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Putin's Russia: Down But Not Out, Part 1

With Maria Lipman, Sergei Guriev, and Daniel Treisman

In this edition of the podcast, we’re discussing Putin’s strategy of repression, the real state of the Russian economy, and whether Putin really has a clear foreign policy.  Featuring interviews with Maria Lipman, Sergei Guriev, and Daniel Treisman, authors from the May/June 2016 issue. 

Don’t miss an episode of Foreign Affairs Uneditedsubscribe on iTunesPodBean, and Stitcher to have this podcast delivered right to your audio player of choice. 

This podcast has been edited and condensed. A rush transcript is below. Music credit: FreeMusicArchive.org / Podington Bear

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ALLAWALA: This is Foreign Affairs Unedited, and I’m Katie Allawala.

Over the past decade and a half, Vladimir Putin’s Russia has been an economic dynamo anda basket case, an imperfect democracy and a tightening tyranny, a constructive diplomatic actor and a serial military aggressor—sometimes all at once. The only constant has been surprise, as the zigging and zagging has left outside observers, and even many Russians, scratching their heads.

So begins the cover package of Foreign Affairs’ next issue, Putin’s Russia: Down But Not Out. Today on the podcast, we’re talking to some of the authors who contributed to that issue. We’ll look at Putin’s strategy of repression, the real state of the Russian economy, and whether Putin really has a clear foreign policy.

First up, we sat down Maria Lipman, editor-in-chief of counterpoint, to learn more about the evolution of Putin’s authoritarianism. 

LIPMAN: Especially early in his tenure, he was moving slowly, he was moving cautiously. He refrained from repressive methods, mostly relying on manipulation, on co-optation, on various ways that gradually sent a signal that loyalty to the government, loyalty to the central power is the safest way.

ALLAWALA: In this phase, he focused less on the public and more on the institutions that could challenge him.

LIPMAN: What he inherited from Boris Yeltsin, Russia's first President, was a very weak state. And the task itself of re-consolidating the state was a legitimate one. However, the state, Putin's state was being reconsolidated by emasculating, weakening first and emasculating institutions that underlined the checks and balances, the division of power. So he gradually took under control Russian governors, by emasculating federalism, taking under control their legislature, taking under control big business, and major media outlets such as national television channels.

ALLAWALA: Has to how he was able to accomplish all this, LIPMAN says he was very lucky.

LIPMAN: Almost as soon as he took power, the price of oil began to rise and Russia of course is heavily dependent on the price of oil, and Vladimir Putin could also deliver and could also send a sense that his Russia is more prosperous, more stable. Intimidation played a role, co-optation played a role. Enabling or offering to the propertied elites, the ability to enrich themselves; this was also a way.

ALLAWALA: What the Putin regime avoided, LIPMAN says, was outright repression.

What can be said is Putin's Kremlin refrained, especially at early stages, refrained from using repression, from using violence, and even if it did it was only individual cases.

ALLAWALA: And according to LIPMAN, that is what has changed.

LIPMAN: Well, now we're living in a different Russia. It can be said that especially since the Annexation of Crimea in 2014, the regime has become more repressive. And the government of today is much less tolerant to independent self-expression in any way, of any mode, than it used to be. The Annexation of Crimea served to consolidate the people around the Kremlin, around Putin.

ALLAWALA: At the same time, the Russian state can no longer provide for the people in the way it used to, thanks to declining oil prices and the Western sanctions regime. In another context, all this might lead to a mass upheaval. But it Russia, it hasn’t yet.  

LIPMAN: The rally 'round the flag effect is fairly strong, so those who still dare, who still attempt to openly criticize the regime, to engage in politics, are acting at their own risk in a society in which loyalty is the order of the day, in which over 80% of people say in public opinion polls that they approve of Putin's performance.

ALLAWALA: Almost as high as support for Putin is suspicion of those who criticize him, LIPMAN explains. 

LIPMAN: The Kremlin propaganda that portrays them as fifth column, as agents of the West, has been successful, and people at large look at them as trouble makers.

So not only it is dangerous for them, it is risky for them to engage in independent activism, but they are facing a society that does not trust them, and that does not think that what they are doing is in any way capable of making people's lives better.

ALLAWALA: In a word, LIPMAN says, protest feels pointless.

