The Price of Nostalgia
America’s Self-Defeating Economic Retreat
For 21 years, Vladimir Putin has reigned supreme over Russian politics. A skillful manipulator of public opinion, he wields the blunt force of repression against opponents at home and the sharp power of cyber-operations and espionage campaigns against enemies abroad. Increasingly, Western analysts and officials portray him as all-powerful, a ruthless former KGB man who imposes his will on Russia from behind dark sunglasses. This narrative, which the Kremlin goes out of its way to reinforce, is tempting to believe. Putin has jailed the closest thing he has to a political rival—the opposition leader Alexei Navalny—and crushed a wave of protests by Navalny’s supporters. Putin’s intelligence agencies brazenly hacked the U.S. government, and his troops are gradually eroding U.S. influence everywhere from Libya to Syria to Ukraine.
But if Putin is unrivaled at home, he is not omnipotent. Like all autocrats, he faces the dual threats of a coup from elites around him and a popular revolt from below. And because of the compromises he has had to make to consolidate his personal control over the state, Putin’s tools for balancing the competing goals of rewarding elites who might otherwise conspire against him and appeasing the public are becoming less and less effective. He has weakened institutions such as courts, bureaucracies, elections, parties, and legislatures so that they cannot constrain him, meaning that he cannot rely on them to generate economic growth, resolve social conflicts, or even facilitate his peaceful exit from office. This leaves Putin dependent on the fleeting commodity of personal popularity and the hazardous methods of repression and propaganda.
Those who acknowledge these vulnerabilities frequently note that Putin is “playing a weak hand well.” But Putin has dealt his own hand, and it is weak primarily because of the tradeoffs inherent to regimes like the one he has built. Eventually, he will have to decide whether to continue the same balancing act, skillfully playing his weak hand even as it gradually diminishes his power, or try to strengthen his hand by introducing economic reforms that will threaten his core constituencies in the security services, the bureaucracy, and the private sector.
Putin was buoyed by an oil-fueled economic boom that sharply raised living standards in his first decade in office and a wave of nationalist sentiment following the annexation of Crimea in his second. As the sheen on these achievements has begun to wear off, however, Putin in his third decade in office has increasingly come to rely on repression to neutralize opponents both big and small. This trend will likely intensify as Russia’s problems mount, accelerating a cycle of political violence and economic malaise that could stymie Putin’s great-power ambitions and test his political skill.
The narrative of Putin as all-powerful is sustained in part by analysts who believe that to understand autocracy, one must understand the autocrat. Putinologists scour the Russian leader’s background, his career path, and even his reading choices for clues to his policies. Their analysis makes for a compelling story of Putin’s Russia, but it does not explain all that much. After all, Putin was just as much an ex-KGB man in the early years of this century, when he favored liberal economic policies and better relations with the West, as he is today, with his strident anti-Western stance. More important, Russian politics follow patterns common to a subset of authoritarian regimes that political scientists call “personalist autocracies.” Studying this type of system, rather than studying the man himself, is the best way to understand Putin’s Russia.
Personalist autocracies are, as the name suggests, run by lone individuals. They frequently have political parties, legislatures, and influential militaries, but power over important personnel or policy decisions always resides with one person at the top. Contemporary examples of this kind of regime include Viktor Orban’s in Hungary, Rodrigo Duterte’s in the Philippines, Recep Tayyip Erdogan’s in Turkey, and Nicolás Maduro’s in Venezuela. The former Soviet space has proved especially hospitable to personalist autocrats: such leaders currently rule Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan. Globally, personalist autocracies are now the most common type of autocracy, outnumbering both one-party regimes, such as those in Singapore and Vietnam, and military regimes, such as Myanmar’s.
Personalist autocracies exhibit a host of pathologies that are familiar to Russia watchers. They have higher levels of corruption than one-party or military autocracies and slower economic growth, greater repression, and less stable policies. Rulers in personalist autocracies also have a common toolkit: they stoke anti-Western sentiment to rally their base, distort the economy to benefit cronies, target political opponents using the legal system, and expand executive power at the expense of other institutions. Often, they rely on an informal inner circle of decision-makers that narrows over time and appoint loyalists or family members to critical positions in government. They create new security organizations that report directly to them and appeal to popular support rather than free and fair elections to legitimate their authority.
