Vladimir Putin achieved an impressive victory in the presidential election of March 2000. He had left nothing to chance against challengers who matched his zeal to promote Russian state interests and national pride. Yuri Luzhkov, the mayor of Moscow, let it be known he was ready to stand on behalf of the Fatherland party. Immediately the government-controlled TV stations released charges about his political and personal integrity. Then Yevgeni Primakov offered a further threat after bringing together the Fatherland and All Russia parties and announcing his candidacy for the presidency. Yet again Russian television stations conducted an operation against the challenger, and Primakov too decided to withdraw his candidacy. This left Zyuganov and Zhirinovski to put forward their standard hopeless case. Opinion polls universally predicted an electoral landslide and Putin made a virtue of refusing to campaign. His nonchalance was counterfeit currency at a time when his subordinates were working hard at conveying his image of cherubic militancy in the news bulletins and suppressing any untoward reports from the Chechnya front. A flattering biography was prepared and rushed into print. Youthfulness, sobriety, competence, persistence, patriotism: these were the qualities which commended themselves to voters. No second round of voting was required. Putin had already won the election in the first round, receiving fifty-three per cent of all votes cast.
Yeltsin and Patriarch Aleksi II gave their blessing at the Kremlin inauguration ceremony. Down the aisle of the St Andrew’s Hall walked Putin like a hunter eyeing the trees on either side of him for quarry. His address to the audience, televised live, indicated a determination to set a new tone in public life. He spoke about democracy and the rule of law. But much more insistent was his emphasis on state power and institutional order. Compliance with higher authority was going to be demanded. Russia’s place in the world would be asserted. Putin was combative in appearance and mode of delivery. He had not needed to go cap in hand to wealthy businessmen to get himself elected. Diminutive in stature, he towered over the proceedings and restored dignity to his office.
Putin was proud of being the product of a Soviet upbringing. He described the dismantling of the USSR as ‘the greatest geopolitical catastrophe of the twentieth century’; he hated the blizzard-like deprecation of the USSR’s achievements. Born in Leningrad in 1952, he had a father who had fought in the Second World War and a grandfather who had cooked for Lenin. As an adolescent he became a judo champion in his native city. He also applied for recruitment to the KGB, but was told that the KGB expected to approach individuals, not to be approached by them. But his enthusiasm was noted and while he was studying at Leningrad State University he was promised a posting. His main early job was as an intelligence officer in the German Democratic Republic. Operating there during the years of Gorbachëv’s rule, he was filled with dismay. For Putin, perestroika’s principal effect was to dissolve a great state, economy and society. But he was also pragmatic and on returning to Leningrad joined the administrative team of mayor Anatoli Sobchak who was seeking to make political and economic reforms work well for the city. Putin was skilled at adapting to circumstances. His organizational talent attracted attention and in 1996 he was promoted to the Presidential Administration in the capital. Soon he was appointed head of the Federal Security Service, and in August 1999 this man whose name was barely known to most Russian citizens became their Prime Minister.1
The ‘oligarch’ Berezovski had boasted to the press that it was he who had put Putin in power. He thought that his commercial interests would be protected in return. He could not have been more wrong. Soon after assuming the presidency Putin called the business elite into the Kremlin and issued a direct warning. Unlike Yeltsin, he would not tolerate their interference in politics. Most of the audience took him seriously but a few individuals chanced their luck. When Berezovski continued to brag and bluster it was made plain to him that his days of pomp were over. Police investigations were started into his alleged frauds. He fled to the United Kingdom in 2001 where he received political asylum and, wrapping himself in a coat of democratic principles and clean capitalism, publicized his accusations against Putin. Next to feel Putin’s wrath was Vladimir Gusinski. He too had multiple interests in the economy. And he had political ambitions: his NTV television channel regularly poked fun at Putin through the Kukly satirical puppet show.2 But his business career had had its murky side and a police investigation was started. Gusinski was briefly arrested. He too fled the country in summer 2001, finding refuge in Israel and Spain.
