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Analysis & Opinion
15.01.10 Russia Profile Weekly Experts Panel: Medvedev’s Pivotal Year
Introduced by Vladimir Frolov

Contributors: Vladimir Belaeff, Stephen Blank, Ethan Burger, Vlad Ivanenko

Two thousand and ten will be a pivotal year for Dmitry Medvedev’s presidency: it ushers in the final lap of his first term in office, when the first tangible results of his presidential agenda need to be put on public display. He can rightly point to some advances. But will he stay on long enough to complete his mission? What will happen to his modernization agenda if he and Prime Minister Vladimir Putin “decide between themselves” that he will not be president in 2012? What will his priority moves be in 2010?

Thanks to the economic crisis and Medvedev’s hard-nosed assessments of Russia’s real problems, the nation has been awakened from complacency, and the return to the status quo ante is no longer viewed by the public as the sure way toward prosperity. People are starting to want change, although they still have but a faint idea of what form it should take and the personal price they would have to pay for it.

The rightly ambitious national goals have been set: economic modernization and a switch from an oil to an innovation-driven economy. These goals enjoy wide-ranging public support, sometimes even from the unlikely quarters of some die-hard liberals. There is no political challenge to Medvedev’s agenda.

He has begun to seemingly put the right people in the right places, and created his own personnel reserve to promote his people to high government positions. He has revoked the right to immunity from public accountability previously enjoyed by high-level officials for the disasters taking place on their watch. The Defense and Interior Ministries are now firing their generals for serious offences and the corruptive practices of their subordinates. These are not “purges,” but a return to normal public accountability, greatly facilitated by Internet technology and the president’s sensitivity to public outrage.

Medvedev’s words and actions are gradually steering the ship of the Russian State onto the right course. But will Medvedev stay on long enough to complete his mission? What will happen to his agenda of modernization, including in the political sphere, were he and Prime Minister Vladimir Putin to “decide between themselves” not to give Medvedev a second term in office starting in 2012? How can Medvedev deal with this “albatross around his neck”? What will his priority moves be in 2010? What political and economic reforms can or even should we expect in 2010?

Vlad Ivanenko, Ph.D. in economics, Ottawa, Canada:

Working on topics related to Russian economic development, I often come to conclusion that this country’s main problem is the lack of national unity regarding the set of objectives Russia should pursue. There are a number of reasons that may explain this deficiency, starting with the abnormally high level of personal distrust detected by international studies in the country and on to general indifference that people have regarding what happens “next door to my dwelling.” But for a practitioner, trying to chart the path to a destination that is not clearly delineated on the map becomes a nightmare.

In this context, the objectives supposedly set by president Medvedev (economic modernization and a switch from an oil (export) to an innovation-driven (domestic) economy) could be a boon, if only they were not expressed in such vague words. In my previous work I have tried to show that the words “innovation” and “hydrocarbon export” are not necessarily opposites, because it is possible to innovate in a resource-based economy: for example, offshore exploration and drilling require sophisticated technologies. Neither is the word “modernization” helpful, as it tells only that its proponents are dissatisfied with the status quo, but does not offer a clue as to what they want instead.
Because of this uncertainty, the practitioner gets involved in the tricky business of trying to deduce from indirect evidence what the Russian elite, including Medvedev and Putin, mean when they promote the agendas named “Go Russia!” or “Putin’s Plan.”

I am less concerned with what both leaders say and concentrate more on the shape that “modernization” and “innovation” programs might take in Russia. For a social change to happen, three components should be in place. Firstly, the general public needs to understand and to support the new program. Secondly, a trustworthy and capable management team has to be put in charge. And finally, there must be resources necessary for its implementation. How would the two primary contenders in the presidential election of 2012 fare on these points?

Judging by my past experience, I remain skeptical that the Russians could come to agreement on a national scale as to what actions this country should take in the near future. It is more likely that a number of public consensuses can be reached on mundane topics that resonate with the residents of regions or municipalities. In this respect, the “vertical of power” promoted by prime minister Putin is less likely to lead to social changes than the arm’s length operations of bureaucracies presumably favored by president Medvedev.

