Democracy. Russia. CIS.

Putin’s Third Term: “Potemkin reform”

Posted by democratist on May 2, 2012

May 2nd 2012,

In our last article, Democratist wrote about the concept of “international society as homogeneity”: The basic idea is that states become more like each other over time because of the spread of ideas or ideologies at the international level; for example, the French revolution of 1789 popularized the ideas of nationalism, democracy and a more centralized state, which then became influential throughout Europe in the following two centuries. At around the same time the rise of the British Empire underscored the importance of science for national power through the industrial revolution.

As states compete against each other they promote ideas like nationalism, mass education, investment in infrastructure, and innovation to improve their international position: In each case the elite seeks to protect itself from the ultimate threat of military defeat through modernization.  As a result, states begin to resemble each other not only because of globalization or the exchange of ideas, but because their rulers have a vested interest in becoming more “modern” in order to protect their legitimacy at home, and compete internationally.

In many countries, this process has contributed to the adoption of democracy. In Britain for example, the extension of the franchise to the working class in 1918 can be seen, at least in part, as a reaction to the 1917 revolution, and fear of its influence on soldiers returning from the trenches by the British government.

In Russia there at least two major contemporary sources of this kind of international pressure on the state. The first is the idea of democracy itself as a form of legitimation: Internationally this pressure has grown sharply over the last twenty-five years. Domestically, it remains weak, but is growing as a result of flawed elections and government intransigence.

The second major source of pressure (and one of more immediate concern to the leadership) is the need for scientific innovation, especially in terms of military applications. This is of course not new; Russia has been trying to catch up with the west since at least the time of Peter the Great. However, since 2008 we have seen a resurgence in this issue, as it has become apparent that Russia is falling further behind.

Indeed, this problem was the main driving force behind the “Russia 2020” programme: First outlined in a speech given by Vladimir Putin in February 2008 (i.e just before the start of the Medvedev Presidency), “Russia 2020” suggests three alternative scenarios, in terms of the potential trajectories of Russia’s economic development;

  • The ”innovation” scenario. This presupposes the development of a national innovation system, competitive human capital, and regional development centers, and requires a comprehensive reform and investment programme.  It foresees an average annual GDP growth of 6.5%.
  • The “energy and raw materials” scenario, which is based on faster development and modernization of the extractive sector, and projects an average annual growth of 5.3%.
  • The ”inertia” scenario,” which assumes no significant improvement, and therefore forecasts an average growth rate of 3.9% per year.

In our opinion, while over the course of his presidency Dimitry Medvedev has genuinely attempted to put some flesh on the bones of the proposed “innovation” scenario (tax breaks, technology parks, abolishing import duties on high-tech equipment, trying to encourage foreign investment), over the last couple of years it has shown increasing signs that it is encountering resistance from within the ruling class.

The reason for this impasse is that many in the nomenklatura are opposed both to economic reform (which threatens their privileged positions) and even more so to the implied political changes which would be the backbone of an innovative economy.

In this regard, we consider Putin’s return to the presidency on 7th May as indicative of a broader reassertion of power by these interests, and an indication that they remain eager to avoid the potentially “destabilizing” effects of the political and economic reform required to both attract increased investment, and meaningfully achieve the “innovation” scenario.

Instead, they appear to be hoping that a continued recovery in hydrocarbon prices over the next few years will allow Russia to return to a greater emphasis on the second, ”energy and raw materials” development path, with its promise of a (still robust) 5.3% average annual growth.

They may or may not achieve this goal. But while such growth rates are impressive, especially when compared with a still crisis-ridden West, the inability to modernize which this choice implies suggests serious problems for Russia’s military capabilities: In the absence of innovation from within the domestic public or private sectors or from foreign investors, and with a continuing “brain-drain”, Russia’s aging cadre of engineers and largely soviet-era industrial base are falling behind.

As Alexander Golts wrote in Yezhednevny Zhurnal on 24th April, the leadership is now worried, “that the technological revolution sweeping the world could devalue their most important legacy from the Soviet era – its nuclear arsenal.” However, as he also correctly argues, “any serious reform in education or the defense industry “will eventually run up against Putin’s unyielding power vertical”.

Pressure from the international level is therefore increasingly making itself felt in Russia’s domestic politics: The opportunities for democratization, liberalization and innovation exist and all three are interconnected. However, the threat they pose to key vested interests make all equally unlikely. Instead we will more likely see “Potemkin reform”; pre-selected candidates for gubernatorial elections and a multiplicity of insignificant parties instead of democracy; promises, corruption and profligate spending instead of innovation.

But while you can ignore reality, you can’t ignore the results of ignoring reality: In the event that the Russian military were to face a humiliating defeat or serious setback over the coming years as a result of its increasing comparative backwardness, while growing demands for political change remain unanswered, the domestic political impact will be devastating.

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