Putin urged that the achievements of Russia after the October 1917 Revolution should be given their due; and he re-introduced the melody – if not the words – of the USSR state hymn.3 Most Russians welcomed the restoration of a stirring piece of music they associated with victory in the Second World War. They wanted to be proud again about being Russian; and surveys revealed that the proportion of citizens feeling associated more with the USSR than with Russia was going down only slowly.4 The popular response was favourable. His opinion-poll rating fell drastically only once. This was when he reacted stiffly to an explosion in the nuclear submarine Kursk in August 2000. All on board perished. Putin was widely criticized for declining to interrupt his holiday and display personal sympathy. He learned from this setback and tried to avoid falling out of step with national sensibilities. He was tested again in September 2004 when Chechen terrorists occupied a school in Beslan, a town in North Osetiya, and took captive a thousand tiny pupils, their minders and their teachers.5 Putin was televised supervising the handling of the siege until Russian security forces re-took the buildings. Although the operation was accompanied by many deaths it was not the Russian president who incurred the blame.
He consolidated his position by filling the offices of state with individuals who had ties to the Federal Security Service or other coercive agencies. They ruthlessly enforced governmental decrees. State power was their shibboleth. It is true that newspapers, books and posters continued to criticize or ridicule him. Yet television was the medium with the deepest popular impact, and the humbling of Berezovski and Gusinski had the effect desired by the Kremlin as TV programme editors exercised caution in what they transmitted about the central authorities.
The president was not an enemy of the big business corporations, only of businessmen who got politically too big for their boots. All the remaining ‘oligarchs’ understood this except the hot-blooded Mikhail Khodorkovski who continued to finance political parties and liberal causes hostile to Putin. As one of the wealthiest men on the planet and owner of the oil company Yukos, Khodorkovski had got used to doing things his own way. He declared his wish to encourage a more pluralist form of politics and a less corrupt environment for commerce in Russia. His newspapers regularly criticized the presidential administration and the government; he also subsidized opposition parties in the Duma. When he refused to desist he was put under investigation for fraud. Prosecutors brought him to court and charged him with tax evasion. A huge bill was delivered to the company. Facing bankruptcy, Khodorkovski was obliged to sell off his Yukos assets at a knockdown price to Rosneft, and in May 2005 he was sentenced to eight years imprisonment in Chita province in eastern Siberia. Rosneft was a private company under tight governmental supervision. Its acquisition of Yukos was the decisive signal that Russia’s political economy had changed since Yeltsin’s presidency.
The implications for foreign businesses in the country were discouraging. The government’s declared priority in the early 2000s had been to attract the maximum of Western capital into the Russian economy. The world’s biggest energy companies queued up to buy up rights of extraction in areas of Russia where great profits seemed guaranteed in the near future. Royal Dutch Shell and BP signed early deals. Their investors rubbed their hands with satisfaction as Russia appeared committed to having an internationally open economy. Both companies soon suffered disappointment when official investigators were sent into their Sakhalin facilities. Infringements of environmental legislation were quickly diagnosed. One by one, American and European energy corporations were compelled to renegotiate their contracts and accept poorer deals or face the loss of all their holdings in the Russian Federation. They all gave way, and Gazprom, Rosneft and other native conglomerates exploited a commercial advantage. Personnel moved flexibly between them and the various ministries in Moscow. Russia was becoming a bastion of state capitalism. The State Duma in March 2008 rationalized the process by passing a bill to restrict foreign investment in forty-two ‘strategic’ sectors of the economy (which included petrochemicals, nuclear power, armaments, fisheries, airspace and the media). Russia was no longer up for sale to the highest external bidder.
