Does Putin’s Russia Have a Future?
(Bloomberg – bloomberg.com – Leonid Bershidsky – November 7, 2014) Russia’s present is too unbalanced to discuss, and President Vladimir Putin prefers to rehash the past. That increases the temptation to talk about the distant future, to fathom where the country’s current trajectory is leading. Some smart commentators in Moscow have also given in to this temptation, and their scenarios are bleak.
The Russian ruble is down 30 percent against the U.S. dollar so far this year, causing runaway inflation — 7.13 percent since the start of the year — and a panic on the social networks. “Ruble Apocalypse Now,”trumpeted Moscow’s MK tabloid. A nationalist legislator has even revived a doomed proposal to ban the circulation of dollars in Russia. Another legislative proposal, which is much more likely to pass, imposes new taxes on small businesses. At a minimum of $130 per square meter of floor area per quarter, the taxes threaten to kill off many restaurants and hair salons, but the government desperately needs more revenue as oil prices plummet. A two-month-old truce in eastern Ukraine is falling apart, raising the specter of more Western sanctions and unacknowledged Russian casualties.
Good news is scarce, and there’s no reason to expect things to get better in the near term. That may be why Putin’s speeches have grown heavier on historical references. A recent major anti-Western tirade was mainly about the past, and yesterday, in remarks to Russian historians, he presented a spirtited defense of the 1938 Molotov-Ribbentrop pact:
“They accuse the Soviet Union of dividing up Poland. What did Poland itself do when the Germans entered Czechoslovakia? It grabbed part of Czechoslovakia. It did, and then it got paid in the same coin. I don’t want to accuse anyone here, but serious studies must show that such were the foreign policy methods back then. The Soviet Union signed a non-aggression pact with Germany, and they say, oh, how bad. What’s bad about it, though, if the Soviet Union did not want to fight?”
As poet and anti-Putin political commentator Lev Rubinstein wrote in a recent post:
“A category such as the future is absent from official rhetoric… Who needs a future when we’ve got a past like nobody else has! And if we work hard on that past by unifying textbooks, we’ll get an even better past, a finger-licking good one. As for the future, it doesn’t exist.”
That, of course, is mere hyperbole: some kind of future is unavoidable. Outspoken financier Andrei Movchan has proposed an “emotional forecast” game to the Russian expert community: On Snob.ru, he laid out his gut feeling about where Russia is going, and called on his peers to do the same “without wishful thinking.”
In Movchan’s version of the future, Putin’s “feudal-nationalist” policy endures until 2018. The economy stagnates, living standards drop slowly to the 2003 level in the next four years, Russia sinks into a deeper international isolation. Then Putin steps aside for a successor from his inner circle, retaining the title of “national leader,” and Russia’s domestic policy shifts sharply to the left as reserves are exhausted. Capital controls are established, people are not allowed to take hard currency out of the country, private companies are cramped with punitive taxes and restrictions, the Internet is censored and imports slow down to a trickle. By 2024, Movchan writes, “vegetable patches on the edges of Moscow parks become as widespread as they were in the early 1990s” and the crime rate returns to mid-1990’s levels, but Russia includes eastern Ukraine.
By 2024, in Movchan’s scenario, it’s also clear that the economy needs market reforms, and Russia turns back toward the West, mainly to increase its debt burden to 100 percent GDP. To get access to Western funding, it returns Crimea to Ukraine, but all the reforms do is bring back Putin-style semi-feudal capitalism. In another four years, Russia is bankrupt and falling apart, its ethnic republics in the Caucasus and elsewhere splitting off. By 2050, the remnants of European Russia are integrated into the European Union, where they merge with Ukraine and Belarus to create a new center of fast growth, and part of Siberia and the Far East become de-facto Chinese dominions.
This passes for an optimistic scenario these days. Respected economist Vladislav Inozemtsev, who responded to Movchan’s challenge, accused the financier of giving in to what he had vowed to avoid — wishful thinking.
In Inozemtsev’s version of the future, a pro-Putin consensus strengthens in Russia, resulting in the president’s triumphant re-election in 2018. Oil prices will rise again, and the Russian elite will keep drawing a high resource rent. Those who fail to accept the “Putin consensus” will emigrate at a rate of 700,000 to 800,000 a year in 2020-2024. The West will write Russia off and invest heavily in its periphery, turning ex-Soviet states in Europe and the Caucasus into a dynamic growth area. By 2030, Ukraine, Belarus, Georgia and Moldova join the EU, giving it a large Russian-speaking minority, while Russia turns into China’s “respected satellite” and main energy supplier, having lost the European energy market to renewable energy.
In Inozemtsev’s scenario, Putin dies in office in the mid-2030’s, having turned his country into an apathetic, largely neutral backwater, ripe for China to pick up and turn into a “moderately developed Pacific power.”
Commentators such as Movchan and Inozemtsev know full well it’s impossible to make accurate predictions even for the next year or two: Russia’s strategic direction depends too much on the will of one man. As with most people in Russia, however, they see Putin’s power as unshakable and project his increasingly nostalgic vision of Russia’s role in the world into the future. It is, indeed, hard to see what force could topple Putin in the immediate future or change his mind about breaking with the West and making a doomed bid for self-sufficiency. Therefore the scenarios of economic gloom and political sclerosis.
Russia, however, has always been able to magically heal itself after the most painful wrong turns. Perhaps, as it heads into another one, some miracle will present itself to prove the forecasters wrong.
Article ©2014 Bloomberg L.P. All Rights Reserved. Article also appeared at bloombergview.com/articles/2014-11-07/does-putins-russia-have-a-future