During his tenure as president, Putin entrusted state corporations, whose management teams were appointed by the federal government, to run the modernization programs of the time. Organized hierarchically, the executives of such corporations were apparently more interested in obtaining and dividing resources for personal ends, rather than in fulfilling their mandate of “national champions,” as I am unaware of technological breakthroughs achieved at Rosnano or other state companies. Regarding president Medvedev, I trust Frolov’s assertion that “he has begun to put the right people in the right places,” but I would like to get more information about those places before passing judgment.

Finally, a word on the available resources is in order. While the export of crude oil may not be a “sexy” topic in Russian political discourse today, in the medium-term it will remain the main resource upon which the country can base its “modernization” or “innovation” programs. To that end, one would expect that profits generated by energy companies are used to finance state-favored investment programs. In this respect, I notice general convergence between the positions taken by Putin and Medvedev, as both of them favor relatively high rates of taxation for hydrocarbons.

Concluding this impromptu exercise in comparative analysis and forecasting, I would venture to say that Medvedev is better positioned than Putin to carry out the program of modernization if the country can agree on one, whereas the top two priorities for president Medvedev in 2010 are a clear delineation of the objectives pursued by the new management teams, as well as finding sufficient resources for the projects they are meant to carry out.

Ethan S. Burger, Adjunct Professor, Georgetown University Law Center, Washington, DC:

When I make a quick visit to President Dmitry Medvedev's website and blog, I am amazed by how packed his schedule is and the range of issues that he deals with. Of course, president Medvedev is the head of a team consisting of many capable minds who almost certainly support the policies Medvedev seems to be advocating. It strikes me, however, that he is deliberately being kept busy by Prime Minister Vladimir Putin who is "over-scheduling him" to ensure that he does not have the ability to devote his attention to any single problem or set of interrelated issues, or to build his own political base. Of course, I could be wrong, and the two leaders may have already agreed to switch jobs in the future.

Indeed, Medvedev should be congratulated for making it clear that a return to Russia's past is not desirable politically or economically (it is not clear that Putin has reached this point). It is hard to forget that when the Russian submarine Kursk sank, Putin could not cut his vacation short, and in the immediate aftermath sought to pin some of the blame for the disaster on foreign countries. Today, the Russian prime minister may be better coached by his public relations team, but he lacks president Medvedev's instincts and vision.

While Medvedev can give a good speech arguing for the need to take decisive action (e.g. in changing the manner in which state enterprises are run, including ending crony capitalism), he has too much to accomplish and lacks the resources to see things done. Furthermore, the lack of an aggressive independent media and mass non-governmental organizations to force the Russian president to concentrate his attention on a few key issues allows business to continue as usual in the near-term. Medvedev has made a little progress in his anti-corruption campaign, but it seems to have been carried out in a highly selective matter.

Just because Medvedev is in the public eye does not mean that Putin and his allies are still not calling the shots. I am not aware of any government official being charged with criminal offenses for violating the rights of Russian citizens and being placed in jail. I am not aware of any serious investigation into the accuracy of government officials' stated incomes and net worth declarations, resulting in punishment for those who have violated this law. As far as I know, even though the Russian Supreme Court ruled that Platon Lebedev's rights have been violated, neither he nor Mikhail Khodorkovsky have been pardoned or even given parole.

It would be great if president Medvedev proved the skeptics wrong. His actions have not done so. Medvedev does not need a Ralph Nadar-like figure to tell him what has to be done; he needs the Russian people to make him accountable for implementing well-crafted programs consistent with his pronouncements. If one were so inclined, however, one could assemble quite a portfolio of acts of violence stemming from political dissatisfaction with the present conditions in the country, the unacceptable rate of crime, and the unwillingness to have adequate policies to address the country's HIV/AIDS and heroin epidemic.

Vladimir Belaeff, President, Global Society Institute, Inc., San Francisco, CA:

For Russia, as for the rest of the world, the year 2010 will be dedicated to recovery from the global financial crisis. This recovery will be gradual and subject to possible delayed recurrences of market failures – for example, the effects of collapsing values in the commercial real estate sectors.

