The Status Quo Fatigue

American Enterprise Institute for Public Policy Research

In Moscow, a striking contrast exists between signs of economic revival after the 2008-2009 crisis and the general pessimism among intellectuals, opposition leaders, top analysts, entrepreneurs, and media figures. An investigation of this paradox points to several explanations. Unlike a few years ago, there is a pervasive sense that the political and economic model Vladimir Putin offered the country–stability in exchange for “guided/sovereign democracy,” sustained by state-guided oil- and gas-driven growth–is nearly exhausted. Disillusionment with President Dmitri Medvedev’s ability to translate liberal rhetoric into action and implement meaningful reforms adds to the despondence. The presidential election of 2012, which some view as no more than carefully scripted political theater, offers no hope for change.

While the elite’s rapidly diminishing loyalty to the Kremlin is by no means a sign of an imminent crisis, it is a necessary and significant component of any radical change in the future. At the moment, the circumstances point to the gradual erosion of legitimacy and political institutions–or a sudden collapse of the regime, like the recent Egyptian antiauthoritarian revolt.

Key points in this Outlook:

-Corruption and violence in Russia are on the rise, hindering direct foreign investment and prompting the exodus of some of Russia’s best and brightest.
-Dmitri Medvedev has proved incapable of reversing from Vladimir Putin’s stagnant policies.
-If the Kremlin persists in blocking democratic channels of feedback, Russia eventually could see public protests like those in Egypt.

Reflecting the general economic upturn, Moscow is in the midst of yet another of the minibooms it has undergone since the first signs of post-Soviet economic revival in 1997. One unmistakable indicator is the sharp increase in car sales in January–a 72 percent growth since a year ago. Yet unlike previous recoveries, this one seems to be weighed down by memories and an awareness of hopes and promises unfulfilled–both economic and political.

For instance, after the previous recession, also caused by an international crisis (the so-called Asian flu of 1997-98), the Russian economy grew by 10 percent in 2000 when a barrel of oil cost $20-$32. By contrast, Russia’s 2010 gross domestic product (GDP) is estimated to be up 4.5 percent at most, compared to 2009, despite oil prices of $67-$90 per barrel. The accepted explanation is hardly hopeful: unlike a decade ago, the national economy has no spare industrial capacities to fall back on. All the low-hanging fruit has been plucked, while the replacements are either very green or nonexistent. “Economic growth based on oil has been exhausted,” Russian finance minister Alexei Kudrin proclaimed in early February. Yet no other strategic model has been put in place to dislodge hydrocarbons from the foundation of the national economy.

The cheerless mood in Russia stemmed also from the stock taking of the “Putin decade” of 2000-2010. In 2000, Putin promised that Russia would double its GDP in the next ten years and achieve the per-capita income of Portugal. Mirroring oil prices, the Russian economy and especially personal incomes indeed had a very impressive run between 2000 and 2008, but still, instead of doubling, the economy grew by 59 percent (compared to 262 percent in China and 221 percent in Kazakhstan). In 2010, Portugal’s per-capita national income was estimated to be $23,000; Russia’s was $15,900.

Behind these numbers, one leading Russian expert on social and labor policy saw the absence of “real shifts toward modernization.” Salaries in Russia are still very low, even compared to its East European neighbors. One out of every two families with two children is at or below the poverty line. The pension systems (private and state) are in “systemic crisis,” and an overwhelming majority of Russians are pessimistic about their ability to live on their pensions. The only lasting solution is the growth of the middle class–not periodic increases in pensions or salaries for the poorest. But this solution cannot be effected with cash–it requires modern political and social institutions.

In the words of Lev Gudkov, a top Russian pollster and political sociologist, despite the “pumping of money” into the economy and “social sphere” (that is, the welfare system), stagnation continues because the regime is “incapable of solving any of the key problems connected to the urgently needed institutional reforms.” According to a transformation index, which measures reforms in 125 developing countries, since 2003 Russia sank from 41st to 65th overall, and from 31st to 107th in “effectiveness of governance.”

