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New Left Review 44, March-April 2007
TONY WOOD
CONTOURS OF THE PUTIN ERA
A response to Vladimir Popov
In ‘Russia Redux?’, Vladimir Popov has provided a lucid reckoning of the
terrible economic, political and human costs of the shock-therapy era.
If Russia is in slightly better shape now than seven years ago, it is
still significantly worse off than it was twenty years ago. As one
striking graph after another demonstrates, GDP, investment and life
expectancy have yet to return to their 1989 levels. What Popov terms
‘the recession’ has few comparisons in world economic history.
Nevertheless, it is heartening that he can present data which point to
significant improvements in several areas. After the ceaseless
turbulence and moral bankruptcy of the Yeltsin years, the two
administrations of Vladimir Putin have been widely characterized as
inaugurating a new era of stability in Russia: state power has been
reasserted and, thanks to high oil prices, GDP has grown markedly,
government finances are in the black, and much of the country’s external
debt has been paid down. There has also been good news in the social
sphere: the birth rate has risen, while the suicide and mortality rates
have declined.
However, as Popov warns, there are many dangers ahead. The rouble is
overvalued, and the economy is overly dependent on the current
commodities bonanza. Moreover, the government has not used the windfall
from natural resources to fund spending on public goods, and has even
opted to further shrink the tax base. Nonetheless, Popov concludes that
‘Russia is in better shape today than seven years ago’, and asserts that
the priority is to ‘restore the institutional capacity of the state’.
The erosion of democratic prerogatives that has accompanied Putin’s
re-centralization drive is the price that must be paid for continuing
stability; the alternative is chaos.
Popov’s empirical approach is a much-needed corrective to the
liberal-capitalist mirages of ‘transitology’, and to the Kremlin
shadow-puppetry of the mainstream Russian media. Above all, it provides
a solid basis on which to advance discussion. What follows is an attempt
to probe further into the trends Popov has outlined. This is in part a
matter of more detailed quantification—differentiating the elements of
the overall picture, in order to see more clearly the imbalances between
them. But a closer examination of Russia today also has far-reaching
qualitative implications, which in turn will determine how—or indeed
if—the hazards Popov has identified are addressed.
Disequilibria
The rate at which Russian GDP has grown since the rouble collapse of
August 1998 is significant, reaching a high of 10 per cent in 2000, and
averaging between 4 and 7 per cent over 2001–06. The rising economic
tide has lifted the incomes of many: the national average reached 10,287
roubles ($350) per month in November 2006, compared to 2,281 roubles
(around $80) in 2000, while the poverty rate declined from 29 per cent
in 2000 to 17.6 per cent in 2004. The country’s Gini coefficient, the
standard aggregate measure of income distribution, rose from 0.3 in 1992
to almost 0.5 in 1998, but by 2000 had dropped to 0.4, indicating that
at least some of the staggering inequalities of the 1990s had been
smoothed out. However, the Gini figure has since then begun to creep
upwards: from 0.397 in 2000 to 0.409 in 2004. [1]
Two further qualifications should be made to this picture, relating to
the social and geographical distribution of Russia’s new prosperity.
Wealth remains highly concentrated: in 2002, the top 20 per cent of the
population by income accounted for 46.6 per cent of total income, the
bottom quintile for only 6.1 per cent. The latter were faring worse in
relative terms by 2004, when they commanded 5.6 per cent of total
income. [2] Contemporary Russian society is to a large extent stratified
by chronology: among those buffeted by the hurricane winds of shock
therapy in the 1990s, the elderly and the retired were prominent, as
already meagre pensions went largely unpaid during the Yeltsin years.
Here again the country’s improving fortunes have helped, and the sums
paid have even increased. However, they remain low—2,395 roubles a month
($85) in 2005—and the monetization of a string of benefits in 2004 has
stretched pensioners’ resources still further. Their standard of living
has been eroded by having to pay for transport and utilities they
previously received for free, and by inflation—formerly in double
figures, now at 9.7 per cent, and still likely to outpace any increase
in the standard pension.
