Putin's return: a déjà vu presidency? (1)

Yet despite the large number of protests by those disillusioned with Putin's iron rule, and despite the widespread enthusiasm for this unexpected “Russian Spring” -- remember Senator John McCain's warning to Putin that “the Arab Spring is coming to a neighborhood near you" -- it seems that the situation will for the most part remain the same. But there is one difference: The new generation in Russia is carrying the rhetorical weight of the Arab Revolutions, and thus the next few years will be an enormous test for the Kremlin.

Ironically enough, when Putin first came to the presidency 12 years ago, the Russian economy collapsed, foreign policy failed and Western economic assistance provided a lifeline. At the beginning of this new term, the situation is reversed. The Eurozone is in crisis, and the EU is riven by internal political struggles regarding its future development. The next term(s) of the Putin presidency will be decisive: Will the modernization reforms continue? What will the foreign policy priorities be?

Still “Go Russia!”?

Many believe that Dmitry Medvedev had the option of challenging Putin, as he was “the president of hope,” but clearly he never crossed any such line; his only real option for becoming an independent politician and a second term president was to make himself more popular than Putin. But this never happened, and Medvedev explained why in his Sept. 24, 2011 speech when he ceded his presidency bid to Putin: “Prime Minister Putin is definitely the most authoritative politician in our country and his rating is somewhat higher [than my own].” This is a cleverly played act of humility on Medvedev's part, but this rhetorical flourish is not sufficient to explain his various failures in office.

Back in September 2009, Medvedev's confession was that Russia is a “primitive raw materials-based economy,” blighted by “chronic corruption” and “shamefully low” productivity. This was the context for his modernization program, launched in his policy article entitled “Go Russia!” True, many were skeptical about Medvedev's reformist credentials, and much of what he says, he has said before -- and failed to deliver. But, by all accounts, the general thought is that Medvedev tried to be a reformer, but was never able to realize all that he proposed, and thereby lost the support of the liberals who supported him against all odds. When the protests began last year, he started to push through reforms much more quickly.

Consider the surprising disparity between Medvedev's relatively liberal manifesto and Putin's economic policy. Just try googling “Putin” and “liberal economy”, and you will typically find the words “authoritarian liberalism,” “liberal mush” or “Putinomics” inserted between them. Doing the same for Medvedev, on the other hand, produces “surprise liberal manifesto,” and even “liberal economist.” In fact, Medvedev shared his views on how to make Russia the world's top economy during his speech at the International Economic Forum in St Petersburg, June 2011, by focusing on the following: improving the investment climate in Russia to create new jobs in the regions, making progress in the fight against corruption and so on. One of Medvedev's key legacies is Russian membership in the World Trade Organization (WTO), which was finally realized last year. A key achievement of his economic reforms was diversifying away from oil dependence and encouraging the development of the hi-tech sector.

But when Medvedev announced his departure from the post, his legacy of modernization was thrown into doubt. By October 2011, the Ministry of Finance's budget showed that funding for Medvedev's modernization initiatives was being cut savagely; from the 71 billion rubles ($2.3 billion) allotted for modernization programs in 2012, only 27.8 billion rubles ($927 million) has been set aside in 2012 and even less for the following years.

No one can deny Putin's economic achievements during his previous terms, thanks to the oil revenues, and economic turnaround after the 1998 financial meltdown, which forced the government to implement painful but necessary reforms. Putin's crucial achievement was the considerable improvement in the climate for small businesses. Russia pursued a conservative macroeconomic policy. Perhaps in his next term Putin will retain this conservative view on economics; in an article published on Jan. 30 for Vedomosti newspaper, he asks, “Are we ready to risk Russia's future for the sake of pure economic theory?”  He goes on to declare, “We must change the entire ideology of state control over business activity, and we must drastically limit these functions.” Is it possible that Putin is looking to the left of his “neoconservative” economic views? The answer is both yes and no.

Yes, in the sense that economic development is vital for Russia's global outreach. Putin has floated the idea of forming a Eurasian Union comprised of former Soviet states, and in this regard a “strong, open economy” is a necessity. One can speculate that Putin would very much like to echo Clinton's election catchphrase, “it's the economy, stupid.” However, the answer is also no -- for old habits die hard, and protectionist Russia fears that an open economy could become a powerful weapon in the hands of the West.

At this point, it is too early to say whether or not Medvedev's “Go Russia” modernization project will continue. What is clear is that Putin is champing at the bit to launch his foreign policy strategy, and for this project he will support the promise of “Go Russia.”