Nonexistent before 2008, the budget deficit has reached nearly 4 percent of GDP and, although still relatively low, is being viewed with growing apprehension. According to leading Russian economist Vladimir Mau, the deficit would have reached a dangerous 13.5 percent without the profits from oil sales abroad (“oil transfers”). There is little confidence in the government’s promises to eliminate the deficit by 2015. The habit of profligate spending and the enormous “corruption tax” (not to mention the 2014 Winter Olympics and the 2018 World Cup) will likely prevent the closing of the gap. As a top political analyst said to me, “They have completely unlearned to live within their means. The regime’s spending habits are so ingrained that they won’t end the deficit even with oil over $100 a barrel.”

Putin’s ten-year-old promises of “dictatorship of the law” and “stability,” after the alleged “criminal chaos of the 1990s,” are remembered as ruefully as the doubling of the national economy. It is in the name of this stability, wrote prominent opposition columnist Dmitry Oreshkin, that the authorities took away independent courts, honest elections, and free mass media. The result, Oreshkin continued, has been corruption, rapacity, and highhandedness of authorities at every level, unprecedented even in a country not exactly known for probity and the rule of law. On February 9, Russia’s most respected business daily, Vedomosti, cited a survey of Moscow small-business owners, 68 percent of whom reported paying bribes. According to the head of the Moscow branch of the Chief Investigative Agency, the Russian equivalent of the FBI, the average bribe in the capital was $20,000.

Police venality and brutality are a daily national nightmare, and gang wars and execution-style murders in broad daylight have shocked the country in the last few years. As a result, while Russia has achieved a significant decrease in the absolute number of murders, the “Putin decade” has failed to erase an enormous gap with the rest of Europe in the rate of homicides. As opposition leader Vladimir Milov points out, with 14.2 murders per one hundred thousand people, Russia is behind only South Africa and Brazil among the twenty top industrialized nations. It is also the only European country among the twenty countries with the highest incidence of murder. (By comparison, there were 4.47 murders per one hundred thousand in the United States in 2009.)

Chechnya has been “pacified,” but at the cost of becoming a brutal dictatorship, virtually independent from Moscow and toying with elements of sharia governance. The Muslim fundamentalist insurgency has moved to Dagestan, Ingushetia, and Kabardino-Balkaria, where terrorist attacks occur almost daily, while the Moscow subway and the Domodedovo airport have been targets of bombings that killed dozens. One of the most astute and courageous observers of Russian politics, Lilia Shevtsova, posed a question that is all but rhetorical: “Wasn’t it under Putin that Russia began to lose the North Caucasus?”

Hardly surprising under the circumstances, the business climate appears to be moving to “sell.” In the words of Ruben Vardanian, president of one of Russia’s first post-Soviet investment houses, Troika Dialog, which was sold to the state-owned Sberbank in early February: “To sell one’s business to the state to wait out these uneasy times . . . is a better business model in our country today than to create an independent business.”

It makes more sense to sell–and park at least some of the money abroad. The official end of the 2008-2009 crisis has failed to stop the flight of capital from Russia: $38 billion left the country last year, almost 50 percent more than the Central Bank had forecast. The contrast with the other BRICs (Brazil, Russia, India, and China) is stark: Russia may try to institute some sort of control over capital movement, while Brazil, India, and China have problems absorbing the flood of investments. Capital is reportedly fleeing Russia because “the probabilities of a new, stable growth are vague, the investment climate is not getting better, and corruption and the state’s interference in business are not decreasing.” Adding to the unsettling situation is the nature of the fleeing capital: it is not just the “oligarchic” money of multimillionaires but that of the middle-of-the-road entrepreneurs and “people with the middle income.”

While Russia urgently needs mammoth investment to modernize or replace badly worn-out, forty- to fifty-year-old infrastructure inherited from the Soviet Union–a project costing an estimated $1 trillion, according to the managing director of the European Bank for Reconstruction and Development–most of the funding is unlikely to come from home, where, according to estimates, between 50 and 80 percent of investment is already made by the government. Yet it is hard to count on an inflow of capital even remotely commensurate with the task. Even at the height of the oil-fueled boom in 2004-2008, the share of foreign direct investment as a percentage of total investment from abroad was “depressingly small,” as one Russian expert put it: 23-26 percent. Between January and September 2010, it diminished further to 17 percent.