There was no thought of dismantling capitalism. Cabinets during Putin’s presidency always included not only former intelligence officers but also liberal economic reformers. Among such liberals was Mikhail Kasyanov, who was Putin’s prime minister from May 2000 to February 2004. Kasyanov tried to impose a framework of commercial law – and indeed there was a degree of enhanced protection for small businesses to register and operate even though the local elites remained as corrupt as ever. Improvement was also detectable in the workings of the courts, but only in cases lacking a political dimension.6 Yet Putin and Kasyanov did not get everything their own way. They worked long and hard for a new Land Code and yet the Duma frustrated them by rejecting the proposal for the privatization of territory outside the urban outskirts. President and Prime Minister were annoyed that farms in the countryside remained outside the jurisdiction of the reform. The Federal Assembly was equally averse to the call for Gazprom to be broken up so that the pieces would compete with each other. Nor did it sanction the demand for electricity and other utilities to be sold at higher prices to Russian domestic consumers.7
Putin also ran into difficulties when he attempted to put pressure on the leaders of the various republics and provinces of the Russian Federation. Soon after being elected, he withdrew their right to sit automatically in the Council of the Federation where they could affect the passage of legislation; he awarded himself the power to sack any one of them. He also divided the whole country into seven super-regions and appointed his own plenipotentiary to each super-region with the mission to ensure compliance with central laws and Presidential decrees. Putin’s initiatives were greeted with barely a murmur of objection from local leaders.8 Yet little changed in reality. The sheer complexity of political and economic processes in every republic and province defeated the attempt at abrupt disciplinary action; Putin was more successful in intimidating the media than in securing obedience from the lower levels of the state hierarchy. But one thing he did achieve was a halting of criticism of the government. Mintimer Shaimiev of Tatarstan, who had been a thorn in Yeltsin’s flesh, became a garland around Putin’s shoulders. In 2004 Putin forced through a measure allowing the presidency not only to remove regional governors but also to appoint new ones without reference to the local electorate.
Formal central prerogatives were one thing, provincial reality was often entirely another. The new governors, being obliged to ensure stability of administration, needed the co-operation of local politicians and businessmen. A strategy of give-and-take worked better in practice than peremptory orders.9 The old Russian obstacles to achieving an effective political hierarchy persisted, and the Kremlin found itself increasing its fiscal subsidies to the regions.
Putin had formed a party, Unity, in September 1999 to enforce the government’s authority. Unity’s main function was not to discuss his policies but to agree to them in the Duma. But the party failed to achieve a majority in the Duma election of December 1999. The President in May 2001 engineered a coalition with three other parties called United Russia. Like Yeltsin, Putin refrained from becoming a party member and justified this by saying that the President ought to stand outside the fray of public dispute. In December 2003 the Duma elections left United Russia a little short of an absolute majority. But other Duma deputies quickly came over to Putin’s side and the Kremlin at last broke free of the restrictions in the parliament which had plagued Yeltsin. Presidential authority was strengthened as party discipline increased.10 Indeed Putin needed to veto only one bill produced by the legislature from 2002 onwards. He removed the Communist Party of Russia from the chairmanship of several Duma committees. After 2003, indeed, United Russia supplied the leaders of all such committees. The State Duma and the Council of the Federation had become pliant instruments of presidential rule.
Putin’s election for a second presidential term in March 2004 hardly required him to conduct a campaign. This had not stopped him from organizing fawning support from the media. Zyuganov, veteran of presidential contests in 1996 and 2000, said he had had enough and allowed Nikolai Kharitonov, who was not even a communist party member, to take his place. Zhirinovski took a similar decision: not even the chance of months in the political limelight induced him to take part. The liberals were in disarray. Irina Khakamada put herself forward on their behalf but did not succeed in uniting them. Russian TV took little notice of anyone but Putin, who asked to be judged on his record and appealed for patriotic unity. The election was a foregone conclusion: he would have needed to fall under the wheels of a Moscow trolley bus to lose against his rivals. This time Putin took seventy-one per cent of the votes in the first round, again rendering a second unnecessary.
He had been given credit for bringing order and stability to the country. In truth the economic resurgence had little to do with his performance as a leader. Since mid-1999, before he was even prime minister, there had been a steady rise in oil and gas prices on global markets. By the end of 2007 the Russian economy was the world’s tenth biggest in gross domestic product, having expanded at an annual rate of seven per cent since Putin’s rise to the presidency.11 This had the effect of widening prosperity in Russia. Real incomes more than doubled in the same period. The size of the middle class purportedly grew to a fifth of the population by 2008. Other estimates put it at a tenth. What was undeniable was that people with a stake in the market economy had grown in number. From stall-holders to owners of small manufacturing or retail companies the proliferation was rapid and constant. Employment in all sectors of the economy had increased. Neglected regions were at last beginning to experience some improvement.
