Medvedev, Putin on separate roads to nowhere
By Pavel K Baev
The political crisis in Moscow, continuing after the dismissal of Mayor Yuri
Luzhkov, dominated Russian debate last week. Even President Dmitry Medvedev's
state visit to China was overshadowed by these events and may be remembered
only due to the expression "message from China", which has become a Russian
equivalent to "get the sack".
Meanwhile, the third quarter has ended providing some fresh food for economic
thought. Neither Medvedev nor Prime Minister Vladimir Putin appears interested
in this nourishment, but each had a moment to reflect on economic vicissitudes
while signing an important directive: the law on the Skolkovo innovation center
and the state budget for 2011-2013, respectively. These long-debated documents
could decide the political fate of the signees.
Skolkovo has become Medvedev's pet project since this spring. This law,
granting territory of about 600 hectares a special legal and tax status was
rushed through the State Duma and the Federation Council, despite some
skeptical views about the ambiguities in this legislation. Many questions
concerning the enclosing and distribution of the valuable land just outside
Moscow's ring-road and close to the famous Rublevka elite dacha village are
indeed left open, though far more serious are the issues about the feasibility
of the idea of an innovation-city (which currently exists as a
website).
In technical terms, Nikita Khrushchev's plan for building an academic city near
Novosibirsk was perhaps more challenging. This alternative to Joseph Stalin's sharashka
- special prisons for scientific projects - was successfully implemented. What
makes Medvedev's project problematic is not the sky-rocketing costs of bold
architectural designs, but the proposition for turning Russian conservative
science institutions into business enterprises. This "free market" model is
undermined by the very low demand for high-technology innovations in the
Russian economy, which condemns Skolkovo into becoming an "offshore" fenced
enclave operating in the globalized research milieu.
Putin's macroeconomic plans are demonstratively down-to-earth, though that does
not actually make them more realistic. The main assumption underlying his
budget was formulated by Deputy Prime Minister Igor Shuvalov, who presented the
document for rubber-stamping in the State Duma and predicted a "return to the
growth trajectory we had seen until the fall of 2008". This forceful, but
wishful thinking is not supported by the plain facts of economic life which,
interpreted by Andrei Illarionov, the most controversially perceptive Russian
economist, is marked as the beginning of a new industrial downturn. Statistics
are far from reliable, but this forecast is supported by undisputable
assessments of low investment activity, instead of the expected inflow of
foreign capital - Russia continues to export money. Further increases of
pensions and other social programs, which Putin presents as his particular
priority, in this stagnant economy are only feeding inflation nearing 1% per
month. The aim of reducing the budget deficit is clearly incompatible with the
populist ideology of generous social spending in the face of shrinking
revenues.
Medvedev's narrow ambitions for building one "wonder-village" seem to
complement rather than contradict Putin's "staying-the-course" set of
guidelines, particularly since the US$500 million earmarked for Skolkovo in
2011 (up from $125 million this year) pales in comparison with the Sochi Winter
Olympic Games construction budget of some $30 billion.
There are, however, issue-specific tensions between the visions of "a new
Google every year" (Skolkovo's unofficial motto) and "back-to-the-future", as
envisaged by the government's budget priorities. One particular manifestation
of these tensions is the discord in discussion on Russia's long-delayed entry
into the World Trade Organization (WTO). Medvedev wants to make it his personal
achievement and has ordered to resolve the remaining technicalities by the end
of the year, confirming his concessions to US President Barack Obama in a
telephone conversation last Friday - and instantly reporting this success on
his Twitter-blog.
Putin has specifically ordered that all new obligations would be implemented
"only after we join the organization, as this process can last indefinitely,
imposing indefinite restrictions on us". He also affirmed that the state
support for the agricultural sector would increase despite promises to the US
to cut down subsidies.
There is a discernible desire to snub Medvedev in this stance, but Putin holds
the opinion that WTO membership is not that important for Russia since its main
source of strength will always be the export of energy resources. What
underpins this conviction is the preference for erecting and lifting trade
barriers as political expediency dictates, which has been a feature of his
"pragmatic" foreign policy since he took control over it in 2000.
Medvedev understands the political value of protectionism but has to prove his
ability to implement policy. The WTO talks are yet another test of his
leadership. Time is indeed running out fast for Medvedev, and for the Skolkovo
dream, which cannot take any meaningful shape in the next two years, and could
turn out to be a political liability. Meanwhile, Medvedev finds himself
inaugurating Putin's projects, such as the oil pipeline to China, which
apparently strengthens Russia's profile as energy supplier.
Medvedev's central task is building a political coalition of "modernizers"
strong enough to dissuade Putin from re-claiming the presidency without
igniting a political conflict that would be an order of magnitude more
destructive than the quarrel with Luzhkov. Nothing resembling such a coalition
is developing, despite the massive spin on the message, which has been rather
timid since Medvedev has been softening and diluting the point that Putin's
regime has no future.
This had been very nearly spelled out last year in the policy article "Go,
Russia!" written by Medvedev. Putin emerged as supremely confident and slightly
ironic in carefully edited TV reporting on a recent power-breakfast, while a
tense Medvedev appeared uncomfortable in the role of mayor-slayer. Economic and
political modernizations are inseparable, but the latter would amount to a
rebellion - and a rebel the Russian president is not.
Dr Pavel K Baev is a senior researcher at the International Peace
Research Institute, Oslo
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