Vladimir Putin was sworn in as Russia’s new president at a grand ceremony in the Kremlin on Monday. As his fourth term begins – which may also be his last term – speculation is rife about the composition of the new Russian government.
Chronic Russia watchers are absolutely certain that Putin’s nominees for top government posts – to be announced by May 15 – will give clues about his priorities on the policy front. However, Putin may have ended their suspense already with a presidential decree titled “Russia for the People” issued within hours of being sworn in as president.
The decree consolidates his vision of the economic and social development of Russia and is projected as his top priority. One may call it Putin’s strategy of “Russia First.”
But Putin’s strategy is radically different from his US counterpart’s “America First.” For a start, it is far more sweeping in its scope with developmental programs embracing healthcare, education, demographics, housing and urban development, international cooperation and exports, labor productivity, SMEs, roads and infrastructure, ecology, digital economy, science and culture.
The ambitious goals include making Russia one of five largest economies globally by 2024. In terms of nominal GDP, Russia now ranks 13th in world ranking, while in terms of total purchasing power parity, it is ranked sixth, after China, the US, India, Japan and Germany.
Other goals outlined in Putin’s strategy include extending the life expectancy in Russia to 78 years by 2024, from the present 71, and to 80 years by 2030, and halving the number of Russians in poverty, now estimated at 20 million, keeping productivity growth at 5% and maintaining GDP growth at a pace faster than the global average.
Cuts in defense spending
Interestingly, Putin aims to mobilize funding for “Russia First” not through aggressive pursuit of mercantilist policies abroad, but by axing military spending in the country’s budget. Whereas Trump intends to make American great by hiking defense spending to all-time high level, Putin is taking the diametrically opposite course of effecting sharp cuts in spending on the military.
In essence, the steady annual rise of 10% in Russia’s defense spending in the Russian budget that was characteristic of recent years has ended. The Stockholm International Peace Research Institute estimates a 20% drop in defense spending in Russia last year. As a percentage of GDP, defense spending is slated to fall from 6.6% in 2016 to 5% this year. That figure is expected to drop to 3% by the end of Putin’s new term in 2024.
This marked shift in national policy grates against the prevailing thesis of Putin being a warmonger who is plotting land grab in the Baltics. What Putin is aiming at must be understood from three different angles. First, the ambitious modernization program of the Russian armed forces through the past decade has been more or less accomplished.
On March 1 in his State of the Union address, Putin unveiled a range of new cutting-edge military technologies that have been developed, which are designed to ensure global strategic balance, which is a corner stone of the Russian defense strategy. That is to say, a cut in military spending will not jeopardize Russia’s national defense. This is one thing.
Second, it stands to reason that Putin is viewing the legacy of his new six-year term as one which can be called “nation-building.” This is perfectly understandable. In the last term, Putin successfully piloted Russia’s resurgence on the world stage as a great power. A grateful nation appreciates his profound contribution in this direction.
The fantastic popularity rating of 82% that Putin now enjoys is largely to be attributed to his stewardship of Russia’s return to great power status.
Having said that, there is also a flip side to it. Paradoxically, 45% of the Russian people also register their disapproval of Putin for his failure to ensure an equitable distribution of income. Equally, close to 90% of Russians are convinced of the need for “reforms” in the country.
Although no one is talking here about a color revolution in Russia, the point is, there is social discontent, which can be the breeding ground of protests triggering social instability.
Third, while Putin has been successful in stabilizing the slump in 2014 resulting from a combination of a fall in oil prices and western sanctions, the economic situation is expected to become difficult in the coming period. It is no exaggeration that Putin’s Achilles’ heel is the economy.
Putin has promised a technological breakthrough in Russia, which would enhance economic competitiveness at the international level and reduce the overall dependence on commodity exports. But then, Russia’s success in closing the technological gap with Europe is traditionally linked to the cooperation it gets from the West.
Theoretically, Russia has a “China option” for modernizing its economy, but in reality, a variety of factors put serious limits to it.
Clearly, a policy of alienation from the West is not going to help matters for Putin’s “Russia First.” Suffice to say, a renewed effort by Putin to repair Russia’s relations with the West is on the cards. Interestingly, German Chancellor Angela Merkel will be the first Western leader to meet Putin as he begins his new term. Merkel is paying a ‘working visit’ to Sochi on May 18.
Merkel probably knows Putin, a fluent German speaker, better than any other Western leader and is in a position to take the lead role to realign Russia with Europe. She is obviously on a mission to gauge the prospects of a new beginning. The good thing is that there is a growing realization in Europe that Russia’s complete segregation from the West will not work.
But it takes two to tango. Even if Putin makes an overture, it may not amount to much, given the toxic climate of Russophobia prevailing in US politics. Incredibly enough, the US chose the eve of Putin’s inaugural last week to announce the resurrection of the Second Fleet of the US Navy, which was mothballed years ago, to protect America’s east coast from the “Russian threat.”