LONDON- Any advantage acting Russian president Vladamir Putin might have gained from being seen as the successful strongman is being whittled away by the day, as the war in Chechnya moves from its heroic phase of revenging the bombing of innocent civilians in Moscow and becomes one more drawn out, slog-in-the-mud, war of attrition, with not much prospect of quick victory. Once again, as before the last election, Chechnya is in danger of becoming an election albatross. Putin either has to have an immense stroke of luck in Chechnya or he has to announce that Russia has got what it wanted with the capture of Grozny and given the terrorists a smack on the nose they’ll never forget. So he is withdrawing his troops and switching off the spotlight. Who knows, he may even ask Alexander Lebed to fix it for him.
The election issue is not going to be the war, it is going to be the economy, stupid – the same formula that won Bill Clinton, first the presidency and then a second term.
What was not very long ago a disaster story has become the incumbent president’s strongest suit. In the election for the Duma held just before Boris Yeltsin’s surprise resignation the sense of economic improvement won Putin’s party its powerful position in the legislature. And since then the economic news has only improved.
The nightmare scenario that was predicted for Russia by both insiders and outsiders following the dramatic collapse of the ruble in the summer of 1998 has not come to pass. In retrospect, it appears as if a lot of powerful Russians looked into the abyss and decided that the old course of minimalist economic reforms, over-dependency on foreign capital and corrupt and speculative day to day business practice had now got so out of hand that if it continued unchecked even the oligarchs and tycoons would suffer.
A telling joke is making its rounds in Moscow: “There are two ways out of the Russian economic crisis: the natural and the miraculous. The natural way is that the archangel Michael and all his angels come down to earth and work 12 hours a day to save the Russian economy. The miraculous way is that the Russians will do it themselves”.
It is, in fact, says Anders Aslund, the Swedish expert on the Russian economy, an old Polish joke, from the days, not that long ago, when Poland, now a high charging economy, was mired in economic stagnation and corruption.
The transformation that happened in Poland could even happen in Russia, argues Aslund in the current issue of Foreign Affairs. In the late 1970s Poland’s reputation for honesty was dire. The exchequer was regarded as a trough for the elite to feed in. Commentators explained it in terms of Polish culture: the legacy of persistent foreign rule and an omnipresent Catholic Church that never allowed people to think for themselves. Now we can see that Polish culture is the country’s strong suit. When a reformist government was elected in 1989 radical reform became possible – and other elements in Polish culture came to the fore, Christian probity and an old tradition of hard work in the face of adversity.
Russia, it must not be forgotten, did have a period when real reformers were in power – between November 1991 and August 1992. The West (or some of it) now realizes it missed its big chance. Then the West was seen by the Russian leadership as a good friend in the making and the country was ready to take its medicine if given a helping hand. Yet Washington in particular but also the Europeans rebuffed Yeltsin. All Washington could think of was how to secure payment of the old Soviet debt.
Having missed its historic opportunity the West has spent the best part of a decade running after Russia in, at best, an haphazard manner, at worst irrationally and counterproductively.
Feeling guilty that it was slow to recognize the moment of real change in Russia – as it likewise failed in Gorbachev’s time – the western powers have encouraged the International Monetary Fund to keep money coming in on no more of an argument than that Russia is too big and too nuclear to be allowed to fail. Even foreign portfolio investors caught the mood and poured in money in such quantities that the corrupt Russian oligarchs felt no pressure to mend their ways.
But the fall of oil prices and the spillover from the Asian financial crisis in August 1998 punctured a hole in the Russian ship that even the West was powerless to avert. No one, now, was prepared to lend a hand until the ship hit bottom. Yet a year and a half later, out of the wreckage, something worth while is becoming apparent. The sinking, in fact, radically curtailed the power of the corrupt elements in the business community; no longer is there so much money swilling around for them to grab. Moreover, they have been forced to see, as in Poland, that the competition for bribes had become counterproductive. For those who are interested in the long run a more legitimate economy is becoming more attractive.
Could it be under Putin that there is a cultural change afoot that will draw on better elements in Russian traditions? Certainly there appears to be more of a stable political consensus around the need for moderate market reforms.
At last, the tax take is going up and the deficit down. The economy has begun to grow at a surprisingly healthy clip, particularly in the industrial sector. And if Putin can quickly realize his goal of convincing the Duma to legalize private ownership of land, the pitiful state of Russian agriculture should begin to change.
The question is, is the West clever enough to make the best of this third opportunity? A major debt write off of half the old Soviet debt, as was done for Poland, would be in order if Russian progress continues. The West, again as it did for Poland, needs to open wider its doors to Russian exports and for Russians to come and study.
Meanwhile, whether he has sensible Western support or not, Putin knows he has enough under his belt to play the economy card. None of his rivals can outflank him on this. He is as probably as sure of victory as Bill Clinton was on the eve of his re-election bid. The economy, stupid, is not just a great slogan, it’s how it is.
