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President Vladimir Putin of Russia caught much of his ruling elite off guard when he dispatched his entire government on January 15. With implementation of Putin’s much-prized national projects by the government in trouble and real incomes declining year after year, it was, perhaps, only the matter of time before he would sacrifice someone from the government’s socio-economic bloc. However, few Kremlin insiders expected Putin to fire his ministers or the premier (and one-time president) Dmitry Medvedev to resign with more than four years left in Putin’s fourth term. Yes, Medvedev has been chronically unpopular with the public, but some Kremlin watchers thought that the premier would be ousted closer to the end of Putin’s term.

Before that term expires in 2024, Putin needs to decide whether to amend the Russian Constitution and stay on in the Kremlin, or pick a successor and relocate to the premier’s residence, expanding his powers at the expense of the next hand-picked president. Other options, which Putin has reportedly entertained, include becoming the head of the Russian-Belarussian Union state, or, transforming Russia’s State Council from a consultative body into an executive body, expanding its powers and staying on as its chairman.

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Of these four posts, it is the second (become a premier) and fourth (stay on as head of the State Council) that appear more likely for Putin to choose. In his annual address to both chambers of the Russian parliament, he stated, “it would be appropriate to fix the status and role of the State Council in the Russian Constitution” and called for transferring the right to name the premier and most of his ministers from the president to the parliament. He also said he supported a “constitutional provision under which one person cannot hold the post of the president for two more than successive terms.”

It is ultimately immaterial which option Putin chooses because he has made it clear that no matter what title(s) he ends up choosing, he has no plans to stop steering Russia. More important, no matter whether he is either de-facto or de-jure ruler of Russia (or both) after his term ends, Putin will likely be facing the same structural problems that have been impeding Russia’s development for years. Russia cannot hope to revive the growth rate of seven percent or more that it enjoyed early in Putin’s rule unless its obsolete economic growth model, which relies on energy exports, is rebuilt. That requires not only liberalization of the economy, where the state’s share has been estimated to reach 55 percent, but also improving the quality of public administration and enforcing the rule of law to minimize widespread corruption. This includes sweet deals that some of the nation’s monopolists reportedly hand to companies controlled by some of Putin’s close friends as well as bribes that law enforcement officers extract from private businesses.

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Putin has been successful in hoarding money in order to finance national projects designed to try to turn Russia’s economic and socio-demographic fortunes around, but that won’t happen in a corrupt, non-competitive, and badly governed environment. Technological modernization, increased private investment and, ultimately, reviving economic growth at rates above the global average — which Putin called for in his Wednesday address — will remain problematic as long as entrepreneurs continue to lose bids to politically connected rivals or even have their businesses seized by venal law-enforcers. Ultimately, competition needs to increase not only in the country’s economy, but also in the political sphere. Russia could genuinely benefit from Putin’s proposals to transform Russia from a super presidential republic into a country where the Parliament has a more substantive role, if real opposition could have won seats in free and fair elections to provide checks and balances on the executive power.

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Putin is rumored to prefer focusing on foreign policy, where the Kremlin has proved itself to be a skilled player, while finding structural problems at home too boring to focus on. However, unless these are solved, he or his successor will continue to confront the reality that Russia remains too far behind the United States and China economically and demographically to be a true peer to these countries in the changing global order.

Simon Saradzhyan is the founding director of the Russia Matters Project at Harvard Kennedy School’s Belfer Center for Science and International Affairs.