If Putin is unrivaled at home, he is not omnipotent.
These tendencies are readily explicable when one considers what personalist autocrats stand to lose if they leave office. The leaders of military dictatorships can retreat to the barracks, and the heads of one-party dictatorships can retire to plum posts in the party, but personalist dictators enjoy their wealth and influence only as long as they stay in power. And once they relinquish it, they are at the mercy of their successors, who rarely want once formidable rivals waiting in the wings. Over the last 70 years, personalist autocrats who lost power have tended to end up in exile, in jail, or dead.
Although he may not show it, Putin is surely aware of this danger. As Gleb Pavlovsky, a former adviser to the Russian leader and now a critic, put it in a 2012 interview:
In the Kremlin establishment . . . there has been an absolute conviction that as soon as the power center shifts, or if there is mass pressure, or the appearance of a popular leader, then everybody will be annihilated. It’s a feeling of great vulnerability. As soon as someone is given the chance—not necessarily the people, maybe the governors, maybe some other faction—they will physically destroy the establishment, or we’ll have to fight to destroy them instead.
The similarities between Putin and other personalist dictators do not end with his worries about removal. Like his Filipino, Hungarian, Turkish, Venezuelan, and Central Asian counterparts, he has gradually eroded the powers of the legislature, subdued independent media, subverted elections, and usurped authority from previously powerful regional officials. Last year, Putin pushed through changes to Russia’s constitution that will allow him to run for office in 2024 and 2030. Given the potential downsides of leaving office as a personalist autocrat, this effort to prolong his rule came as little surprise. Faced with similar term limits, every personalist autocrat in the former Soviet Union has made the same choice.
But by undercutting the kinds of political institutions that constrain executive power, Putin has reduced certainty about policy and increased the vulnerability of elites. As a result, investors prefer to park their capital in safe havens outside Russia, and many young Russians have taken their significant human capital abroad. Even superrich Russians feel vulnerable: they hold far more of their wealth in cash and have more volatile incomes than do their peers in other countries, and they have resisted the Kremlin’s calls to bring their capital home.
Without strong formal institutions to legitimate his rule, Putin relies on great personal popularity to deter challenges from elites and keep protesters off the street. Over the last 20 years, Putin’s approval ratings have averaged a remarkable 74 percent, and there is little reason to believe that Russians are lying to pollsters in large numbers. But these high approval ratings were largely driven by the economic boom that doubled the size of Russia’s economy between 1998 and 2008 and the unique foreign policy success of annexing Crimea in 2014. Since 2018, Putin’s popularity has wavered. His approval ratings remain in the mid-60s, but Russians express far less trust in him than they have in the past. In a November 2017 poll, when asked to name five politicians they trusted, 59 percent of respondents named Putin; in February 2021, just 32 percent did so. During the same interval, support for a fifth Putin term fell from 70 percent to 48 percent, with 41 percent of Russians surveyed now saying that they would prefer he step down.
Putin is constrained not just by his need for high approval ratings but also by the challenges of governing a modern society with an unwieldy bureaucracy. In Khrushchev: The Man and His Era, the political scientist William Taubman recounts how Nikita Khrushchev, who led the Soviet Union from 1953 to 1964 and controlled a Communist Party and a bureaucratic apparatus with far greater influence over society than Putin has, complained to the Cuban leader Fidel Castro about the limits of his power:
You’d think I could change anything in this country. Like hell I can. No matter what changes I propose and carry out, everything stays the same. Russia is like a tub full of dough, you put your hand down in it, down to the bottom, and think you’re master of the situation. When you first pull out your hand, a little hole remains, but then, before your very eyes, the dough expands into a spongy, puffy mass. That’s what Russia is like.
