By Piotr Dutkiewicz,
Director of the Institute of European and Russian Studies at Carleton University in Ottawa, Canada
Of late, a palette consisting only of black and white has seemed sufficient to paint a picture of Russia. A sketch of the dominant Western (and recently, increasingly Russian) conceptualization of the last two decades of the country’s history looks something like this: The democrat Boris Yeltsin introduced a market system and erected the foundation of a Western model of democracy. This free market and a newly free press effectively overhauled the Russian political system, giving rise to hope for the emergence of a democratic and pro-Western Russia; one which would become a good citizen of the post-Cold-War rapidly globalizing world order.
In 2000, all such hopes were dashed. A new ruling elite led by Vladimir Putin (often with a military or KGB background) decided to undertake a coup d’йtat. Granted, this coup was constitutional, but due to its radical nature it was no less revolutionary. It moved Russia back to the level of a Mega Euro-Chinese gas station. It became no more or less than a classic petro-state, albeit one protected by a mighty nuclear arsenal. The talk these days is increasingly about a new authoritarian state, within which one can already discern the resurrection of the Soviet Union.
Economic arguments (particularly after economic crises hit Russia in the fall of 2008) are equally damaging. In short, Russia has been hit by a “double crisis,” one growing out of its own faults and another created by global processes.
If so, then why does the majority of Russians support Putin (and his successor)? The answer is complex as Putin’s Russia is neither a banal authoritarian state nor a soft incarnation of the Soviet Union. But such an understanding requires that we add some colors to a hitherto black-and-white etching of the country.
A NEITHER-NOR RUSSIA
Today’s Russia is certainly a challenge for the willing analyst. It is obviously not a liberal democracy, but, given the freedoms available for every Russian citizen, neither can it be labeled an authoritative regime. Russia does have democratic electoral law, but the electoral mechanism does give considerable influence to the party in power (and the bureaucracy that accompanies it). Vladimir Putin is considered by many to be a 21st century incarnation of the czars, but in reality his power – especially in the regions (mainly due to the “autonomous bureaucracy”) – is seriously constrained. The Kremlin, though it fosters an aura of omniscience, continues to base its politics on what might be termed as a timid trial-and-error approach.
Russia has a market system (as recognized by the EU and WTO) but the system of accumulation is to a large extent based on non-market political access. The media are not “free” per se, but neither are they under state control (with the exception of state television). The government’s rule is seen as strong but the state’s institutions remain fairly weak. While the decisions of the Kremlin’s elite are seen by many as systemic manipulation – or just a PR exercise – many of them are real responses to the needs of the Russian people. Strength and weakness in one. Russia is seen as pragmatic but the role of its ideological component (as in the case of the concept of “sovereign democracy”) is more important than many assume. Russian politics is becoming increasingly assertive but its implementation is everything but that. At the moment there is neither stability nor change. In other words: a neither-nor Russia.
Moreover, while Russian foreign policy may at times seem clear to the West, it is anything but, even for insiders. Russia wants to influence the decisions of other countries and of international institutions, but in reality there is little certainty (in most cases) exactly what her position on many issues is.
Just as authoritarian actions do not necessarily equate to a belief in an authoritarian system, a lack of a central governing ideology does not necessarily signify a lack of ideological basis for state governance, a lack of democracy is not synonymous with the absence of freedom, rejection of Marxism is not a rejection of the historical value of the Soviet Union as this elite’s fatherland. A classical neither–nor situation dominated by shades and ambiguities, in many cases dressed up for the occasion in boldness, strength, high morality and sometimes arrogance and self-righteousness.
It is worth returning to the late 1990s as it deeply shaped the systemic thinking of the Kremlin’s ruling group. A sense of humiliation rooted in the all-too-obvious evidence of social and economic collapse, evaporating sovereignty, “democracy a la Yeltsin” pushing Russia away from its “great status”, indeed a sense of Russia being “driven to its knees”, all contributed to the “deep mental formation” of a current elite.