Geography is a crucial variable in assessing Russia’s present condition.
Both population and resources have always been distributed extremely
unevenly across the country’s vast territory. Industry is concentrated
in European Russia, the Urals and the Arctic Circle; as a result, the
per capita gross regional product of the Central Federal District, for
instance, is two and a half times higher than that of the Southern
steppe and North Caucasus. The capital’s gravitational pull on the
country’s economy is extraordinary: Moscow alone accounts for 20 per
cent of GDP. If we factor in the wider Moscow region, St Petersburg and
Tiumen’, only ‘four regions produce nearly half of Russia’s output’. [3]
The present reliance on exports of oil, gas and metals has exacerbated
existing imbalances by dramatically raising the wealth of resource-rich
regions: annual per capita gross regional product in Tiumen’ oblast’,
for instance, stood at 575,411 roubles in 2004 ($19,800), compared to
12,583 roubles ($430) in Ingushetia, the Russian Federation’s poorest
sub-unit. [4] Needless to say, this torrent of cash has largely flowed
into the coffers of extractor companies as profits, rather than to
employees as wages.
Regional aggregate figures conceal further disparities. There are
significant differences not only between regions, but within them. In
the Central Federal Region, for instance, annual GRP per capita stood at
$4,350 in 2004, and the average yearly income at the end of 2006 was
$6,120. But the gap between the region’s maxima and minima is vast:
where the average annual income in Moscow is $13,440, in Ivanovo oblast’
it is a mere $1,860—a ratio of over 7 : 1. Lower, but nonetheless
significant, ratios obtained elsewhere: in the Urals, the average income
of the Yamalo-Nenets Autonomous okrug is nearly five times higher than
that of Kurgan oblast’; inhabitants of Samara oblast’ on the Volga earn
two-and-a-half times as much, on average, as those of Mordovia. [5]
Given the aforementioned concentration of industry, and corresponding
focus of investment and employment opportunities, the distance between
well-fed regions and lean zones seems set to widen in the years ahead.
In such a context, the gradual increase in domestic fuel prices that
Popov recommends in his conclusion would have vastly disparate impacts
in different parts of the country and on diverse social
sectors—reinforcing the dynamic of growing territorial and social
inequality.
Stabilization and deceleration
High global oil prices, coupled with the dominant role of natural
resource extraction in the Russian economy, have resulted in a Slavic
version of the ‘Dutch disease’. Popov points to the consequent
overvaluation of the real exchange rate as the principal reason for the
effective slowdown in the rate of GDP growth since 2000. But a sequence
of other, interconnected factors could be adduced, with significant
longer-term implications.
Firstly, there is the matter of investment, both in terms of
scale—relatively low, at less than 20 per cent of GDP—and character. The
smashing of the planned economy in the 1990s led to large-scale
de-industrialization in Russia, and what profits did accrue from
surviving enterprises were largely funnelled out of the country into
offshore accounts. The rouble collapse of 1998, in rendering exports
more competitive, encouraged capitalists to repatriate some of this
wealth. But as Simon Clarke notes, though investment has increased since
the 1990s,
most of this . . . [has been] in piecemeal re-equipment and
reconstruction of existing facilities to maintain or expand existing
production capacity in a favourable market environment, rather than in
the construction of new plants which will be able to produce to world
cost and quality standards and actively expand the market. [6]
The direction of investment towards existing capacity, rather than
towards diversifying the economy, may partly explain why the volume of
imports increased by nearly 20 per cent in 2003–05: even in auspicious
macroeconomic circumstances, domestic goods have been unable to compete
with foreign-produced ones in many sectors. [7] This seeming
unwillingness to devote funds to broadening the base of the Russian
economy—and so the basis for future profits—suggests that the Russian
business elite remains largely extractive in nature. Unless and until
this orientation changes, GDP growth will continue to depend above all
on the vagaries of global oil prices.
