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Russian President Vladimir Putin strides the world as the master tactician. In Crimea, eastern Ukraine and Syria, he seized the initiative and left his adversaries flatfooted and guessing as to his ultimate intentions.
Putin displays similar decisiveness against his domestic opponents, as the recent dismantling of the editorial staff at the independent newspaper RBC attests. Yet, blinkered decision-making processes can lead to bad policy choices. Having gutted the domestic media and created a puppet legislature, Putin is no exception to this rule.
The Kremlin is transfixed by the implementation of a series of decrees that Putin issued in May 2012, in the first flush of his successful return to the presidency. He remains focused on these executive orders - and their assigned metrics - as signs of his domestic success.
The decrees, which cover foreign, social, economic, housing and health-care policy, set out a road map for Putin's third term. His 200-plus bureaucratic instructions included bold declarations: Life expectancy would increase from age 70 in 2012 to age 74 by 2018 (though the average Russian male still only lives to 65); the cost of housing a square meter would decrease by 20 percent; 25 million high-productivity jobs would be created by 2020, more than doubling the estimated number in 2012, and Russia would move from 120th to 20th place in the World Banks's "Doing Business" rankings by 2018.
Putin's resolute adherence to now questionable priorities, especially in regard to social policy, is emblematic of what has gone wrong with his national agenda.
Because the facts on the ground - and the state of the Russian economy and the lives of everyday Russians - have changed dramatically since the 2012 decrees. Putin just met with his Presidential Economic Council for the first time in three years to discuss alternative plans, which range from a targeted stimulus to major structural reforms, to spur economic growth. Meanwhile, spending on his proclamations continues unabated.
When first issued, no price tag accompanied this agenda. Current estimates range from $10.8 billion to $43 billion. The head of Russia's audit chamber recently announced that before evaluating the effectiveness of Putin's orders, the agency needed to know their cost.
Putin is not the first candidate to make lofty promises while campaigning. Yet he raised the political stakes by elevating these promises to official government directives, and has single-mindedly been following their progress.
He has, for example, criticized proposed federal budgets, and fired ministers and government officials for not fulfilling the demands set forth in his decrees.
Fast-forward four years, and the debate over implementation of the decrees has only intensified. Significant government and academic resources have been expended to analyze their progress. The government proudly proclaims it has fulfilled 82 percent of the demands in the decrees. Outside monitors put the rate far lower.
No matter what the overall percentage, however, the optimism that inspired these decisions -- oil was selling at $113 a barrel in 2012; it is now $49 -- has long since been overtaken by events, including the introduction of economic sanctions against Moscow, the collapse of oil prices, high inflation and a weakened ruble.
Despite the hoopla surrounding the implementation rate, the underlying reality is far less encouraging. The decrees, for example, call for significant salary increases. Yet, the purchasing power of many professions, including doctors and teachers, remains at 2012 levels.
Moreover, regional governments have accumulated significant debts while striving to meet the increased social spending requirements. The regions, according to one source, still lack 15 percent of the revenues needed to implement the decrees.
Meanwhile, the big-ticket items - increased productivity, cheaper housing - now seem far beyond the reach of the government.
What does this continued preoccupation with the decrees say about Russia today? First, it illuminates why the Russian government has not been able to implement a sound anti-crisis plan for the past two years. Money and attention urgently needed to stimulate economic growth are regularly diverted to pad the success rate of fulfilling the orders rather than tackling fresh problems.
Second, Putin remains obsessed with meeting certain prestige goals instead of reforming institutions and addressing the underlying problems of ordinary Russians. He appealed to popular opinion, for example, when he promised to lower housing costs and provide better jobs. Today, however, fewer Russians than ever can dream of purchasing a home. Indeed, by not defending the ruble, the Kremlin ensured that Russian people would have to bear the brunt of the current recession.
Such realities, however, are unlikely to impinge on Putin's world. As he contemplates his re-election campaign in 2018, the Russian president will likely just declare his policies a success by pointing to the final percentage of decrees implemented. Such a strategy would allow him to avoid running on his actual economic record.
All these references to rates of performance have a Soviet ring to them. Russia would have fulfilled the plan even though the nation's standard of living and global competitiveness have declined precipitously.
