WASHINGTON CONSENSUS BREAKS

ANALYSIS

 Washington Post and Anders Aslund Agree with ROVP on Medvedian Thaw

The Washington Post (WP) and the ‘Washington consensus’ it reflects woke up this week from their long hibernation from reality and objectivity regarding Russia.  This reflects a growing realization among some who make up the overly negative assessment of Russian politics, that it has gotten it wrong in rejecting ROPV’s and Dr. Gordon Hahn’s two-year claim that a political thaw is underway in Russia. 

On February 26, the WP allowed publication of an editorial by Anders Aslund – an otherwise respected economic analyst who had become a constituent part of the increasingly discredited consensus.  He endorsed the assertion made by ROPV’s analyst Gordon Hahn in April 2008 that there would be a ‘thaw’ or perestroika 2.0 in Russia under President Dmitrii Medvedev.  Aslund acknowledged: “Russia is finally experiencing a thaw in the middle of winter.”

Few Russia observers have supported the view that President Medvedev intends or will be able to initiate a serious political thaw.   Dr. Hahn has argued for nearly two years ago that Russia’s new president would usher in a new era of reform while Prime Minister and former president Vladimir Putin gradually hands power over to his successor.  Over time, Medvedev will be unleashed from the confines of the ‘tandem’  and taking the lead in beginning sorely needed economic and political reforms.

This process does not necessarily require a split of the ruling duumvirate.  Indeed, even before Medvedev’s inauguration as president, it was clear that a thaw was likely during his administration, as nuanced signals, Russian historical precedents and contemporary imperatives suggest (Gordon M. Hahn, “Is A Russian Thaw Coming?,” Russia: Other Points of View, April 18, 2008). 

Events early in Medvedev’s term confirmed a real, if creeping thaw had already begun. Gordon M. Hahn, “More Signs of a Possible Thaw Under Medvedev,” Russia: Other Points of View, June 2, 2008, ).  In his last major address as president Premier Putin stated clearly that there would gradual political reforms over the next few years.

A month after Medvedev’s inauguration, Dr. Hahn reiterated that barring any unexpected upheavals there would be a political thaw: “Medvedev is on a leash.  If he learns to stay on the sidewalk and not wander into the traffic, Putin will gradually lengthen and very gradually remove that leash, fade into the premiership and perhaps leave it in a second Medvedev term.  In lieu of a major jihadist attack, an assassination, or an overly aggressive Western Russia policy, an economic and political thaw will likely develop at the pace with which Medvedev takes control.  Such a thaw will be very gradual – like watching an iceberg melt – but it will melt.” (Gordon M. Hahn, “The Politics of Unleashing,” Russia Profile, July 1, 2008. 

This view had been roundly rejected by nearly all Western and most US-based native Russia watchers - journalistic, analytical, and academic alike.  Most continue to argue that Medvedev is nothing more than Putin’s puppet and the tandem no more than a vehicle for Putin to keep his supposedly neo-totalitarian hands on the helm until his return to the presidency in 2012.  For example, Kathryn Stoner-Weiss, without even waiting for sufficient time or evidence that might mitigate the early signs of a thaw, argued: “Clearly Medvedev either cannot or will not diverge significantly from the path on which Putin set his country in 2000” (See Kathryn Stoner-Weiss,“It Is Still Putin’s Russia,” Current History, Vol. 107, Issue 711, pp. 315-321 at p. 320). Stoner-Weiss has been accompanied by virtually the entire cohort from what might be called the Rusology community [see Andrew Wilson, “Russia’s economic crisis - no cue for ‘Perestroika 2.0’,” Open Democracy, 4 September 2009, www.opendemocracy.net; Stephen K. Wegren and Dale R. Herspring, “Conclusion,” in Stephen K. Wegren and Dale R. Herspring, ed., After Putin’s Russia: Past Imperfect, Future Uncertain (Lanham, Md.: Rowman and Littlefield, 2010), pp. -291-305, at p. 301; Nikolai Petrov’s comments in “Medvedev Is Permitted ‘Rhetoric,’ Not ‘Practical Decisions’,” Svobodnaya Pressa, 28 December 2009, www.svpressa.ru in Johnson's Russia List, 31 December 2009, www.cdi.org/russia/johnson; Nikolai, Petrov, “The Virtual President,” Moscow Times, September 29, 2009; “Political Commentators Discuss 2012 Presidential Election Issue,” Svobodnaya Pressa, 1 January 2010, www.svpressa.ru in Johnson's Russia List, 2010-#4, 7 January 2010, www.cdi.org/russia/johnson; Alan Cullison, “Economic Ills Spur Russian Gestures of Openness,” Wall Street Journal, 12 Februry 2009.]. 

Other than a recent defection and some waivering from others, this consensus has held.  Recently, the Carnegie Endowment Moscow Center’s fine analyst Dmitrii Trenin endorsed Dr. Hahn’s view (see Dmitri Trenin, “Kremlin two-step: modernize or marginalize,” Japan Times, 10 January 2010).  By October 2009, the Heritage Foundation’s Ariel Cohen seemed open to a Medvedevian thaw (see Ariel Cohen, “Blood Brothers No More?,” New York Times, 9 October 2009).  A month later an uncharacteristically objective Washington Post editorial was relatively positive regarding the significance of Medvedev’s straight talk about Russia’s enormous problems and challenges, even as it tried to maintain its standard line.  The Post even adopted Hahn’s argument, applying the perestroika model to measure expectations about the possible pace of reforms: “(I)t's worth remembering that the political transformation that led to the fall of the Berlin Wall 20 years ago this month began with another Kremlin leader, Mikhail Gorbachev, speaking unaccustomed truths about his country. A lot of people then believed that Mr. Gorbachev didn't mean it, or had no ability to act on his words; they were proved wrong. Let's hope that those of us who have doubted Mr. Medvedev's capacity to reverse Russia's descent into authoritarianism and aggression will be pleasantly surprised as well” (see “Mr. Medvedev's Glasnost,” Washington Post, 14 November 2009).  This grudging caveat, however, had all the appearances of an attempt to cover all bases.

