EARLY SIGNALS SUGGEST CONTINUITY, NOT CHANGE AFTER TANDEM OFFICE SWITCH

by Gordon M. Hahn

My prediction that Medvedev would serve a second consecutive term was foiled by Prime Minister and former president Vladimir Putin’s decision to run for the presidency and President Dmitrii Medvedev’s decision to switch places with Putin.  Another prediction still holds: Putin and Medvedev could trade places over the coming decades moving Russia very gradually towards democracy and a more free market-oriented economy.  Yet another possibility remains unclear: will Putin gradually let go of the reins of power and hand them over to Medvedev––after all premier Medvedev serves at the president’s pleasure, and the latter’s pleasure could change over the next one or two presidential terms.  

Putting aside the somewhat dubious proposition that the Russian political scene can countenance two six-year terms for Putin without significant political and/or economic reforms, what do Putin’s early presidential campaign signals tell us about whether the newly configured tandem will be marked more by policy change or continuity?  Putin’s first major appearance since the announcement provides some clues.

At an investors’ conference at Russia’s Foreign Trade Bank, Putin promised that he would continue Medvedev’s previous strategy of economic modernization and gradual political reforms.  On the latter, Putin stated that the tandem’s priority of political stability did not mean Russia’s political system is regarded as perfect and not in need of change.  Rather, he said that “there is undoubtedly need for changes and they will happen, but they will take place in an evolutionary way.”  “Russia does not need anymore revolutions” has been Putin’a motto for over a decade now.  Putin reiterated the theme in the now fashionable Stolypin-ite terms to investors: “We don't need great upheavals, we need a great Russia!” (“Predsedatel’ Pravitel’stva Rossiiskoi Federatsii V.V. Putin prinyal uchastie v Investionnom forume VTB Kapital ‘Rossiya zovyot’,” Premier.gov, 6 October 2011).

Time will tell whether there will be continuity and whether the tandem will step up the pace, moving beyond the return to the 5 percent barrier for parties to enter the Duma set for the 2016 Duma elections.  Politically relevant reforms––such as tougher anti-corruption measures, MVD reform, judicial reform, and prison reform––seem set to go forward as well.  On October 6th, for example, MVD chief Rashid Nurgaliyev approved the membership of the ministry’s new public council, which now includes four human rights activists, most notably head of the Moscow Helsinki Group Lyudmila Alekseyeva (“Leading Rights Activist Included On Russian Interior Ministry's Public Council,” Interfax, 6 October 2011).

Putin was particularly insistent that economic and technological modernization would move forward.  It is here that I suspect we could see an acceleration of the slower pace begun under Medvedev towards deeper economic liberalization.  Thus, Putin told investors: “Our strategic goal is to diversify the economy. However, to change its structure, we must open the way for thousands of new projects and business ideas, and we understand this. First of all, what we need is state-of-the-art manufacturing and modernised, quality jobs, new technology, and a dramatic increase in performance. Moreover, we intend to carry out large projects in bio and nanotechnology, communications, energy-saving, and space exploration. We are going to establish a network of powerful hi-tech companies…. It is very important for us that new, highly localised manufacturing is established in Russia and the flow of investment is followed by modern technology” (“Predsedatel’ Pravitel’stva Rossiiskoi Federatsii V.V. Putin prinyal uchastie v Investionnom forume VTB Kapital ‘Rossiya zovyot’,” Premier.gov, 6 October 2011).  

To attract investment towards these ends, Putin announced that his government had submitted an amendment to the State Duma days earlier that will allow foreign investors to buy stakes of up to 25 percent instead of the present 10 percent limit in strategic resource companies without permission from a special government commission.  He also announced the possibility of permitting competition with GazProm in the gas export sector (Anatoly Medetsky, “Putin Offers Liberal Rules and Kudrin,” Moscow Times, 7 October 2011.)

Putin’s strong words of support for former Finance Minister Aleksei Kudrin also suggest continuation of liberalization, rather than a reversion to stagnation or backsliding.  Kudrin spoke out against defense spending and a future Medvedev government after Putin’s announcement that he would run for the presidency, and Kudrin felt forced to resign as a result.  Putin stressed that Kudrin remains a friend of his and Medvedev’s as well as an important advisor on their team. 

One sign of change, however, has emerged.  It comes in the area of foreign policy but could have potentially profound domestic policy implications.  In a rare newspaper article Putin proposed the formation of a Eurasian Union (ES), which he appears to envisage, when formed, will be a Eurasian version of the European Union. It will begin as an economic union coalesced around the United Economic Space (UES) set to start early next year. It will unite Russia, Kazkakhstan and Belarus (which is deepening economic ties beyond their already existing Customs Union).  

