Putin’s dilemma and the future of Russia
Russian Prime Minister Vladimir Putin faces a dilemma in either ignoring continued protests with the hope of riding them out or infiltrating them with instigators who foment violence in an attempt to justify a police and military crackdown before the election in March when Putin will be seeking to return to the Russian presidency.
At least 25,000 Russians demonstrated peacefully in Moscow’s Bolotnaya Square on Saturday protesting last week’s elections for the Duma, Russia’s parliament. Some protesters provided candy bars and flowers for the police. The protester’s umbrella group, Solidarity, is planning larger protests between now and Russia’s presidential election in March.
The immediate allegations of voting fraud in last week’s elections are said to be a small indication of a much broader charge that Putin runs Russia as a kleptocracy. Opponents claim that Putin allocates business resources to favored associates while arresting competitors under dubious indictments.
Putin has designated companies associated with the oil and natural gas industries in particular as “national champions” closely regulated or directly controlled by the government. Oil and natural gas make up two-thirds of Russia’s exports with most of the rest consisting of metals and chemicals. This makes Russia subject to the “Dutch disease” – a term coined by The Economist magazine to describe a country where the demand for its natural resources drives up the price of the local currency (the ruble in this case) effectively pricing other potential exports out of international markets.
Under Putin’s rule Russia has suffered from both the economic natural resource curse in the form of the Dutch disease and the political natural resource curse in the form of government control of the country’s wealth. When governments control wealth (as in many oil rich nations) freedom suffers. Instead of investing in people to improve their productivity and thus increase government revenues, countries that are highly dependent on natural resources control wealth more directly and dole it out to favored citizens.
Russia is the largest country in the world in land area but has a population of just over 140 million people, which is less than half the population of the United States and one-tenth of the population of China. Moreover, Russia’s population is shrinking. Millions of Russian citizens emigrate each year from Russia for other countries including some of Russia’s most dynamic and creative young people. Russia’s fertility rate is just 1.4 which is less than the 2.1 rate required for population replacement. Its rate of population decline is worse than that of Japan and is only exceeded by Belarus, Ukraine and Bulgaria.
Above all Russia needs to diversify its economy and provide opportunities for its young people. It must break its dependence on the oil and natural gas industries and provide better quality education and a better business environment with clear and consistent laws enforced in a fair and equitable manner. Putin does not seem to be interested in this agenda. His reelection would no doubt ensure a continuation of the status quo and just keep Russia from achieving its economic and democratic potential. We can only hope that he will not make matters worse by violently suppressing dissent.
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