By sending troops into Crimea, Russian President Vladimir Putin has amplified Ukraine’s turmoil and set off the most dangerous crisis Europe has seen this century. Less noted, however, is that the move portends a significant change in Russia’s domestic politics. Putin has abandoned the strategy that has underwritten his political dominance for the last 14 years. And in doing so, he has bet the throne on an approach that is likely to fail.
The secret to Putin’s past political success is simple: Presiding over years of rapid economic recovery, he could claim credit for restoring stability after Russia’s chaotic transition from communism. During his first two presidential terms, from 2000 to 2008, the country’s growth rate averaged seven percent a year. In fact, that success mostly reflected factors beyond Putin’s control, including surging oil prices and a flood of liquidity into emerging markets. But it did also require a commitment to open borders, integration into international institutions such as the World Trade Organization and the Organization for Economic Cooperation and Development, cordial relations with Western business circles, and efforts to project an image of modernity and increasing sophistication. A 13 percent flat income tax and a conservative macroeconomic policy did not hurt.
As Russians’ incomes soared, so did Putin’s popularity. His consistently high approval ratings -- since 2000, they have never fallen below 60 percent on polls conducted by the Levada Center, a Russian nongovernmental organization -- have rallied Russia’s fractious elites to the president’s side and kept naysayers at bay. The global financial crisis in 2008–9 threw Putin’s strategy into doubt. By massively boosting spending, the government managed to protect Russians’ living standards. But in the last two years, the public has recognized that the growth rates of Putin’s first two terms are not returning. Since late 2011, quarterly growth has fallen steadily from 5.1 to 1.2 percent a year.
Recharging the economy would require a serious commitment to safeguarding property rights and attacking corruption. As stagnation deepened, rumors