According to a strategist for a top Russian bank, it is hard to get foreign investors excited about Russia when structural reforms are absent, economic recovery is weak, and the trade balance is worsening. “The second trial of Mikhail Khodorkovsky,” he explains, “has shown that it is impossible to count on serious changes in the political and legal area.” A scholar from the Higher School of Economics, too, felt that corruption and the “weakly developed basic institutions” of the free market (the defense of property rights, honest courts, and competition) make the betterment of the investment climate no more than “wishful thinking” (khotelka).

Elite pessimism is also fueled by the disappearance of what might be called the “Medvedev factor” in national politics. The gap between the president’s rhetoric and his deeds has been so vast that, across the board, my Moscow interlocutors seem to have given up on giving him the benefit of the doubt. They no longer perceive him as a budding reformer but as a consummate trimmer, whose advocacy of a more liberal version of the regime invariably yields to the status-quo-bound vision of his mentor, Putin. They are tired of seizing on hopeful interpretations of clues. “The genre of well-calculated omissions and meaningful silences is beginning to tire,” Oreshkin wrote. “The problem is that [Medvedev’s] ‘signals’ excite fewer and fewer people.”

Between December 2010 and February 2011, Medvedev’s credibility as a defender of the rule of law may have been irreparably undermined by two instances of flagrant lawlessness. The first of them was the aforementioned Khodorkovsky trial and the maximum sentence he received. Expressing the consensus among the Moscow elite, Gudkov called them “the scandalous trial and the shocking sentence.”

Medvedev’s credibility as a defender of the rule of law may have been irreparably undermined by the Khodorkovsky trial and the arrest of Boris Nemtsov.

This legal charade was followed by another: the arrest of opposition leader and former first deputy prime minister Boris Nemtsov as he was leaving a rally that was preapproved by the Moscow authorities. Nemtsov was charged with verbally abusing the police and calling for a march on the Kremlin. Half a dozen videos (including those by the police themselves) showed Nemtsov doing nothing of the kind, but they were not admitted as evidence by the presiding judge, who convicted Nemtsov based on the testimony of two officers who did not make the arrest. (One of them later confessed to falsifying his testimony on the order of his superiors.) During the forty-hour pretrial detention, Nemtsov was confined to a four-by-nine-foot concrete cage–with no toilet, no light, no chair, not even a mattress. Nemtsov’s eyeglasses, belt, and shoelaces were taken from him. He slept on the floor on his overcoat. During the five-hour trial, Nemtsov was forced to stand, as the judge refused his attorney’s request to bring in a bench from the lobby.

For the reform-minded intelligentsia, the last nail in the coffin of Medvedev’s credibility may have been his behavior at the World Economic Forum in Davos, Switzerland. On Khodorkovsky, he mouthed Putin’s line that the former owner of Russia’s most profitable company was guilty “just like [former Wall Street broker Bernard] Madoff.” To the Russia panel–which, as the Moscow Times put it, was interested in “the rules of the game, the transparency, the fight against corruption, opportunities for legal recourse and equal justice under law”–the president “inexplicably” had nothing to say. “Medvedev Takes Pass in Davos on Rule of Law,” ran the Times headline.

The centerpiece of Medvedev’s speech in Davos–an invitation to invest in Russia via state-sponsored investment funds–was interpreted by opposition commentators as his having given up on improving the fundamentals of the investment climate: the rule of law and the sanctity of property. Instead, the Russian president, in effect, touted the Kremlin as the most reliable partner and the only effective means of risk mitigation. In this investment model, the government was the “roof,” as the Russians call a criminal group that protects a business from other racketeers in exchange for profit sharing. “Invest through us (the state), and you’ll be just fine,” explained Novaya gazeta, Russia’s only remaining national opposition newspaper. “As to Sergei Magnitsky–a lawyer for the Hermitage Fund, who investigated a multimillion-dollar swindle by high government officials and died in prison because he was denied medical care–and Mikhail Khodorkovsky–well, that happens when someone tries to bypass the government.” Novaya gazeta’s headline summarized it well: in Davos, Medvedev offered “A Roof Instead of [a Healthy Investment] Climate.”