Yet capitalism in Russian remained a wild phenomenon. In industries big and small the executive and judicial authorities turned a blind eye to the infringement of health and safety rules. Mining and chemical enterprises were the tip of a dangerous iceberg for the workforce. But strikes were few and demonstrations were fewer. Political repression and manipulation played a part in procuring this situation, but anyhow the wish of most Russians was to live comfortably. There had been many improvements since the mid-1980s. Citizens of the Russian Federation had freedoms not witnessed since the fall of the Imperial monarchy. They also had a degree of privacy impossible in the USSR. They could enjoy their sense of nationhood without fear of official disapproval. Yet it rankled with them that blatant social inequalities remained. The conspicuous wealth of the few contrasted with the harsh austerities afflicting the many. Unfairness abounded. Administrative processes were still prone to arbitrary rule. Police and judges were venal. Russians went on grumbling and had much to grumble about. In order to cope with existence they turned to the traditions of mutual assistance which had for centuries helped them through the worst times. But they did not take to the streets. The last thing twenty-first-century Russians wanted was a revolution.
In the early years of his presidency Putin had confined his assertiveness to domestic politics. Recognizing that Russian power would remain restricted until the economy could be regenerated, he stressed his commitment to a ‘multipolar’ world. This was a tactful way of expressing dislike of the USA’s dominance as the single superpower. In practice, there was not much he could do to turn Russia into one of the globe’s great poles. Like Yeltsin, Putin tried to make up for this by holding frequent meetings with his leaders of other countries. Each get-together was managed superbly by his media experts and Putin, fit and increasingly confident, contrasted sharply with his decrepit predecessor. But substantial results were few.
Putin rushed to offer condolence and support to the USA after 11 September 2001 when Islamist terrorists flew aeroplanes into New York’s World Trade Centre. The destruction of the twin towers and the massive loss of human lives provoked the Americans into a furious reaction involving a military campaign in Afghanistan to eliminate the Al-Qaida organization. American President George W. Bush proclaimed a ‘war on terror’. Waiving Russia’s conventional claim to exclusive influence in the former Soviet republics of central Asia, Putin made no protest about the Americans using air bases in Kyrgyzstan to attack Al-Qaida in Afghanistan. He also made little fuss when, in December 2001, Bush unilaterally announced his intention to withdraw from the anti-ballistic missiles treaty signed by Washington and Moscow in 1972. Russian diplomatic stock was rising in Washington, and Putin for a while was treated as a worthy partner in international relations. Bush had claimed in midsummer 2001: ‘I looked the man in the eye. I was able to get a sense of his soul.’ Putin acquired Western indulgence for the continuing military campaign in Chechnya. The fact that international Islamist groups had sent men, arms and money to the Chechen rebels allowed him to represent Russia as having been fighting at the front line against terrorism worldwide.
Washington ceased rewarding Putin for his assistance once the war in Afghanistan had ended in spring 2002. Although he was left alone to do what he wanted in Chechnya he was not encouraged to reassert Russian power outside the borders of the Federation. He continued to devote diplomatic efforts to the forging of closer links with the European Union and indeed with NATO. But the reality of Russia’s global weakness was there for all to see.
