After the Election: Putin's Plans for Russia
Summary
With slightly more than 50 percent of the vote, it appears that
Russia's interim leader, Vladimir Putin, has captured the
presidency outright. Western leaders appear befuddled over just who
this man is, what he wants and what he is likely to do. Indeed, the
curious notion that Putin is pro-Western has taken hold in some
sectors. This is whistling past the graveyard. With the election
now behind him, Russia's president is likely to grab hold of the
economy by taking control of Russia's oligarchs. And he is equally
likely to challenge the United States on its plans for a national
missile defense. Such a Russian challenge will threaten to split
America from its allies in Europe.
Analysis
With the apparent outright election of Vladimir Putin to the
presidency, Russia is entering a new stage. In this stage,
understanding this leader's intentions and the forces that
constrain them will be critical. To date, American leaders and the
mainstream press have expressed two views. The former KGB officer
is a younger, more vigorous Boris Yeltsin, ultimately committed to
economic and political reforms or - as expressed in The New York
Times recently - Putin is a non-entity, a product of the
bureaucracy, with no idea of where he is going nor what he will do.
Both views are equivalent to whistling past the graveyard. The
second misreads Russian history. The first simply refuses to face
the fact that economic reforms have failed, not because of bad luck
but because the country's institutions and culture could not
support a free market. A free market is possible only where there
are property rights - possible only when a legal system can enforce
claims. Russia has been unable to implement such a system. The idea
that Putin will remain committed to reforms requires resolute
obtuseness.
As president, Putin will grapple with two central problems. The
first will be to take control of the economy and direct what
capital there is into meaningful economic activity; this, in turn,
will require the means of the state, enlisted to co-opt opponents,
if possible, and frighten them if necessary. The second will be
protecting Russian national security from the overwhelming power
and influence of the United States. To do this Putin will most
likely challenge Washington on the volatile issue of a National
Missile Defense (NMD). Such a defense would put Russia into a
strategically inferior position. To avoid it, Putin will attempt to
seize upon the strategic danger of the moment, and split Washington
from its European allies.
The central problem facing Russia is the need to transform vast
pools of money into investment capital. Because Russia lacked a
functional legal system, both the internal privatization system and
the foreign investment process extracted money from the economy and
placed it under the control of a class of individuals with the
political power to protect their claim. Much of the money was
directed out of Russia; much of the rest was used to purchase and
maintain a system of political protection. Investments in media,
real estate and luxury goods were central.
As a result, serious capital investments have been marginal at
best. Anything that requires years to turn a profit has been
avoided. Investment outside of the major cities is nearly non-
existent. Political control and influence at the village level
makes investment there too expensive and uncertain. As a result,
Russia is experiencing a massive depression. Life expectancy has
declined and much of the countryside has been reduced to barter. In
the cities, Western currencies dominate. Russia is not facing
catastrophe; it is in catastrophe.
In a country where the market doesn't operate to turn money into
investment capital, the logical alternative is now the state. In
the Russian case, the hypertrophied state apparatus has become
decrepit - but it remains in place. And it is more likely to
function than the legal system. Admittedly, state allocation of
capital is a terrible idea. But the only thing worse than that is
the complete non-allocation of capital, which is what Russia faces
now.
However, getting the state to allocate capital poses a problem of
enforcement. Who will enforce the edicts of various ministries in
the government that will take shape? The traditional solution is to
use the state security apparatus. The apparatus has no experience
in enforcing legislated property rights, but it does have a culture
attuned to enforcing state bureaucratic edicts. More important, it
is the only force in Russia that could seriously threaten the
oligarchs. It is therefore no accident that Putin, former head of
the FSB (successor to the KGB), has surrounded himself with former
KGB operatives. He is reaching into the one working element of the
Russian state to jump start not only the state, but society as
well.
Though he feigns confidence in public, it seems reasonable to
assume that Putin knows perfectly well that time is not on his
side. He also understands that the oligarchs have tremendous
influence within the state and the security apparatus. Putin must
convince them that it is in their interest to turn control of the
economy back to the apparatchiks and policemen. He has two means of
doing this. First, he can convert the oligarchs from businessmen
into members of the apparatus. Most came from the apparatus, after
all. And within it they can enjoy the power and privileges of the
state elite, while keeping their cash buried in foreign banks.
Russian history is replete with examples of the elite changing
sides.
Putin can also try to co-opt them faster than they can subvert his
program; but this will be difficult to do. So, he likely has a
second plan: frighten them into submission. Class hatred runs deep
in Russia. The one thing that can frighten the oligarchs is a
massive outpouring of anger from the masses, now apathetic.
The traditional communist calls tend not to move people these days.
