Source: Carnegie

Lonely at the Top

By Anders Åslund

Originally published in The Moscow Times on July 13, 2004.

President Vladimir Putin has had a fantastic run. The economy has grown by 6.5 percent per year for the last half-decade. Macroeconomic problems have been resolved in resolute fashion. Putin routed his opponents in both the recent parliamentary and presidential elections. Oligarchs and regional governors have been cowed, and the media have been transformed into a choir that sings hymns of praise. Few political leaders can boast such a successful first term.

Alas, Putin's second term is not likely to resemble his first because he has altered the nature of Russian politics. His first term was characterized by a balance of power between the oligarchs and siloviki, as well as between the federal government and regional governors. Although increasingly controlled, substantial independent media voices still existed.

Thanks to open competition the best ideas usually prevailed. The government made some wild decisions, but they tended to be checked and reversed. Russia had become a stable and predictable society because of an intricate system of checks and balances, which helped make Putin enormously popular. He could take credit for the good and blame the bad on others.

Now everything has changed. Putin has successfully concentrated extraordinary power in his hands. His chief of staff and prime minister do not dare to do anything without a direct command from him. Both chambers of parliament have lost all independence, so they have to be instructed as well. Even the regional governors are subdued. Most checks and balances have fallen by the wayside. With merciless logic, the problems political science tells us are caused by over-centralization of power are rapidly emerging.

The fundamental problem is that the president has to make all significant decisions himself. He has made that clear he wants it this way, but one person cannot make all the decisions, and the outcome is a government in stalemate.

As a result, not only long-awaited administrative reforms but virtually all structural reforms have ground to a halt. The current bank crisis illustrates how a limited problem becomes a big headache when the authorities do not act in a timely manner. People now wax nostalgic about the decisiveness of former chief of staff Alexander Voloshin and former Prime Minister Mikhail Kasyanov.

Regional governors have also lost power. Under Boris Yeltsin they ruled unimpeded, even organizing strikes to blackmail the federal government. In Putin's first term, a fruitful balance reigned, but it has been jeopardized. Governors have also started delegating their decisions to the president. Russia has recently seen a couple of minor strikes, and the weakened governors have been reluctant to resolve them, making them national concerns.

After most checks and balances have been dismantled, nothing can discipline the victorious state agencies, notably the security services, from enjoying the fruits of corruption. Extortion carried out by law enforcement and central state bodies has by all accounts reached unprecedented levels.

As the most important decisions hinge on Putin's whims, Russia has lost its relative transparency and predictability. The stock market, especially the price of Yukos shares, illustrates the ensuing vagaries.

In his first term, Putin proved himself a consummate politician, nurturing his enigma, appealing to nearly everybody and playing multiple interest groups off against one another. Now he appears not to like politics. His idea of consolidating power is that of a bureaucrat striving for absolute control. United Russia is a party of bureaucrats, not politicians. Putin does not even use a press spokesman, compelling himself to make all statements and depriving himself of plausible deniability. His KGB roots are all too apparent: Trained to trust no one, he only trusts himself.

For Putin, the result is unfortunate. His enigma has evaporated as he has overexposed himself. Because of his evident and overwhelming power, nobody but him is likely to be blamed. Thanks to their prior independence, the Russian media have enjoyed great popular credibility, but this will soon be lost under increasing state control. The public pressure on Putin to perform will be all the greater, since he will have to justify himself with economic or national achievements at the same time that his ability to deliver is diminishing.

The problems Putin now faces are largely of his own making. The starkest example is the Yukos affair, which threatens to become the hallmark of his second term. His motives appear to be a mix of politics and personal vengeance, while others desire to get their hands on Yukos' assets. This scandal has made his judicial reform such a joke that he wisely avoided mentioning it in his annual state of the nation address. Putin does not seem to know how to get out of this mess, leaving him with little choice but to bankrupt one of Russia's biggest and best companies. To avoid looking like a robber, he might even be forced to nationalize it, thus endangering Russia's successful oil industry revival, which has been driven by competing private oil companies.

The new Russian malaise is naturally being reflected in the foreign media, harming Russia's international reputation, which Putin did so much to bolster in his first term.

Such is the situation before August, a month that often brings disaster to Russia because most senior officials are on holiday. Either petty crooks try their luck, or nobody is in place to handle an unexpected crisis. Russia appears unlikely to avoid serious crises with such a dysfunctional government, but it is difficult to predict what sort of crisis people should be worrying about, because the most unexpected crisis usually becomes the most serious.

Putin's team has learned the essence of Western economics admirably. Now it needs to take a crash course in political science.

Anders Aslund, director of the Russian and Eurasian Program at the Carnegie Endowment for International Peace, contributed this comment to The Moscow Times.