Monday, April 4, 2016

Czar Vladimir: How Putin Wasted Russia's Best Chance for a Liberal Democracy 3 / 3

by Nomad

In this final installment of the three-part series, we turn to the realities of Putin's attempt at empire-building and the tragedy of lost opportunities. We also ask "Quo Vadis, Mother Russia?"

Part One
Part Two

A Very Dangerous Neighbor

Although he might be nostalgic for the good old days of the Soviet era, Russian President Putin is intelligent enough to know there's little hope of returning to that time. One of the main drawbacks to that period was the failure to move hearts and minds. The dull and drab years could not possibly inspire a nation.

He seems much more interested in a revival of Russian imperialism, steeped in a largely imaginary czarist past and supported by a national religion.
Author of the book, Putin’s Wars : The Rise of Russia’s New Imperialism, Marcel H.Van Herpen notes:
This official revival of old imperial pomp and glory coincided with an increasingly aggressive behavior vis-à-vis the former Soviet republics.
In 2009, Putin's policies really moved out of the domestic arena. In August of that year, a new law came into effect which allowed the use of Russian troops in foreign countries “to protect citizens of the Russian Federation.” 

The threat of the law lay in its interpretation and application.
These measures seemed to be meant as a legal preparation for eventual armed interventions in Russia’s Near Abroad and were interpreted as a growing Russian bellicosity, experienced as a threat by its neighboring states.
As we have seen, those fears about the implications of the law were entirely justified with the invasion of Ukraine.

In 2014, Russian Foreign Minister Sergey Lavrov attempted to justify the use of Russian troops sent into neighboring Ukraine’s Crimea region as a necessary protection for his country’s citizens living there.
Lavrov told the UN Council on Human Rights in Geneva:
“We are talking here about protection of our citizens and compatriots, about protection of the most fundamental of the human rights – the right to live, and nothing more.”
He assured the audience:
“Human rights are too important to make it a bargaining chip in geopolitical games, to use it to impose one’s will on others; less so to instill regime change,”
However,  absolutely nobody was fooled by Lavrov's remark.

The Russian government had provided more than enough evidence of its "respect" for human rights.
Human Rights Watch has noted Russia's casual disregard for basic rights such as the  freedom of association, freedom of expression, as well as the harassment of human rights defenders and political opponents.  

There was another problem with Lavrov's statement.  
Russian-friendly Ukrainian president Victor Yanukovich on 1 March 2014 requested Putin use Russian armed forces to "restore the rule of law, peace, order, stability and protection of the population of Ukraine."
Yanukovich's request harkened back to the days of the Warsaw pact when the leaders of client states, like Hungary in 1956, could call upon the mighty Russian military to put down civilian revolts.

If Putin's actions and reactions present a challenge to the West, this retrograde movement always threatens the security of the region and risks all-out World War.

Russia under Putin might be able to justify to itself the need for armed intervention with its neighbors, former Warsaw Pact nations, but, as Van Herpen points out, these formerly colonized peoples have gained or regained their national independence and are not likely to be willing- except under force- to return to those days.
A reconstitution of the former empire on a new basis will, therefore, necessitate a huge, prolonged, and concentrated effort by the Russian leadership, an effort involving making use of all the means the Russian state has at its disposal: from economic investments and economic cooperation to economic boycotts, from pipeline diplomacy to energy blackmail, from using its “soft power” to diplomatic pressure and corruption of local political elites, from charm offensives to provocative actions and military threats.

Shambles and Residue

With the Russian economy in shambles, most of the non-military options are could lead to further problems for Putin. One source provides us with a short list of challenges that Putin can no longer ignore:
  • The population is becoming impoverished faster than before
Compared to the recent crises in the Russian economy, the population is getting poorer much faster this time. By year-end 2015, the amount of goods purchased by Russians had decreased by 10 percent.

