Whenever I have to explain the secret of the success of Vladimir Putin’s success to people who do not understand the situation in Russia, I begin with a question: what was the world price of oil in 1999?
(In 1999, Putin became the Prime Minister of Russia. On Dec 31 of that year, he became President.)
There, in one number, is the secret of Vladimir Putin’s economic ‘miracle’. Given that the price of oil was $111 a barrel as recently as this June, and briefly over $140 in July, 2008, it is no wonder that Putin’s Russia is richer than Yeltsin’s. With that kind of surplus cash, you can have rampant corruption, a military buildup, and the trappings of prosperity all at the same time.
Unfortunately, there is a flip-side. When your economy is a one-note song, you are utterly dependent on the price of your critical commodity staying up in the stratosphere. Or as Matt O’Brien of the Washington Post put it:
“A funny thing happened on the way to Vladimir Putin running strategic laps around the West. Russia’s economy imploded.”
What Russia’s recent implosion exposes is how much of an economic incompetent Putin really is. In his 14-year ride as leader of Russia, he has had plenty of time to build up and diversify the Russian economy with sound free-market principles. Other eastern European economies like Poland, the Czech Republic, and my own homeland of Estonia were able to do it. They are now thoroughly Western - and didn’t need the constant inflow of petrodollars to make the transformation. In contrast, the end result of 14 years of Putinismo is endemic corruption, fading glitz and glamour, and a second-rate military. The contrast between Russia’s chest-thumping chauvinism and its underlying weakness is best exemplified by the Russian motorcycle gang, the Night Wolves, who display icons of the Virgin Mary and Stalin, while riding around in that most American of icons – the Harley Davidson.
As usual, Walter Russell Mead has a good take on Putin’s recent troubles. Read it here, but he makes a couple of points that I want to comment on.
“Putin, who embodies a mix of geopolitical recklessness and shrewd calculation …”
This is exactly right and something I have been saying for a while: Putin is clever tactically but a doofus strategically. While it is true that he has outwitted President Obama on Syria, and the West in general on the Ukraine, one must ask: to what end? How is Putin’s adventurism in Russia’s real long-term interest? As I have pointed out, Russia has three borders: in the east, against China; in the south, against various Muslim states; and in the West, against Eastern Europe. Along the eastern border, there is a demographic tidal-wave of illegal Chinese aliens flowing into Eastern Siberia that threatens – in the long-term - to undermine Russian authority there. So what does Putin do about this? He cuts a sweetheart oil deal with the ChiComs. As Mead puts it:
“If there were a way for China to make extremely advantageous energy and mineral deals while also propping up a power that, like China, wants to see a reduced U.S. role in the world, Beijing just might lend Putin a helping hand.
It won’t come cheap, though: Beijing can see what a weak hand Putin has, and it will expect to be compensated—at Russia’s expense—for any help it offers the struggling strong man.”
Along Russia’s southern border, the Muslims constitute a demographic and terror threat. So what does Putin do about it? He helps the most radical of those regimes (Iran) build an A-bomb.
In contrast, along the western border, all the new republics of Eastern Europe want is peaceful coexistence. As recently as a couple of years ago, NATO was actively exploring partnership with the Russian Federation. In reaction to this, Putin starts a war of annexation against one of them (the Ukraine), and practices tactical nuclear strikes against another (Poland).
Oh yeah, I almost forgot. Russia also has one other border – in the north. For the moment it is peaceful. But with the creation of a northern command, bellicose promises of annexing the North Pole, and mock strategic bomber runs against Canada and the US, Putin is once again making enemies where there was once only friends.
But, as O’Brien points out:
“Putin might be playing chess while we play checkers, but only if we lend him money for the set.”