This situation turned in his favour as the revenues from oil and gas exports started to fill Russian state coffers; and Putin, thinking he had nothing to lose, adopted an assertive manner in reaction to American initiatives in international relations. The USA led an invasion of Iraq, a strong trading partner of the Russian Federation, between March and May 2003 in complete disregard of the Kremlin’s objections and concerns. The Americans also announced a willingness to prepare the way for Georgia and Ukraine to join NATO. They interfered in the politics of Uzbekistan. They cheered the ‘Orange Revolution’ in Kiev when, in December 2004, the anti-Moscow candidate Viktor Yushchenko won the presidential election despite serial attempts to defraud him of his victory. In 2006 they requested Poland and the Czech Republic, freshly incorporated in NATO, to allow them to install an anti-ballistic missile ‘shield’ on their territory. President George W. Bush insisted that the enemy he had in mind was Iran; but Russian politicians regarded it as one militant initiative too many against the interests of Russia’s security. In each instance Putin made public his criticisms, abandoning any worry of a worsening of the relationship with the USA – and his truculence found favour with Russians, who applauded him for restoring their country to a seat at the table of the world’s great powers.
Western politicians continually called on the Kremlin to show greater co-operativeness. They pleaded for NATO’s good intentions to be accepted. Putin barked it out at a dinner for Prime Minister Blair: ‘This is ridiculous. I am a Russian. I cannot agree with the Americans on everything. My public won’t let me for a start. I would not survive for two years if I did that. We often have different interests.’12 As proof of his determination, in July 2007, Putin suspended Russia’s adherence to the Conventional Forces in Europe treaty signed by the Soviet leadership in 1990. His attitude went down well with Russians regardless of political orientation. Disputes among parties were shunted to marginal matters of foreign policy as opinion rallied to Putin.
The broad ruling group, however, never felt completely secure in power, and it was ruthless in enforcing its grip on public debate. Investigative journalists who highlighted official corruption or challenged the government’s account of the war in Chechnya exposed themselves to personal danger. In October 2006 Anna Politkovskaya was murdered outside her Moscow apartment. She was the most prominent of the critical reporters targeted in this manner, but there were several others. Her newspaper, Novaya gazeta, was subjected to repeated acts of persecution. Vladimir Slivyak exposed the widespread negligence in the civil nuclear industry in the Russian far north; he was treated as a traitor and subjected to continual harassment. In the United Kingdom, where Boris Berezovski stepped up his barrage of accusations against the Russian authorities, Alexander Litvinenko – one of his associates – was poisoned with a lethal dose of polonium-210. Outspoken rival politicians were intimidated. A gang of unidentified thugs had crushed the fingers of Yabloko leader Grigori Yavlinski’s pianist son in Yeltsin’s time. The dangers of opposition persisted under Putin. Garry Kasparov was temporarily thrown into gaol merely for campaigning for justice and civil rights. The FSB was given licence to act outside the law in defence of the whole state order. Putin himself professed ignorance of the specific cases. What is more, he showed little sympathy for the victims and did next to nothing to rectify the general situation. Russia sank deeper and deeper into a pit of authoritarian rule backed by criminality.
Putin in his second term moved ever further down the road towards a centralization of power. From December 2004 the leaders of the Russian Federation’s republics, instead of being elected, were to be selected by the president and their names were to be submitted to the legislative bodies of their localities for approval or rejection. Several of the smaller of the non-Russian republics in the Federation, moreover, were abolished. The authority of ‘the centre’ was ceaselessly confirmed.
In April 2005 Putin also took a grip of the country’s thousands of civil associations from charities to recreational groups, making it compulsory for them to acquire official registration and subjecting them to central supervision through a Public Chamber he himself appointed. Foreign agencies were treated with some suspicion and difficulties were placed in the way of the British Council, the BBC Russian Service and other bodies. Religious denominations too were put under pressure. Although the Russian Orthodox Church was granted privileges, in return it was required to show eager loyalty to the secular authorities. Putin, himself a professed Christian, interfered in personnel appointments in other faiths. Berel Lazar, a Hasid, was his first choice as Chief Rabbi in 2000. Universities were vigorously patrolled. Textbooks were vetted; approved authors had to moderate any criticism of Stalin. A youth movement, Nashi (‘Our Ones’), was founded to divert adolescents towards patriotic ideals. Its organizations were employed to harass the British ambassador after a worsening of Russo–UK relations in 2006. Lip-service was paid to enhancing social freedom. The reality was that the Kremlin distrusted collective endeavours by citizens unless there could be confidence that respect for the government, its leaders and its policies would be maintained.
