What to expect from Putin 3.0?
So that’s it then. At Saturday’s party convention Dmitry Medvedev announced that he would step aside for Vladimir Putin, currently prime minister, after next year’s presidential elections. Mr Putin, who served as president between 2000 and 2008, will be returning to the job for a third mandate.
Not that it surprises anyone, really. Putin’s enduring grip on Russia’s political apparatus has left little doubt about who’s been the puppet master all this time. His stature as an energetic, virile leader - driving Harley Davidsons, scuba-diving and riding horses bare chested - as well as his brash promotion of Russia’s interest abroad has earned him unmatched popularity among Russians. And his increasingly authoritarian methods have centralized political, economic and judicial power under one roof and marginalized any form of external opposition.
Yet the two men had maintained a veneer of suspense until now, and the announcement ends months of speculation over who will get the top job. In the short term this is good news: over the past few years political uncertainty had induced investors to take billions out of the country; they could now be convinced to return, especially as assets, dragged down by the global turmoil, are now on the cheap. This will give much needed oxygen to Russia’s financial markets.
In the long-run however, uncertainty remains. The current leadership already faces a number of challenges, which include a weakening popularity, rampant corruption, declining demography and violent insurgencies. But it will soon be confronted with the most daunting of all - a stagnating economy. In the years to come, due to decreasing reserves and insufficient investment, the production of oil will level off. Russia overwhelmingly depends on energy exports, so the country’s current account will rapidly deteriorate: imports of consumer goods is projected to exceed oil production by 2014. Moscow will then find itself increasingly dependent on foreign investment - and on global prices for hydrocarbures.
Much will depend on what route Mr Putin chooses for the country. Optimists hope he will take radical measures to diversify the economy and plants the seeds for modernization. On the face of it, signs shows that they could be proven right: in this week-end’s address to the party, he underlined Russia’s problems with a vehemence never witnessed before, and pledged comprehensive reforms to solve them. And before then, Putin had already started styling himself as a newborn reformer - he even proposed a new tax on the rich earlier this year.
Yet most fear that he will just stick to the current, flawed, ressources-based model. His power is heavily reliant on the mammoth energy/minerals lobbies, who see any attempts of liberalization as a threat to their vested interests. Few think he will seek to redistribute their gains to the rest of Russia’s economy. He has also methodically hollowed out the country’s institutions, depriving the system from the check and balances needed to guarantee a sound business climate. Wary entrepreneurs and investors will continue to settle abroad, and Russia will be short of key ressources to modernize a country - talents and cash.
So risks of stagnation loom large. Putin is about to run for another six years, and if he follows through with a fourth mandate he could serve for six more. That would make a good 24 years at the helm of Russia’s government, and put Putin in the category of former Soviet leaders Leonid Breznev (18 years) and Josef Stalin (around 30 years), not exactly remembered for their reformist zeal. His return brings back dark memories of economic and political immobilism.
Maybe Putin will undertand the historic responsibility that comes with running a country for almost a quarter of century, and catch the virus of reform. Maybe he will decide to embark on a radical modernization program. Or maybe he will just mould his strategy on that of his notorious predecessors, and bet that he can deal with Russia’s few bugs without rebooting the system. He could get away with it for a while - but not for long. In IT as in politics, system obsolescence generally ends up causing a fatal crash.