RONDELI BLOG

Putin’s Pre-Election Economic Promises: Myth and Reality

2018 / 04 / 11

Author: Amb. Valeri Chechelashvili, Senior Fellow at Rondeli Foundation

 

Various political, economic and social promises in the pre-election period are a common occurrence in every country. The higher the level of democracy in the country, the higher the level of development and education of the society, the harder it is for a political party to make unfounded promises. Hence, the pre-election competition becomes more professional.

The level of professional discussions between the political opponents is also dependent upon the degree of political competition. In other words, in the case of the monopolization of the political space, the dominant party does not much bother to analyze how realistic its promises are. For example, in North Korea the leader says whatever comes to his mind and the society applauds. If the promises could not be fulfilled, it will be the fault of the external enemies. Internal enemies can also be blamed, if necessary.

What happens in Russia has direct influence on Georgia. Of course, in determining our foreign policy priorities, we should take the events unfolding in Russia and the Russian factor in general, into account. Hence the immediate interest of Georgia is how the Russian leadership sees and assesses its perspectives, its place in the international relations systems, regional policy, trends of economic development and goals – on which factors Russia bases its faith of boosting influence on the international arena.

Everyone has already seen that the President of Russia, Vladimir Putin, will not be leaving the Kremlin through elections. Rather, this could be caused by several factors:  a) biological factors, b) domestic coup, c) root geopolitical fluctuations, popular uprising and so on. The first is god’s will, second is less likely, due to the nature of the Russian regime, which is based upon the unlimited power of the law enforcement structures, especially the Federal Security Service. However, the situations were similar in the Soviet Union and Romania as well, yet they were unable to avoid the third option.

Making forecasts in this field is difficult; however, one thing can already be said today:  the second six-year Presidential tenure of Vladimir Putin will be much more complicated and full of challenges. What vision does the leader of Russia have, given such a situation and what does he offer to his public and electorate?

In order to answer this fundamental question, it is necessary to analyze the 1 March 2018 annual address of Putin to the State Duma, which practically represented his pre-election program.

The structure of the Presidential address was constructed quite logically. The first part was allocated for the analysis of the existing situation, problems and challenges. The second one dealt with the ways of resolving the problems and social issues whilst the third one was about the international situation, Russia’s place in the international relations system, objectives of strengthening its positions and spreading influence, with the use of the military component first and foremost, of course. We will focus on the first two parts.

The facts and their assessments presented in the first part were accurate and objective, as well as critical, which is why it was quite unexpected. The very beginning of the address pointed out that the speed of technological changes is gaining strength quickly and whoever fails to keep up with it, is doomed to hopelessly lag behind. This is an interesting conclusion by the President of the country, whose aggressive policies put the country under international sanctions and hence, divorced it from the road of world technological progress.

In order to overcome this challenge, Putin offers the following conclusion to the audience:  the space of freedom must be expanded, democratic institutions, self-governments, civil society institutions and courts strengthened – we must be a country which is open to the world. One would expect to hear this from the opposition politician Grigory Yavlinski. Putin spoke from the stage as if somebody else had been governing the country for the past 18 years and it was that somebody who formed the faulty economic model based on mining resources, restricted civil liberties, abolished the rule for electing the governors, implemented the practice of murdering political opponents and general terror within and outside the country, pitting Russia against the whole civilized world.

Backwardness is the main challenge and the biggest enemy – pointed out Putin, presenting his own view of how to overcome backwardness. Here starts the most interesting part. It must be quoted fully:  “Russia not only needs to firmly assume its place among top five world economies, it must also double its GDP per capita in the middle of the next decade”.

Such confidence is quite awe-inspiring. Russia is currently the 12th largest economy in the world, between South Korea and Australia. For more clarity, let us look at the table, which will give us a general image of the dynamics of the world’s leading economies.

Size of Leading World Economies and their Growth Rate (2017)

 

GDP (USD Trillion)

GDP Growth (%)

USA

19,36

2,3

China

11,93

6,5

Japan

4,88

0,7

Germany

3,65

1,8

France

2,57

1,8

UK

2,56

1,5

India

2,43

7,4

Brazil

2,08

1,5

Italy

1,92

1,1

Canada

1,64

2,1

South Korea

1,52

3,0

Russia

1,46

1,6

Australia

1,39

2,9

Spain

1,30

2,5

Mexico

1,14

1,9

Indonesia

1,01

5,3

Turkey

0,84

3,5

 

Source: http://www.imf.org/external/datamapper/[email protected]/OEMDC/ADVEC/WEOWORLD

The table above shows many things.

Several important factors stand in the way of the implementation of Putin’s plans. It cannot be done without all-out structural reform of the economy. The main problem is the contradiction between the philosophy of the Russian government and the existing development opportunities. The issue is that as a result of reforming and de-monopolizing the economy of the country, as well as the thorough implementation of competition principles and the formation of independent economic subjects, the growth of the demand by the public on democratizing the political system will become irreversible.

Eventually it will become impossible for a single group of individuals to retain dominance on the political arena. Economically independent electorate will be free to vote as they please and political competition in elections will become a must, without any guarantees of gaining success in the process. This is unimaginable under the current Russian elite.

Russia’s economic resources are dwindling. The prices of oil and gas have reached their peak and will only show a strong trend of reduction in the future. This is also caused by the unprecedented growth in the production of shale oil and gas, as well as the development of alternative energy sources ensured by technological progress.

The structure of the Russian economy is rigid, degree of freedom low. If Russia does not take active compromise measures to avoid international isolation, Putin’s pre-election promises will not be fulfilled. Even if it manages to do that, it is difficult to imagine Russia entering the top five largest economies in the world. If the current trends continue, Russia will not even be able to retain the 12th place it now holds. The table clearly shows that Australia and Spain will overtake Russia in a few years, perhaps also followed by Mexico and Indonesia later on. It is unlikely that Turkey, currently occupying the 17th place on the list, will manage to do this.

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