The reluctance to invest is not confined to the private sector. In 2004,
the Russian government set up a Stabilization Fund in which the dizzying
quantities of petroroubles would accumulate. Any revenues from sales of
oil over a price of $27 per barrel for Urals crude are now paid into the
fund, the balance of which peaked in June 2006 at just under $80bn. [8]
Yet as Popov observes, the Putin administration has ‘failed to use
windfall revenues from oil and gas exports . . . to repair badly damaged
state institutions and to restore the provision of crucial public
goods’. [9] Some of the ‘Stabfond’ booty has been used to pay down
external debt and cover pension arrears; but since the summer of 2006,
it has been almost exclusively spent on foreign currency—45 per cent on
dollars, 45 per cent on euros, 10 per cent on sterling. Between July
2006 and the end of January 2007, cumulative spending on foreign
currency from the Stabfond reached 2.4 trillion roubles, or $91bn—on top
of the $250bn in foreign reserves the state already possessed by June
2006. [10]
In a country where ‘as many as one hospital in five still lacks hot
water and sewerage facilities’, where ‘state funding pays for less than
one-third of the operating costs of state universities’, a government
awash with cash has nonetheless opted not to spend much of it on public
goods. [11] Instead, it has poured its resources into global capital
markets, to ‘finance oil importers’ bigger current-account deficits—in
effect, lending the increase in fuel bills back to consumers’, and
propping up their economies rather than redressing the imbalances of its
own. [12] This, it should be stressed, is in addition to running a
budget surplus of 7.7 per cent of GDP in 2005, and implementing a series
of regressive changes to the tax regime since 2001—including a flat
income-tax rate of 13 per cent and a cut in corporate tax from 35 to 24
per cent—that have systematically favoured corporate wealth at the
expense of ordinary citizens. [13]
Who rules Russia?
The Putin government’s choice of spending priorities—bolstering the euro
and the tumbling dollar rather than providing for the needs of its own
people—and the reluctance of Russia’s entrepreneurs to invest in
expanding domestic markets, raise fundamental questions as to the
overall strategy of Russia’s current business and political elite.
Before addressing these, however, we need first to tackle a more basic
matter: who are Russia’s new rulers?
Much has been written about the rise of representatives of the ‘power
structures’ under Putin, one-time KGB Lieutenant Colonel and, prior to
his elevation to the premiership and presidency, director of the FSB,
successor agency to the KGB. Drawn from the ranks of the military and
security services, siloviki are indeed prominent in the current Russian
leadership: according to Olga Kryshtanovskaya and Stephen White,
siloviki composed 58.3 per cent of the Security Council in 2003,
compared to 33.3 per cent in 1993, and a mere 4.8 per cent in the
Politburo of 1988. They have also increased as a proportion of the
regional elite: of 88 heads of federal sub-units, 2.2 per cent were
drawn from military or security circles in 1993, rising to 4.5 per cent
in 1999, and then surging to 10.2 per cent in 2003. [14] Of most concern
to those fearing an authoritarian restoration is the fact that many of
these appointees remain within the ‘active reserve’ of their original
ministry—from which they are effectively seconded, and for which they
are supposed to prepare a monthly report on their activities.
The melding of security services and political power is a salient
characteristic of Putin’s Russia; a point to which I will return.
Perhaps even more striking, however, has been the swelling presence of
business in the state. The rouble collapse of 1998 profoundly altered
the character and composition of the Russian business elite, virtually
sweeping away Moscow-based banking and finance, while the sudden boost
to domestic production resulting from default and devaluation led to a
rise in the weight of the real sector—and a corresponding new prominence
of industrial regions. Where the 1990s scene was dominated by a handful
of ‘oligarchs’, at the turn of the century political influence and
economic throw-weight was distributed across a larger, more
geographically dispersed pool of individuals, with closer affiliations
to the state apparatus than their tycoon predecessors. Indeed, an
examination of the trajectories of the new business elite reveals that
in 2001, 29 per cent had a nomenklatura background, up from 24 per cent
in 1993; Kryshtanovskaya and White further observe that ‘the main source
of recruitment of the business elite is government ministries’. [15]
Conversely, business has been a significant source of state cadres. This
applies at all levels: a whole section of Putin’s Presidential
Administration was drawn from the ranks of Al’fa Bank, while as Table 1
shows, by 2003 some 20 per cent of the government was drawn from
business, which provided almost the same proportion of Duma deputies.
