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Commentary: Putin’s domestic strategy: Counting the trees, missing the forest
May 31, 2016 / 3:31 AM / 2 years ago

Commentary: Putin’s domestic strategy: Counting the trees, missing the forest

Russian President Vladimir Putin strides the world as the master tactician. In Crimea, eastern Ukraine and Syria, he seized the initiative and left his adversaries flatfooted and guessing as to his ultimate intentions.

A billboard with a portrait of Russian President Vladimir Putin in Kerch, Crimea, April 7, 2016. The board reads: "Crimea. Russia. Forever." REUTERS/Andrew Osborn

Putin displays similar decisiveness against his domestic opponents, as the recent dismantling of the editorial staff at the independent newspaper RBC attests. Yet, blinkered decision-making processes can lead to bad policy choices. Having gutted the domestic media and created a puppet legislature, Putin is no exception to this rule.

The Kremlin is transfixed by the implementation of a series of decrees that Putin issued in May 2012, in the first flush of his successful return to the presidency. He remains focused on these executive orders -- and their assigned metrics -- as signs of his domestic success.

The decrees, which cover foreign, social, economic, housing and health-care policy, set out a road map for Putin’s third term. His 200-plus bureaucratic instructions included bold declarations: Life expectancy would increase from age 70 in 2012 to age 74 by 2018 (though the average Russian male still only lives to 65); the cost of housing a square meter would decrease by 20 percent; 25 million high-productivity jobs would be created by 2020, more than doubling the estimated number in 2012, and Russia would move from 120th to 20th place in the World Banks’s “Doing Business” rankings by 2018.

Putin’s resolute adherence to now questionable priorities, especially in regard to social policy, is emblematic of what has gone wrong with his national agenda.

Because the facts on the ground -- and the state of the Russian economy and the lives of everyday Russians -- have changed dramatically since the 2012 decrees. Putin just met with his Presidential Economic Council for the first time in three years to discuss alternative plans, which range from a targeted stimulus to major structural reforms, to spur economic growth. Meanwhile, spending on his proclamations continues unabated.

When first issued, no price tag accompanied this agenda. Current estimates range from $10.8 billion to $43 billion. The head of Russia’s audit chamber recently announced that before evaluating the effectiveness of Putin’s orders, the agency needed to know their cost.

Putin is not the first candidate to make lofty promises while campaigning. Yet he raised the political stakes by elevating these promises to official government directives, and has single-mindedly been following their progress.

He has, for example, criticized proposed federal budgets, and fired ministers and government officials for not fulfilling the demands set forth in his decrees.

Fast-forward four years, and the debate over implementation of the decrees has only intensified. Significant government and academic resources have been expended to analyze their progress. The government proudly proclaims it has fulfilled 82 percent of the demands in the decrees. Outside monitors put the rate far lower.

No matter what the overall percentage, however, the optimism that inspired these decisions -- oil was selling at $113 a barrel in 2012; it is now $49 -- has long since been overtaken by events, including the introduction of economic sanctions against Moscow, the collapse of oil prices, high inflation and a weakened ruble.

Russian President Vladimir Putin chairs a meeting with military officials at the Bocharov Ruchei state residence in Sochi, Russia, May 13, 2016. Mikhail Klimentyev/Sputnik/Kremlin via Reuters

Despite the hoopla surrounding the implementation rate, the underlying reality is far less encouraging. The decrees, for example, call for significant salary increases. Yet, the purchasing power of many professions, including doctors and teachers, remains at 2012 levels.

Moreover, regional governments have accumulated significant debts while striving to meet the increased social spending requirements. The regions, according to one source, still lack 15 percent of the revenues needed to implement the decrees.

Meanwhile, the big-ticket items -- increased productivity, cheaper housing -- now seem far beyond the reach of the government.

What does this continued preoccupation with the decrees say about Russia today? First, it illuminates why the Russian government has not been able to implement a sound anti-crisis plan for the past two years. Money and attention urgently needed to stimulate economic growth are regularly diverted to pad the success rate of fulfilling the orders rather than tackling fresh problems.

Second, Putin remains obsessed with meeting certain prestige goals instead of reforming institutions and addressing the underlying problems of ordinary Russians. He appealed to popular opinion, for example, when he promised to lower housing costs and provide better jobs. Today, however, fewer Russians than ever can dream of purchasing a home. Indeed, by not defending the ruble, the Kremlin ensured that Russian people would have to bear the brunt of the current recession.

Such realities, however, are unlikely to impinge on Putin’s world. As he contemplates his re-election campaign in 2018, the Russian president will likely just declare his policies a success by pointing to the final percentage of decrees implemented. Such a strategy would allow him to avoid running on his actual economic record.

All these references to rates of performance have a Soviet ring to them. Russia would have fulfilled the plan even though the nation’s standard of living and global competitiveness have declined precipitously.

Moreover, Putin would be continuing a Russian pattern set centuries ago. Russia has been governed by decree -- meaning personal rule -- since Peter the Great. This does not mean Putin is totally inflexible. He has, for example, let market forces determine the ruble’s value, and watched the currency tumble as a result.

Nonetheless, Putin is demanding that priorities he set in 2012 must be realized -- even though the positive economic conditions at that time have long since disappeared. The Russian political class feels compelled to follow Putin’s orders because that is how an autocratic system works.

The Russian leader’s policy decisions are unlikely to lead to immediate collapse. The price of oil has crept up and stabilized. In addition, Putin now has his own personal national guard that would respond without question to any political challenge from Putin’s opponents.

Yet, instead of pursuing a true modernization effort, Putin has fallen back on the May 2012 decrees as an alternative measurement of success. One that he can make look good on paper. The price of complacency, however, is blindness to constructive feedback.

Russia will wake up one day and discover that its public institutions and economy have yet again fallen behind parts of the developing world. The fixation on the May 2012 decrees helps explain why.

About the Author

William E. Pomeranz is deputy director of the Kennan Institute at the Woodrow Wilson Center for Scholars in Washington. Kathleen Smith is a teaching professor at the Center for Eurasian, Russian and East European Studies at Georgetown University.

The views expressed in this article are not those of Reuters News.

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