On March 18, Russia holds a presidential election. No surprises are expected regarding the outcome; and, according to the economist and political analyst Dmitri Travin there should be even fewer expectations of political reform in the country following the re-election of Vladimir Putin for his second consecutive (and third overall) presidential term.
Travin is a professor at the European University in St. Petersburg and the scientific director of the Center for Modernization Studies. For more than 30 years he has studied economics, economic history and historical sociology. He is the author of more than 10 books on the history of reforms in Russia and the modern Russian economy.
His most recent book, co-authored with academics Vladimir Gelman and Andrei Zaostrovtsev, was ‘The Russian Way: Ideas, Interests, Institutes, Illusions.’ That book, on Russia’s path dependence, came out in late 2017 and sparked heated discussion across the world’s largest country by land-mass.
Just prior to Russians heading for the voting booths, Travin spoke to Asia Times on a range of issues facing the country.
What will Russia’s political landscape look like after the presidential election?
Presidential elections in Russia, of course, will not change anything. It is already clear who will win. Some intrigue remains over government positions, however. Will there be some changes? Will Dmitry Medvedev retain his post of prime minister? It seems to me that if we do see any big staff changes, they will be in the economic bloc, likely as a way to re-ignite the economy, which has been stagnant since 2009.
What are his economic promises?
In a State of the Nation Address to the Federal Assembly on March 1, Putin promised to boost GDP by 50% over seven years. Economists have already calculated that to do this, we’d be talking about 6% annual growth, and since there is no growth expected in the early stages, we are essentially looking at an 8% annual expansion of the economy. Those plans seem somewhat fantastic to me.
How about diplomacy?
We shouldn’t expect much in the way of change in terms of foreign affairs either. Even if Foreign Minister Sergei Lavrov resigns, it is unlikely that major changes will follow, including in terms of Russia’s Asian pivot. [Russia has flirted with stronger Asia ties for years. It’s hard to say if there was ever an official ‘Asia Pivot,’ but some commentators say one began in 2014, when Putin and Xi signed a major gas delivery deal. Since then, Russia-China ties have been warming in terms of business and military cooperation.]
What is Putin’s focus?
Of the three main areas of political activity – preservation of power; economic development; foreign policy – Putin is really only interested in the first. Economy-wise, he would like to change something, but there is little chance of that. In terms of foreign policy, it is unlikely that he will be able to score any wins since the sanctions that the US and Europe levied on Russian companies and officials after the Crimea annexation in March 2014 are likely to be extended.
How serious are Russia’s economic problems?
I don’t share Putin’s fantasies about sudden GDP growth. But, to say that the economy is collapsing is not true either. Stagnation can last a very long time. Our situation is even worse than it was in post-bubble era Japan, because there stagnation occurred after a long period of growth to the level of a top global economy. The country became rich and found its labor force was too expensive, while in the neighborhood there were lots of cheaper options. But in Russia today the standard of living is low. Our GDP expanded quickly only between 1999 and 2008.
Since 2009, GDP has grown by less than 1% a year and there are no serious reasons to expect improvements. Favorable conditions for investment have not been created. Labor productivity will not grow without investment and new technologies, which we can no longer import form Europe and the US. Domestic demand cannot expand, because real incomes have been falling for several years in a row.
The demographic situation too is complicated, which indicates that additional labor would need to continue arriving from Central Asia. However, the attractiveness of Russia’s labor market is declining due to ethnic tensions and the depreciation of the ruble. There’s no point in coming to work in a poorer country – which is what Russia is becoming.
For foreign investors, what are the economic stumbling blocks?
There are no economic reforms. In Russia, there is a bad investment climate for three reasons: a high level of corruption; no guarantee of property rights; and sanctions. All this indicates that it’s better not to deal with this country. In terms of sanctions, Putin can’t win back lost positions. It’s not as if he can return Crimea to Ukraine without a massive loss of face. Not a single Western leader seems ready to change their policy toward Russia.
How serious is corruption?
The current government campaign against corruption has not changed anything. Arrests continue to be made among those in the security forces. Several former governors are under investigation. Minister of Economic Development Alexei Ulyukayev was found guilty of taking a bribe of US$2 million and sentenced to eight years in prison. But, corruption is systemic and cannot be eradicated with such measures. Meanwhile, Putin is not ready to allow society to radically democratize, so that civil society can fight corruption. So what we have is a continuing cycle of asset appropriation and re-appropriation that has been in place pretty much since the 2003 attack on Mikhail Khodorkovsky, the former owner of oil company Yukos, and his imprisonment for 10 years.
So, no reform, no change, no growth?
There will be no reform, just like there won’t be economic growth. If oil prices rise, we may see temporary growth. From time to time the economy may improve, but I see no ground for stable long-term growth.
Just as six years ago, when the president promised to radically increase the salary of public sector workers right before the elections, everything can be promised in the Russian political system. This will not affect the election outcome.