Paul
Goble
Staunton, December 31 – The loss by
members of the Russian elite of a positive model for the future is a more
important factor behind the country’s current economic malaise than the fall in
the price of oil or the imposition of sanctions and counter-sanctions,
according to Andrey Yakovlev, a senior analyst at Moscow’s Higher School of
Economics.
“The current situation in the
Russian economy is a clear illustration of the ways in which a crisis in people’s
heads leads to a crisis in reality,” Yakovlev says. Indeed, “one of the main results of 2014-2015
is that any idea about an ideal model of the development of the country, which
the elite had in the early 2000s finally disappeared.”
That was the product of developments
going back more than a decade. In 2007,
the notion that “an economically strong Russia could aspire to participate in
the administration of the world” formed the basis of Vladimir Putin’s Munich
speech and reflected the choice of many in the government in business of a kind
of South Korean model.
But the crisis which began in 2008 “showed
that this was not the case.” More than
that, it showed that the power vertical was not nearly as functional as many
thought. And that in turn led in the fall of that year to the collapse of the
expectations of many in business and in the state about the future, a collapse
that continues to this day.
This lack of confidence led on the
one hand to a new wave of capital flight and on the other to ever harsher
government pressure on business as the regime tried to make up for its
losses. That in turn contributed to the
eight percent fall in Russia’s GDP in 2009, but it became obvious that both
sides had less and less room for maneuver.
“The main goal” of Putin’s
anti-crisis policy at that time was “the support of social stability,” and to
that end, he increased pensions and budgetary spending so that even though the
GDP was falling, personal incomes in most cases were not, Yakovlev says.
In 2009-2011, Dmitry Medvedev made
an effort to change things and to restore a dialogue with business, which
pointed to the formation of “a new contract between the authorities and
business – investment and economic growth on the basis of successful mid-sized
companies in exchange for an improvement of the business environment.”
These measures “gave a definite
effect, but the political events of 2011 and the reaction of the authorities to
them turned out to be much more significant for economic actors.” From their perspective, the power vertical
was beginning to shake; and Putin’s political mobilization of the population
did not moderate those concerns.
And thus, “from 2012 on, various
branches of the powers that be, in particular the economic block of the
government and the force agencies in essence were conducting mutually exclusive
policies which only intensified the negative expectations in the elite” and led
to even more capital flight.
This split in the minds of the elite
was no accident, Yakovlev continues. “It arose fromteh loss by the current
power elite of a vision of the future. All our state propaganda of the last
three years has been about the past,” and the elite feels it does not have any “positive
idea which it could propose to society.”
In many respects, he says, this
situation resembles the one the Soviet Union found itself in 1968 after sending
forces into Czechoslovakia and freezing reforms at home, two actions which marked
“the ideological defeat of the USSR.” But this divided consciousness wasn’t
restricted to the political elite: it has affected business and the opposition
as well.
Russia has the basis for a strong and
rapidly growing economy, according to Yakovlev, but what is preventing that is “above
all a deep distrust between business and the authorities.” Neither has a clear
sense of what the future should be and each distrusts the ability of the other
to come up with one.
There is precedent for the two sides
coming together and reaching an agreement. It happened in the early 2000s and
was close to happening after 2009. But
the situation now is more difficult and any outcome will depend on the judgment
of the force structures about whether “the military-political ambitions of
Russia are unrealizable without a sufficient economic base” and whether they
can offer a detailed “’model of the future’” for Russia.
“We are now at a fork in the road,”
Yakovlev concludes. For a certain period, Russia can avoid making a clear
choice, but “such balancing itself generates negative expectations and
therefore it can hardly last for a long time” because the longer it lasts, the
more these expectations are likely to become “self-fulfilling prophecies.”