As analysts know, production dropped in the 1990s in Russia; however, not everybody knows that this decline was of a magnitude unprecedented in the 20th century. Neither the First World War along with the revolution of 1917, with the subsequent bloodshed of the civil war, nor the horrors of the Second World War, brought about such a dramatic drop in output as was seen in the 1990s. In 1998, at the lowest point in the transformational recession of the 1990s, Russia’s GDP was 55 percent of the pre-crisis peak of 1989. In short, the economic losses from the 1990s recession were exceptional in scale and, importantly, in duration.
Such an unprecedented plunge in production caused equally unprecedented tension in society. Due to the immense growth in income inequality, the real incomes of the absolute majority – 80 percent of the more vulnerable members of the population – were approximately cut in half. During privatization, there occurred a massive redistribution of national wealth; in just a few years, somewhere around a third of all state property passed into the hands of a few dozen oligarchs for a song.
Inevitably, the brunt of these hardships was borne by society’s most vulnerable groups because they had fewer resources with which to cushion the impact of economic decline and increased insecurity. This was further exacerbated by their limited ability to respond constructively (either through political or economic means) to rapidly changing circumstances and by a lesser capacity to protect their vital interests in the political process.
The transformational recession was brought on not so much by market liberalization as by the virtual collapse of the state. Russian spending on “ordinary government” (excluding spending on defense, investment and subsidies, and debt servicing) in real terms decreased three-fold, so that government functions – from collecting custom duties to law enforcement – were, for all intents and purposes, either curtailed or transferred to the private sector.
The shadow economy, estimated at 10–15 percent of the GDP under Brezhnev, grew to 50 percent of the GDP by the mid 1990s. In 1980–1985, the Soviet Union was placed in the middle of a list of 54 countries rated on their level of corruption, with a bureaucracy cleaner than that of Italy, Greece, Portugal, South Korea and practically all the included developing countries. In 1996, after the establishment of a market economy and the victory of democracy, Russia came in 48th in the same 54-country list, between India and Venezuela.
The regionalization of Russia proceeded in leaps and bounds in the first half of the 1990s. The percentage of the regional budgets in the revenues and expenditures of the consolidated budget increased, while the federal government was forced to haggle with the subjects of the federation over the division of powers, including financial jurisdiction. Russia as a Federation was on the brink.
I have argued that an indispensable attribute of any state is a minimum of three monopolies – a monopoly on force, tax collection, and currency issue. All three monopolies were undermined in the Russia of the 1990s.
The voucher privatization of 1993–94 and the “loans for shares” auctions of 1995–96 led to state property being sold off for a pittance, and this at a time when the state needed money more than ever before. As a result, anyone who could call themselves at least bit well-to-do at the time not only had unlimited opportunity for incredible enrichment, but was also able to take partial control of the economy of the former superpower. The Russian business elite had found joy in the unbearable lightness of living within a weak state.
In 1998, the short-lived stabilization of the mid-1990s ended in stunning failure with the August devaluation of the ruble and subsequent default. Real incomes on a month-to-month basis fell by 25 percent in the fall of 1998, only climbing once again to the pre-crisis mark in 2002.
The state crisis had reached its apex: federal government revenues and spending fell in 1999 to 30 percent of the GDP at a time when the GDP itself was almost half of what it had been 10 years before. State debt and foreign debt had peaked; the currency reserves had shrunk to $10 billion, less than those of the Czech Republic or Hungary. The prevailing feeling was that the federal government was so useless that it might as well just shut down.
It would be hard to name countries with a developmental level similar to Russia’s, where the state lost so much of its independence in its relationship with private capital. A virtual merging of big business and the middle/upper management levels of the bureaucracy occurred in Russia, and their interests became practically indistinguishable one from the other. Neither the civilian ministries, nor even the top bureaucracy were able to counter this force; even the “power” agencies, such as the Ministry of the Interior, the army, and the security services began “privatizing.” As a result of this process, the state became neo-patrimonial (a capitalist-cum-feudal system) and to a large extent privatized. In such an environment, the issue of improving equitable policies became irrelevant (as it is almost impossible to implement any kind of policy interventions that might challenge the fusion of such powerful interests).