The demise of the “Medvedev factor” has spelled the end of public politics. The Kremlin is again an inscrutable “black box,” with machinations that can be decoded only by what comes out. This is at once a great deal and very little: an unending stream of often-meaningless and sometimes-bizarre simulations of state business. The sole goal of this “imitation politics,” the editor of an elite political journal told me, is to keep everyone off balance and ensure that neither member of the Putin-Medvedev duumvirate looks like a political lame duck ahead of the 2012 “elections.” Independently of one another, three Russian intellectuals used the same term to describe this strategy: zamutit’ or to “muddy things up.”

Among Medvedev’s most recent ukases were cutting the number of Russia’s time zones from eleven to nine and observing daylight saving time year-round. Putin, as is his wont, comments on everything: from the Russian film industry to air guns and from salaries in Kirov, one of the poorest Russian provinces (they should be raised, Putin told the governor), to what subjects should be required in high schools. And, of course, there are the secrets of his fitness regimen, which he shared with supermodel Naomi Campbell in an interview for GQ.

The end-of-the-year survey published in the middle of January by the Levada Center, Russia’s most trusted independent public opinion firm, echoed the general sense of pessimism and alienation among Moscow intellectuals. Asked about key social and economic aspects of Russian life in 2010, respondents answered “changed for the worse” across the board. The predominance of the pessimists over the optimists (“changed for the better”) in the survey was especially large in ecology (the difference between pessimists and optimists was 43 percent), ethnic relations (40 percent), fairness in income distribution (35 percent), the possibility of earning good wages (34 percent), the standard of living of the “main segment of the population” (30 percent), personal security (29 percent), health care (25 percent), the “impact of rank-and-file on the affairs of state” (22 percent), and police (20 percent).

To be sure, the ratings of the Putin-Medvedev duumvirate, although somewhat down in the last few months, remain astronomically high by the standards of genuinely democratic nations, hovering around 70 percent. Yet the validity of this approval is at best suspect. Thus, Gudkov argues that the censored national television channels, from which most of the population gets its information, project an image of Russia that has less and less to do with reality. This censorship and the suppression of free competition among the political parties have ended, in Gudkov’s view, a national public debate about the country’s current development and its future. They removed from the people’s purview the “price of the policies” implemented by the “leaders without alternative”–and thus their responsibility before society.

Still, most Russians believe that government corruption and embezzlement have grown substantially in the so-called zero years (nulevye gody) of 2000-2010, especially after 2007. Confirming the pattern of all Russian revolutions, the Levada poll shows that the “most negative feelings” are found in the capital. Muscovites either reported an actual drop in the standard of living or expressed “strong fears” about it. The mistrust of authorities among the inhabitants of the capital occasionally borders on paranoia: surveyed a few days after the suicide bombing at Domodedovo airport on January 24, 2011, four in ten readers of Moskovskiy komsomolets, one of Moscow’s most popular dailies, believed that the attack was organized either by the current or former siloviki (the security and the military).

Shevtsova saw signs of alienation in the nationalist riots of ethnic Russian soccer fans on the Manezh Square last December after an ethnic Russian young man was shot and killed in a brawl by a kavkazets, a man from the predominantly Muslim North Caucasus. (While the shooter, Aslan Cherkesov, was detained, his friends were released at first by the Moscow police, causing the riots.) Shevtsova called it a “revolt of the Putin generation”–those who came of age in the first decade of the new century and were reared on the drumbeat of “Russia’s getting off its knees” and–various “resets” notwithstanding–the anti-Americanism of the “national leader” (Putin) and his echo chamber, the national television. Yet for all the high-protein, jingoistic diet, they seem to “intuitively feel the hopelessness of the future.” While the Kremlin has managed to prevent another riot by a combination of threats and pandering (Putin even had tea with the fans’ leaders), the authorities’ initial confusion and fear seem to indicate the Kremlin’s ride on this tiger is getting increasingly precarious.