Putin and his fellow rulers over several years combined electoral abuse, legislative licence, violent repression and media control to sustain an authoritarian regime. His projects on terrorism, on political extremism and public demonstrations were smoothly passed by the Federal Assembly. The loose wording of the laws was designed to make it easier for government and security agencies to curtail open dissent. Putin also succeeded, after years of trying, to scrap the remnants of the communist system of social security and replace it with monetary payments that gave a lesser guarantee of assistance in times of personal emergency.13 Yet he could not permanently ignore the popular grievances recorded in sample surveys. In 2005 he announced four ‘national programmes’ for urgent reform in housing, social welfare, agriculture and health care. The central and local elites had neglected such sectors since the fall of communism since they themselves could easily pay privately for what they needed. Most families, though, experienced dreadful under-provision. They lived in cramped accommodation. They could ill afford the weekly grocery bill. If they fell sick, they had to pay bribes to state-employed doctors for treatment.
His public image was assiduously manicured by his spokesmen, and it elicited a positive response from most Russians. The female pop duo Singing Together had a hit with ‘I Want A Man Like Putin’; his sober lifestyle commended itself especially to young women. When he appeared on radio for a question-and-answer programme, middle-aged listeners rang him up to express their heartfelt thanks. Male adults appreciated his relish for macho sports like judo. He also posed for a photo holding a tiger cub which an unknown friend had given him on his birthday. TV stations, all owned by his supporters, joined in the praise. The photographers accompanied him on a tour of eastern Siberia in August 2007 when he took Prince Albert II of Monaco out fishing – and pictures appeared of him stripped to the waist in the bright sunlight. Requests came through from the public for the Constitution to be amended so that he could stand again for a presidential third term. For a while he seemed to toy with the idea. The loyal sections of the media gave the impression that Russia, having found its saviour, should not allow him to stand down from the paramount office.
Outside of politics, Russians also began to do better on the international stage. Official sport recovered. Yeltsin had always supported tennis and the proliferation of private clubs produced a grand slam champion, Marat Safin. Female players thrust themselves forward in 2006–2007. Russian football became a serious force in European competitions. At the Beijing Olympics in August 2008 the country came third in the medals table. In December of the same year Xenia Sikhinova won the Miss World contest in South Africa.
The Duma elections in December 2007 produced 315 seats for United Russia. This was a remarkable endorsement of Putin’s period of rule. But he resisted the temptation to alter the Constitution and pondered whom to recommend as his successor. It was thought that his choice might fall on Viktor Zubkov, whom he appointed Prime Minister in September 2007. Like Putin, Zubkov hailed from St Petersburg, and the two of them had worked together for a long time. In the end Putin plumped for Dmitri Medvedev. At the time Medvedev was serving as First Deputy Prime Minister; he was also in charge of the ‘national programmes’ announced by Putin to improve health care, housing, agriculture and education. He was not a complete unknown but as yet lacked a clear profile in the eyes of most Russians. Continuity would be preserved by a secret deal whereby Putin would be asked to serve as the new Prime Minister. The usual dirty tricks were played. Liberal-minded politicians were ruled out of the contest on spurious technical grounds. These included ex-premier Mikhail Kasyanov. Even the former chess world champion Garry Kasparov was banned. Tired veterans Zyuganov and Zhirinovski were allowed to stand but they received little airtime on television. In stark contrast, Medvedev’s every public appearance was filmed and the Kremlin’s mastership of ‘political technology’ secured the desired result in March 2008.
Medvedev was an appropriate selection for Putin to make. A fellow Leningrader, Medvedev had proved his allegiance as a political client over many years. He was bright in intellect and gentle in appearance. If Putin strutted around like a judo master, Medvedev had the aura of a retired member of a 1990s boy band. What attracted the rest of the world was Medvedev’s readiness to emphasize Russia’s need for the rule of law. But his appointment of Putin as Prime Minister made it clear that change, if it was going to happen, would occur only very gradually.