LIPMAN: Pointless is a very important factor in today's Russian environment in which people may be aware, and they are aware of a deteriorating economy, of pervasive corruption, but they strongly believe that nothing depends on them. There is nothing people can do. That there is only one decision-maker in the country, and this is Putin. And this is also what makes independent activism pointless.

ALLAWALA:  Helping Putin deepen the sense that his critics are traitors is that, in the wake of the Ukraine and Syria interventions, many Russians feel like the nation has finally regained its rightful status.

LIPMAN: People are more proud of these than they ever have been in the 25 years since the collapse of the Soviet Union. So this sense, this public sentiment enables the regime to remain powerful and to still have public support even despite the deteriorating economy. How long this will last is anybody's guess.

ALLAWALA: The smart money might be on things staying as they are, at least for now.

LIPMAN: When people are asked in public opinion polls what they themselves think will happen, how long people will have the patience, the endurance, the answers are actually peculiar. A majority, or should I say a plurality, about one-third of the Russian people, say nobody knows how long this endurance will last.

So, about one-third of people admit that they don't even understand themselves. They don't know whether things will explode or not.

ALLAWALA: And even if there is an outpouring of anger, it might not lead to any change.

LIPMAN: So, I really don't believe that Putin's regime can be defeated by... There is no force that can defeat it. It might be weaker than it used to be economically, but it is also true that inside the country, there is no force, group, person, political party, what have you, that can be seen as a challenge to the Kremlin, as something that can effectively act as a rival or as a competitor.

ALLAWALA: That was Maria Lipman, editor-in-chief of counterpoint and author of “How Putin Silences Dissent” from the new issue of Foreign Affairs.

In recent years, many discussions of the Russian economy have opened with an old joke. In the mid-1990s, John Major, the British prime minister, asked Russian President Boris Yeltsin to characterize Russia’s economy in one word. “Good,” Yeltsin said. Major, seeking more detail, asked him to elaborate in two words. Yeltsin replied: “Not good.”

As Sergei Guriev, professor of economics at Sciences Po in Paris, writes in his latest article for Foreign Affairs, the joke was prescient. Over the past 25 years, Russia’s economy has alternated between “good” and “not good.”

And at the moment, of course, things could be characterized as really not good. There are three main reasons. The first is a lack of reform and pervasive corruption.

GURIEV: This factor already played an important role before Crimea, Russian economy slowed down before Crimea. And this is the factor which would have continued to play the role of major anti-growth driver, even if nothing happened with oil prices or Crimea. And this is probably the more important factor because it's not transient, it's not temporary to address these problems as serious structural reform has to be undertaken.

ALLAWALA: The second factor, he says, is the decrease in oil prices, which has sent an acute shock through the Russian economy.

GURIEV: Russian exports are very much linked to oil prices and Russian budget is very dependent on oil revenues. And in that sense, this is a major shock. This shock is transient in the sense that when Russian economy adjusts to the shock, it may start growing again, especially oil prices recover.

ALLAWALA: The third factor is the sanctions regime imposed by the West.

GURIEV: Sanctions per se are not as dramatic as the first two factors, but they enforce those problems. Because for example, when Russia faced the oil shock, it would be able to mitigate the shock or at least smoothen the damage falling out from this shock through borrowing out money from abroad, which is unfortunate is not possible now with the sanctions.

ALLAWALA: Putin came into office promising economic reform, but that hasn’t happened.

GURIEV: So one big change that would have happened and hasn't happened was privatization of pretty much everything except for natural resources, natural monopolies, and defense. And this is something which was promised to be done before 2016 and almost none of that has happened, almost no privatization have happened. And in Russia, like in all other countries, private companies are run better, are more efficient. There are many other reforms regarding protection of property rights, protection businesses from expropriation and so on so forth, these things have been promised but also haven't happened. If anything, the situation with expropriation risk got only worse.

ALLAWALA: As to whether the Putin regime will suffer as the economy worsens, Guriev’s take is slightly different from LIPMAN’s.

GURIEV: The economic growth of 2000 was a very important part of the political equilibrium. When this growth has disappeared and incomes of Russians are falling down, the situation has to change. Russian public seems to accept the decline in living standards in exchange for the feeling that there is a greater good. There is a greater cause Mr. Putin promotes in a sense that Russia stands up to external enemies, Russia defends whatever conservative values and so on.

