrial complexes, and developing a modern transport infrastructure.
However, Putin’s Plan’s positive and progressive economic vision for Russia’s future contrasts sharply with his somewhat gloomy assessment of the international environment in which Russia will have to exist until 2020.
Putin discerns a new arms race, launched by the United States and NATO, and is very apprehensive of NATO’s defense infrastructure moving closer to Russian borders.
"It is clear that a new arms race has been unleashed in the world. The developed countries...spend huge amounts of money, many times as much as we spend, on developing weapons systems," the president said, adding that Russia should show restraint and not allow itself to be drawn into a costly confrontation.
Putin also noted that the policy of “containment” pursued by some countries in regard to Russia was driven by their desire to gain access to its natural resources.
"NATO's military infrastructure is approaching our borders," the president said. "We closed down our bases in Cuba and Vietnam, and what did we get? New American bases in Romania, Bulgaria, and a new third missile defense region in Poland. We are actually being forced to take retaliatory steps," he said, calling for a new security strategy by 2020 that would address emerging threats.
Putin also showed no sign of a plan to relax control over the country’s political process, arguing that a few large parties, even if they share the agenda of building a strong Russian state, would compete for the right to govern the country. He likewise warned against foreign influence on Russia’s political process.
Putin admitted to democracy being a cornerstone in Russian society, but claimed that political parties who took money from foreign governments were guilty of "immoral" behavior and of "demeaning the Russian people."
Would Putin’s Plan succeed in making Russia a good place to live? How is this plan viewed in the West? How realistic and forward-looking is his social-economic agenda? Does Russia have enough resources and the political will to complete the transformation into one of the leading nations of the world that Putin so desires to see on his watch? Why is Putin’s international outlook so gloomy? Why does he choose to emphasize threats and downplay or even ignore opportunities for Russia? What kind of role does he want Russia to play internationally? Would this international outlook help or hamper Putin’s ambitious agenda in local socio-economic development?
Vlad Ivanenko, PhD economics, Ottawa:
The title of Putin's latest speech - "On the Strategy for Russian Development until 2020" - is misleading because the president has not unveiled any new initiative. The speech starts with a comparative analysis of the current situation compared with Russia’s state in 1999, and concludes with a list of national goals that will appeal to one social stratum or another. Putin failed to clarify, in his usual manner, which group should expect his support in the end.
The speech contains a fair assessment of what Russia was in 1999, and a sober evaluation of the country's transformations by 2007. Putin emphasizes three unsolved problems: an inefficient and corrupt bureaucracy, high inflation, and an incapable military force, all of which he admits leaving to his successor. Judging by the remainder of text, the president fails to see easy solutions to the aforementioned problems, but proposes options that might work in his own opinion. Yet, his propositions sound like friendly advice to the next office holder, rather than instructions. Apparently, Putin is willing to give a real chance to his successor, Dmitry Medvedev, to prove his worth in the new capacity.
The composition of the options offered in the plan is eclectic, suggesting that Putin strives carefully balancing the interests of several groups. First, the president mentions the so-called "national projects" (state investment in health, education, and affordable housing) supervised by Medvedev. Second, he underscores the importance of "national state corporations" (in airspace, shipbuilding, and IT industries), promoted by Medvedev's principal opponents collectively known as "siloviki". Finally, the president talks about projects appealing to other power groups such as regional authorities and military forces.
In what amounts to his political will, Putin urges the Russian elite not to abuse the current power transition by engaging in internecine quarrels, but to compete ideologically. He specifically mentions the role he envisions for political parties: to be the conduit of new ideas that benefit the country, and not to be the vehicle for promoting private interests at the expense of public good.
Interestingly, the president defines a clear task for the next government that he plans to chair himself: to outline the strategy for Russian development until 2020. This passage explains what Putin expects to achieve at his new post, defining the currently ambiguous "Putin's Plan". There is an obvious time limit for completion of this task as his tenure cannot last forever. Moreover, the phrase "the strategy should be defined following the results of an all-national discussion on the subject" indicates that as the prime-minister, Putin is prepared to move beyond his current role of an "elite conflict moderator" to the capacity of a truly "national leader". This idea puts him on a direct collision course with the presidential office, a situation he professes to avoid at all costs. By pretending to be as strong as the next president, Putin in all likelihood attempts to protect his successor from getting engaged in a fight with certain elite groups, by taking the sole responsibility for their joint actions.