The representation of business in the upper house of the Russian Federal
Assembly was still higher: in 2002, almost a third of Federation Council
members came from private enterprises. [16] More than a dozen Russian
regions, resource-rich ones prominent among them, are now headed by
businessmen from major local companies.
The upshot of the 1998 rouble collapse, then, was a ‘renegotiation, but
not a dissolution, of the interpenetration of business and government
that defines an oligarchy.’ [17] Indeed, with Putin’s successive
appointments, since 2001, of key government figures and allies as
chairmen of state companies, the relations between business and
officialdom have become still closer. The two are now, in the words of
the Financial Times, ‘extraordinarily intertwined’: Deputy Prime
Minister Dmitri Medvedev is also chairman of Gazprom; Putin’s deputy
chief of staff, Igor Sechin, is also chairman of Rosneft. Taking the
Presidential Administration as a whole, ‘11 members chaired 6 state
companies and had 12 further state directorships; 15 senior government
officials held 6 chairmanships and 24 other board seats.’ Many members
of the government are also rumoured to have significant, undisclosed
business interests—such as the Communications Minister, Leonid Reiman,
who allegedly still holds a stake in the phone company he co-founded,
Telekominvest. [18]
The Financial Times has described Putin’s immediate entourage as the
‘quasi-board of what might be called Russia, Inc.’ The broad extent to
which state and business have merged, and the amphibious character of
functionaries and executives, initially suggest that this would be an
apt term for the country as a whole. The question arises, however, as to
which of the Russian elite’s two faces—business and state—predominates;
which fractions set longer-term goals and priorities?
Elite orientations
The reassertion of state control over strategic companies and sectors
has been seen as a sign of stealth nationalization—the state using its
administrative powers to crush Khodorkovsky’s YUKOS and, more recently,
even muscle aside multinational companies such as Shell. Western
establishment analysts have diagnosed these developments as a case of
‘resource nationalism’, likening Putin’s actions to those of Chávez or
Morales, while the latest leitmotif of Russian political discourse has
been the idea of ‘sovereign democracy’—essentially referring to Russia’s
ability and determination to pursue an independent course, no longer
reliant on loans or approbation from the West.
Neither of these concepts is an adequate measure of the orientation and
outlook of Russia’s contemporary elite. As noted above, the Putin
administration has not actively redistributed oil wealth to those
dispossessed by the ‘reforms’ of the 1990s; indeed, its tax regime seeks
precisely to benefit the wealthy still further, while the monetization
of benefits and increased charges for utilities penalize the poor.
Though the poverty rate is declining and wages rising, any significant
drop in oil prices will likely reverse these trends, which will once
again have the most severe impact on the lowest income strata. The
decision to spend the oil windfall on euros and dollars, meanwhile, is
ostensibly motivated by a desire to keep inflation in check; but in a
context of continued infrastructural dysfunction, such prudence is a
form of deferred suicide, starving the nation of the public goods that
would secure its survival in the longer term.
Popov criticizes the decision not to spend oil revenues on public goods
and infrastructure, but does not pose the question of why it was made.
It is clear, however, that for all the nationalist rhetoric emanating
from the Kremlin, it is not the livelihoods and prospects of its own
citizens with which Russia’s rulers are concerned. Rather, it is the
continued flow of oil out and money in which they seek to secure,
distributing largesse to the silent narod when electoral needs dictate,
but otherwise focused on the twin prizes of profits and power.
