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A Crucial Alliance360°ANALYSIS

The toxic combination of a stagnant economy and Putin’s counter-reforms could make Russia a danger to Europe in the near future. According to historian Alexander Yanov, the country’s greatest hope for neutralizing this threat and effecting real change is an alliance between its opposition movement and Europe.

On the eve of the Russian elections, British weekly The Economist released an issue with a rather sensationalist headline on its cover: “The beginning of the end of Putin” – without a question mark at the end. As supporting evidence, the magazine quoted Director of the Levada Center Lev Gudkov, “The regime is losing its legitimacy in the eyes of the population,” and cited a statistic, “The number of people who no longer trust Mr Putin has risen to 40%.”

According to The Economist, “People are tired of him. More fundamentally, they are fed up with the personalised system that he presides over. It looks not just corrupt but increasingly anachronistic. Ever more Russians want legitimate institutions. They want to know power can change hands. And because this is exactly what Mr Putin cannot offer, the conflict between him and them is irreconcilable.”

Only a day later, election results ostensibly refuted the article’s conclusions: Putin won in the first round, everywhere except in Moscow. It was the situation in the capital that cast a shadow on Putin’s legitimacy as a national leader (Il Duce, as his Italian analogue was called). Moreover, it was in Moscow where Putin had called his supporters to fight to the bitter end. He even tried to use Lermontov to this end, quoting “Let’s die defending Moscow / Like our brothers died!”

The unfortunate quotation isn’t the problem. The problem is the unfortunate course the country has taken under Putin’s rule. It will develop in contradiction not only to Putin’s irresponsibly generous campaign promises, but also to its potential of becoming a strong and healthy state. In this sense, The Economist may have been right.

During his campaign, Putin promised to significantly raise salaries for soldiers and police officers, doctors and teachers (combining guns and butter). The problem is the fact that the budget for 2012-2014 is already established, and no combination of the kind appears anywhere in it. Rather, there is no need to worry about the “guns” part of the budget. Police and military spending will be rising to unprecedented heights: In 2011, defense spending was 1.54 trillion rubles and law enforcement, 1.24 trillion; by 2014, these will grow to 2.73 and 2.07 respectively.

In the time that Vladimir Putin has been President, defense spending per capita has risen from $46 to $600. Foreign security will make up 6.5% of the GDP. Even in the USA, despite the fact that it bears the responsibility of being a world leader, the budget doesn’t extend to this kind of spending (in relation to their respective GDPs). It is as though by 2014, the 100th anniversary of the beginning of World War I, Russia is preparing for war. With whom, it’s not clear yet. However, it is arming itself at such a pace that in as little as two years, it may become the most militarized country in the world.

However, the problem with Putin’s promises isn’t the “guns,” it’s the “butter”. The teachers and doctors were also promised trillions. The trouble is that in the budget, they are slated to get just the opposite: spending on healthcare, for example, will be cut from 504 to 454 billion rubles. The education situation isn’t as drastic: the spending is only reduced from 506 to 498 billion rubles. Not increased – cut! So where will the promised trillions come from? New taxes or reserve funds intended for softening the blow during the present and future economic crises? No. Most likely, Putin is banking on another hike in oil prices. Poor doctors and teachers.

Even more scandalous is the situation with housing and utilities, although utility costs are one of the most important issues for regular citizens. The budget cuts spending on these necessities from 234 to 74 billion rubles. Combine this with the substantial difference between the minimum wage (4611 rubles) and the official poverty line (6800 rubles) and the fact that covering this shameful divide is nowhere in the budget: that’s Putin’s generosity for you.

How should this unheard of generosity be reconciled with the actual callousness of the budget? It’s simple: the national leader categorically does not believe in one of the most important principles of democracy, namely the uncertain nature of election results sine qua non for every candidate. According to Putin, the “leader” must win, and he must do so in the first round, and at any price, since the second round would be tantamount to shaking the very foundations of government. This is the source of his campaign’s entire tone, and his boundless promises. This is where the Lermontov comes from, along with the tears on Manezhnaya Square.

As for Russia, according to a report published in 2003 by Goldman Sachs, the country was to become a future world leader. Brazil, Russia, India and China (abbreviated as BRIC) were named the most promising and fastest growing nations that, according to report authors, would overshadow every current European leader in terms of their GDPs by the middle of the 21st century. Essentially, the report promised a Russian Miracle. It discussed an economic leap forward which would allow Russia to overtake Italy by 2018, France by 2024, England by 2027, and finally, Germany by 2028. It was enough to make one’s head spin. Especially in comparison to Putin’s 2000 promise to merely catch up with Portugal, one of the poorest countries in Europe.

These bouyant expectations broke the crisis that affected all of the BRIC countries. It should be noted that it affected all of them in different ways. According to the Center for Economic and Political Research’s Alexey Mikhailov, citing World Bank statistics, over the course of the three crisis years (2009-2011), China’s GDP grew 31%, India’s 27%, Brazil’s 11%, and Russia’s 0. According to other sources, a negligibe growth can be observed in Russia’s GDP after all. In either case, the contrast with other BRIC countries is apparent.

The first sign of the 2008 crisis was the depressing prognosis from British bank HSBS according to which by 2050, Russia would not be a world leader, as Goldman Sachs had planned, but in 15th place. Whether Russia will catch up to Portugal by then is still unclear; what’s obvious is that Turkey, Indonesia, and not to mention leading European nations, are going to leave Russia far behind.

