The Kremlin’s Failing Monopoly

CAMBRIDGE - Ever since Vladimir Putin came to power a decade ago, the Kremlin regime has relied on two pillars: the security forces and energy exports. By suppressing internal rivals and absorbing their assets, the regime created a dual monopoly.

Redistributing some of the profits from high energy prices enabled the regime to improve living standards and make itself popular with ordinary Russians. And resolving internal problems through a disproportionate use of force reassured even the regime's security obsessed ex-KGB men.

Until recently, this combination of carrots and sticks functioned effectively. The virtual absence of popular protest in Russia during the Putin years seems amazing. But make no mistake: Putin's popularity ratings relied not on his vigor, humor, or mystique, but on salaries and credits that Russians had never enjoyed before. And, as long as oil prices were growing faster than Russian salaries, those in power could still grab a big slice of the profits.

Now that happy union between the Kremlin and ordinary Russians is ending. Few Russian policymakers, much less the Russian public, expected oil and gas prices to collapse as they have. We do not know what will happen next. If prices rebound, Putin and his people will glorify themselves for their wisdom. But if prices remain stagnant at current levels, Putin's system is doomed to failure.

It is no coincidence that George W. Bush's and Putin's disastrous presidencies were cotemporaneous. By driving up energy prices, Bush was Putin's greatest ally, with Putin returning the favor by refocusing Russia from its multiple problems to "terrorism." Both sought to undo the work of their successful predecessors, Bill Clinton and Boris Yeltsin. Both led their countries into traps with which their successors must deal. When Bush said that he liked what he saw in Putin's eyes, he meant it. But their successors are as different as the procedures that brought them to power.

Since Soviet times, the Kremlin has traditionally been wary about Democratic administrations in the United States. John F. Kennedy refused to tolerate the Soviet military presence in Cuba. Jimmy Carter boycotted the Moscow Olympics. Clinton led the successful operation against Slobodan Milosevic's Serbia, the Kremlin's best friend in Europe. And Obama's triumph heralded the fall in oil prices.

With energy revenues screeching to a halt, Putin's regime will lose popularity. Central myths about Putin the healer of the nation and the supplier of giveaway budgets are collapsing.

And Putin cannot avoid responsibility. If the Kremlin claimed credit for the oil- and gas-fired prosperity of the past six years - prosperity due solely to economic exuberance elsewhere in the world - the Kremlin should be accountable for the current devastation.

Americans today compare their current crisis to the Great Depression; Russians compare theirs to the crisis of 1998, which is much fresher in the collective memory. In 1998, the whole world, which was then enjoying a global boom, looked at Russia with sympathy. Things could not be more different now.

In 1998, Russians did not yet take for granted imported cars, foreign tourism, and other middle-class perks. The ruling group in the Kremlin was variegated and conflict-ridden, but its response to the crisis was effective and even creative. Now, the ruling group is uniform, unanimous, and most likely unfit for any serious revision of policy. It is a dangerous situation.

Though the current level of anti-Americanism in Russia's official media seems unprecedented, the regime is most worried about internal problems. During the current financial crisis, which hit Russia right after the war with Georgia last August, the Kremlin and the Duma issued a series of laws and orders that have turned Putin's authoritarianism into a dictatorship. Opposition parties have become negligible. The oligarchs' businesses have been largely nationalized. The presidential term has been extended. Industrial centers with growing unemployment will receive more troops.

Trial by jury, which was infrequent anyway, is being seen less and less. The concept of high treason is bandied about almost daily. We will see more persecution of scientists, journalists, and businessmen, whose work with international charities, media, or corporations will now be construed as treachery.

Some of these people will be murdered rather than tried; others will be tried by state-appointed judges rather than murdered. But this is not news anymore in Putin's Russia.

What will become news will be the sort of mass protests that were seen recently in Ukraine, Thailand, or Greece. Can Putin's dual monopoly survive them? Perhaps, but it will do so only if it risks deep change, a new perestroika rather than simply a thaw. But it is more likely that the regime is too rigid and too blinkered to act.

Copyright: Project Syndicate, 2009

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