Reading Russia: The Rules of Survival

In an attempt to explain the Russian Revolution to Lady Ottoline Morrell, British philosopher Bertrand Russell once remarked that Bolshevik despotism, appalling though it was, seemed the right sort of government for Russia. "If you ask yourself how Fyodor Dostoevsky's characters should be governed, you will understand," was his not-so-subtle point. In explaining the recent resurgence of authoritarianism in Russia, most political theorists have abstained from referring to Dostoevsky's novels or Russia's authoritarian political culture. They have a better explanation. It was not "soul," it was "oil." The "oil curse" has replaced the "soul curse" as the most popular explanation for Russia's current state of affairs. High oil prices have been blamed for democracy's failure and Vladimir Putin's consolidation of authoritarian rule. The facts fit. During Putin's time as president from 2000 to 2008, Russian oil and gas companies earned in excess of US$650 billion more from their exports than they had in the previous eight years under Yeltsin. The breakneck pace of economic growth gave Putin a free hand politically, and he used it without compunction to entrench the power of himself and his circle, unhindered by weak and shallow-rooted democratic institutions.

Thus Putin's Russia was conceptualized as a classic "petrostate"—strong and weak at the same time, brutally confident yet potentially vulnerable, and hostile to democracy. This picture of Putin's Russia as an authoritarian oil state attracts many Western analysts because it seems to carry a promise that falling oil prices will bring regime change. What Russian liberals prayed for was economic crisis and cheap oil. Putin's regime, they reasoned, may remain unchallenged as long as it can hand out petrodollars and improve the material well-being of the people, but it will be doomed when hard times strike. Putin's centralized, autocratic system cannot deliver good governance and is generally inept at handling crises. Thus, many were convinced that a major economic crisis would force the Kremlin either to open up the system and allow more pluralism and competition, or else fall back on naked repression—a strategy that is self-defeating in the long run.

And now God has heard the liberals' prayers. Oil prices began collapsing in the second half of 2008, and Russia is facing a perfect economic storm. The only question is whether the fall of oil prices will really mean the fall of Putin's regime. Is the current crisis the one that will end Putinism? Is the crisis more dangerous for Russia's new authoritarianism or for Europe's new democracies?

The early evidence of the Putin government's performance in response to falling oil prices supports the assumption that the regime is ineffective, vulnerable, and unprepared to deal with the challenge. There is no doubt that the crisis has hit Russia extremely hard. In the last six months of 2008, industrial output declined by almost 20 percent.¹ Assets that were once liquid are now leaden. The Russian economy was hurt simultaneously by the collapse of the Russian stock market, the sharp dip in commodity prices, and rising outflows of capital fleeing to safer investments beyond Russia's borders. The country's financial reserves are melting like snow in spring.

The social and political fallout of the crisis is dramatic. We can already detect splits among the ruling elites, with some of the Kremlin's in-house oligarchs bleeding and others cheering. Unemployment is rising, and the specter of mass protest has the authorities gravely worried. The degree of their fear may be gauged from the Kremlin's decision to send OMON troops from the Interior Ministry to crush protests that broke out in Vladivostok in December 2008, when thousands rallied to denounce a plan to raise the tariff on used foreign cars. The crisis has also sharpened the tensions between Moscow and various regional authorities, and many are hard-pressed to imagine how, given the new economic reality, the Kremlin will be able to continue buying the loyalty of vassals such as Chechen president Ramzan Kadyrov. The downturn in the construction industry is...