Moreover, Putin would be continuing a Russian pattern set centuries ago. Russia has been governed by decree -- meaning personal rule -- since Peter the Great. This does not mean Putin is totally inflexible. He has, for example, let market forces determine the ruble's value, and watched the currency tumble as a result.
Nonetheless, Putin is demanding that priorities he set in 2012 must be realized - even though the positive economic conditions at that time have long since disappeared. The Russian political class feels compelled to follow Putin's orders because that is how an autocratic system works.
The Russian leader's policy decisions are unlikely to lead to immediate collapse. The price of oil has crept up and stabilized. In addition, Putin now has his own personal national guard that would respond without question to any political challenge from Putin's opponents.
Yet, instead of pursuing a true modernization effort, Putin has fallen back on the May 2012 decrees as an alternative measurement of success. One that he can make look good on paper. The price of complacency, however, is blindness to constructive feedback.
Russia will wake up one day and discover that its public institutions and economy have yet again fallen behind parts of the developing world. The fixation on the May 2012 decrees helps explain why.
© (c) Copyright Thomson Reuters 2016.
18 Comments
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lincolnman
He assassinates his opponents, he crushes any media outlet that criticizes him, he raids the treasury and hides the funds through cronies in off-shore Panama accounts, he invades neighboring countries, all the while the Russian people suffer…the facts are the only people better off are Putin and his fellow band of criminals...
badsey3
Russia has a small population, large land assets and natural resources. Even with the banksters pulling the rug from underneath they are still able to be successful. If anything taking away all the foreign fiat investments has made Russia stronger. Russia is a large gold buyer and has assets to sit on, USA and many others are in debt.
The real issue here is energy and Russia leads in supplying Europe with natural gas -that trend is going upward. Nordstream 2 will only give Russia a larger advantage. LNG from the USA or other will be too expensive (unless subsidized by the US tax payer) to compete with Russian gas pipelines.
JeffLee
The economy is shrinking 4 percent a year and is in its worst recession in 2 decades. in 2000, it was still at the stage of re-inventing itself after the communist system -- in which Putin was supposed to defend as a KGB colonel -- collapsed.
And the others have extensive hi-tech industries that rule the world. How about them Russian cars, computers and smart phones, eh?
FizzBit
From wiki
CNBC and CNN? I'd do the same thing to these masters of lying and propaganda.
The Wilson Center had a Kennan Institute Moscow office up until 2014 then closed it down. So two years later the Kennan Institute decides to publish this article? I'm guessing that if the Moscow office was still in operation, they would have faced a few reasonable and opposing voices before publishing this POS propaganda piece. It doesn't take a rocket scientist to understand that Obama is attacking Russia with an economic war, a media war and threatening Russia's borders with NATO.
http://www.russia-direct.org/opinion/kennan-institute-alumni-russia-open-letter
Again from wiki
From the article
So, I guess we can confirm that the Kennan Institute is now a defacto propaganda finger of Obama. Who, by the way, has also assassinated his opponents, imprisoned whistleblowers, raids the treasury, hides funds through a massive and legal Black Budget, invades far away countries, all the while the American people suffer
Anatoly Solntsev
Russia is very strange country that can be ruled only with a strong hand. And the standards of everyday life are very low comparing with other leading countries. There is no working economics except for the energy and military fields. They ask Russians to suppress more for 15 years or so. They are not magicians but only very skilled to make promises while using zombiefication through mass media calling opposition the spies and agents of US etc.
Asakaze
The usual sensless Western propaganda. I have a better line: Obama and his cronies kill political opponents (Qaddafi), supress freedom (Snowden) and use brutal force to crush any other dissent among its citizens (the Ferguson affair), hide funds in off-shore accounts, invade countries all around the world, support even openly criminal (Kosovo) and nazi (Ukraine) regimes.
Not correct. But anyway, at least Russia has nothing like Lehman shock and it lives within its means, it does not have 19 trillion national debt (and counting, quicker and quicker). How the US is going to repay? Or we'll be spectators of the greatest default in the history of mankind?