Russian assertiveness in international relations kept rising. The ‘foreign policy concept’ adopted in July 2008 took pleasure in the recent strengthening of state power and economic well-being in Russia. Foreign minister Sergei Lavrov suggested that the period of the West’s global dominance was over, and Medvedev’s team were determined to roll back the recent inroads made by NATO. A suitable opportunity cropped up in August 2008 when President Mikhail Saakashvili of Georgia sent troops into the rebellious republic of South Osetiya. Georgia had already announced its intention to apply for NATO membership. Russian presidents since the break-up of the Soviet Union had regarded the ‘near abroad’ as a zone where American influence was not welcome. Saakashvili’s campaign met with a furious response. The tank units of the Russian Army thrust their way over the mountains down into Georgia, smashing all military resistance and ruining strategic economic infrastructure. Medvedev, while announcing that armed occupation would be only temporary, proceeded to give official recognition to the independence of both South Osetiya and Abkhazia.
The Russian Army carried out a crude operation that attracted opprobium in the rest of the world. It was reported – and never convincingly denied – that Putin told French President Nicolas Sarkozy that he intended to follow the example of what the Americans had done to Saddam Hussein and to ‘hang up Saakashvili by the balls’. Sarkozy allegedly asked: ‘Yes, but do you want to end up like Bush?’ Putin admitted: ‘Ah, you’ve got a point there.’14 Russia’s people in any case felt positive about the Russian campaign. The rulers and the ruled sensed that proof had finally been given that the country would need to be taken seriously even by the Americans. First Putin and then Medvedev demanded that the US should stop using NATO as a means to pursue a unilateralist foreign and security policy around the globe. Medvedev claimed that the difficult stage of rebuilding the Russian state and economy was over. Russia was again a great power. It demanded respect for international law in relations among states. It required to be treated on an equal basis by the countries of NATO. It depicted itself as having its own distinct civilization, and the values and power of the West were declared as being on the decline.
The bludgeoning of Georgia removed lingering doubts in Poland and the Czech Republic about accepting the American proposal to establish installations against long-range ballistic missiles on their territory. Russia caused fear without gaining friends or admirers. It also worried potential investors. Despite its petrochemical riches, it needed help in modernizing its drilling and refining facilities – and the Russian government’s bullying of foreign companies was scarcely going to hasten this process. The harassment of Berezovski, Gusinski and Khodorkovski had the effect of inducing other rich businessmen to try and decant their fortunes to London. Putin and Medvedev inadvertently pushed economic talent westwards. The departure of Berezovski and other ‘oligarchs’ was regretted by few citizens but the atmosphere of Russian big business was not improved. The Kremlin and the petrochemical industrial sector were locked in an intimate embrace. Occasional information trickled out about the wealth of ministers. Public office became a ticket to vast wealth. Liberal political opposition to the Kremlin became demoralized. Yavlinski stepped down from the Yabloko leadership in June 2008. The Union of Right Forces gave up independent activity in November, amalgamating itself with other such parties into the new Right Cause party and campaigning for democracy, the rule of law and free markets; but the fact that Medvedev endorsed its foundation indicated how little a challenge to him it represented.15
Moscow’s meddling in the post-1991 territorial settlement in the former USSR was on the increase. Medvedev pointed out that this was no different in principle from what the Americans had done with Kosovo (which formally declared its independence from Serbia in February 2008). Russia strengthened its ties with Venezuela and Cuba as if searching to help the enemies of successive American presidents in the New World. A dispute with Ukraine about payment for Russian gas led to a suspension of supplies to several other European countries in January 2009 until the Ukrainian government agreed to terms. In November 2008, furthermore, Medvedev had announced the intention to install missile-launching facilities in the west of the Russian Federation in reaction to President Bush’s initiative in Poland and the Czech Republic. By January 2009, after Barack Obama’s inauguration as US President, things were calming down, and Medvedev suggested the need to resume negotiations. Russians aimed to bargain from a position of pride and strength. Tacitly they regarded most of the former Soviet Union as falling inside their sphere of legitimate influence and aimed to secure agreement from the Americans to keep their noses out of the region.
