Russia. A History

Some critics argue that the ‘Moscow Consensus’ so exaggerated the state’s role that it was counter-productive. They argue that Putin favoured large-scale enterprises like Gazprom (the natural gas monopoly) to the detriment of small and medium-sized enterprises, which play a central role in the economic growth of developed countries. Thus, whereas these small enterprises account for over half of economic activity in developed countries, in Russia they produce just 15 per cent of the GDP. Putin’s critics also argued that state intervention can lead to political distortions: Putin wanted not only to ensure state control over strategic sectors, but also to rein in politically active oligarchs, especially those linked to Yeltsin’s ‘Family’ and those who displayed political aspirations. In particular, it was widely thought that political motivation, not economic planning, led to the prosecution of powerful ‘oligarchs’ like Boris Berezovskii, Vladimir Gusinskii, and Mikhail Khodorkovskii. Whatever the merits of such accusations, they had a chilling effect on global investors and tarnished Russia’s image in international business circles. Finally, some critics argued that renationalization led to slower growth, even stagnation, as in oil production; the cumbersome state proved far less efficient and tended to repulse, not attract, FDI.

Politics and Power

Such criticism and reservations notwithstanding, the Putin presidency brought prosperity to the people and popularity to its president. His approval ratings rose to stratospheric heights—75 per cent in December 2005 and 86 per cent three years later. That popularity guaranteed an overwhelming victory in presidential elections; his 53 per cent in March 2000 jumped to 71 per cent in March 2004 (with the Communist candidate garnering just 14 per cent). Although Putin experienced brief phases of popular dissatisfaction (most notably in 2005, when he modified the various entitlements of pensioners), the overall trajectory was precisely the opposite of Yeltsin—upward, not downward.

Putin converted popularity into power. Although initially beholden to the ‘Family’ and its oligarchs, he reduced their role and replaced them with his ‘own’ people. The most striking change was the growing presence of the siloviki

(people of the ‘power ministries’—the security organs, interior ministry, and military). He showed a strong preference for people from his home base, St Petersburg, and appointed these people to the Security Council, Presidential Administration, and executive branch. For all his adulation of the state, Putin distrusted rank-and-file officialdom and relied on trusted associates to impose his will.

Putin also made the election of a ‘presidential parliament’—one ruled by supporters, not adversaries—a priority. The election of 1999, on the eve of Putin’s accession to the presidency, produced a ‘loyal’ Duma, and Putin (who claimed to be a ‘supra-party president’ and ran as an independent) actively promoted a new presidential party, ‘United Russia’. By winning the support of other parties, by dispensing patronage, and by establishing a large base of party members, the pro-government party won an overwhelming majority in the 2003 and 2007 Duma elections. As a result, pro-government deputies increased from 26 per cent in 1993 to 75 per cent in 2007 (consisting mostly of United Russia party members), with a corresponding decrease in parliamentary opposition. The Communist Party, once the largest party in the Duma, fell from 33 per cent in 1995 to 12 per cent in 2007, its membership rolls shrinking from 500,000 in the mid-1990s to 165,000 in October 2007 (when United Russia, revealingly, reported a membership of 2 million). The nationalist Liberal Democratic Party of Russia, headed by the flamboyant Vladimir Zhirinovskii, dropped from 24 per cent (1993) to 12 per cent. Even more dramatic was the decline of the liberal parties, which fell from 29 per cent in 1993 to 4 per cent in 2007 and failed to meet the minimum threshold to qualify for representation in the Duma.