The UK Guardian reports that
Russia’s recession-hit economy has propelled the country’s poverty rate to a nine-year high, state statistics showed, as the country struggles to cope with a crippling economic crisis.
An average of 19.2 million Russians – or 13.4% of the population – were living last year on less than 9,452 roubles ($139) a month, the minimum subsistence level determined by the Russian government in the fourth quarter.
  • A free-floating exchange rate leads to inflation
In 2014, Russia moved to a free-floating exchange rate, making the Russian currency value market-determined. During this time, the ruble has fallen against the U.S. dollar and the euro by 60 percent; in addition, the value of the ruble is affected by fluctuations in oil prices. As a result, the ruble may fall or grow by 20 percent in one month. Possible rate shifts are included in the price of all contracts in the country.

  • A lack of government investment in the Russian economy will limit future growth
According to economists, ... indicators that determine future economic growth – primarily investments – fell much more. Investment in fixed assets fell by 8 percent while the import of equipment from abroad has decreased by as much as 38 percent.

  • Alternatives to Western investment have failed to materialize
Despite all  of the bold political proclamations, Chinese investments have yet to arrive on the Russian market.In fact, some investors from China have even begun to withdraw funds from Russia. On Feb. 4, China's Chengdong Investment Corp. decided to sell its stake in the Moscow stock exchange. Chengdong, it should be noted, is a sovereign wealth fund responsible for managing part of the People's Republic of China's foreign exchange reserves. In 2014, the total assets of Chinese reserves came in at around $ 746.730 billion.
  • Widespread corruption makes doing business in Russia too risky
Russia is, as investors in the East and West have learned, a poor place to invest in. Why? Widespread corruption is the likely suspect. 
A report by the Japan Times that corruption has become institutionalized and is invisible to most people, although it weighs on the price of almost everything, from apples to subway tickets to medical care.
Georgy Satarov, a former Kremlin adviser and political scientist who studies corruption, said there has been no comprehensive research in Russia to establish how corruption affects the price of goods. But studies in Kyrgyzstan by his Indem research institute show that corruption accounts for nearly half the cost of retail goods in that former Soviet republic. He said he would expect the impact on prices to be about the same in Russia.

In the past, we have reported on one notable case of what can happen to Western investors when they attempt to seek fair play in Russia.

Why Corruption in Russia Cannot Be Tackled

Corruption is really a systematic problem that runs deep in all levels of the Russian society. So widespread that any attempt at reform may actually be impossible. 
The business environment suffers from inconsistent application of laws and a lack of transparency and accountability in the public administration. Russia’s regulatory inefficiency substantially increases the cost of doing business and has a negative effect on market competition. Companies face challenges when dealing with licences and permits, although recent legislative changes have reduced red tape and bureaucratic procedures.
Anti-corruption laws have proved to be ineffective in dealing with the problem because "courts themselves are often politicized and corrupt."

There are other reasons why there is little hope for Russia when it comes to dealing with widespread corruption.  Putin also has a vested interest in not exposing the levels of corruption. 

Recently leaked documents of secret offshore bank accounts in Panama appear to implicate Putin's inner circle. A close friend, Sergey Roldugin, was reported to have been something like a front man. An investigation by the International Consortium of Investigative Journalists, German daily Süddeutsche Zeitung and other media partners has found that Roldugin was "a behind-the-scenes player in a clandestine network operated by Putin associates that has shuffled at least $2 billion through banks and offshore companies."

Putin's name is not included in the leaked documents but his friends and associates appear to have earned millions of pounds from deals that would have been difficult to secure without his patronage.
If the charges are true, this money has made members of Putin’s close circle fabulously wealthy, to the tune of billions.
The Guardian article also adds:
Though there is nothing unlawful about using offshore companies, the files raise fundamental questions about the ethics of such tax havens – and the revelations are likely to provoke urgent calls for reforms of a system that critics say is arcane and open to abuse.
(This limited list includes only the economic problems. The social problems that require serious attention are too numerous to go into in any depth in this post.)

What Might Have Been 

The great tragedies of history often lie in what might have been. Had Putin not risen to power, things might not be any better than they are not. That's true.
However, had a visionary and wiser leader taken over after Yeltsin, it is quite certain that Russia would not be facing its present difficulties. And Putin and his ruling party have been given more than enough time to solve his nation's problems. Instead, things have gotten worse. 