The fact is that even as Putin’s second term wound down, he and his future successor were signaling their intent to reverse some of the counter-reforms instituted during Putin’s tenure and begin new reforms.  Indeed, the first two years of Medvedev’s presidency have seen serious ‘reset’ of Russian domestic policy and several reform intiatives – some more advanced than others, but nevertheless real reforms – in the social, economic, and political systems.  Moreover, it appears that this will not be a passing Khruschevan political thaw.  A new era of great reforms seems to have begun; one that could rival or complete those of the perestroika era.  It is likely to be of long duration and could see the tandem rotate in power for a decade or more before a ‘transitional’ rather than revolutionary regime transformation is marked by their handover of power to a new leadership in free and fair elections.

ROPV is glad to see that some are beginning to come around at least partially to a more constructive view on this fundamentally important issue for U.S. foreign policy.

THE ARTICLE IN QUESTION:

Washington Post
February 26, 2010
The end of the Putin model
By Anders Åslund
[Anders Åslund is a senior fellow at the Peterson Institute for International Economics and most recently the author of "Russia's Capitalist Revolution."]

A recent week in Moscow left one clear impression: The Putin model of crony state capitalism is dead.

For years, the structure that Vladimir Putin crafted looked invincible, with its steady, high growth rates and effective, mild repression. But the system only distributed ample oil rents to the elites and the ordinary people, creating neither moral nor economic value.

Today the bill is due. In 2009, Russia's gross domestic product plunged 7.9 percent, even though Moscow had the world's third-largest international currency reserves. Russia performed the worst among the Group of 20 leading global economic powers. And as Russian elites realize that the Putin model has failed, opposition to the government is mounting.

At a business conference in Moscow this month, the suave first deputy prime minister, Igor Shuvalov, faced suggestions that the juggernaut of emerging economies in Brazil, Russia, India and China is being reduced from BRIC to BIC because of Russia's poor performance. Questioned about responses to the global economic downturn, Shuvalov defensively claimed that Russia's actions had been successful. But the numbers do not show this.

Russia's problem is larger than day-to-day constraints. Its public finances are in good shape; its current account is sound. But during Putin's second term as president, from 2004 through 2008, a substantial renationalization of business took place, spearheaded by his confiscation of the Yukos oil company. Much of Russia's economy is now dominated by monopolistic state corporations such as Gazprom, Russian Railways, Russian Technologies, Transneft, Rosneft and a handful of banks. They are run by Putin confidants who are close friends from his days in the KGB.

These big state corporations accounted for much, if not all, of the decline in Russia's GDP last year. They are a black hole of inefficiency. Their leaders do not know how to run a company, which leads to poor financial results, huge state subsidies, miserable services and enormous corruption.

When oil prices were high enough to keep the circus going, elites did not complain. The government's tactics in the Yukos case, including fabricating charges against former company chairman Mikhail Khodorkovsky, had taught them to keep quiet, and besides, they were doing very well financially. Today, however, corruption spurred by state corporations is causing Russia to lag behind other countries.

Putin and his state capitalism are clearly to blame. The state sector expanded during his time in power, according to the European Bank for Reconstruction and Development; it became more corrupt, according to Transparency International; Russia became less competitive, according to the World Economic Forum; the business environment grew worse, according to the World Bank. Russia is so corrupt that it has failed to expand its road network since 2000. Such facts were known in recent years, but only because Russian elites feel the effects are people speaking up.

A cacophony of elite voices are offering critiques, to the point that 2010 already bears some resemblance to 1987, the year Mikhail Gorbachev's glasnost policy of openness came to life. Igor Yurgens's Institute of the Contemporary Development, which is chaired by none other than Russian President Dmitry Medvedev, has taken the lead with a full-fledged call for Western liberalism, advocating the dissolution of the Interior Ministry and the FSB, successor to the KGB. On Feb. 18, Medvedev followed its cue and sacked 17 police generals. In December, the old Kremlin courtier Gleb Pavlovsky even called on Putin to retire, saying the prime minister is obsolete.

Surprisingly, one of the most important forces acting against Putin is Vladislav Surkov, the eternal political deputy chief of the presidential staff. Another shock came when authorities allowed more than 10,000 people -- an enormous rally by Russian standards -- to demonstrate in the western city of Kaliningrad on Jan. 30, even though the protest was directed against Putin and the regional governor. Surkov's subordinate overseeing domestic politics in northwestern Russia was instantly sacked, a rare event in Putin's Russia. The buzz on the Moscow grapevine is that Putin accused Surkov of having allowed the protest to take place.

Russians are becoming less afraid than in recent years and are even ashamed of their prior cowardice. Those jumping on the bandwagon include the respected finance minister, Alexei Kudrin, who publicly criticized Putin's United Russia party, and Sergei Mironov, the Putin loyalist who chairs the Russian Federation Council.

Although Medvedev is widely deprecated domestically and abroad, it can be a gift to be underestimated. The president has criticized state corporations, law enforcement and corruption in public, providing openings for others to fill in, and he offers an alternative platform of power.

Put another way, Russia is finally experiencing a thaw in the middle of winter.