Russia’s enormous size and bureaucratic complexity mean that Putin inevitably must delegate some decision-making authority to lower-level officials, all of whom have their own interests. And because Russia’s state institutions are weak, Putin must also work with powerful businesspeople who are more keen to make money than to serve the state. As Putin’s authority is channeled down through this chain of bureaucrats, businesspeople, and spies who may or may not share his preferences, slippage inevitably occurs, and policies do not always get implemented the way he would have preferred.
The problem gets worse when the Kremlin seeks to maintain plausible deniability. To covertly supply rebels in eastern Ukraine, for instance, Putin partnered with Konstantin Malofeev, a Russian oligarch who allegedly funded a band of private mercenaries that maintained indirect ties to the Russian military. In July 2014, however, these rebels appear to have inadvertently shot down a Malaysian commercial airliner, killing almost 300 passengers and crew members. In order to camouflage its cyberattacks, the Kremlin similarly relies on hackers who work for private-sector front companies but who answer to the Russian security services. In 2016, it was the sloppiness of these hackers that allowed the United States to identify Russia as the source of the Democratic National Committee hack. The Russia analyst Mark Galeotti has dubbed the Kremlin’s outsourcing of dirty work to groups with murky ties to the state “adhocracy.” This method of statecraft hides Moscow’s hand, but it also loosens its grip on policy.
The Kremlin struggles with more mundane tasks, as well. In 2012, Putin issued a detailed set of targets to increase economic growth, improve bureaucratic efficiency, and support social programs. That these decrees were poorly formulated was one indication of the bureaucracy’s weakness (among other flaws, they optimistically assumed an annual growth rate of seven percent). But even more telling was the lack of follow-through. On the five-year anniversary of these decrees, Sergei Mironov, then the head of the Kremlin-friendly party A Just Russia, reported that the bureaucracy had implemented just 35 of the 179 decrees monitored by his committee in parliament. Autocrats have long struggled to elicit honest information from their subordinates and make sure their policies have taken hold, and Putin is no exception.
Imperiled and constrained by the very compromises that enable them to amass power, personalist autocrats struggle to balance defending against the two main threats to their rule: coups by the political elite and protests by the public. Those in the leader’s inner circle typically have a stake in the regime’s survival. This is true of Putin’s cronies, who have become rich beyond their dreams. But these elites also pose a potential threat. Cronies can capture personalist autocrats who lean too heavily on them for support. Moreover, rare is the political insider who thinks he could not do a better job than his boss if given the chance. According to the political scientists Barbara Geddes, Joseph Wright, and Erica Frantz, between 1945 and 2012, leaders of nondemocracies were more than twice as likely to be replaced by an elite coup as by a popular revolt.
Autocrats also face threats from below in the form of protests. The “color revolutions” toppled rulers in Georgia in 2003, Ukraine in 2004, and Kyrgyzstan in 2005. Few worries animate the Kremlin more than the possibility of a popular uprising, and many analysts argue that it was the large protests against corruption and electoral fraud in 2011 and 2012 that prompted the Kremlin to sharply increase the penalties for attending and organizing protests.
These dual threats put Putin in a bind, because steps that might reduce the risk of a coup by elites can increase the risk of a popular revolt, and vice versa. Investment in the security services that buys the loyalty of elites may necessitate cuts to social services that stoke popular anger and risk igniting protests. Conversely, generous social programs that placate the public and forestall a revolt may require cuts to state spending that anger regime insiders and make a palace coup more likely. In general, Putin must walk a narrow line between allowing his cronies to engage in enough corruption and self-dealing to keep them loyal and promoting sufficiently broad-based economic growth to keep the public from protesting.
In his first decade in office, high energy prices and sound macroeconomic policy obscured this tradeoff, allowing Putin to reward both elites and the masses with spectacular increases in income. But the days of $100-a-barrel oil and surging living standards are behind him, and Putin must now choose between rewarding his cronies and reforming the economy. Infighting among elites, although always hard to measure, appears to be on the rise as the regime’s economic largess falls. The last four years have seen a sitting minister of economics jailed for bribery, a senator arrested on the floor of the Federal Assembly for murder, and a prominent American businessman detained for almost two years. Arrests for economic crimes, which are often a rough proxy for violent corporate raids, increased by a third in 2019. And spats among Russia’s security services surged in 2018 and 2019, until the coronavirus pandemic hit.