The relationship between these is perhaps the structuring feature of
Russia today: administrative power provides crucial tools for business
success, while commercial considerations often dictate the allocation of
state assets and offices. The convergence of state and business is in
that sense far more than a coalition of the self-interested: it is a
symbiosis rooted in the neo-patrimonial form assumed by capitalism in
Russia. For the state has been the key structure through which the
country’s capitalists have pursued their economic interests—using its
officials to secure the outcome of privatizations; to facilitate hostile
(often armed) takeovers, asset-stripping and money laundering; to defer
or conceal tax debts; even to act as paid protection against organized
crime. At a meeting with the country’s most prominent tycoons in July
2000, Putin revealingly pointed to ‘the fact that you have yourselves to
a significant extent formed this state, through political and
quasi-political structures under your control’—adding that ‘perhaps what
one should do least of all is blame the mirror.’ [19]
In the twenty-first century, the state has become the indispensable
guarantor of property acquired in the 1990s. Many have seen in Putin’s
selective persecution of the ‘oligarchs’ since 2000 a forceful
reassertion of state prerogatives and authority over business. However,
this is to overlook the extent to which a strengthening of state power
serves precisely the interests of Russia’s business elite. OECD
economist William Tompson observes that ‘for Russia’s new rich,
state-building and structural reform were intended to consolidate the
victories they had won in the 1990s.’ [20] In a context where state and
business overlap so extensively, an expansion of state power has often
simply meant an exponential increase in the coercive strategies
available to business groups. [21] While the centralizing rhetoric of
the national leadership has gained in stridency, business elites have
shifted their attention to securing the services of the state apparatus
at regional and local levels, where ‘state resources . . . are rented to
powerful and expanding business groups’. [22] The phenomenon of state
‘capture’ that characterized the 1990s has, then, been modified in form
rather than substantively reduced.
The resulting formation could be described as one in which the state has
little or no autonomy from the economic interests of Russia’s elite. The
fractions of this state–business alloy consist of both state actors and
business groups, who combine according to common economic interests.
Divisions on forward policy—such as the further liberalization and
lowering of tariff barriers required for WTO entry—take place along
sectoral lines, with many export-oriented manufacturers and
still-fragile banks aligned with proponents of ‘sovereignty’, against
liberal supporters of increased integration into the global economy. The
influence of the two main tendencies fluctuates, with Putin hovering
above the fray—and deliberately working to maintain the fragmentation of
domains and interests that has thus far blocked the emergence of a
unified capitalist class.
Putin enjoys considerable support among the general populace, but this
has a shallow, plebiscitary character, and should not be mistaken for a
broad social consensus on which the elite as a whole could depend.
Indeed, Russia’s rulers have been unable to forge an ideology with any
consistent appeal; the recent cultivation of nationalist sentiments has
mostly taken the form of post-imperial spasms, rather than a coherent
vision that would enable them to exert moral leadership. They instead
hold sway over the atomized populace through a combination of electoral
approval for Putin himself and various unformalized mechanisms of
coercion. These play a more prominent role than Popov’s analysis—where
crime, corruption and the informal sector appear as mere by-products of
an unstable conjuncture—would suggest. Indeed, they are integral to the
functioning of Putin’s Russia, and as such are critical to any
understanding of its future course.
Symptoms of informality
The principal administrative change wrought by Putin has been a
formidable re-centralization; the ‘vertical of power’, in the
President’s own phrase, has been firmly planted in the country’s soil.