In a recent interview that appeared in Foreign Policy, leading American economists Nouriel Roubini and Ian Bremmer put in the last word in the debate regarding Russia’s place in the world market, stating that Russia should be taken out of BRIC. What happened? According to experts, Russia has lost its potential for economic growth, its population is aging too quickly; it is no longer capable of taking the economic leap it was thought to in 2003. I would put it even more succintly: Putin happened. He led the country in the exact opposite direction from what would have made the leap possible: toward the governmentalization of the economy, which led to, in President Medvedev’s words, the current state of rabid corruption; toward the end of political competition, which had been meant to, in the words of Putin himself, become the “heart and life force of democracy”; toward the militarization of the budget, the corrupt and far-from-independent judiciary. In other words, toward complete degradation.

Doubtless, the ugly era in Russian history associated with Putin will end sooner or later. In several points, I will try to outline a more or less painless path out of the current situation. All of its success, everything that qualified Russia for inclusion in BRIC in 2003, Russia owes to the privatization of the wild 90s, despite the fact that all pro-Putin rhetoric, in Russia and in the West, is based on villanizing this period.  Beginning in 1999, the Russian GDP grew over 10% for five quarters in a row. Nothing like this ever happened again in the post-Soviet economy. The momentum from that push remained in effect until the 2008 financial crisis, during which the growth slowed to just 5% in five quarters out of 36.

Even the rabid corruption, government-backed raids, and the other wonders of Putin’s counter-reforms couldn’t kill the momentum of the wild 90s. It took a serious crisis to lay bare the true price of these counter-reforms: the country turned out to be incapable of overcoming it. Currently, even the bravest analysts don’t dare to prognosticate GDP growth at 5%.

It is peculiar that neither Russian nor European political analysts are concerned that this crumbling nuclear power with its back to the wall governed by a reactionary clique is no less dangerous to Europe than the similarly crumbling Iran. And maybe even more dangerous.

It’s possible to hope that President Putin 2.0 will correct Prime Minister Putin’s mistakes which the latter inherited from President Putin 1.0. We can hope that Russia’s opposition will compel Putin to establish something like the round table of the Velvet Revolution. However, there are too many reasons to believe that such hopes are baseless. Despite the fact that in Russian history, the opposition has put forth seven consitutions and four Great Reforms (in the 16th, 18th, 19th, and 20th centuries), in five centuries of fighting, the opposition has never won a decisive victory. They weren’t able to end serfdom in the 16th century; they weren’t able to institute a constitutional monarchy in the 18th, nor establish a democracy in the 20th. In the end, 2012 Russia is just as authoritarian as it was in 1512.

The modern Russian Europeans, who made themselves known at enormous demonstrations on Bolotnaya Square, who defended Russia against its Il Duce, will continue to fight for their rights. But wouldn’t it be arrogant to expect that they could accomplish something that 20 generations of their predecessors weren’t able to? No matter how you look at the situation, Russia’s becoming “the sick man of Europe” as the Ottoman Empire was called in the 19th century, and is in many ways very dangerous for Europe.

Some may ask: but what danger could tomorrow’s Moscow pose for Europe, when it is demoralized by Putin’s regime, degraded, furious, рогозинская? Let’s picture what Europe will do if Moscow were to give it this ultimatum: either dismantle all of your ABM bases, or we will remove them ourselves with missile attacks from our base in Kaliningrad. Will it tuck its tail between its legs and dismantle the bases? Threaten a counter-strike? They will say that Russia isn’t the USSR, and that it has irrevocably debased its previous ideological draw. This is true. But did Nazi Germany have a draw? Did the general aversion to the Third Reich make it any less dangerous? Imperialist confidence and growing tensions turned out to be a lot more powerful than popularity. And meanwhile, Russia doesn’t have any of these things. In the 16th century, with the approach of its confrontations with the West, Russia occupied Livonia; in the 17th century, Left Bank Ukraine; in the 19th, Northern Caucasus and Central Asia. What would prevent it from occupying natural resource rich Azerbaijan in the 21st century? Or Left Bank Ukraine again? Or at the very least Georgia? If all of this happened, would Europe tolerate it?

It would be very unwise to allow Moscow to become the “sick man of Europe”. Since the only force capable of improving the situation in Russia are the Russian Europeans, the smartest move is supporting them today, instead of dealing with the provocations of a furious Russia ten years from now. The opposition won’t be able to seat Putin behind its round table on its own, but with Europe’s help, it might be able to. That is, if Europe understands the necessity of turning the conflict between Russian Europeans and the Putin clan into a conflict between the Putin clan and Europe.

Analyzing such a conflict will be a complicated task for Russian and European intellectuals, that is, once they finally realize the deplorable state of Russia and the threat it poses. I would like to point out the obvious. The Putin clan’s Achilles heel is the stolen assets in European banks and European real estate. Even the hint of the question “Where does this money come from?” coming from European justice officials could be enough to make Putin sit down with the opposition a lot faster than ten demonstrations.

The television monopoly that serves as a crucial prop in Putin’s regime can only be destroyed from outside. If even Al-Jazeera, responding to pressure from the Arab world, was able to find a place on the American television market, it seems very possible that Europe is capable of pressuring Russia into having an independent channel. If it tried.

I believe that ending Putin’s regime in the healthiest way, and preventing Russia from turning into the sick man of Europe, is only possible with the joint efforts of the EU and the Russian Europeans. Europe needs to see how imperative creating this alliance is, before it’s too late.

The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.

*[This article was originally published by Institute of Modern Russia on March 7, 2012].