To sum up, in the 1990s the Russian state lost its capacity to govern and to manage tremendous burden of transformational change. The state, facing internal and external pressures, withdrew from its basic functions (protection of its citizens, provision of health care, securing legally bounded transactions, monetary oversight). The accidental elite that took power lacked both coherence and a long-term plan and so leased the country to a merger of oligarchs (formed by the state’s privatization scheme) and the top echelon of Kremlin insiders. The state became engaged in a massive redistribution scheme that gave away state assets and, with them, the dominant power within the system. As state provisions were disappearing, a “parallel state” started to emerge to secure a smooth process of primitive (based on the state’s distributional capacity and de-industrialization) accumulation at the regional and federal levels. This mutation of capitalism transformed market relations into a system of complex symbiosis between nominally legal structures and organized crime, which became not only a systemic economic force but also a political actor in its own right. That process led to a massive impoverishment of society with all the associated negative consequences for societal cohesion, health, education, and so on.
Putin’s group decided to reverse that trend. For that task they needed not only more power than Boris Yeltsin had as President but – most importantly – a different kind of power. The Kremlin’s future rulers were convinced that at the very core they needed to restore what was a traditional and central engine of social development in Russian history: the State. In order to accomplish this project, they had to link the state and accumulation into one undivided whole of social power. If one looks for a singular explanation of “Putin’s Idea”, most probably this is the closest we can get. Their long-term task was to reconstruct and modernize Russia but in order to have some results in that remarkably complex goal, they had to dramatically change the pattern of accumulation and the structure of power; indeed, to reshape the political economy of Russia.
ACCUMULATION – POWER – MODERNIZATION
The logic of the capital expansion in the 1990s was nothing short, as Jonathan Nitzan and Simshon Bichler argued, of “to penetrate and alter the nature of the state itself”. They were, however, caught in an existential dilemma – to have a weak state was good for business (no taxes, corrupt officials, etc.) but to have too weak a state was bad for business (their main problem was that the state was too weak to secure/protect the gains of the dominant capital). In a truly Hegelian spirit they solved this seemingly deep contradiction by evoking the notion of politics. The oligarchs, then, “had to take things into their own hands” by engaging in a collective political action.
But it was not enough, and as early as the mid-1990s, Russian oligarchs were actively looking for international capital backing. They were seeking transnational ownership to, on the one hand, gain access to international capital (in order to gain more power domestically) and, on the other, to secure their access to safer investment abroad. Having advanced the “privatization of the state,” Russian oligarchs were getting ready to make a real deal: to merge with international capital and put the Russian economy on the trading block.
Are we still puzzled why Putin’s group obsessively put “state sovereignty” at the core of their program? Why were the Kremlin’s planners besieged by the “threat of unpredictability,” “lack of control” and “need for stability”? And are we still puzzled by the Russian population’s support for Putin in light of the “double failure” of the 1990s – the loss of “empire” and the collapse of the economy?
It is time now to try to decipher the political economy of Putin’s Russia. A seductively simplistic algorithm of Russia’s political economy would look something like this:
- Putin’s group rule = power + oil/gas + TV
- Power = state-based accumulation + Presidency (trusteeship)
- Oil/Gas = principal state/private revenues
- TV = relative control of mass opinion
Therefore, Putin’s rule + power + oil + TV = the Russian developmental state in progress.
