In the Thick of It

A blog on the U.S.-Russia relationship
Putin amid birches

Putin’s Legacy: Brezhnev Lite?

December 14, 2017
Andrew C. Kuchins

Last year, Russia’s former Finance Minister Alexei Kudrin—who for the past 18 months has been preparing, with many colleagues, the most comprehensive and liberal program of structural economic reforms Russia has seen in a long time—spoke at the annual Valdai Club gathering with modest optimism for the country’s future. This year Kudrin did not take part in the Valdai meeting, and when I saw him earlier in October he seemed a beaten and depressed man who sensed that his hard work would lead to little or nothing.

That turnabout gives a good sense not just of the domestic economic policies we can expect from President Vladimir Putin, who did not exactly shock the world this month when he announced his candidacy for another six-year term, but also a hint of the legacy we might expect him to leave behind when his time as Russia’s de jure and de facto leader—now at 17 years and counting—comes to an end. Operating on the assumption of a Putin victory in 2018, I suspect that (a) his early economic successes—like robust growth of 7 percent annually in 2000-2008—will be eclipsed by much weaker economic performance to come and (b) we will not see significant change for the better in Russia’s relations with the West.

Both these features resemble Russia under a different long-serving leader, Leonid Brezhnev, whose tenure from 1964 until his death in 1982 was marked by political stability and, toward the end, by a stagnant economy, with the Soviet Union falling behind global competitors, and by tensions with the West, especially with the United States. Both in today’s Russia and in Brezhnev’s, the troubled relations with Washington dropped to new lows after brief thaws (which have been the exception, not the rule, over the past hundred years): détente in the early and mid-1970s and the Obama-Medvedev “reset” of 2009-2011. And as Putin has focused on reinvigorating Russia’s military might and global stature—at the expense, some would argue, of improvements at home—so did Brezhnev’s Soviet Union, reaching full nuclear and military parity with its superpower rival while its citizens famously queued for food and toilet paper.

That said, the USSR under Brezhnev—even in his much-joked-about dotage—was a far more authoritarian police state than today's Russia (and likely just about as corrupt); in foreign policy, it was much more seriously contesting the interests of the United States and its allies all over the world. And yet in the 1980s few, if any, of us, inside or outside Russia, had any idea that within a decade the mighty Soviet Union would collapse.

One big question about Putin’s legacy has to do with just that: Are there real seeds of revolution in the country and what will make them sprout and grow? The Western press has made much of the youth demonstrations organized and inspired by opposition figure Alexei Navalny, but this is more of a mirage than the embryo of a major social movement. Lev Gudkov, director of the Levada Center and perhaps Russia’s most respected pollster, told us in Moscow that it is exactly the young generation (age 18-29) that is the most pro-Putin of all, with nearly 90 percent supporting the president. How badly disappointed will they be in the regime in the years to come and what will they do about it?

Whither Economic Reform

Going back to his landmark article published on the eve of his promotion to the presidency in December 1999, Vladimir Putin has always strongly supported evolutionary rather than revolutionary change. The Valdai conference title “Creative Destruction: Can a New World Order Emerge from Conflicts?” characterized the current global period as highly turbulent with changes in the balance of power coupled with dramatic, rapid, ultimately unpredictable technological change. The message from Russian leaders was that a rapid pace of economic, political and social reforms has historically led to chaos and twice in the past century to the collapse of the state.

Maybe it’s not surprising then that an economic reform program to stimulate growth in Russia during the next term does not appear to be on the agenda. Kudrin’s plan, according to a high-level Russian government official, was supposedly being considered alongside several more, including that of the Stolypin Club, the Ministry of Economic Development and Trade and others, and the Kremlin would choose the best features of each to go forward with. That sounds like a recipe for no plan at all. In addition, officials in Moscow emphasized that discussion of key economic reforms, such as pension reform, would not be part of the presidential campaign.

We also learned that privatization of state-owned enterprises was not on the agenda for the foreseeable future. Officials provided some flimsy explanations for why this is the case, but the reality is that, with Russia under Western economic sanctions, there is little market for Russian assets, thus making them highly undervalued. The Rosneft privatization last December appeared as an embarrassing sham for the Russian government. Probably better to hold off on privatization if one has to resort to such a farce.

