Autocracy blocks political and economic change in Russia

The author, former chief executive of the Yukos oil company, is the founder of Open Russia

In the third decade of President Vladimir Putin’s rule, trust between Russia and western governments is at zero. The prospects for political reform and economic modernisation in Russia are not much higher. This is bad for the wellbeing of the Russian people. It also tarnishes Russia’s attractiveness as a destination for western investment.

The total absence of trust in western-Russian relations makes our times different from much of the 1917-1991 Soviet era. It carries the risk of political mistakes and gambits that may lead to conflict. Putin wants to see himself as a full-fledged player in the “big game” of global geopolitics, but the state of the Russian economy and society do not afford him that opportunity. Therefore he claims his seat at the table by using traditional criminal methods — by playing against the rules.

Western leaders seem to have had enough. The Biden administration promises that from now on such games will cost the Kremlin dearly. For his part, Putin has vowed to draw a “red line” in defence of Russian interests, warning that those who cross it “will regret what they have done in a way they have not regretted anything for a long time”.

Matters might be different if there were a genuine prospect of political change. But Putin’s regime, in its current state, is not ready for reform. Its laws completely rule out the possibility of changing the power structures by means of elections.

Can we expect a revolutionary scenario? Undoubtedly. In the event of Putin’s death or incapacitation, Russia’s personalist autocracy would be unlikely to survive the upheaval without a dramatic conflict. That would be bound to set off a whole range of other latent tensions in Russian society. Another possibility, not to be wholly excluded, is a serious political miscalculation resulting in defeat in a military conflict.

Under Putin, the authorities have consciously sought to revive the imperial reflexes of the Russian population. Combined with torrents of state propaganda, school education, orchestrated political processes and outright violence, this has contributed to a sense of helplessness in society.

At the same time, the authorities intentionally keep income levels within a range where people scrape along from pay cheque to pay cheque, keenly aware of the total dependence of themselves and their families. All this reduces Russia’s economic growth rates but serves to preserve the political status quo.

Public attitudes to Putin’s regime reflect the structure of Russian society. Perhaps half the population would not mind keeping Putin in power for a fifth presidential term after his present six-year spell ends in 2024. The same half thinks that the sentence imposed on Alexei Navalny, the opposition leader ailing in prison, is appropriate. Among the other half, many are critics of the system and many others are not ready to take an open stance.

Russian society is heterogeneous. About 25 per cent of people are educated residents of big cities, where opposition to Putin is strongest. About the same amount, maybe a little less, live in “electoral sultanates”, or territories where feudal and even tribal orders rule. The remaining 50 to 60 per cent live in the industrial society of the mid-20th century — in so-called “mono-cities” and other urban areas of central Russia that have only two or three large enterprises. Meanwhile, the population of big cities has changed greatly because of the influx of migrants from central Asia. For all these reasons, I am not sure we can expect positive political changes in Russia driven by public pressure.

As for meaningful economic change, several obstacles stand in the way. The first is domestic investment. Not only is much state expenditure unproductive, the authorities also withhold investment essential for modernising the economy. Apart from the banal purposes of theft and self-enrichment, the rationale for this policy is to accumulate reserves and avoid dependence on western countries.

Second, western sanctions, imposed in response to Putin’s military and espionage activities abroad, restrict the flow of investment and technologies into Russia. They limit the involvement of high-level foreign professionals and entrepreneurs in the economy. This situation is unlikely to undergo radical change, for no one wants to strengthen an autarchy prone to external violence.

Finally, there is the question of Russia’s institutions and the rule of law. The state under Putin has repeatedly demonstrated its high-handed attitude to private property and the decisions of international courts. Its own parliament, courts and other institutions are not independent. Russia today is simply not a good place to invest your energy, acumen and capital.

Regular scandals erupt in the form of corruption, money laundering and even violent crimes — explosions, poisonings, murders. My Dossier Center will shortly present a new report on the Kremlin’s illicit mechanisms of influence in western Europe. This work will continue.

By now, everyone should understand that the Kremlin sees the economy as a tool of politics. Simply put, one can only achieve and hold on to economic success in Putin’s Russia by agreeing to engage in corruption or by becoming an agent of Kremlin policies. This is what western investors should keep in mind.