Now, we see that it does not really last that long. We see that narrative of Russian government changes every half a year or every year and in that sense, that means that probably Russian government understands that Russian public cares about economic performance and it's looking for new ideas how to make Russian public continue to support the government.

ALLAWALA: In this sense, Guriev explains, it is not too late for the Putin regime to reverse course and try to stimulate growth.

GURIEV: Well, first, there are foreign policy moves that can help to overcome the isolation, pretty much reversing the foreign policy moves that have been undertaken in the last couple of years. There are reforms related to privatization promoting competition, protecting property rights, fighting corruption. There are policies related to investing in human capital. So, all these policies have all been drafted including in Mr. Putin's own 2012 electoral program. But as I mentioned, unfortunately, the vast majority of those promises have not been kept so far.

ALLAWALA: Guriev notes that all of these policies were already included in Putin’s 2012 electoral platform, but that they haven’t been implemented. There is some good news, though.

GURIEV: So, there is one thing which Mr. Putin promised and that is something that had been followed up, which is the improvement in the business climate from the point of view of Doing Business Report. In World Bank's Doing Business Report, Russia rose in the ranking quite dramatically in the last four years through improving certain things. Now, these improvements have not brought in foreign investment simply because there are bigger risks. There are risks related to geo-political isolation, there are risks related to disappropriation by corrupt officials or politically connected business people. But still, it's an achievement which will pay off whenever the isolation ends.

Another good news is that Russian Central Bank was conducting reasonable macroeconomic policy, reasonable monetary policy, Russian Central Bank allowed Ruble to depreciate and that helps mitigate the shock from falling oil prices. And I think that was a very, very smart move.

ALLAWALA: In all likelihood, the Putin regime will soon have to deliver more where that came from. 

GURIEV: No regime is more popular when economic performance is declining. I have a research project together with another author of this issue, Daniel Triesman, where we look at popularity of leaders in all countries around the world, in more and less democratic political systems. And we see that everywhere around the world, in different kinds of political regimes, popularity of leaders declines as economic performance goes down.

ALLAWALA: That was Sergei Gureiv on the Russian economy. In our last segment, we’re turning to the other author he mention, Dan Triesman, who talked to us about Putin’s foreign policy, specifically why Russia seized Crimea.

TREISMAN: One view is that Putin was basically defensive reacting to the expansion of NATO. And what happened in the crisis of February 2014 was that Putin essentially panicked. Thought that Ukraine was also going to enter NATO quickly and therefore struck in Crimea to prevent that happening. So that's the first view.

ALLAWALA: Treisman calls the second view “Putin the Imperialist.”

TREISMAN: In this view the assumption is that Putin, a former KGB spy and Russian Nationalist, has always had a secret plan to expand Russia to make up for the loss in status and the loss in territory at the end of the Soviet Union. 

ALLAWALA: And finally, there’s the view that Putin’s moves have been more haphazard.

TREISMAN: The third image of how Putin made this decision assumes that or interprets it as being very spontaneous, a reaction to events. Putin is not a strategist, he's a tactician. He doesn't think about the long run. He doesn't have any consistent plan of action. Instead, what he does is he looks at the circumstances at each moment and he reacts accordingly. Perhaps not taking into account the full costs or the longer term implications of his actions. In this view, Crimea was really an accident that he stumbled into in the heat of the crisis.

ALLAWALA: Treisman says that there is a lot of evidence to support the Imperial Putin idea.

TREISMAN:. One can go back really to the start of the Putin period in power. He said as everybody knows that the disintegration of the Soviet Union was the greatest geopolitical catastrophe of the 20th century. In 2008, he in a quite heated conversation, private conversation with President Bush said reportedly, that Ukraine is not even a state, that it was patched together from bits and pieces partly from former Russian territories.

More recently in the last six months or so before the Crimean intervention, there were various bits and pieces of evidence that also seemed to suggest some kind of planning for an event of that kind. For instance, there were many visits by top Russian officials to Kiev and to Simferopol and Crimea.

ALLAWALA: But such evidence can be deceiving. 

TREISMAN: Now what I argue in the piece, based on a lot of interviews in Russia, and examining the records as carefully as I could, is that a lot of these don't really amount to what they seemed to amount to at first. That in fact there were other explanations and that some of the pieces of evidence that seemed to suggest a concerted plan to intervene. Actually, if you look closely, suggests something much more improvisational.