Without major reform or privatization, the Russian leadership appears to be betting on Russia taking the lead on technological breakthroughs in the next five to 10 years to catch up with, perhaps even surpass, its global competitors. Sberbank CEO German Gref gave a dazzling Steve Jobs-like presentation about major ongoing and accelerating breakthroughs taking place now in fields such as artificial intelligence, blockchain technologies, robotics, big data and others that will radically change the workplace as well as the global economy. He was effusive in his praise of Putin and the government, which has “seen the light” and executed a “U-turn” in the promotion of high tech. Even Gref, who had authored Putin’s initial economic reform program in 2000, did not talk about the need for reforms per se, but said that a technocratic government in Russia would be best in the years ahead. I would like to share his optimism, but it does remind me of the emphasis in the late Brezhnev years placed on the “nauchno-tekhnicheskaya revolyutsia” (scientific-technological revolution) and the idea that the USSR had to keep pace with, if not overtake, the United States and its allies. We know that did not turn out so well for the Soviet Union.

My main takeaway from these recent trips and discussions is that Russia is looking at fairly stagnant economic growth of about 2 percent in the coming years and, like all countries, will be grappling with great technological change that will be very disruptive at the individual, state and global level.

Ukraine, Sanctions and the West

One constraint on economic growth, as suggested above, lies in the continuing, and possibly deepening, Western sanctions against Russia, whose effect will likely increase over time. Russian elites, even Putin, acknowledge that the sanctions are having a detrimental effect on the Russian economy—usually pointing to the 1 percent drop in GDP estimated to be caused by sanctions. But in official circles the tendency is to diminish the negative effect and point to the positives of an import substitution policy, especially for agriculture. Privately, experts and business people debate how pernicious in the longer term (three to five years) the impact of the sanctions will be for the development of critical Russian technologies, such as in the oil and gas sector.

This naturally brings us to the question of Ukraine, as it is the main reason for the sanctions—imposed by the U.S., EU, Japan and Canada shortly after Russia annexed Crimea—as well as the biggest obstacle to normalizing Russia’s relations with the West. Last August, the United States Congress, in what I call a “hostile takeover of U.S. Russia policy,” codified these sanctions and placed further restrictions on U.S. economic engagement with Russia, as well as with Iran and North Korea. Symbolically Congress was saying that Russia is now part of an updated “axis of evil” that is dangerously opposed to U.S. interests in many contexts. This was also an expression of deep anger over Russian meddling in the 2016 presidential election, as well as congressional distrust of President Donald Trump who has long advocated easing the sanctions if not lifting them altogether.

From what I heard in Russia this fall, I see no reason for optimism here. Putin was especially defiant on Ukraine and on relations with the West in his remarks at Valdai. When a European panelist posed a question about Ukraine and prefaced it by saying “Europe sees now that the ball is in Russia’s court,” Putin immediately fired back that he sees it exactly the opposite—that the ball is in Europe’s court to put much more pressure on Poroshenko and his weak government to abide by the commitments he made in the Minsk II agreement. When another participant noted that Mr. Putin was very critical of many Western policies toward Russia over the years, and asked what he thought were the mistakes Russia had made with the West, his answer was simple and powerful: “Our most serious mistake in relations with the West is that we trusted you too much. And your mistake is that you took that trust as weakness and abused it.”

It is clear that Putin and his colleagues are very disappointed in the Trump administration, but they do not ascribe guilt to Trump personally, but rather to the deep Russophobia that permeates the U.S. Congress, media and political class. Perhaps the Kremlin really was expecting the Trump administration to make major concessions to Russia in order to re-track the relationship—it is hard to blame them looking back on the things Trump said about NATO, Ukraine and the status of Crimea and other issues pertaining to Russia. But it is also clear that the Kremlin was not, and still is not, ready to make any significant concessions on Ukraine that could result in a breakthrough. We also need to keep in mind that there is no powerful domestic constituency in Russia now to promote much stronger ties with the West or deep economic and social reforms to modernize the country.

Postscript

To conclude, let’s return to the legacy question and what this could look like in 2024, at the end of Mr. Putin’s (highly likely) next term. While I would like to be wrong, there is no substantial evidence to support the conclusion that the Russian president will unveil a major economic reform program that is essential for stimulating substantial economic growth, or that any resolution on Ukraine is in the offing that could begin to normalize Russia-Western relations. Absent something quite dramatic, the new normal for Russia is a stagnant economy, falling further behind competitors, coupled with a very scratchy adversarial relationship with the West.

No doubt Putin views himself as the only person capable of steering Russia through the rough waters ahead, and in announcing his candidacy—at an 85th-anniversary celebration of the Gorky Automobile Plant—he suggested a populist platform, positioning himself as the only candidate who can protect Russians’ jobs and security. But will his policies match the promise? And will his supporters stay loyal? I couldn’t help but notice that Putin himself evinced virtually no enthusiasm with the announcement, leaving the stage very shortly after a cheering crowd of “volunteers” endorsed his candidacy.

Andrew Kuchins is a senior fellow at Georgetown's Center for Eurasian, Russian and East European Studies.

Photo credit: Press service of the government of Russia (premier.gov.ru).