The Times published yesterday 2 very interesting articles that give a good insight into the consequences of the Russian elections that have put Dmitri Medvedev in the presidential seat formerly occupied by Vladimir Poetin. The first article “from bankruptcy to big bucks” considers the political economy of Russia. The second analysis of Michael Binyon “Back-seat driver should resist trying to grab the wheel” gives an interesting insight into the psychology of Russia’s new president
From bankruptcy to big bucks
Two three-letter words sum up Russia’s economic good fortune under Vladimir Putin: oil and gas.
Russia was bankrupt just a decade ago, its economy in meltdown after the Government defaulted on its foreign debt and the stock market lost two thirds of its value in a single day.
Oil was just $11 a barrel in 1998, half the level of the year before, but the price rebounded sharply to $35 just as Mr Putin came to power in 2000. Foreign currency reserves tripled and Russia — the world’s largest oil producer and second only to Saudi Arabia as an exporter — has been awash with money ever since as the price of crude has risen to above $100 today.
It has wiped out its international debt and built up foreign currency reserves of $480 billion, the third largest in the world after China and Japan. It has also built up a vast stabilisation fund — worth $144 billion and growing — to support future investment and insulate the state budget against falls in the oil price.
Dmitri Medvedev inherits a country transformed by oil, though he cannot hope to enjoy Mr Putin’s luck in seeing revenues triple. One immediate challenge is to tame inflation at almost 12 per cent as the petro-fuelled economy threatens to overheat.
But the former chairman of Gazprom knows that Russia’s status as an energy superpower can only grow. Russia is the world’s largest gas exporter and has the world’s largest proven reserves. It supplies a third of the EU’s gas imports, a dependence that has triggered alarm bells in Brussels, and is extending its reach with new gas pipelines and deals to sell direct to consumers.
Critics say that the Kremlin is already using its energy influence to reassert political influence over its former Soviet neighbours, raising prices and manipulating supply. Russia replies that it is simply switching to market prices for everybody.
Some experts warn that Russia has become dangerously dependent on energy and that a dip in prices would hit the economy hard. Mr Medvedev has made diversification of the economy a central part of his programme, promising to encourage the growth of small businesses by slashing red tape and fighting bureaucratic corruption.
Analysis: Back-seat driver must resist taking the wheel
President Putin insisted last September that he did not want his successor to be a puppet. Russia would need a strong President for the foreseeable future, he said, since party democracy was still in its infancy. But did he mean it? And now that he is no longer President, will he allow his hand-picked successor any room for manoeuvre?
Mr Putin’s ambivalence was already clear then, a month before he announced that he was “willing” to serve as a future Prime Minister. He also declared that he intended to continue playing a key role in Russia’s government, and that whoever followed him “will have to reckon with me”. So how does he propose to steer policy-making as a back-seat driver? Already there are forecasts that the Kremlin Zil, zigzagging in different directions, will crash, and that it will be President Medvedev who gets hurt.
Dmitri Medvedev has no political constituency of his own. A middle-class lawyer, the son of academics, he owes everything to Mr Putin, the mentor who is very different in temperament, background and ideology. He is a competent administrator — he transformed the lumbering state-owned Gazprom into one of the world’s most influential energy companies. But, unlike Mr Putin, he has no loyal following of acolytes, former KGB colleagues or ambitious politicians. He will be accepted by the Kremlin siloviki (power-brokers) solely because he is Mr Putin’s man.
Both men understand this. But both know that a clone would be unacceptable at home and overseas. Mr Putin has ridden the wave of nationalist, nostalgic and aggrieved sentiment, basing much of his popularity on harnessing Russia’s longing to be strong, disciplined and feared again abroad.
The mild-mannered Mr Medvedev can never don the same clothes. But he can show a different face: the liberal (a relative term in Russia) who speaks for the middle class, the conciliator in tune with a young generation of businessmen more open to the outside world.
This would go down well with the intelligentsia, the only class not swept away by Putinmania. It would also smooth Moscow’s dealings with the outside world after a tricky year. All that would be useful to Mr Putin who, as Prime Minister, will remain in charge of domestic policy, where his authoritarianism finds greatest resonance.
The two can therefore work in tandem — the good cop and the bad cop. The bad cop will clearly set the pace — but he will do so as he always has: incrementally and often in the shadows. And if Mr Medvedev has any mind to challenge this arrangement, there are plenty of Putin loyalists to remind him who is still the boss.
Nevertheless, a clash could occur, largely because the presidency carries duties that cannot be ignored even by a dominant Prime Minister. Mr Putin must at times defer to the head of state, especially in dealings with foreign countries.
Neither Mr Putin nor the Russian public would welcome a President they do not respect. Mr Medvedev must assert himself at least to the point where he is considered a political figure in his own right. The question is whether, if he starts turning down an unfamiliar route, the back-seat driver will seize the wheel and even eject the driver.