The “New Emigrants”

For the regime’s critics, there is hardly a more telling proof of alienation than Russia’s huge emigration–all the more remarkable for occurring in peacetime and in an economic environment more than tolerable by national standards. Novaya gazeta estimated that three hundred thousand families have left Russia in the last few years. In late January, the chairman of the Auditing Chamber of the Russian government, Sergei Stepashin, confirmed the estimate by putting the size of emigration at 1.25 million.

Unlike the two most recent “waves” of emigration–the Jewish and dissident wave in the 1970s and the exodus of the early 1990s spurred by the economic dislocation of the Soviet collapse–those leaving today cannot be written off as potential or real fifth columnists, nor dismissed as abandoning the motherland in search of “sausage and blue jeans.” The new emigrants are mostly ethnic Russians, younger, educated, urban, and middle class; they are “small, middle, and even large” business owners. In short, they are some of the best and brightest. According to Mau, in the long run the “emigration of the elite” is likely to become Russia’s biggest problem.

The new emigrants are said to be searching for educational and professional opportunities; they are afraid of terrorism and tired of “extortions” (pobory) and “harassment” (naezdy) by corrupt government functionaries. In an online poll of Novaya gazeta readers (whose demographic profile closely resembles that of the new emigrants), respondents listed “the growth of nationalistic mood,” high taxes, and, most of all, the “preparation for Putin’s return to power” as causes of the emigration.

The antiauthoritarian revolt of the Egyptian protesters produced little hope or cheer among the Moscow intelligentsia. Not that the similarities between the regimes were lost on Russia’s independent observers. As usual, the superb Novaya gazeta led the way. Isn’t our state also “corrupt, technologically backward, slow, huge, ineffective and repressive”? it asked on January 28. And don’t we, too, have little time to wait “before the same faces in power become as irritating” as they were in Tunisia and Egypt?

Lest the reader fail to appreciate the parallels, the January 31 issue of Novaya gazeta highlighted this passage in its analysis of the Egyptian crisis: “The clan which is settled on top of the power pyramid only ‘lets out steam’ to lower the pressure by imitating elections. The electoral process is distorted (parties are prevented from registering, the ‘unwanted elements’ banned from mass media) and the results of the people’s voting are invariably falsified.” The paper’s op-ed editor and leading columnist Andrei Kolesnikov described the elements of “Tunisian syndrome” in unequivocally native terms: the unchanged and unaccountable authorities, “stability” that turns into “stagnation,” corruption that stems from those in the “inner circle” doing whatever they want under the protection of “the top boss,” and the state-controlled private businesses and “privatized” state bureaucracies.

Yet independent media were quick to point to profound differences between Russia and Egypt. For instance, while upward mobility stalled by nepotism and paltry job creation is definitely an issue in Russia, unlike Tunisia and Egypt there may not be enough young people to achieve the critical mass necessary for a revolt. As one of the national opposition leaders, Vladimir Ryzhkov, pointed out in a February 1 article, while 40 percent of Egypt’s 80 million people are under the age of fifteen, Russia (whose workforce shrank by nine hundred thousand last year alone) faces not “an excess but an acute shortage” of young people. Indeed, as a professor at a prestigious Moscow college said to me, a very low birthrate has created what could be a historically unprecedented situation in Russia: the number of applicants to the country’s colleges and universities may be less than the number of available slots.

Tahrir Square’s Painful Reminder

There are deeper reasons for Russians’ lack of enthusiasm at the sight of Egypt’s antiauthoritarian revolt. Tahrir Square was a painful reminder of how long and arduous the road has been between the exhilaration of Russia’s own glorious revolution in August 1991–when hundreds of thousands demonstrated in virtually all the largest cities in opposition to a hard-line military coup–and a stable, working (even if far from perfect) democracy; how thickly strewn with missed opportunities and prone to dead ends it looks in retrospect.