The public, too, is restless. Real household income fell every year between 2013 and 2019. Pension reforms shaved 15 percentage points off of Putin’s approval rating over the course of 2018, and Russians routinely cite economic difficulties as their most pressing problem. The protests in January in support of Navalny, which occurred in more than 100 cities, were rooted as much in economic dissatisfaction as in opposition to Putin.
Putin faces a similar dilemma in foreign policy. The policies needed to generate economic dynamism—opening the economy to foreign trade, reducing corruption, strengthening the rule of law, increasing competition, and attracting foreign investment—are difficult to square with his assertive foreign policy, which has benefited hard-liners in the security agencies and firms in import-competing sectors. The Kremlin’s more confrontational foreign policy toward the West has brought Moscow back as a global force and secured Putin’s place in Russian history, but it has also impeded much-needed economic reforms that would strengthen the country’s position abroad over the longer term and satisfy Russian citizens, most of whom, according to opinion polls, care more about their own living standards than their country’s great-power status.
Moscow’s annexation of Crimea and intervention in eastern Ukraine led to U.S. and European sanctions that have further slowed the economy. These measures have scared off foreign investors and reduced Russian access to foreign technology and financing. That Kremlin elites frequently call for these sanctions to be removed is evidence of the considerable, if intermittent, pain they have caused some oligarchs in particular.
Putin likely knows that he could boost economic growth by charting a less assertive foreign policy. His longtime adviser Alexei Kudrin, who served as Russia’s finance minister from 2000 to 2011 and is now the government’s chief auditor, told the St. Petersburg International Economic Forum in 2018 that the success of Russia’s economic policy depends on reducing tensions with the West—a comment that brought a swift rebuke from Russia’s Ministry of Foreign Affairs. Putin continues to challenge the West, and the United States in particular, to boost his popularity among nationalist voters. But as with all of Putin’s strategies for managing threats to his rule, stoking patriotic sentiments comes at a cost—in this case, broad-based economic growth.
Like all personalist autocrats, Putin has relatively blunt tools for managing the tradeoffs inherent to his position. He has succeeded in exerting control over the media, but he is no master manipulator. If he were, public opinion would more closely mirror the Kremlin’s line on foreign policy. Putin’s annexation of Crimea was wildly popular, but support for using Russian troops in eastern Ukraine and Syria has always been quite modest. Despite the Kremlin’s harsh anti-Kyiv rhetoric, most Russians have a positive view of Ukraine, and just 15 percent support unification with the country. The Kremlin has also conducted a noisy anti-American campaign in recent years, but Russians are about as likely to hold a positive view of the United States as they are to hold a negative view. According to a January 2020 opinion poll, two-thirds of Russians believe their government should view the West as a partner rather than a rival or an enemy. Attempts by the Kremlin to shift blame for Russia’s economic malaise to foreign countries have largely fallen flat, and few Russians believe that their government is capable of improving their economic situation. In what Russians call “the battle between the television and the refrigerator,” the latter is winning.
Part of the Kremlin’s problem is that manipulating information sometimes backfires. If people believe that the information they receive is being spun, they will lose confidence in the source. As Russian television became more politicized over the last decade, Russian viewers became more skeptical. According to public opinion polls, viewers’ trust in what they saw on television fell from 79 percent in 2009 to just 48 percent in 2018. Meanwhile, the share of Russians who cited television as their chief source of news dropped from 94 percent to 69 percent between 2009 and 2020.
Putin retains the trump card of force, a card he has played with increasing frequency as the economy has stagnated and the warm glow of the annexation of Crimea has faded. Since 2018, the Kremlin has dealt with political opposition far more harshly than in the past, making it harder for independent candidates to run for even local office and using force against protesters as a rule rather than an exception. In late 2020 and early 2021, the Kremlin further restricted protest activity, sharply increased penalties for unsanctioned protests, expanded the definition of “foreign agents,” and made slander on the Internet punishable by up to two years in jail. The arrest of Navalny, his sentencing to almost three years in prison, and the brutal treatment of those protesting on his behalf are the logical extension of this repressive trend.