Putin described the ES as “a powerful supra-national association capable of becoming one of the poles of the contemporary world. At the same time, it can play the role of an effective "link" between Europe and a dynamic Asia-Pacific region.”  However, the vision for now seems to be limited to strictly economic entity: “closer coordination of economic and currency policies on the basis of the Customs Union and the Single Economic Area to create a full-fledged economic union” through “the gradual merger of existing structures -- the Customs Union and the Single Economic Area.”  

Membership will be “open,” Putin notes, based on their “sovereign” choices first of all, but not exclusively to the former Soviet newly independent states (Vladimir Putin, “Novyi integratsionnyi proekt dlya Yevrazii – budushee, kotoroe rozhdaetsya segodnya,” Izvestiya, 3 October 2011).

Putin intends to use the limp CIS, an entity once thought to be a potentially viable vehicle for some sort of political and/or military integration, as a vehicle for facilitating the integrative processes necessary for the formation of the ES.  Putin promised Russia would  “work on improving the institutions of the Commonwealth and on infusing it with a practical agenda” in particular, “specific, intelligible, and attractive initiatives and joint programs within the CIS….in the sphere of power engineering, transport, high technologies, and social development, “humanitarian cooperation in science, culture, and education,” and “collaboration in the sphere of the regulation of the labor markets and the creation of a civilized environment for labor migration” (Vladimir Putin, “Novyi integratsionnyi proekt dlya Yevrazii – budushee, kotoroe rozhdaetsya segodnya,” Izvestiya, 3 October 2011).

Thus, the economic integration process also seems to be part and parcel of Putin’s plans to push Russia’s economic growth and modernization.

The ES is to be based on a free trade agreement and is not intended, according to Putin, to recreate a union akin to the old USSR.  Any underlying political side of this vision is unlikely to be realized, so there is no need to regard this as a project with potential to revive a ‘new USSR.’  However, depending on the details they could create greater dependency on Russia among those post-Soviet states that wish to join.

The economic aspects of the ES are potentially feasible.  Moreover, the ES could revive the idea of a golden parachute for Putin or Medvedev in the event changes to, or dismantling of the tandem, are thought necessary.  The time and energy required to achieve integration and the possibility that the quality of integration would do little or nothing for Russia’s modernization, makes the project somewhat risky for the tandem’s modernization agenda.  Finally, the ES is not really a substantial departure from Medvedev presidency’s policies, since it was during that time that the noted Customs Union and UES were brought to fruition.  So even here, the by-word is continuity rather than change with the return of Putin.

Comments

[nemn]

"Putin promised that he would continue Medvedev’s previous strategy of economic modernization"
really? there were reforms? like this one? http://www.rbcdaily.ru/2011/10/13/tek/562949981716406
has something changed after Alekseeva become a member of the presidents comission of human rights? no! than why we expect a change after her moving to a MVD commission?

[nemn]

"Moreover, we intend to carry out large projects in bio and nanotechnology, communications, energy-saving, and space exploration. We are going to establish a network of powerful hi-tech companies"

does someone really think that high tech companies and projects can be "carried out" or "established" by the government? if it is possible what did they do in the last 12 years?

[Mark]

Did you look across the border? Maybe you noticed that China has gradually taken over the low-to-middle tech fields and established networks of "science parks" that now train foreigners as well as Chinese, and that "Made In China" is showing up on the labels of everything from mainframe computers to cellphones to appliances to flatscreens. Who do you think established those industries and research/technology centres? A Chinese Donald Trump?

Don't make the mistake of thinking that if Time Magazine says it can't be done, it can't be done. What Time Magazine means is, "We don't want to imagine it can be done". Put down that copy of "Putin. Ten Years. The Results", and read something.

[nemn]

I think those "science" parks were established by western companies because of the low chinese salaries. 'cause the chinese government guarentees the property rights

[Mark]

Then you'd be wrong. The Science Park initiative is a national advancement initiative domestically and a dedicated soft-power foreign policy tool internationally, run by tandem coordination staffs under the Ministry of Science and Technology of the Chinese government. There are now 52 such Science Parks - designed specifically to attract western investors but not in any way run by foreign companies - in China, and in the last 5 years China has introduced 5 internationally; in Russia, Singapore, the UK and the USA. China is the world's second-largest investor in R&D.

http://seedmagazine.com/content/article/global_science_park/

There is a great deal of international cooperation and exchange of scientific discovery and technique, so it certainly isn't a total loss to the west and many valuable Chinese advancements are made to common benefit, not to mention joint achievements. But overall control is administered by the Chinese government, and the net beneficiary is China.

Russia's efforts at Skolkovo appear to be directed toward a similar goal, to benefit the nation and offer employment to its people as well as opportunity to foreign investors and companies. However, unlike China's program, the west can't piss on it or laugh at it enough.