This has meant, on the one hand, increased efficiency in the basic
functioning of the state—above all in the collection of taxes—and the
assumption, to a higher degree than in the Soviet period, of civilian
posts by military and security service personnel. On the other hand,
increased centralization has had at least two other, less widely
remarked consequences. Firstly, the federal centre has not done away
with regional structures, but rather has simply created a new layer of
state employees who usurp the functions of their counterparts, without
displacing them altogether. Hence, in part, the phenomenal
bureaucratization of the Russian state: there are now 1.3 million
functionaries, more than twice as many as the USSR had prior to its
dissolution. [23] Secondly, it is not only authority that has been
centralized: the shadow world of corruption has been similarly
reorganized. According to research by the Russian think-tank INDEM,
although the quantity of bribes decreased by 20 per cent over 2001–05,
the average size of a bribe actually increased thirteen-fold. [24] The
same study estimated the volume of business corruption at $316bn, while
the Russian deputy general procurator put it at $214bn. Either way, as
Leonid Kosals observes, ‘both figures exceed the scale of revenues of
the Russian federal budget’—adding that the growth of corruption ‘is
roughly tenfold, which is many times greater than the growth of the
economy as a whole.’ [25]
The scale of corruption in Russia stems above all from the continued
prevalence of informal practices in all spheres of society—in turn a
product of what Georgi Derluguian has called the ‘persistent
under-institutionalization of Russian life’. [26] In political terms,
the lack of institutions gives rise to widespread personalism, which at
the very least sustains a ferment of cliques and factions—witness the
number of St Petersburgers in Putin’s retinue. It also frequently clears
the way for brazen nepotism. To cite only two of countless examples:
between 1996 and 2000 the Kursk oblast’s oil concern, pharmacies, public
security and cultural affairs were placed into the hands of his
relatives by the then-governor Aleksandr Rutskoi; while much of
Bashkortostan’s economic life today lies in the purview of president
Murtaza Rakhimov’s family.
There are, of course, plenty of similarly egregious cases elsewhere in
the world. But the personalism that facilitates such corruption is part
of a whole complex of informal practices on which the post-Soviet order
relies. As Alena Ledeneva has argued, ‘the informal component is an
integral part of political power in Russia, which makes it both
efficient and dependent on the unwritten rules, their non-transparency,
and the selectivity of law-enforcement.’ [27] Hence, for instance, the
dismemberment of YUKOS did not aim solely to transfer prize assets to
companies connected to the government; it also deliberately sought to
create uncertainty among investors as to the rules of the
game—preserving the prerogative of state officials to uphold or overturn
property rights, according to the interests of their own fractions.
The Russian economy has long possessed a sizeable shadow sector. In the
Soviet period, it was above all a mechanism for coping with shortages;
similarly, in the 1990s, when cash was in short supply and, as Popov
records, ‘the payment system was on the brink of collapse’, barter deals
made up 50 per cent of total transactions and the shadow economy
accounted for between 40 and 50 per cent of GDP. [28] The commodities
boom has ensured a substantial monetization of the economy, but Popov
warns that barter and non-payment could surface once more, ‘if the
authorities resort to tight monetary policy’. This somewhat understates
the extent to which informal economic mechanisms are a permanent feature
of Russia’s socio-economic landscape. Again, the favourable
macroeconomic climate conceals the persistence of unofficial channels;
where the latter ‘were used in the Soviet economy to protect enterprises
from the exigencies of the plan’, present-day recourse to them ‘protects
companies from the exigencies of the market.’ [29]
Crime and colonial war
According to Popov, ‘the scale and scope of criminality in Russian
society remains vast’. The murder rate currently stands at over 20 per
1,000—three times as high as that of the US, and ten times that of
Western and Eastern Europe, Canada, China and Japan. Still, this is
lower than before. There has, however, been a 60 per cent increase in
the overall crime rate over 2002–06. Popov contends that this is ‘most
likely a sign of better recording of crimes’. [30] Many would not share
his confidence. A higher degree of (real or perceived) official
competence no doubt encourages people to report crimes; but enough to
account for a 50 per cent rise, over an already high rate? The
persistence of informal practices mentioned above, the continued and
growing corruption, and the further entrenchment of income inequalities,
all work to expand the social fractures in which crime thrives. The fact
that the law is manifestly an instrument at the service of particular
interests and factions has arguably done much to undermine respect for
legality.