This year a deeply divided Russia is readying to mark the twentieth anniversary of the birth of free, posttotalitarian Russia–or, in Putin’s assessment of the Soviet Union’s demise, of “the greatest geopolitical catastrophe of the twentieth century.” Hindsight seems to have brought an appreciation of the 1991 revolution’s greatest flaw: it was an attempt at democratic construction on a very shallow social foundation, in soil scorched ten feet deep by seventy years of totalitarian communism. Most damagingly, Russia lacked a civil society capable of self-organizing to defend its dignity and resist degradation and subversion by authoritarian urges deeply embedded in the national political culture.

To Russian liberals today, the lasting salvation is not in a one-time antiauthoritarian Tahrir Square, no matter how brilliantly lit by pent-up passion for freedom. The only hope they increasingly see for Russia is the gradual, bottom-up growth of grassroots social movements (environmental, charitable, anticorruption)–a sort of high school of democracy whose courses in hands-on citizenship and personal responsibility for one’s life and country are already audited by hundreds of thousands of Russians, despite the regime’s occasional harassment or even, although still relatively rare, suppression of a self-organized citizenry. Until enough people graduate (two, five, ten years from now?) from this school of civics, a free, prosperous, sustainably democratic Russia is likely to remain a dream–standing, like the house of Baba Yaga, the old witch from Russian folktales, on thin chicken legs, only a few inches into the ground.

Russian Tahrir Square?

Gudkov best summarized the elite mood in Moscow and is worth quoting at length:

Unnoticeable in the early 2000s, by the end of the decade, the processes of intellectual and moral degradation of society are not only obvious but have brought about permanent changes. It has become clear that a system of unlimited political power sharply lowers the effectiveness of governance, replacing the problems of the country’s strategic development with the problems of staying in power and personal enrichment of those close to the highest leadership. The selection of government functionaries based on personal loyalty and opportunism, instead of competence, inevitably mars the quality of state functions and abolishes mechanisms of . . . control over administration. Obvious to the society and evinced, first and foremost, by the growth of corruption and arbitrariness, the disqualification and immorality of the powers-that-be cannot but lead to de-legitimization of the personalistic regime and the entire system of state administration.

Does such an analysis spell out a Russian Tahrir Square anytime soon? Of course not: even utterly discredited political and economic models continue, sustained by a combination of censorship, repression, inertia, indifference, bribery, and cooptation. The Brezhnev regime “stagnated” (a term that has been revived and widely used today) for a decade and a half before a repair through liberal reforms was attempted.

Does the present mood make Tahrir possible? Yes, and strongly so. While elite disillusionment, even as deep and raw as that in Moscow, is not a sufficient condition of a political crisis, it is one of its necessary components, for it amounts to a withdrawal of loyalty by a key population segment, which in national politics punches far above its demographic weight. Most importantly they are opinion makers, fueling the perception of the regime’s “delegitimation”–a fatal political illness, which, if allowed to go untreated, in time leaves any polity a hollow shell, protected, usually half-heartedly, by a thinning layer of secret police and an even more reluctant military.

No one can know today when, where, and how the spark will ignite. Yet the consensus among Moscow intelligentsia appears to be that if the Kremlin persists in blocking normal democratic channels of feedback and discontent, while daily indignities multiply, ignite it will. I have seen plenty of dry wood.

In the words of Kolesnikov: “Even if Vladimir Putin, our Ayatollah, remains in power as prime minister or president for many years, no one knows where lie the limits of inertia and when the uncontrollable growth of protest activity will begin. The only obvious thing is that the explosion may occur–and at any moment. If the authorities will continue to do nothing.”

The author is grateful to AEI research assistant Kevin Rothrock and senior editor Laura Drinkwine for their help in editing and producing this Outlook. hairy girl hairy girl https://zp-pdl.com/best-payday-loans.php https://zp-pdl.com/fast-and-easy-payday-loans-online.php займы онлайн на карту срочно

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