Russia’s bad equilibrium

After more than two years of economic contraction, Russia seems to have achieved some semblance of stability.

Though economic growth is expected to reach only about 1 per cent in 2017, the fear of economic destabilisation that has permeated the country since its 2014 invasion of Crimea — which was met with crippling sanctions from the West — has all but evaporated.

The combination of foreign-policy optimism, creature comforts and domestic repression seems to be a potent elixir.

Just as in Leonid Brezhnev’s time, foreign policy is overshadowing Russia’s domestic politics.

Unlike then, however, Russia’s prospects are looking up.

US President Donald Trump has made clear his desire to improve relations with the Kremlin, and will reportedly meet with Russia President Vladimir Putin in June.

The French presidential election, set for April, may also go Russia’s way. 

Both centre-right candidate François Fillon and far-right candidate Marine Le Pen are ardent friends of Putin, though centrist Emmanuel Macron, who is not, also stands a chance.

Russia’s own presidential election, set to take place in March 2018, appears much less momentous, because no change is expected, with Putin being re-elected and Dmitri Medvedev staying on as prime minister.

That appears to be acceptable to most Russians, at least to comfortable Muscovites.

Moscow’s infrastructure has never looked better: the city boasts a well-functioning and recently expanded metro system and modern, clean and efficient airports.

Even its once-chaotic parking lots have been put in order — and the need to park has been reduced by the proliferation of cheap and rapid car-sharing services.

Residents can visit impeccable and luxurious shopping malls, and purchase virtually any food they desire (apart from Western cheeses) from upmarket grocery stores.

Of course, there are Russians who are not satisfied with the current state of affairs. 

That, among other things, is what the all-powerful Federal Security Service (FSB) is for.

Freedom House has just further downgraded Russia’s score for political rights, to the lowest possible level.

The spectre of repression was apparent at last month’s Gaidar Forum, an annual event held by the Russian Presidential Academy of National Economy and Public Administration that honours the Yeltsin-era reformer Yegor Gaidar.

Each year, thousands of Russia’s social scientists and hundreds of foreigners gather for three days to discuss economic policy.

Government ministers on the panels appear relaxed, open and competent, but are careful to avoid stark statements.

Russia’s key problems — the absence of real property rights, rule of law and democracy — were mentioned this year, notably by former Finance Minister Alexei Kudrin, but only gently and in passing.

As usual, most plenary discussions were devoted to details of the country’s well-functioning macroeconomic policy.

Russia’s large economic establishment remains too well off to want to rock the boat.

While the ministers’ stance may not be surprising, past Gaidar Forums carried the hope — if not the expectation — of some challenge to the ruling elite.

Moscow’s academic economists listen intently to the forum each year, hoping to hear something radical, or even a little defiant, though they themselves are unwilling to mount a challenge.

At last year’s forum, a 10-person panel of prominent Russian liberal political analysts — a regular feature of the forum, in which I participate — suspected that some defiance was on its way.

 Some panel members even predicted a challenge to the regime — say, that a member of the opposition would be elected to the Duma, or that economic hardship would fuel social unrest.

Those predictions came to nothing.

Few of Russia’s Europeanised liberals voted in the Duma election; the conservatives in the country’s south and east were far more enthusiastic.

Our panel, it seems, overestimated economic results and underestimated the role of war and repression in consolidating support for Putin and his regional sultanates.

In fact, the overwhelming sense among Russians is that Putin’s invasion of Ukraine and annexation of Crimea were good for Russia.

It was a masterful play on Putin’s part.

By transforming Ukraine into a weak and conflict-ridden enemy, he both quelled rising pro-democracy sentiment in Russia, inspired partly by Ukraine’s move towards the European Union, and aroused nationalist euphoria.

Another foreign-policy development may have benefited Putin.

According to Tatyana Vorozheykina, a professor at the Moscow School of Social and Economic Sciences, Russia’s destruction of Aleppo has given Putin another “win” to tout.

Add to that the growing clout of right-wing populists in the West — a symptom of a larger crisis of liberalism — and it has been easy to portray Putin as the kind of leader countries need.

This year, nobody on the Gaidar panel anticipated anything but policy inertia, more repression and mass conformism.

Putin’s regime has consolidated itself around the flag, and few within Russia are willing to challenge the status quo.

The only potential sources of change, therefore, are external events and relationships — areas where Putin does not have full control.

As it stands, Russia seems to be on strong geopolitical footing.

But things are not always as they seem. 

For example, though Trump’s support for closer ties would seem to be good for Russia, a major ingredient of Putin’s nationalist appeal is his ability to reinforce Cold War drama.

For that, he needs the US — and the West, more generally — to be his enemy. Amity could spell long-term trouble for Putin.

In the short term, however, as independent political analyst Dmitri Oreshkin put it at the Gaidar Forum, it is likely that only a “black swan” event abroad could bring about change in Russia.

The country’s new equilibrium may not be good, but it appears stable — for now.

The writer is a senior fellow at the Atlantic Council. His latest book, co-authored by Simeon Djankov, is “Europe’s Growth Challenge”. ©Project Syndicate, 2017. www.project-syndicate.org