But there is one hot button that can still mobilize Russians:
nationalism. Putin has done everything possible to revive Russian
nationalism and create an image of himself as the owner of and
spokesman for the Russian national interest. Chechnya was critical,
a case study in how he would halt the disintegration of the Russian
Federation. Much of his popularity depends on nationalism.
Throughout Russian history, political leaders finessed economic
disaster by feeding the populace Russian national pride. Putin is
gifted at the game.
But he must now do more and build on the Chechen experience - and
this is where Putin will likely face his second problem, putting
Russia back on equal footing with the West. Putin must now create a
sense in Russia that he is dedicated to returning the country to
its international greatness. Putin needs to confront the West, and
particularly the United States.
He has already quietly laid the groundwork. For example, he has
stated that he would be willing to join NATO as an equal; some in
the West saw this as a gesture of conciliation when it was actually
a warning. Any attempt to extend NATO without including Russia,
with a veto power equal to that of the United States, would be
resisted. It is in fact fascinating to observe the degree to which
Putin has made the West think that he is being conciliatory. Many
of his initial contacts with Western visitors and journalists have
given a variety of impressions. This may be a reflection of the
fact that in Putin's experience he has little first-hand
understanding of the West.
The chief confrontation with the United States will clearly be over
American plans for a National Missile Defense (NMD), an anti-
missile defense that would in theory protect most of the United
States from a limited ballistic missile attack. The Clinton
administration plans to make a decision on deployment this summer,
following a series of tests. The American argument for this system
is that it is not aimed at Russia but rather at aspiring missile
powers such as North Korea. Since the Cold War is over, the
argument goes, and the U.S.-Russian balance of terror is defunct,
Russia should have no objection to abrogating the Anti-Ballistic
Missile Treaty in order to defend against "rogue nations."
The Russians have resisted - at times quite loudly. After all, an
American missile defense upsets the strategic equation with Russia.
Russian strategic forces are the backbone of defense for the
nation. And Russia could not possibly afford to build its own
national missile defense in a quest for relative parity. But what
the Russians have really been saying is that an American dismissal
of Russian nuclear interests is another - the final - insult. From
Russia's point of view, it is still a great nuclear power.
As a result, it seems that Russia under Putin is prepared to make
the nuclear balance a meaningful question again. This is a critical
issue, one Putin can use to whip up the nationalism already at his
disposal. It is also a strategically effective ploy. Putin came of
age in Germany during the 1970s and early 1980s, when the
deployment of American Pershing II missiles came to head.
Russia's argument at the time was for a nuclear freeze - and it was
designed to split the Western allies. Indeed, it did, sparking a
grassroots movement in Europe that was nearly impossible for the
Reagan administration to overcome. The target of the Russian
campaign was West Germany. A crisis over ballistic missile defenses
now would be a replay of the Pershing II crisis. This time ground
zero will be a unified Germany.
The last time, the United States got its way. But this time there
are quite possibly different outcomes at hand. Europe has nothing
to gain from a National Missile Defense that doesn't protect the
European continent and is not desired by Europeans. The Germans do
not want to see a replay of the Cold War, in whole or in part. As
important, Germany is heavily exposed financially in Russia. Berlin
would rather work with the Russians in repairing their economy -
even by authoritarian means - rather than confront them. For their
part, the Russian leadership will want to split the United States
from its European allies, to prevent future episodes of unbridled
American power, like last year's war for Kosovo.
Putin will force a confrontation with the United States for reasons
other than geopolitical ones, as well. He needs to create both a
sense of national purpose and a sense of national crisis if he is
to cut a deal with the oligarchs or - if necessary - liquidate
them. The oligarchs flourish to the extent that there is a sense of
national helplessness and apathy. To the extent that Putin can
create a sense of national empowerment, mobilization and, above
all, a sense that Russia now has a leader willing to act, Putin can
confront his old friends, the oligarchs.
To avoid going the way of Yeltsin, Russia's leader faces a fairly
seamless web of choices. He has to get the country's economy going
and to do that he must get control of the oligarchs. To get control
of the oligarchs, he must both entice them and frighten them. To
frighten them, he must create a sense of national embattlement that
strengthens his regime and puts them at risk. To create that sense
of embattlement, Putin needs an international crisis. If missile
defenses won't do, he will find something else. For this Putin
needs a foreign enemy and the United States is the obvious choice.
Putin is, indeed, not driven by ideology. Like most Russian
leaders, he believes in power and order more than anything else. If
one looks at the current situation dispassionately and non-
ideologically, as Putin is certainly doing, there is a road map to
follow. Part of the map runs through tense times with the West. The
complacency about Vladimir Putin, therefore, is difficult to
fathom. There is no mystery. He is one of the most understandable
leaders Russia has had since Yuri Andropov.
* See our "We Told You So" Page, including our story that predicted
Vladamir Putin's rise to power.
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