The Fear Factor

Russians are richer today than ever before in their history. Average annual growth rates of more than 6.5 percent for the past eight years have dramatically increased real disposable incomes and consumer spending. Unemployment has been cut from 12 to 6 percent; the poverty rate, according to one measure, is down from 40 to 14 percent. Most Russians will remember the Putin era fondly.

But analysts and future historians will evaluate the Putin era more closely, and when they do so they will need to avoid confusing correlation with causation. Putin happened to be Russia's president during a tremendous economic boom. But he did little if anything to cause it. In fact, Russia's economic turnaround actually began in August 1998, a year and a half before Putin became president, when a financial meltdown forced the government to pursue prudent fiscal policies and a more rational exchange rate.

These reforms stimulated economic growth just as oil and gas prices began to rise. They have continued to climb ever since, providing the main engine for Russia's growth. Yes, Putin nudged the economy. He implemented tax reforms and started a stabilization fund to save petrodollars rather than spending the windfall profits in ways that would spur inflation. He also allowed Russia's electricity monopoly—Unified Energy Systems—to be dismantled. But, at the same time, he increased state ownership in the economy as a whole and the oil sector in particular. He allowed corruption to explode—a 10-fold increase, by one estimate, over the Yeltsin era. Russia's economic recovery occurred not because of Putin but in spite of him.

Putin's real legacy is in the political sphere. When Putin became president in 2000, Russia was far from a liberal democracy: political parties were weak, rule of law was more an aspiration than a practice, and the president wielded too much power compared to the Parliament. Since 2000, however, Putin has systematically curtailed every check on Kremlin power, weakened nearly every democratic institution and strengthened none. When he came to power, three television networks—RTR, ORT and NTV—had national reach. RTR was already state-owned, and Putin forcibly acquired control of the other two. Smaller stations quickly got the message and gutted their independent news programming. Ultimately, most major Russian national newspapers transferred ownership to Kremlin loyalists. The Moscow weekly Novaya Gazeta is the last truly independent newspaper; on the radio, Ekho Moskvy remains an independent news source, but its future is questionable.

Putin moved next against the regional governments. He established seven supra-regional districts, headed primarily by former generals and KGB officers, and assigned them the task of reasserting Moscow's control. These Putin appointees threatened and removed independent-minded governors, and increased the role of local police and intelligence officials loyal to the Kremlin. Putin then emasculated the Federation Council, the upper house of Russia's Parliament, by removing elected governors and heads of regional legislatures from the seats they would have automatically assumed and replacing them with appointed representatives. Regional elections were rigged to punish leaders who resisted Putin's authority. And in a fatal blow to Russian federalism, Putin announced in September 2004 that he himself would appoint governors rather than continue the practice of direct elections.

Putin also weakened the State Duma, turning this lower house of Parliament into a rubber stamp for Kremlin decisions. In the 2003 and 2007 parliamentary elections, Putin leveraged his personal popularity, along with Kremlin control of the media and regional governments, into landslide victories for his party, United Russia. Political parties not aligned with the Kremlin are all much weaker today and work in a much more constrained political environment. Potential financial backers of independent political actors also have been scared out of politics. The 2003 imprisonment of Mikhail Khodorkovsky, previously Russia's wealthiest man, sent a powerful message to others about the costs of trying to influence political outcomes not sanctioned by the Kremlin.