In order to make any change, to define new rules, and “bring the state back,” Putin’s Kremlin elite needed more power and new resources (in order to avoid becoming trapped in a new dependency cycle by the oligarchs). So what they were really looking for was a different mode of accumulation; accumulation that would not differentiate between “economic” and “political” power; where money would not be “separated” from the institutions, law, culture, etc.; accumulation that would be more totalizing in their capture of economy/society; accumulation that would epitomize power; or in J. Nitzan’s and S. Bichler’s terms “…what we deal with here is organized power at large. Numerous power institutions and processes – from ideology, through culture, to organized violence, religion, the law, ethnicity, gender, international conflict, labor relations, …all bear the differential level and volatility of earnings… there is a single process of capital accumulation/state formation, a process of restructuring by which power is accumulated as capital.”
In other words, they attempted to intertwine capital linked to politics with politics linked to institutions and law, which in turn was linked to ideology, with ideology linked to value systems and culture, with a culture linked to religion, which is linked to almost everything that matters and, by the end of this logic chain, to turn to power again – power as confidence in obedience. I shall note, however, that while the confidence in obedience was quite high (but never taken for granted by the Kremlin) in the first years in power, the current economic crisis may change that quite significantly. As recent opinion polls show, the confidence in the ruling group may evaporate quite fast as Russians expected much more after being obedient for so long.
The relatively easiest and most profitable source of accumulation (and hence power) was oil and gas. With prices spiking for almost a decade, it gave Putin’s group enormous leverage and confidence domestically and internationally. Oil has its vices too, but as a second component of Putin’s rule, it became indispensible for the project. The third module of power to capture was to take control of TV. More that 75 percent of the information absorbed by Russians comes from TV. So, to put tighter controls on TV than on any other printed or e-media was the third principal rule of survival in a long-term, strategically thought plan.
The second part the “algorithm” (Power = state-based accumulation plus Presidency) is that Putin’s group reversed the main vector of accumulation from private to state. The state became the principal agent of accumulation; the state (and state “hegemonic” bureaucracy and key interests groups related to it) is also its main benefactor. By paraphrasing Joseph Schumpeter’s famous conception of capitalism without the capital that led him to the conclusion that the “dynamic characteristics of capitalism arise from non-capitalist sources” we come to the core of Putin’s group’s base of accumulation: the State.
Putin’s group is much closer to the ideas of Friedrich List’s National System of Political Economy than to Adam Smith’s The Wealth of the Nations. It is not the invisible hand of the market but a very visible hand of the state that is to be responsible for “development and progress.” F. List’s justification of the de facto protectionist approaches through the creation of a constructivist doctrine of national development fits squarely into the “Putin Plan.” If we also consider List’s moral and spiritual overtones of productive force and his emphasis on the defensive capacity of the state to protect its “integrity,” we can add Putin to the list of his hidden admirers.
But to put any plan into motion you need the implementers, supporters, and at least a slim but trustworthy social base for change. Here enters the need for the Presidency – the office, the collective, the institution, the prestige, legitimacy, charisma, and the man himself. There emerges a distinct need to find the ideal individual/collective holder of the trusteeship. Who shall/can lead society in a truly revolutionary time of transformation? Society itself, the idea goes, cannot be trusted entirely as they have lived too long in an entirely different system, and so they can’t grasp the “goal of the change.” Society is also prone – as the 1990s showed – to massive media/political manipulations. Oligarchs and high-level officials were not the best option in 1998 for a ruling group either, as they were engaged in stripping assets and placing them abroad. They were, after all, businesspeople, not interested in the wealth of society or the future of the state. So who was to lead Russia to its revival?
