Success Abroad, Oppression at Home

BY MAXIM TRUDOLYUBOV

Russian president Vladimir Putin may be burnishing his public image by voicing his grievances with the West, but it is from the West that he receives the kind of recognition he should appreciate the most.

Putin is “the new king of Syria,” proclaims the scholar Jonathan Spyer in the pages of the WSJ. Putin went from being a pariah to being a Middle East powerbroker in less than five years, writes Steve Rosenberg of the BBC. Russian expansion in the Middle East is a “clear reality on the ground,” the president of the World Economic Forum says.

“Despite its limited resources, Russia has very effectively returned as a global player, going back to the areas from which the Soviet Union withdrew as it collapsed,” Angela Stent, a professor and director of the Center for Eurasian, Russian and East European Studies at Georgetown University, recently told the Russia File.

“There is an acknowledgment now that President Putin and Russia have very cleverly taken advantage of opportunities presented to them by a divided and distracted West and returned to the Middle East and to Africa. One should not underestimate Russia’s ability to influence global affairs even if the fundamentals would not suggest such a role,” Stent thus sums up the gist of her recent book, Putin’s World. Russia Against the West and With the Rest.

What permeates those praises is a sense of bewilderment as to how the Kremlin manages to combine a stagnating economy that prevents citizens’ real incomes from growing with expanding military activity and a general privileging of foreign policy on Russia’s agenda.

Russia’s “state is making interesting bets. I do not quite understand how the regime intends to successfully get past the problem of declining incomes and the population’s concerns regarding living standards,” Michael Kofman, a senior research scientist at CNA, said in a recent conversation with the Russia File. “The state has a strategy for maintaining macroeconomic health and building up the foundations of economic and military power. But it does not seem to have a plan for what to do with actual people.”

The living standards issue is back in the news in Russia. Real disposable income grew by a full 3 percent between last July and September, Russia’s statistical agency Rosstat reported. Russia’s economists and market analysts were at a loss as to what could be the source of the sudden upsurge. “This figure is hard to explain in terms of other macroeconomic indicators, say, the growth of GDP, consumption levels, or heightened economic activity, because none of those have shown any significant changes,” said Tatiana Maleva, director of the Social Analysis and Forecasting Institute at the Russian Presidential Academy of National Economy and Public Administration (RANEPA). Other economists and political commentators were equally skeptical. “We have just witnessed an economic miracle,” the news site The Bell said in its report.

“Never, since the agency started its regular reports on this measure in 2014, did Rosstat register a 3-percent growth in one quarter. My feeling is the Rosstat will be grilled by professionals and commentators for this figure but the bureaucrats responsible for the state of the economy would be happy,” Kirill Tremasov, a respected macroeconomic analyst, wrote on his Telegram channel.

The assessments of Russia’s standing from a domestic perspective and from a foreign-policy perspective seem to be diverging. Russia’s current president has a long history of being portrayed by Western media as a powerful but sinister figure. A lot of that has to do with the annexation of Crimea and hostilities in Ukraine.

Today’s wave of recognition seems to be different. Russia watchers admit the new reality on the ground, in which Putin’s Russia is a respected referee in the Middle East and a possible counterweight to China in Africa. The loud praise of Putin sometimes has an added purpose of contrasting the Russian leader’s geopolitical activism with the current U.S. president’s unwillingness to back America’s old allies.

Whereas Donald Trump seems to treat foreign engagement, both military and diplomatic, as an unnecessary expense, Vladimir Putin considers it a strategic investment. Whereas Trump keeps chastising U.S. partners for free-riding on America’s military might, Putin never even touches on the economic background of his relationships with Russia’s allies.

Trump recently lauded his decision to deploy additional U.S. troops and equipment in Saudi Arabia, adding that the Saudis had agreed to pay for the U.S. help. The U.S. president thus presented Saudis as “paying customers” as opposed to those “unpaying” freeloaders, the Kurds. Putin, on the other hand, is ready to absorb losses as long as his military “investments” reap political returns.

How Moscow’s successes in the Middle East and possibly in Africa are supposed to translate into economic benefits for the Russian population is not quite clear. New arms sales opportunities may well transpire, but they will only widen Russia’s state-owned companies’ profits and benefit the Russian budget, which is already in large surplus. Neither natural resources nor arms, both industries closely controlled by the state, require making Russia’s domestic economic field broader, fairer and more inclusive. In fact, the state does not need all the small businesses and empowered middle classes that a competitive economic regime breeds.

This might be a clue that could help us answer the question of how Moscow manages to be so successful internationally despite being economically weak. Moscow does it not despite but because of its economic base being relatively narrow. Suppressing messy grassroots economic activity helps, not hinders, Russia’s military and diplomatic success.

Russia now has a prosperous and successful state, a state that is a recognized actor on the world stage. Russia also has a population that faces severe constraints in exercising its economic and political freedoms. Many Russians are doing well, many do not struggle economically, and of course there are those who do struggle—about 20 million people, by some accounts. In Moscow’s view, it is important that the sources of income be clearly visible to, and preferably controlled by, the state.

More than a century ago the Russian historian Vasily Klyuchevsky noticed something he considered one of the central paradoxes of Russia’s expansion. “As the country’s territory expanded, as the influence of the Russian people grew abroad, so, in inverse proportion, was its domestic freedom increasingly restricted,” he wrote in his Course of Russian History. In the post-Soviet period, this paradox was much in evidence, though in reverse order. This writer personally would like to see Klyuchevsky finally proven wrong by a Russia whose foreign recognition and domestic freedoms were not mutually opposed. But the venerable historian’s observation seems to hold, for now