Putin’s increased reliance on repression is a sign that his other tools are failing. The danger for the Kremlin is that repression takes on a self-reinforcing momentum. As the political scientist Christian Davenport has argued, authoritarian regimes that resort to repression typically come to rely on it more and more because of its tendency to perpetuate the problems that generate opposition in the first place. Crackdowns on protests rooted in declining living standards only heighten popular grievances among the economically disadvantaged and further entrench those who benefit from the status quo. Repression also increases a ruler’s dependence on the security services and crowds out other means of dealing with the opposition.
Putin has relatively blunt tools for managing the tradeoffs inherent to his position.
Skillful repression has helped keep Putin in office and pushed the political opposition to the margins, but it has done little to resolve the underlying problems that threaten his power. It has not promoted economic growth, strengthened property rights, or reduced corruption. On the contrary, it has made the problems worse by empowering the security services and the corrupt government officials who benefit most from them, and it has encouraged the flight of human and economic capital, which are essential to economic growth and good governance. Emblematic of this issue is the fact that in 2018, Russia spent more on prisons and less on prisoners than any other country in Europe.
A future spike in energy prices that increased rent streams to the elite and delivered prosperity to the broader public would offer Putin some respite. If energy prices stay where they are, however, his future looks rocky. Given the diminishing returns of media manipulation, further repression and additional limits on political rights seem like a good bet. Having already tilted the electoral playing field against the opposition and drastically increased the punishment for protesting, the Kremlin has begun to move against the social media platforms that Putin’s opponents have used to gain traction. In March, the Kremlin announced charges against Facebook, Twitter, YouTube, TikTok, and the homegrown outlets VK and Odnoklassniki on the pretext that they failed to remove material harmful to children. Such actions will do little to endear Putin to young Russians, who are already the most likely to oppose his rule.
The parliamentary elections slated for September are likely to be fraught. Approval ratings for the ruling United Russia party are lower than ever, and so the Kremlin will need to clamp down on the opposition while also keeping the regime-friendly Communist Party and Liberal Democratic Party in the fold. And relying on excessive voter fraud would be risky. After a stolen election last year, neighboring Belarus saw months of protests, a fate the Kremlin would like to avoid.
Looking further down the road, the expectation that Putin will stay on as president past 2024 will only reinforce Russia’s economic stagnation and heighten popular frustration over the Kremlin’s inability to raise living standards or improve governance. The result will most likely be a steady increase in pressure on the regime and in repression against its opponents.
Russia remains a great power, albeit a diminished one. Although Leonid Brezhnev, who led the Soviet Union at the height of its global power, would be appalled by the country’s current military capabilities and geopolitical status, Boris Yeltsin, who inherited a country in collapse, would view them with envy. Russia’s nuclear might, geography, and seat on the UN Security Council ensure that it ranks among the great powers—as do its educational, scientific, and energy prowess. The country has more college graduates as a proportion of its population than almost any member of the Organization for Economic Cooperation and Development. It produced an effective COVID-19 vaccine in less than a year, and it will provide Europe with low-cost energy for years to come and remain a major player in global energy markets. Those who dismiss Russia as a regional power are mistaken.
Putin faces no immediate threat to his rule. He is a deft tactician with considerable financial resources facing a disorganized opposition. Yet no amount of shrewdness can overcome the agonizing trade-offs of running Russia the way he does. Cheat enough in elections so that you don’t risk losing, but not so much that it signals weakness. Rile up the base with anti-Western moves, but not to the extent that it provokes an actual conflict with the West. Reward cronies through corruption, but not so much that the economy collapses. Manipulate the news, but not to the point where people distrust the media. Repress political opponents, but not enough to spark a popular backlash. Strengthen the security services, but not so much that they can turn on you. How the Kremlin balances these tradeoffs will determine Russia’s immediate future. But the trend toward greater repression over the last four years, and its likely continuation, does not bode well for Russia or its leader.