From the utopian socialists, through the Hegelian principles of development, Marx’s debate on the role of the “individual man”, the Fabian’s society ideal of correcting the socio-economic change in the British colonies, the League of Nation’s institution of trusteeship, the ideas of Sergei Witte, and Lenin’s notion of a “vanguard party,” theorists and practitioners of all stripes and colors have struggled with the answer to this very question: Who is to lead society into development and progress? Who can be entrusted to lead the change? Hegel’s “spiritless mass” or someone else? In their brilliant book on development, Robert Shenton and Michael Cowan observed that, “A ‘handful of chosen men’ could now assume the mantle of the ‘active spirit’ to become the inner determination of development”, regardless of the system of governance and its ideological dress. This reminds me of the Saint-Simonian ideal that to remedy disorder, “Only those who had the ‘capacity’ to utilize land, labor and capital in the interest of society as a whole should be ‘entrusted’ with them.” Putin’s version of a trusteeship is thus given its philosophical justification. Sociologists are ready to support me with their empirical studies of the configuration of the Putin’s inner circle. The notion of the trusteeship – I believe – explains a lot about Putin’s leadership.
It may explain, for instance, the Kremlin’s partial distrust of society (which explains why only very limited change via grass-roots social movements was permitted) but also their desperate need to “have society engaged” in the convoluted form of the Social Chamber (among other things, in order to keep the bureaucracy in check). It may also explain some of the reasons for the relative freedom of the parliamentary elections in 2008 and the Kremlin’s actions against the “not trustworthy oligarchs” and their anti-bureaucratic outbursts. It can explain an uneasy cohabitation of conservative and liberal ideas that are transformed into policies and institutions by the Kremlin’s rulers. It can also explain their “philosophy of power”.
The final part of the algorithm (Putin’s rule + power + oil + TV = the Russian developmental state in progress) deals with the longer-term, intentional as well as unintentional consequences of ruling Russia for the last ten years. In other words, what was the power for? Today, Russia is a developmental state in progress (being, I shall underline, in a state of policy hibernation – or stagnation – for the last three to four years). The current economic crisis has shown that the painfully accumulated state capacity (both institutional/legal, financial, and moral) to act as a principal agent for change did not result in an economically effective, politically significant, and socially viable transformation of Russia’s socio-economic system (or, in the words of Gleb Pavlovsky, one of the Kremlin’s chief alchemists, “Medvedev is right, this is a dead end”). The question is: Is it really “a dead end”?
To answer, we should make a small detour to trace the main features of the “developmental state”. The idea is not new. The postwar period saw the coming together of statist theories, specific measures of state intervention and more general extension of state regulation in critical aspects of the economy. Herein lays the origin of the contemporary developmental state. The idea/practice was first applied in post-colonial Africa, then later – more ambitiously and consistently – to a cluster of rapidly growing economies in East Asia such as Japan, South Korea, Taiwan, Singapore, Indonesia and Malaysia. Many argued that their spectacular growth was possibly due to the activist and “market friendly” state. But not all states can be evaluated as developmental. Adrian Leftwich, one of the key authorities in this area, proposes that only “…states, whose politics have concentrated sufficient power, autonomy and capacity at the center to shape, pursue and encourage the achievement of explicit developmental objectives… can aspire to be the ones”. The argument goes that in a developmental state, the state itself becomes the main instrument for the pursuit of both public and private goals. The state comes to define and determine who will be able to make which decision of administrative, political, and economic significance. Political and administrative positions become – obviously – a fruitful means of securing economic resources and opportunities (so it is normal that state came to be an important avenue for realizing private goals). The claim of the state to define public goals and the legitimate means for pursuing private goals is formally recognized in a notion of “national sovereignty.” The expansion of state economic management is justified by the notion of “national development.” The state’s “capacity for coercion gives the content to these otherwise vacuous concepts”. However, there is a twist to this story. The power arising from the state capacity to allocate resources depends largely on the exclusion of alternative sources of access to capital; hence the tendency of the holders of the trusteeship to organize the provision of services and commodities along monopolistic lines (something that Russian materials and energy producers know by heart).
As you can see, from a comparative perspective the approach taken by Putin and his group is a general approach to development, not new. What is new is the specific historical circumstances in which this project was being launched and its fundamental understanding of its amalgamated accumulation-as-power and trusteeship-led mode of reproduction of social relations. The Russian ruling elite faced a formidable developmental task which required coherent and strategic actions, and the only agency capable of achieving social and economic stability in the given circumstances was the state.