The Russian rulers vigorously pursued the national economic interest in international relations. They – or Gazprom and Rosneft – sold their energy resources to Europe. The existing pipelines favoured the maintaining of this commercial connection. The Chinese were known to be slow payers; the Europeans had a record of prompt settling of charges. Medvedev, moreover, was just as aware as Putin that Russia stood in need of foreign capital and technology. The boom in state revenues from gas and oil was disrupted in mid-2008 when world prices dipped; and the forecasts of Russian extraction of its energy resources anyway suggested that output was going to fall. Manufacturing, agriculture and transport remained in an outdated condition. Moscow and a few great cities flourished while the rest of the country awaited ‘modernization’. Public education stood in great need of adequate financing and rapid reform. The decline in the birth rate among ethnic Russians continued. What is more, eastern Siberia underwent depopulation as the state withdrew its subsidy for residence there. Although the incidence of poverty across the country declined during Putin’s presidential terms it still affected one in seven households in mid-2008.16 Russia took 131st place in a world ranking of countries according to how ‘peaceful’ they were. Quite apart from the violence in the north Caucasus, Russian crime, political repression and military expenditure were high and getting higher.17 Drug abuse, moreover, went on rising. Acute concern grew about Russia’s demography as measured in rates of mortality, births and ill-health.
A vast task of transformation lay ahead. The Kremlin elite was aware of its responsibilities to the nation and spoke often about them. Putin and Medvedev settled for a mixture of politics and economics which appeared to have worked elsewhere. Vigorous control over elections and policy-making was imposed. Big business was made to understand that its freedom to make money could and would be revoked if ever its leaders fell out of line with the government’s wishes. At the same time the Kremlin held back from censoring the Internet or closing down bookstores. Private dissent was tolerated so long as it stayed inside the apartments of the dissenters or was limited to a few eccentrics selling poorly produced pamphlets on street corners – this was more than what was allowed in China, Singapore or Indonesia.
The Russian economy after 1991 was immensely sensitive to shockwaves emitted by the global economy. When the global ‘credit crunch’ occurred in summer 2008 the Russian stock exchange had to suspend its operations several times before the end of the year. The decrease in oil and gas revenues in the same months aggravated problems. The budget had been written on the assumption that Russian energy products would continue to command high prices on foreign markets. There was a return to the difficulties of the 1990s with salary and pension arrears, job uncertainty and inflation. The Russian boom had failed to last a full decade. Closures of businesses became an epidemic. Even the mightiest Russian company, Gazprom, experienced an eighty per cent collapse in its share prices in the second half of the year. Many of the most successful entrepreneurs had accumulated their wealth by raising huge loans from foreign banks, and as the value of commodities fell on world markets they faced difficulty in servicing their debts. The solution for them was to sell off assets to the state. Once-mighty oligarchs felt the bruises of a deep recession and started to lose their grip on the country’s natural resources. The loans-for-shares débâcle of 1996 was repeated in reverse: this time it was the business elite going cap in hand to the government. The fragility of Russia’s decade-long economic upsurge was revealed.
Medvedev feared that the recession might lead to social unrest, and he warned political opponents against trying to exploit the situation. The security forces were held at the ready. Although they could maintain order on the streets there were worries amidst the political elites that this was not permanently guaranteeable. At the end of January 2009 a large protest demonstration was organized on the Pacific periphery of the Russian Federation, in Vladivostok, against the policies of the government. Security forces were put in readiness to deal with angry demonstrators in other cities. Placards were held high: ‘Down with capitalist slavery!’ and ‘Bring back the right to work!’ Communist party organizers were not the only militants. Putin’s rating in the opinion polls dipped for the first time since the Kursk disaster. Suddenly the political order appeared less than completely stable. The Kremlin leaders had always been nervous about popular opinion. This was one of the reasons why they took so much care to emasculate the electoral process. For years the containment of popular grievances had been effective. But when the material improvements made since the turn of the millennium were put under threat the patience of millions of Russians wore thin. The question arose: would the people continue to remain silent?