But it is Putin’s continued use of force that has contributed most to
the legitimization of violence in the country as a whole. The war in
Chechnya, waged with even greater ferocity than that of 1994–96,
propelled him to the presidency in 2000, and has played a vital role in
his consolidation of an authoritarian system: crushing Chechen
aspirations to independence was the militarized component of Putin’s
re-centralization drive, and his uncompromising stance underpinned much
of his initial public appeal. Popov glides past the atrocities and
ongoing occupation, noting only that ‘today the separatists are largely
defeated’. Russian military and government spokesmen have declared
victory several times—starting with Putin himself as early as 2000—but
with the war now in its eighth year, no end is in sight. The Russian
army continues to suffer casualties at an average rate of around 3 per
week, picked off by a small but highly mobile resistance; the puppet
regime Moscow has set in place consistently kidnaps, tortures and kills
its countrymen, and is bereft of all legitimacy. There is no viewpoint
from which Putin’s war on Chechnya could be considered a success. Popov
himself provides indirect confirmation of its failure when he refers to
the 43 per cent of the population who in early 2004 wished the president
to end it; by late 2006, the proportion of those in favour of
negotiations with the separatists stood at 64 per cent. [31]
The war is a catastrophe whose consequences stretch far beyond the North
Caucasus. In Russian society as a whole, Putin’s counter-insurgency in
Chechnya has fostered an upsurge in xenophobia and unapologetic
imperialism, the killing of tens of thousands of Chechens portrayed as
essential to the survival of Russia as a state. It has had a more
directly damaging impact on over a million Russians, ranging from raw
conscripts to mercenaries to law enforcement officers, who have passed
through Chechnya since 1994: all of them have either committed or
witnessed acts of boundless brutality, and for all of them, unlimited
force is an officially sanctioned mode of conduct. The psychological
trauma inflicted on soldiers by the war has been termed ‘Chechen
syndrome’. But the insidious symptoms of aggression are not confined to
veterans’ minds; they have become rooted in Russian public and political
life.
The lesser evil?
Popov concludes by emphasizing the need to choose the lesser evil of
centralization and potential authoritarianism over the inevitable
unravelling and chaos that will accompany any other course. Stability is
the prime consideration; democracy can wait until more favourable
circumstances develop. The question that immediately arises is:
stability for whom? From the foregoing analysis, it should be clear that
Russia’s rulers have little interest in the fortunes of the general
populace; the current priority is rather to use the country’s natural
resources to leverage a greater role in global affairs, and so carve out
further opportunities for the internationalization of Russian capital.
Entry into the WTO will assist in the latter goal, though it will also
bring with it a dismantling of the protections that have served Russian
industry well, and undermine recent attempts to revive manufacturing in
the automobile and aviation sectors. To the dangers Popov lists, then,
we should add the exposure to international capitalist pressures and
widening of existing inequalities that inevitably accompany WTO
accession. These forms of destabilization will, of course, largely
bypass the fractions of business and state most actively seeking them.
Finally, there is the matter of the lesser evil. Popov poses the
alternatives in stark terms: the status quo or utter disaster. Such
logic has long helped to rally critics of various kinds to otherwise
unpalatable governments. But it is precisely the immunity from challenge
or debate that enables crime, coercion and corruption to flourish;
conversely, it is the availability of alternative proposals for future
paths of development that constitutes the political health of a nation.
Popov’s analysis presents many points from which such a discussion could
begin.
[1] Federal’naia sluzhba gosudarstvennoi statistiki (RosStat,
www.gks.ru) and UN Human Development Reports, 2002 and 2006. The
official poverty line in 2004 was 2,376 roubles per month (then around $85).
[2] UN Human Development Report 2006; Economist Intelligence Unit,
Russia Country Profile 2006 (henceforth EIU), p. 45. The latter drily
notes: ‘since it is generally assumed that in Russia income and the
ability to evade taxes are positively correlated, actual income
distribution is probably more unequal still.’
