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Russia: U.S. Magazine Marks Putin's 'Grand Bargain'

Russian President Vladimir Putin (AFP) The announcement that "Time" magazine has named Russian President Vladimir Putin its person of the year will come as little surprise to most Russians. "They say that Putin is the most successful figure of the 20th century," academic Leonid Polyakov told a roundtable in September. "I would pose the issue more broadly: Who in history has been more successful than him? Who accumulated such a potential of confidence after being in power just eight years?"

Or, as former First Deputy Duma Speaker Lyubov Sliska put it more succinctly in May: "Putin is our everything."

The newsweekly's editors are careful to note that the distinction "is not and never has been an honor." "It is not an endorsement," they continue. "It is not a popularity contest. At its best, it is a clear-eyed recognition of the world as it is and of the most powerful individuals and forces shaping that world -- for better or worse." They correctly note that Putin's achievements have come "at significant cost to the principles and ideas that free nations prize" and that it is far from clear whether "he proves to be a reformer or an autocrat who takes Russia back to an era of repression."

And perusing the magazine's list of also-rans, including former U.S. Vice President Al Gore and British author J. K. Rowling, it is hard to argue that Putin does not deserve the recognition.

New Rules

In its appraisal of Putin, "Time" argues that he has brought Russia out of the chaos of the 1990s to a new stability from which most Russians are benefiting. "In his eight years as president, he has guided his nation through a remarkable transformation," the article contends. "He has restored stability and a sense of pride among citizens who, after years of Soviet stagnation, rode the heartbreaking roller coaster of raised and dashed expectations when [Soviet leader Mikhail] Gorbachev and then [Russian President Boris] Yeltsin were in charge. A basket case in the 1990s, Russia's economy has grown an average of 7 percent a year for the past five years. The country has paid off a foreign debt that once neared $200 billion. Russia's rich have gotten richer, often obscenely so. But the poor are doing better too: workers' salaries have more than doubled since 2003."

Although "Time" argues that this economic miracle is "partly a result" of high global energy prices, it would be more accurate to say that Putin has been phenomenally lucky that throughout his presidency revenues have flowed in at rates several times greater than the most optimistic projections of 2000. His greatest achievement in this regard has been that he bullied the Yeltsin-era oligarchs into accepting "new rules of the game," which included diverting most of the profits from high energy prices into the government's Stabilization Fund. That fund now contains some $150 billion -- even after being used, as "Time" notes, to pay off Russia's astronomical foreign debt.

Putin's other achievement in this regard has been that he placed capable economists, including Finance Minister Aleksei Kudrin and former Economic Development and Trade Minister German Gref, in charge of these assets, which so far has prevented them from being pillaged. In recent months, however, Gref has been removed from the cabinet and Kudrin has come under fierce attack from the siloviki -- people with ties to the military and security services -- in Putin's inner circle. In February, the Stabilization Fund is to be split into two new funds and the battle to spend those billions will be fierce, possibly to the point of rocking the "stability" for which Putin traded Russia's freedoms.

Many observers have argued that the energy-price windfall has encouraged Russia to put off major reforms and investments that are needed to create truly stable economic development. In the early years of Putin's presidency, he pushed through liberal and much-hailed tax and customs codes and rationalized many Soviet-era economic policies. But in recent years there has been little to boast of. The so-called national projects to improve agriculture, housing, education, and health care (projects that have been overseen by Putin's anointed successor, First Deputy Prime Minister Dmitry Medvedev) have yielded few results and have been attacked as bottomless money pits. Although energy exports account for more than half of Russia's state revenues, production is stagnant. During Putin's second term, old state-dominated monopolies have grown and new ones have been created, increasing the opacity of the economy and placing a premium on political ties and cronyism over sound management and innovation.

'Can Putin Really Be Wrong?'

"Time" writes that Putin established stability through authoritarian domestic policies. "His government has shut down TV stations and newspapers, jailed businessmen whose wealth and influence challenged the Kremlin's hold on power, defanged opposition political parties and arrested those who confront his rule," the magazine's appraisal notes. Kremlin-connected political analyst Sergei Markov perhaps put it better during a conference in August: "The personality of Vladimir Putin is more important to society than institutions of state." Or, to quote Central Election Commission Chairman Vladimir Churov, "Can Putin really be wrong?"

A key result of Putin's draconian domestic policies has been the elimination of all oversight and a consequent flourishing of corruption. To take one example, a study in October found that the country loses some $40 billion a year just on state purchases. Recently a Kremlin-connected businessman told "Kommersant" how the siloviki, led by deputy presidential-administration head Igor Sechin, are raiding lucrative private businesses by making them offers they can't refuse. "This isn't raiding," he said. "We don't take over enterprises -- we minimize their market value using various means. As a rule, these are voluntary-compulsory means. But, as a rule, people understand where we are coming from."

Former Duma Deputy Anatoly Yermolin, himself a retired Federal Security Service (FSB) colonel, told "Novoye vremya" earlier this month: "Putin is not fighting against corruption. He is using it to control the country." He added that "the genius of Putin's management of the country is that the president and his team have turned the main weakness of Russian state management -- corruption -- into its greatest strength."

During his interview with Putin, the "Time" correspondent asked about the corruption problem and received a "testy" response from the president. "If you are so confident, then I presume you know the names and the systems and the tools.... Write to us," Putin said. In a country with no independent law enforcement agencies and no legislative oversight, one that has virtually no independent media and no functioning NGOs, finding out "the names and the systems and the tools" is no easy task.

Although it is no "honor," "endorsement," or "popularity contest," Putin has clearly earned the distinction of person of the year. But it remains to be seen if he really has carried out a "grand bargain" of freedom for stability. The freedoms are gone, but the promised stability -- as the country's current political transition suggests -- seems far from certain. To use analyst Markov's phrase: Can a country where "the personality of Vladimir Putin is more important to society than institutions of state" really ultimately be stable?