So far so good, but as the perennial East European question goes (particularly in times of crisis), “If it is so good, why is it so bad?” I may offer, as an explanation, two fundamental drawbacks of the model’s implementation. First, the model seems to be based (even if unintentionally) on the “old-fashioned” approach of the first generation of developmental state theorists such as Dudley Seers and Hans Singer, who emphasized the need for a distributional approach to economic growth (with the state’s main role being that of principal distributor of wealth). In that sense, the policies based on that notion were emphasizing just one side of the role of the state. What was needed was rather a dual-track, more flexible approach.
Contemporary theorists of the developmental state would suggest that the state should be an engine of “liberal” policies (and a guarantor of their implementation) in the area of economic growth and generation of national income, and, simultaneously, of the “social and re-distributive” mechanism (by giving some developmental opportunities to the poorer section of the population and worse-off regions).
Everyone now is talking about modernization and modernity in Russia. Such talk has become fashionable for radio hosts and newspapers. The problem is that there is no comprehensive economic modernization underway. Whether we like it or not, Russia is today a largely de-industrialized, resource-dependent country with no serious base for technological innovation. Except the enormously powerful energy sector and high-tech pockets of the military industry, it is not internationally competitive. Is that adequate for the Russian aspirations?
Another important point relates to the sequence of the Putin Group Project’s implementation. The first six years of the trusteeship-led process of stabilizing the economy, re-creating a state, re-grouping power, re-shaping politics, diminishing poverty, stopping criminalization of the society, saving oil money, and so on, were largely necessary steps. Cumulatively, they formed a strong foundation for the developmental state and, in general, were quite indispensable prerequisites for making the system work again. However, it is quite clear that there was no “second-phase plan” to move from “stabilization” to “accelerated modernization” (ideally from mid of the first decade). I can only speculate why such a plan did not materialize in 2005-2006 when the Kremlin “got everything” – political power, resources, and high social support “in one”. The point is that Russia did not enter (having enough resources and power to do so by 2005-2006) a second, logical, and fundamentally important phase of fast modernization of industry accompanied by political empowerment of the citizenry. It looks as if groups of busy construction workers suddenly stopped building the road they had so promisingly started, switched off their machines, and went back to patch the holes that were formed while they were busy advancing the construction. (Does this not seem reminiscent of the idea of the National Projects?) In other words, Russia did not capitalize on her wealth to the extent she could have done (as its BRIC fellow members did).
For the above two reasons, the answer to the key question of whether Putin’s project has hit a dead end, shall at this point be quite ambiguous. Everything depends on the government’s/Presidency’s next steps. The economic crisis finally made it painfully clear that the patch-work approach is not an option. Russia has no other choice than to try to reinvent itself. There are three basic ways to follow now.
DO IT OR LOSE IT: THE RUSSIAN DEVELOPMENTAL STATE IN (IN)ACTION
A perennial question among Russia’s intelligentsia is Chto delat? What is to be done?
Based on our best knowledge, we can only point to the best examples known and extrapolate/adjust their experiences into the specific conditions of today’s Russia. Crudely, there are three basic choices to be made (each with its nationally-shaped variations and mutations): there is the “EU way,” the “developmental state way” (as in the East-Asian model) and “slow adjustment” way. Each model has some inbuilt uncertainties and contradictions; each requires strong political will and policy implementation capacity. Guaranteed success of either one is everything but certain. However, by not making a decision, Russia – willingly or unwillingly – will slide down to the junior league of states regardless of a quite possible oil price recovery.