ALLAWALA: In fact, Treisman explains, Putin’s invasion of Crimea seems to have been a reaction to being caught by surprise.

TREISMAN: The key event was the collapse of the Yanukovych regime in Kiev. And that, I think, was not anticipated by the Russians until shortly before it happened. And it created all sorts of uncertainty. Not exactly that Ukraine was about to join NATO. I think people understood that that wasn't going to happen anytime in the near future, at least. I think what it was was fear that the new Ukrainian government, made up of former oppositionists to Yanukovych, would abrogate the agreement under which Russia was allowed to keep control of its naval base in Sevastopol.

ALLAWALA: The gamble, in some ways, turned out to be a poor one.

TREISMAN: So on the one hand, I think I can understand the decision, as that kind of improvisation based on this fear of losing Sevastopol. On the other hand, looking at it with a little more detachment, it seems that the costs of addressing that threat in the way they did are extremely high. So I think they underestimated probably the risk of... Or the extremeness of the Western reaction. The extent of isolation afterwards.

ALLAWALA: That isolation has been particularly difficult for Putin because it undermined one of his pet foreign policies.

TREISMAN:  Putin's great long-term project which was to build what's called the Eurasian Union, a kind of economic association combining former Soviet states, has really been undermined by this because the rest of Ukraine beyond Crimea and some parts in the east, was very strongly united against Russia by the Russian intervention. 

He undermined a lot of his longer-term objectives. He made it economically much more difficult in Russia. He did achieve a very important and remarkable increase in his domestic popularity. His ratings soared and they've stayed high longer than I would have predicted. But still, I think, looking at the costs and benefits, it was an extremely costly intervention. I think it was a gamble that he made in the heat of the moment without fully understanding and being able to estimate the full costs.

ALLAWALA: The funny thing, Treisman explains, is that Putin had other options.

TREISMAN:  I think there were alternatives which would probably have worked as well or better with lowered risk. Essentially to wait it out, to use the strategies that they had used in the past which are covert subversion, developing intelligence assets, kind of corrupt state craft of bribing people in the administration, and then basically just sitting back and waiting for the new government in Kiev to undermine itself as the victors of the Orange Revolution had done through internal quarreling.

ALLAWALA: The fact that Putin didn’t wait out the revolution signals a change in his strategy.

TREISMAN: I would say before February 2014 he was relatively cautious. Although getting increasingly critical of the international order and the way the west behaved, he was not challenging it with military actions in the way that he has since. It was possible to understand Putin's international actions in terms of a kind of basic cost benefit analysis assuming certain fairly plausible interests or as a plausible view of Russia's interests. Since 2014, it's become very difficult. I think he's gambled repeatedly in Syria, in the... Even before Syria, the support for ethnically Russian separatists in Donbass and Lugansk. So, Russian policy has seemed willing to take quite risky actions without a very good ratio of potential benefits to costs.

ALLAWALA: The lessons from those gambles, Treisman says, are clear.

TREISMAN: One lesson that he could learn from the whole Ukraine experience is that when you get involved, and even if you have the relatively low-level involvement as Russia did initially in the Donbass, wars are unpredictable, and things that you didn't count on can nevertheless happen. And it showed Putin that this kind of hybrid war in which you don't get completely involved, you use volunteers and vigilantes and so on, can actually be very dangerous.

ALLAWALA: More worrying perhaps is the lesson that intervention can work. 

TREISMAN: Other lessons for him, I think at this point, are that force works. That you can achieve some objectives. There are potential costs, which he probably didn't take into account, but the military side of the operation in Crimea was pretty smooth. The military intervention in Syria he can see as a big success. I think unlike the US where there's a sense that force often doesn't work given our recent experience that you end up making things worse, I think among the Russian leadership there's a sense that these limited military operations can work quite well.

ALLAWALA: That was Dan Treisman on Putin’s foreign policy. Together, our guests today suggest pessimism about the future of Putin’s regime, which has glaring structural weaknesses but also limited prospects for change. The current chapter of Russia’s story, it seems, is unlikely to end well, yet external pressure or provocation may well inflame the situation rather than improve it. At Foreign Affairs editor Gideon Rose writes in his introduction to the new issue, dealing with such a challenge successfully will require a careful hand and a combination of firmness, prudence, and patience.

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