Eugene Kolesnikov, Private Consultant, the Netherlands:
In my view Vladimir Putin's address to the State Council is particularly significant in two aspects: it demonstrates Putin’s and his team’s determination to boost reforms and it sends a clear signal that Putin considers himself to be the mastermind of this team.
It is quite remarkable that Putin chose to make this keynote speech just days before his successor Dmitriy Medvedev runs for presidency. A program speech like this would be most appropriately delivered by a presidential candidate, and yet Putin took the stage and addressed the nation liberally, using the "I" pronoun throughout the speech. Putin thus demonstrated that he is in control and will continue playing a major role in governing Russia. This event serves both as a reassurance to the concerned public and elite, and rekindles existing uneasiness about the sustainability of the Medvedev-Putin duo in the long run.
The address also conveys the message that the Russian development strategy has acquired a new qualityit is no longer based on a catch-up attitude, but rather follows a grand vision: in just twelve years Russia should join the league of the world’s technological leaders; it should establish itself as one of the world’s financial centers; and it should become the most attractive country to live in.
The hidden drama of this vision lies in the fact that the majority of Russians tend to believe such goals to be actually achievable. Russians have already lived through eight years of an impressive positive transformation; another twelve years on this course appear quite possible. To dissipate any doubt and inspire the country with this grand vision, Putin told the Council that these ambitious development plans should undergo a wide discussion in the Russian society with all of its institutions participating.
Clearly, a country with a vision that inspires its people and a popular leadership, one that boasts abundant natural resources, enjoys financial and economic revival, and is inhabited by highly educated people, wielding military power sufficient to defend its independence, can achieve a lot, perhaps even more than we can imagine in today’s conditions. Maybe this vision can become the core of a new national idea that Russians have been seeking during the last twenty years?
Another aspect of this speech, that I find rather important, is Putin’s very somber recognition that the West is not ready for a compromise with Russia, and that the arms race is now at full speed. Putin made no appeals to the West; he just expressed readiness to remain open to dialogue and made a commitment to reshape the military, ensuring Russia's independence without undermining its economy. The Russian leadership seems to have accepted the reality of a cold peace and is resigned to the idea of an improbable thaw in Russia-West relations.
Anthony T. Salvia, Special Advisor to the Undersecretary of State for Political Affairs in the Reagan Administration:
Having restored Russia to more than a semblance of internal coherence, economic prosperity and international prestige, Putin now proposes to make Russia the best place in the world to live.
You can say what you want about Putin, but he cannot be accused of entertaining trivial objectives.
To succeed, he will have to proceed at breakneck pace. He has succeeded as president in no small measure, because of high commodity prices and because the United States has been distracted by Iraq. Impending political changes in Washington and turns in the global business cycle are unlikely to leave Russia much more room for maneuvering.
His plan for the future of Russia should embrace liberal economics -- the Austrian school if you will. He should aim for a sound ruble, fund health insurance and pension plans through tax-free personal accounts, encourage savings, and generally get the government out of people's way. Russia could leave the competition in the dust and be the envy of the world by adopting liberal measures that empower people to save and invest, and grow with a growing economy. (The United States, in a desperate attempt to maintain an empire it can ill afford, is doing just the opposite).
Putin's speech indicates that he may be thinking along these lines. A radically liberal domestic program that encourages people to work, earn and save will result in a flowering of the economy, the renovation of the nation's housing stock and better quality of its health care. Such policies will liberate the advantage of Russia in a large, well-educated population, and reduce Russia's reliance on commodity exports, thus avoiding the Dutch disease. All of this will do wonders for the stability and prestige of the Russian state, both at home and abroad.
Putin has indicated that he sees himself as a latter-day Peter the Great. Actually, he reminds me more of another Peter-Pytor Stolypin.
Stolypin combined liberal economic measures with socially conservative policies to enable Russia to modernize (under severe pressure from social revolutionary movements), while reinforcing the authentically Russian moral, spiritual and cultural values so as to strengthen the fabric of society. It was the correct approach.
