Russia under Medvedev: ‘A Window of Opportunity’

In Yeltsin’s day, reformers used to talk about ‘windows of opportunity’ for this or that reform. These windows had a nasty habit of closing before the reform was accomplished. Perhaps the Medvedev presidency, which started yesterday, offers another ‘window of opportunity’ for economic and political reform, and normalisation of relations with other countries.

Consider the pamphlet ‘Russia’s Future under Medvedev’(eto angliskii perevod) edited by Igor Yurgens, and compiled by a group of Russian experts brought together by the Institute of Contemporary Development, a think-tank said to be close to the new President. The goal they set out is to improve the welfare of the people. Russian economic policy, they say, should seek to raise Russian per capita incomes to European levels by 2020 by developing a broadly-based economy.

Two things make this report interesting, and possibly important. The first is the frank avowal that economic development should be geared to welfare not to power. Of course, Russia must be strong enough to defend itself. But power should not be the object of economic policy. This marks a clear break from the Putin-era approach which has been to treat economic policy as an instrument of foreign policy, as well as a means of self-enrichment for the elite. The choice between welfare and power is fundamental. The Soviet Union may have started off as a welfare state, but it soon became a power state, and the same drift has been apparent in the Putin years, as reflected both in domestic politics and external policy. Russians have yet to understand that America is powerful because it is economically successful: it is not economically successful because it is powerful.

Equally interesting is the report’s discussion about the political conditions required for a ‘welfare’ policy. It insists that broadly-based economic development requires deep political reform. The authors reject, that is, the authoritarian model. They are quite explicit about this: ‘The absence of genuine and honest competition within Russia’s political system and the method used to appoint the elite deprive Russian society of the opportunity to discuss its future development, and exclude the majority of the population from taking part in the country’s self-determination’. The development of a welfare state, in short, requires liberal constitutionalism. The Russian state, as now constituted, is not a suitable vehicle for the ‘comprehensive development’ of society, because it has no mobilization or feed-back mechanism. It is a weak state, however many arbitrary acts it may commit.

In my view, this argument is basically correct, but it has to be rescued from an obvious counter-example. Critics of western-style democracy can point to China, where an authoritarian Communist Party has led the post-Communist economy onto a very fast growth path, now in its 25th year. The critics forget that the Chinese Communist Party, though undoubtedly autocratic, has much greater legitimacy than the ‘fake’ political parties created by the Kremlin to ‘manage’ democracy. It has deep roots in Chinese society, which it uses both for the purpose of mobilization and as a feed-back mechanism. Since no one in Russia wants to go back to a monolithic single-party state, there is no alternative but to go forward to an ‘honestly competitive’ political system. A major tragedy for Russia is that the Communist Party, which does have popular roots,has failed to evolve into a social democratic party, as has happened in eastern Europe. This would have made it a genuine competitor for power. Unless, or until, the Communist party takes this step, the prospects for a competitive political system remain poor.

The experts are not unduly optimistic about the prospects for economic reform. They point out that over the last 150 years Russia has repeatedly fallen victim to the same cycle. First, liberal reforms lead to a rapid economic upturn. Then, different interest groups fight over the distribution of its economic benefits and are tempted to use the new wealth for geopolitical purposes. Social tension grows as military expenditure rises. The reforms are checked, and conflicts at home and abroad lead to political and social crisis.

The same thing, they say, is likely to happen again. There are two main alternatives. Russia’s rulers may try to recreate the ‘warfare’ state along Soviet lines in the quest for ‘superpower’ status. This will fail for the same reason the Soviet state broke down: inefficiency of central planning. More likely is a continuation of the ‘rentier’ state developed under Yeltsin and Putin. This is neither a power state nor a welfare state, but somewhere in between. Russian society will live off rents from the energy and raw material sector. The elites take the giant share but can distribute enough of them to keep enough people happy, so there is no pressure to reform.The middle class is bought off by modest prosperity; the workers are kept happy by subsidised social services, especially cheap housing and heating. There are ad hoc interventions and tactical maneouvring within the elite, interspersed with populist appeals and feeble attempts at market reform, but no real change. However, such an economy is vulnerable to external shocks –such as a fall in the price of energy –which can trigger off a violent struggle over distribution.

To what extent, then, has a genuine, if brief, ‘window of opportunity’ for reform opened up? The outcome of the complicated set of rigged elections and Kremlin infighting has been to nudge the Russian system towards pluralism. Although power for the foreseeable future will stay with Putin, some leakage to Medvedev is bound to develop over time, if only because Medvedev is directly elected, and Putin is not. The two leaders in combination have a greater power to push through the reforms outlined by the experts than either has singly , provided they stay together, and provided they both want reform. Beyond this it would be dishonest to think one can say anything definite.

The fate of the Yurgens reforms also depends on the development of international relations. There is an influential anti-Russian lobby in both Washington and London, which wants to bully Russia into ‘improving’ its behaviour – by excluding it from membership, or even meaningful association, with clubs like WTO, NATO, EU, and the G8, and competing actively with it for influence in the CIS. Edward Lucas, in his new book, The New Cold War , subtitled ‘How the Kremlin Menaces both Russia and the West’goes further and argues that Russia should be treated as an enemy. Nothing, in my view, would be better calculated to drive the Kremlin towards a ‘power state’ and away from ‘welfare state’ thinking, confirming Russian paranoia, and dishing any hope of deep reform.

The issue is at heart simple enough. Is Russia’s behaviour vis-à-vis the CIS and Europe a sign of aggressive intent, or a defensive reaction to the fear of ‘encirclement’? Historians debate exactly this question in relation to the origins of the Cold War. The issue is complicated by the lack of a common language of international relations: what to Russians looks like encirclement to western politicians is simply spreading freedom, markets, and democracy. This perceptual divide is much more difficult to negotiate than the mundane competition for resources, which is well understood by everyone.

It will require a large effort of mutual accommodation. The west is much more likely to get Russian cooperation on things which really matter, like stopping nuclear proliferation, if it goes easy on moral lectures and abstains from useless, but insulting, cold war gestures like expanding NATO and planting anti-missile defences in Eastern Europe. The Kremlin also needs to rethink its foreign policy. It has to face the fact that Russia is very isolated in the world, with one aspiring satellite, Serbia, a marriage of convenience with China, and a bunch of unsavoury clients in Central Asia. The Kremlin’s positions and arguments, on a whole range of foreign policy issues, enthuse the Russians, but convince very few others. It is ‘drunk with imagined successes’.

Post-Communist Russia has not had a strong hand to play, but there have been big subjective weaknesses in the conduct of its foreign policy. The chief of these is that the Kremlin almost completely ignores the importance of ‘soft power’ –the power of attraction which a country exerts by means of its institutions, its way of life, its economic success, its intellectual power, and the language of its public spokesmen-very broadly, by the quality of its civilization. Russian leadership of its own sphere will be a function not of its military might but of its ‘attractiveness’ –to Russians and others. In today’s globalizing world it is not enough to be feared and one cannot expect to be loved, but there is a middle ground of attraction which Russia should explore relentlessly. The Yurgens reform agenda –a broadly-based business economy, an uncorrupt administration, an honestly competitive political system – has to be part of that exploration.