Friday, September 30, 2011

Putin's Return to the Presidency: Russia's Limited Options

Russia is a vast country, rich in natural resources and energy wealth. But Russia's core population of ethnic Russians is shrinking and aging. The industrial infrastructure of Russia -- including its military infrastructure -- is rusting and losing its human capital via natural loss and out-emigration. Russia's political aristocracy continues shipping the nation's wealth to overseas banks and investments. And the core of Russia's hopes -- the health and optimism of its citizens -- is in decline.

Here are a few other problems that Russia will face under Czar Putin:
For the last ten years, the Russian government's budget has ballooned, from 1.96 trillion rubles in 2000 to 20.4 trillion rubles in 2011 ($63 billion to $680 billion). Much of this spending has come in the form of direct tributes to regional governors, as well as to some ministries and their officials. It will be difficult to maintain this level of expenditure, since today, more than at any other moment in Russia's history, state revenues depend on the price of fossil fuels; oil, gas, and other petroleum products make up 72 percent of exports. If oil prices continue to fall, Putin may have to cut the budget, which could have a dangerous and unpredictable effect.

A new Putin presidency will cause the Russian public's passive dissatisfaction with their country and its rulers to grow and become more active, reflected by an increased outflow of educated professionals to other countries. Some opposition groups will form, perhaps based on Internet communities, brought together by a sharp rejection of bureaucratic arbitrariness and cynicism. _ForeignAffairs

With Putin’s return to the Kremlin, analysts are predicting a new “brain drain”—an exodus of Russia’s educated and creative young professionals who will not see a future with a ruler that plans to remain in power longer than Joseph Stalin (on the current timetable, until 2024). Another likely result is a renewed crackdown on what remains of Russia’s independent media and the already-illusive civic freedoms; a new round of repressions against the regime’s political opponents; continuing corruption; and a more confrontational stance toward the West and the ex-Soviet “near abroad,” especially as Russia’s increasingly shaky economic situation will necessitate diverting people’s attention elsewhere (the government recently admitted that the budget would only balance at an elevated oil price of $116 per barrel—with the current price being $104).

The most dangerous result of Putin’s attempt to cement his power, however, is an increased likelihood of upheavals. Popular discontent is rising: the August surveys by the independent Levada polling agency showed that 54 percent of Russians disapprove of the current government, while 64 percent would like to see the composition of the United Russia–dominated Parliament change “significantly” or “totally.” According to the same polling data, most Russians also believe that the upcoming parliamentary elections on December 4 will be a farce. With nine political parties across the spectrum—from the left-wing United Labor Front to the center-right Popular Freedom Party—denied registration and barred from the ballot, and a strict de facto censorship operating on national television, it is difficult to disagree with them. _WorldAffairs

We have known since 1996 that Russia wasn’t a democracy. We now know that Russia isn’t a dictatorship controlled by one party or one dynasty. It is a regime ruled by one man. “The party doesn’t exist,” said one of Russia’s leading independent economists. “The politics is all about one person.”

That new reality might seem to be a victory for Mr. Putin. But it is a flawed triumph. His resumption of absolute power is also an admission that he and his cronies have failed in the project they set themselves in 2008. That was to create a self-replicating institutional base for the regime he brought to power in 2000, when he took over from Boris Yeltsin and dismantled the fledgling democratic structures.

Russia’s transformation into what political scientists call a sultanistic or neo-patrimonial regime is a break both with Russian history and with the global trend. The Kremlin has been home to plenty of murderous dictators. But the czars drew their legitimacy from their blood and their faith. The general secretaries owed their power to their party and their ideology. Mr. Putin’s rule is based solely on the man himself. _Globe&Mail
As the price of oil fluctuates, the Russian government's hold upon its people's loyalty will likewise fluctuate. Time is working against Putin in this regard, rather than for him as most pundits appear to think. The Arctic, for example, is more likely to freeze a harder thicker ice cap rather than to thaw and create a sea passage, and open drilling zones. The growth of the shale oil & gas industry in Europe threatens to severely reduce one of Russia's most lucrative markets. In addition, substitutions of other feedstocks in place of crude oil in many areas from transportation to plastics, is likely to put a downward pressure on Russia's Ural crude prices.

Putin is seen as the "strong man" president. But if the declining nature of Russia's military technology and power is exposed to the world, inadvertently, Putin will find it all the harder to maintain order. And such an exposure becomes ever more likely with the passage of time, and the increasing bellicosity of Mr. Putin's regional bullying.

Russia cannot supply its army with a full contingent of ethnic Russians. In Georgia, it was forced to use Muslim mercenaries to do a lot of its dirty work. Putin will be forced to depend upon more and more non-Russians serving within the ranks of the Russian armed forces, and of divided loyalties.

Putin will find it difficult to keep Chinese influence out of Eastern Siberia, as more and more illegal Chinese immigrants move in and occupy the towns and industries there. Russians have never wanted to live in Siberia in large numbers, and the shrinking demographic dynamic is hitting the ethnic Russian population of Siberia very hard.

Looking at the underlying fundamentals, Russia has no alternative to Putin.

Russia's options are limited, after having so many of its non-Kremlin institutions destroyed by the Putin machine. Putin sees anything that he does not directly control as a direct threat to his power, and so he will continue to try to destroy anything new that tries to form an independent existence in Russia.

Any outside entity stupid enough to form an alliance or partnership with Putin's Russia is certain to be badly shafted by the czar, if the opportunity arises.

The best strategy for the rest of the world in dealing with Putin's brave new Russia, is to do everything possible to reduce the international prices of oil & gas. Since Obama's energy starvation policies are oriented toward doing exactly the opposite of that, Obama simply must go.

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