Happily, it is possible to see elements of the same approach in Putin's speech to the State Council. If he becomes prime minister, I would recommend he move boldly ahead with a sweeping program of liberal economic reforms, combined with such conservative social policies as radical incentives to encourage large families and an end to abortion on demand for both moral and pragmatic reasons. After all, Russia needs all the babies it can get.
Unlike Peter the Great, Stolypin stood for Russia as Russia and sought to bring about her revival and modernization in ways consistent with her traditions. This is the way forward even now.
It is ironic, but strong leadership on the part of the new Russian president and prime minister will be needed to "impose" liberal reform. It will not happen otherwise. This state of affairs would be the mirror image of what is happening in the United States, where a democratic polity is opting for increasing illiberal policies and the destruction of the national currency to pay for it.
Russia should not expect any sympathy from the West, which has no interest in a strong Russia athwart the crossroads of Eurasia. The West will continue to pillory Moscow for being imperial and autocratic when it is neither. This is tragic. It represents a massive failure of vision. Instead of reinforcing the division of Europe by such dubious means as parking an ABM system on Russia's doorstep, we should be acting on Ronald Reagan's vision of including Russia in a defense scheme for greater Europe (i.e., Europe, the United States and Russia).
Professor Stephen Blank, the US Army War College, Carlyle Barracks, PA:
While proposing a bold socioeconomic agenda, Putin leaves behind a state and governing structure which represents the single greatest obstacle to the realization of that vision. Secondly, behind him is a Russia which is stronger internationally by dint of its energy resources, American recklessness, and his own diplomacy, but which is as isolated as before if not more, and still noncompetitive beyond its borders. The governing structure, with its renationalizations "velvet repivatizations," etc. cannot be economically competitive, except within the bounds of its own increasingly autarchic economy. The uncertainty of property rights and of foreign direct investment (as opposed to portfolio investment) will continue to retard economic development and obstruct innovation. The recent failure of the defense industry to compete is but one example, as is the response to it -- more state takeovers. Until and unless the natural genius of the Russian people is allowed to flourish freely, all the inequities cited above cannot be overcome in a meaningful way, because this government, whose structure is the pre-modern Tsarist paradigm, cannot allow for consumer sovereignty, a truly free-market economy, and political freedom of its people. Undoubtedly, progress can occur within this framework along the goals that Putin postulated, but it will inevitably fall short of what is needed.
As for the national security part of the program, this threat assessment is frankly nonsensical. NATO can't even unite in Afghanistan against an attack on its own members. Putin's statements about the advancement of troops to the border, dating back a year and a half, are quite false and fallacious, reflecting the government's continuing dependence upon inflated and self-serving threat assessments. The latter are proffered by the military and intelligence services who remain unreformed and are still fighting in the last lager of the Cold War.
There are signs that this assessment, coupled with the utter ineptness of the military industry and armed forces in reforming themselves, is leading to a situation where we could return to a state of frozen hostility, embodied in a nuclear arms race, because Russia cannot compete in the conventional sphere. In fact it also means that Russia cannot cope with the real threats it faces, not the imaginary NATO threat, but the real threat of losing the North Caucasus to terrorists.
Putin's call for a new military road in the North Caucasus suggests that Russia might lose control over the Georgian military highway, its main highway to the area, due to the fighting that goes on there. The proliferation of missiles by Iran and China, as some officials admit and others know, is a greater threat than anything Washington or Brussels might do, but these states are Russia's supposed friends and allies. Thus the gloomy threat assessment and determination to play an obstructive role vis-à-vis Russia's true Europeanization not only isolates Russia, but renders it unable to cope with the real threats to it security, and gives too much power to the metal eaters who, like the Bourbons have learned nothing and forgotten nothing.
An autocratic and an autarchic economy will continue to prevent Russia from reaching Putin's goals as laid out in his speech. Ultimately, it is a consummate historical irony that it is Putin's own policies that have contributed to this cul de sac, and despite the progress in the economy, ultimately Putin, in his own way, will be seen as a political leader who, to echo Mayakovsky, stepped on the throat of his own song.