The recovery period is estimated to last from 2010 until roughly 2012, precisely during the second half of Medvedev’s current term as president. Just as he successfully navigated the pitfalls of the crisis in 2009, Russia’s president will surely be occupied with the urgent tasks of managing the recovery in 2010 and beyond.

Therefore, the proposition that 2010 will be a “pivotal year” in the sense offered by Frolov is probably not entirely accurate. This is not to say that programs of Russia’s modernization will be inactive during this year. But there are also the reforms of the global financial architecture, the development of European security mechanisms, negotiation and ratification of the new START, the Iran problem, and other major initiatives, all of which will continue in 2010 and beyond. In a sense, 2010 will be a “routine” year in a period of accelerating global change. How 2010 will be “more pivotal” than 2009 or 2011 is debatable, and probably a subjective perception.

It bears repeating that the modernization program announced for Russia is not some brief interlude, during which a renewed, innovative economic and political system magically emerges. The time span proposed for Russia’s modernization is on the order of 20 years, which is consistent with the duration of transformations on a similar scale, both in history and in the present.

The initial strategic premises of Russia’s modernization were defined in the 2008 to 2009 timeframe. Although some results are already apparent (which validates the concept), it is not very insightful to expect breakthroughs as early as 2010 – one year after concept formulation. The year 2010 should be spent on careful analysis, process design, detailed goal setting and the marshalling of forces for the next two decades of work.

Russia’s modernization must commence by addressing the “people question:” how to identify, train, empower and deploy the necessary human resources, how to establish achievable goals, how to stimulate innovation, how to transform innovation into real economic value.

The political hopes that some radical-liberal ideologues attach to the plans of Russia’s modernization are notable. It is inevitable that Russia’s modernization will involve social and institutional changes, including politics: consider the epoch of the great reforms by Tsar Alexander II. It does not, however, follow that these social, political and institutional changes will implement a radical liberal agenda. Pyotr Stolypin’s “liberal conservatism” is a more likely scenario, and this is not germane to the agenda of the present liberal camp in Russia.

There is a rather sound opinion that radical liberalism has committed political suicide in Russia, and that this failure is the true cause of the persistent lack of electoral success by Russian liberal politicians. Modernization cannot fix this.

Therefore, there is no practical basis to expect (or to demand) that a modernization program for Russia must implement a radical liberal ideology. Democracy is based on the will of the majority of citizens; to propose that the rather vague, narrow and often unfounded claims of a very small group of people with a radical vision must be included in a vast and complex national project is not very realistic or practicable.

Using the present conditions as a basis for estimate, one concludes that 2010 will be not more of a “pivotal” year for Medvedev than 2008, 2009 or 2011.

Professor Stephen Blank, the U.S. Army War College, Carlyle Barracks, PA:

I am rather more skeptical than Frolov about these trends. Even under Putin there was widespread recognition that it was necessary to move Russia from its excessive dependence on oil and gas. While the economic crisis is easing or has eased, it is not clear that there has been any decisive change in policy.

Secondly, normal accountability as Frolov describes it is not a government under law, which alone can permanently eliminate this disgraceful behavior. Although these firings may have inspired some trepidation in the lower level officials, the structure of rule remains untouched.

Thirdly, innovation, as such, is a slogan, not an agenda. So it is not surprising that the public has no idea where it is going, since the government has not yet spelled out a direction.

Thus as 2012 draws closer into view, we should expect more visible signs of a struggle, though hardly a linear one, rather something more inchoate, over the future course of the country and the election.

Putin's intervention into the START talks on December 29 and his previous foreign policy gambits against Medvedev, (e.g. the WTO, Latin American policy, Igor Sechin's takeover of energy policy in Asia), suggest that we will not see a stable or predictable line on anything for some time to come.

Meanwhile, it is clear that the economy needs decisive measures, but it is quite unlikely that they will come easily, if at all.
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