Let me start with the developmental state option as a lot of energy, money and political capital have already been invested in it. This scenario would hypothetically look as follows: Based on the hitherto achieved pattern of accumulation/power, the Russian ruling group decides to move to the next level of developmental state evolution: a deep and systemic modernization of the country. But the initial Kremlin-elite-based trusteeship of the stabilization/consolidation period (roughly 2000-2005) is no longer enough to move ahead. They prepare a plan that will envision modernization, not narrowly defined (as the need for new technology and equipment) but as an all-embracing, staged process of legal/institutional, economic/social, technological, research/educational, and conscience/ideological change. They set in motion reforms and then move to a clear cluster of priorities in their plan, centered on re-constructing a sophisticated industrial base linked to the innovative scientific research/implementation and pushing banks to finance it. Only those who are really competitive get the money. The Kremlin makes special efforts to make rules and procedures as clear as possible for business and supports these through a strong, corruption-free court system. Corruption at large is at least halted thanks to changes in the regulatory system, punitive actions and changing social attitudes that no longer accept it. As the Kremlin needs to find a larger pro-modernization consensus and (simultaneously) ways to convince/co-opt/neutralize powerful, interest-based opponents (located mainly in the energy sector), they make a choice of relying on the small middle class, medium-scale business, and that section of bureaucracy that is dynamic enough to implement new policies. At the same time, they launch a mass media campaign to explain to the different constituencies the benefits of going through a quite painful and unexpectedly long (five to six years) initial modernization process (and of the danger of not setting off down this path). As the process advances, the Kremlin is peacefully undermining rising social discontent (which is normal as the re-distributive function of the state is becoming step-by-step diminished and increasingly targeted) and gaining enough support to make the bold move of reforming the resource and energy sectors. Finally, they move to the point of the democratization of the developmental state. Does this sound like fantasy? But is there any other choice than some form of this fantasy other than a comfortable oil-and-gas-cushioned stagnation?
The “EU way” is a second possible option. Obviously I am not advocating transposing a copy of the European Union onto Russia or her applying to join the EU. Vladislav Inozemtsev, a well-known Russian economist, made a very good point by saying that: “This path doesn’t require such a strong developmental state as the first one, but needs radical political decision to be made, …a pro-European policy based on accepting if not European values, but EU practices. If Russia accepts the major part of the EU-wide regulations known as acquis communautaire, complies with European ecological, competition, trade and some social protection standards, the modernization of this country may take another direction.” Of course, it would be a revolutionary decision that would shake the whole system. Russia is far away (institutionally/legally and strategically as far as state is concerned) from the EU. This would also mean re-shaping Russian foreign policy and some portion of the elite’s mentality, but as Russian economic interests are located between Europe and Asia this might be the most sustainable choice.
The third way is to have a “status-quo modernization.” Such a scenario embraces at least four components: first, some transfer of most modern technology (mainly to military industry); second, keeping the budget filled with petro-dollars (that will be quite sufficient at $68-70 per barrel to fulfill current level of social and security obligations); third, strengthening military capacity to secure Russia’s diminishing economic and social power; and fourth, implementing even more assertive international policies to hide domestic weakness. Within this scenario the Russian state can go on without any significant change for at least couple of years. The deep modernization can be postponed and reconsidered at the later stage. This is a socially risky but doable scenario (but one that might relegate Russia to the “secondary powers” club).
In the first two cases, the ruling group shall consider moving from the “trusteeship” mode of ruling Russia to a “social coalitions”-based system. As history has shown, even the most enlightened “trusteeship” cannot reorganize the system (in a longer term) without broader societal support. At this moment the game is not – narrowly defined – about technology and innovation transfer, as some members of the elite advocate; rather, it is about making Russian society and economy innovatively oriented, with the state playing a decisive role in that process.
The choice between accelerated continuity, “discontinued modernization” and “status quo evolution” should be carefully considered as the future of a huge country is at stake. What is certain is that the lack of real modernization policies of the last four to five years cannot be continued without serious, negative, long-term consequences. The only good thing about the current crisis is that no one can deny the necessity for accelerated change and the need for a larger, societal debate about the future of the country. And this in and of itself is a good thing for Russia.
This article previously appeared in Russia in Global Affairs magazine
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