[3] EIU, p. 45. It should be noted, however, that many Russian companies
have their headquarters in Moscow, which inflates the city’s figure
substantially; nevertheless, this statistical bulge itself illustrates
the capital’s dominant role in the national economy.
[4] Figures from RosStat website.
[5] Figures from RosStat website.
[6] Simon Clarke, ‘A Very Soviet Form of Capitalism? The Management of
Holding Companies in Russia’, Post-Communist Economies, vol. 16, no. 4
(2004), p. 420.
[7] EIU, p. 43.
[8] Elena Lebedinskaia, ‘Stabfond: segodnia, zavtra . . . navsegda?’,
Neprikosnovennyi zapas, no. 50 (2006); figures from Ministerstvo
Finansov, www.minfin.ru.
[9] Popov, ‘Russia Redux?’, NLR 44, March–April 2007, p. 43.
[10] Financial Times, 9 June 2006; figures from Ministerstvo Finansov
and EIU, Russia Country Report, September 2006, p. 39.
[11] EIU, p. 24.
[12] Economist, 10 November 2005.
[13] EIU, pp. 66, 39.
[14] Olga Kryshtanovskaya and Stephen White, ‘Putin’s Militocracy’,
Post-Soviet Affairs, vol. 19, no. 4 (2003), pp. 289–306. I have cited
the figures for the most tightly defined groups, rather than the much
higher aggregate figure calculated by Kryshtanovskaya and White; for
important methodological qualifications to their data, see Sharon
Werning Rivera and David Rivera, ‘The Russian Elite under Putin:
Militocratic or Bourgeois?’, Post-Soviet Affairs, vol. 22, no. 2 (2006),
pp. 125–44.
[15] Kryshtanovskaya and White, ‘The rise of the Russian business
elite’, Communist and Post-Communist Studies, 38 (2005), p. 300.
[16] Andrew Barnes, ‘Russia’s New Business Groups and State Power’,
Post-Soviet Affairs, vol. 19, no. 2 (2003), p. 180.
[17] Kryshtanovskaya and White, ‘Rise of the Russian business elite’, p.
295.
[18] Financial Times, 19 June 2006; and William Tompson, ‘Putin and the
“Oligarchs”: A Two-Sided Commitment Problem’, in Alex Pravda, ed.,
Leading Russia: Putin in Perspective, Oxford 2005, p. 193.
[19] Tompson, ‘Putin and the “Oligarchs”’, p. 182.
[20] Tompson, ‘Putin and the “Oligarchs”’, p. 188.
[21] Vadim Volkov has concluded that in the period since 2000, ‘the
major instruments of aggressive enterprise takeovers are corrupt state
organizations that have judicial and coercive power.’ Volkov, ‘The
Selective Use of State Capacity in Russia’s Economy: Property Disputes
and Enterprise Takeovers After 2000’, PONARSPolicy Memo no. 273, October
2002.
[22] Volkov, ‘Selective Use of State Capacity’.
[23] EIU, p. 9.
[24] Cited in Leonid Kosals, ‘Klanovyi kapitalizm v Rossii’,
Neprikosnovennyi zapas, 50 (2006), p. 196.
[25] Kosals, ‘Klanovyi kapitalizm’, p. 191.
[26] Georgi Derluguian, ‘Under Fond Western Eyes’, NLR 24,
November–December 2003, p. 138.
[27] Alena Ledeneva, How Russia Really Works: The Informal Practices
that Shaped Post-Soviet Politics and Business, Ithaca, NY 2006, p. 188.
[28] Popov, ‘Russia Redux?’, p. 44; Kosals, ‘Klanovyi kapitalizm’, p. 184.
[29] Ledeneva, How Russia Really Works, p. 118.
[30] Popov, ‘Russia Redux?’, pp. 46, 49.
[31] Popov, ‘Russia Redux?’, p. 50; poll data from Levada Centre,
www.levada.ru.
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