And that's not merely unfortunate for Russia but for the world.  If ever there was a time for ideological counter-balance to "unfettered" Western capitalism, this is it. Had Russia set upon an alternate path, embracing or re-interpreting to any significant degree either Western liberalism or Western social democratic ideas, the world dynamic would be wholly different. 

Alas, Putin's Russia and his the lack of a modern vision has failed to fill the ideological void left by the collapse of the Soviet Union. 

After all, that repression, all those hopes, crushed and revived and crushed again, it's hard not to feel a great deal of sadness for how things turned out. 
That Russia could somehow come full circle to what it had abandoned both in 1991 and before that in 1917 will probably be considered by future historians as a modern tragedy.

Life After Putin

The next chance that for Russian democracy may come the moment Vladimir Putin steps down. The legacy of autocrats - especially ones who have no family dynasty to pass control to- don't usually survive much longer than the individual. Putin might have brought a level of stability to the badly-shaken Russian Republic but, since he has failed to actually reform the systematic problems, it is likely that chaos will begin all over again. 

What remained from the breakup of the Soviet Union is the Russian Federation, the largest country in the world, covering more than one-eighth of the Earth's inhabited land area. That's quite a chunk of real estate to manage. 

According to an analysis by the Economist magazine with some more specific historical information from the NY Times and Aljazeera, there is no reason why the fragmentation process started in the 1990s will not continue. 
Putin is keeping Russia together "through force and payoffs to regions and regional leaders." It has been compared to a khanate in which "local princes receive a license to rule from the chief khan in the Kremlin."
Mr Putin has reversed federalism, and turned Russia into a centralised state. He cancelled regional elections, imposed a “presidential” representative over the heads of governors and redistributed tax revenues in Moscow’s favour. But he did not build common institutions. The Russian state is seen not as an upholder of law but as a source of injustice and corruption.
In short, says the writer, Russia under Mr. Putin is much more fragile than it looks. As we examined in Part Two, Putin has made good use of both Russian nationalism and the Russian Orthodox religion to consolidate power. 

However, Russian federation members with high Muslim populations are not likely to be charmed and much more likely to feel disenfranchised both ethnically and on religious grounds. Islam is the predominant religion in Chechnya in the North Caucasus.
It is not alone. The ethnically Muslims are predominant in seven republics of the Russian Federation.
Approximately 800 kilometers (497 miles) east of Moscow.lies the Republic of Tatarstan, home to 2m Muslim ethnic Tatars. About 55% of the population there is Muslim.
In Dagestan, a staggering 83% of the population of Dagestan adheres to Islam, while a mere 2.4% to the Russian Orthodox Church. 
In this regard, Putin's nationalism and religion have been exceedingly short-sighted and has every likelihood of collapse in the long term. At worst, it could lead to religious conflict within Russian borders.

On a larger scale, the Economist article also paints a grim painting of one possible scenario. 
The spectre of disintegration is already haunting Russia. Politicians and pundits are scared to discuss it publicly. Shortly after annexing Crimea and stirring separatism in eastern Ukraine, the Kremlin introduced a law which makes “incitement of any action undermining Russia’s own territorial integrity” a criminal offence.
In fact, it is Russia's expansionist policies that had posed the greatest threat to Russia's territorial integrity. 

Ukraine set a bad example. By claiming it to be a part of Russia, he has increased the suspicion that Russia will not use similar force against any other neighbor.
Putin opened a Pandora’s box of backlash from former Soviet states.
Mr Putin brought into motion forces that thrive on war and nationalism. These are not the forces of imperial expansion—Russia lacks the dynamism, resources and vision that empire-building requires. They are forces of chaos and disorganisation.
That's one opinion, of course. Time will show its validity. Yet, in the end, Putin managed to exchange liberty for stability and that stability is very likely to last only as long as he remains in control. 
After that, Russia, its neighbors and the rest of the world may enter into a new era of danger and confusion, not unlike the time that followed the fall of the Russia's newly sainted Czar Nicholas II.