- Reading RussiaThe Dying Mutant
The corporatist kleptocracy that Russian leader Vladimir Putin has erected is profoundly misunderstood in the West. The Putin regime's Western defenders and apologists like to trot out a pet argument that migrates from one publication to another. It goes something like this: "What is most important for Russia right now is not abstract 'democracy,' but the development of capitalism. A growing middle class of property owners with a vested interest in the security of their own property will eventually demand the establishment of liberal institutions."
This extremely popular theory totally ignores the actual nature of Russian "capitalism." The right to property in Russia is entirely conditional upon the property owner's loyalty to the Russian government. The system is tending to evolve not in the direction of freedom and a postindustrial society, but rather back toward feudalism, when the sovereign distributed privileges and lands to his vassals and could take them away at any moment. The only difference is that, in today's Russia, the things that Putin is distributing and taking away are not parcels of land, but gas and oil companies.
Over the last decade, a mutant has evolved that is neither socialism nor capitalism, but some hitherto unknown creature. Its defining characteristics are the merging of money and political power; the institutionalization of corruption; and the domination of the economy by major corporations, chiefly trading in commodities, which flourish thanks to public resources that these corporations and their political allies have privatized.
This is gendarme-bureaucratic capitalism with the Father of the Nation at its head. Such a "petrostate" model cannot deliver consistent economic growth, nor can it overcome the enormous gulf between rich [End Page 52] and poor, or ensure a breakthrough to postindustrial society. This model dooms Russia to economic degradation and marginalization. The current global crisis has made this truth crystal clear.
Several days after his inauguration on 7 May 2008, Russian president Dmitri Medvedev spoke at the St. Petersburg economic forum. With thinly disguised glee, he referred to the acute problems of the world economy and declared Russia to be an island of financial stability amid the stormy ocean of a global capitalist system in crisis.
At the time of this writing in late February 2009, the Russian stock market had dropped by 80 percent in comparison with the day of Medvedev's St. Petersburg sermon. But this is just one indicator of a crisis that is growing deeper. Much more dangerous for Russia's "rising from its knees" economy are the flight of Western capital and the drop in oil prices, two developments that are unlikely to be reversed any time soon. Without Western capital and high oil revenues, Putinomics is simply not sustainable.
Russia's kleptocrats immediately rushed to the rescue of their little bailiwicks—banks that belong to ministers and ex-ministers, state corporations that belong to friends of the president—spending tens of billions of government dollars for this purpose. This set of "anticrisis" measures was so shameless and impudent that even the hyperloyal and hypercareful Russian Union of Manufactures and Entrepreneurs protested. Distrust of Putinomics and its dysfunctions is becoming rampant.
The Putin regime, meanwhile, increasingly relies upon its artificially created image of a threatening West (led by the United States) to provide the ideological justification for its model of a corporatist state. Western policy makers will be making a grave mistake if they underestimate or ignore the internal political imperatives that are driving the Kremlin's foreign policy.
Those who call on the new U.S. administration to take into account Moscow's "grievances" are in danger of forgetting that these complaints are grievances of choice, hysterically articulated by the Kremlin-controlled media in order to inflame feelings hostile to the United States. If these manufactured grievances are accommodated, the Kremlin will immediately invent a new set of "humiliations" or unleash some new adventures in the post-Soviet space to prove once again to itself and the Russian public the fundamental hostility of the West.
Take, for example, two of the most lamented "grievances" or "humiliations" on Moscow's list: The installation of missile defenses in Europe and...