And if Russians have nothing of that, how come they are still alive, after two years of Western sanctions? If you want to know about Russian economy, listen to McCain, he buzzed all ears with his stories about Russian rockets that NASA should not buy. Or search about the contract GNF-A signed with a Russian supplier of nuclear fuel.
JeffLee
@Asakaze
Yeah, correct, when rounded off to a single digit. The 2-digit number, if you want to know, is 3.7 percent.
http://www.bloomberg.com/news/articles/2016-01-25/russian-economy-shrinks-most-since-2009-as-oil-prices-plunge
badsey3
What I was trying to equate above is that the EU anti-Russia propaganda (like this article) is not working. The reality is that the EU is heavily dependent on Russia for natural gas for energy and as a chemical stock for business. There is no denying the natural gas volumes and remember Germany is heavily solar and wind energy (and shutting down nuclear) so natural gas complements their energy solution.
Japan could go like Germany. = Solar and wind plus Russian natural gas.
lostrune2
US should have a Putin of their own and rule with an iron-fist, take over the biased media, make the useless legislative branch less powerful but more rubber-stamp, become even more autocratic and centralized power, less transparent so that its enemies can't formulate weak points, etc.
1glenn
The price tag for implementing Mr.Putin's directives ranges from $11 billion to $43 billion? That seems too small, by a hundredfold.
It appears that Mr. Putins foreign policy adventures have built up his ego, but have done nothing to help the people of Russia, or of the territories involved, except for Mr. Assad and his friends.
FizzBit
16 of Russia's 25 longest bridges have been built in the Putin era
Asakaze
@JeffLee
Yeah, January estimates. About a month ago I saw much newer figures, it was something about 1 percent.
Anyway, nice to see that you can not object to other parts of my posting.
JeffLee
Um, no. The figure is for the full year of 2015, which is the most recent yearly figure available. (sigh)
Yeah, right. Where do I begin to unravel the fantasy?
Huh? Russia has been in a "shock" for the last year or so.
https://en.wikipedia.org/wiki/Russian_financialcrisis(2014%E2%80%93present)
And that followed another "shock" a few years earlier.
https://en.wikipedia.org/wiki/Great_Recession_in_Russia
Asakaze
@JeffLee
There are other opinions:
<http://www.forbes.com/sites#/sites/kenrapoza/2015/11/12/regardless-of-sanctions-russia-recession-ends-in-2016-if-oil-cooperates/ >
I also read in the yesterday's "The Japan News" that this year Russia would produce more then 100 mil tons of grain, that will make it one of the world's top producers of wheat. Can't give you the link, it was a printed newspaper.
The bottom line is that Russia has its share of economic problems (and what country does not?), but Russia is self-sufficient and, most important, it lives within its means. Contrary to the US, which eats more then earns, here is the debt. A lot of people in the West got used to living up to ears in debt, just like a financial junkie, but some time in the near future you may not receive your next fix, and what then?
And yes, I see you have nothing to object to the missile / nuclear part of my previous posting.
Garric Rus
Statistics show that talk about the decline of Russian economic early, evidence suggests that the decline experienced just the Western powers and Russia, on the contrary, it is in growth. In 1999, the GDP (gross domestic product) of Russia was 5% of US GDP, by 2015 this proportion rose to 6% Russia's share in the world GDP grew by 23% during the same period, rising from 1.32% to 1.6%. Meanwhile, the share of the US, Britain, France, Germany and Italy in world GDP fell by 10% in the same period, 11%, 19%, 20% and 32% In 1999, the country's power consumption was 26.21% from that of the US, by 2012 it had risen to 33.16 from the US. Furthermore, while Russia's share in world energy consumption in 2014 decreased by 10% compared with 1999, other countries for the same period lost more. According to the index GINC (Geometric Indicator of National Capabilities - «geometric measure state capacity"), the power of Russia grew by 6.53% from 1999 to 2014, while the power of the USA, the UK, France, Germany and Italy fell by 13, 14%, 24.42%, 24.23%, 29.92% and 27.29% respectively.
Сергій Снігур
I like such articles. They show, 1) the Russia image from abroad, 2) how many Kremlin's agents work in the comments to keep the image of Russia high. ;)