How Low is the Exchange Rate?

Putin, Medvedev, and the future of Russia

by by Aaron Cutler

March 2 was a big day in Russia. Forty-two-year-old Dmitry Medvedev won the presidential election, with acting duties to be assumed May 7. Medvedev won with over 70 percent of the popular vote and with the blessing of President Vladimir Putin, who will serve as prime minister once Medvedev assumes office. The transition was not just bloodless--it was buddy-buddy.

After the results were announced, Medvedev and Putin said that they looked forward to running the country together. Will Russia get new leadership, or Putin reheated?

Vladimir Vladimirovich Putin was born in Leningrad in 1952, the son of a factory worker and a naval officer; one of his grandfathers was Stalin's personal chef. He went to law school, then through KGB training, and was stationed in Dresden from 1985 until the Communist regime there fell in 1990. The next year the Soviet Union collapsed, and a plethora of political parties formed in Russia to find direction; Boris Yeltsin, chairman during the Soviet era, became the country's first president. He banned Communism and promised to put his head on the rails if prices rose.
Yeltsin, though, broke his promise. People stayed poor; in fact, they grew even poorer than they had been under Communism. Inflation rose drastically. Russia's losses under Yeltsin tripled the US's losses during the Great Depression. "It was a disaster... People lost everything," Dr. Sergei Krushchev, son of former Soviet premier Nikita Krushchev and Senior Fellow at Brown's Watson Institute for International Studies, told the Independent.

Corruption among government officials exacerbated the situation. Organized crime put pressure on officials. "You have organized Mafia and you have disorganized bureaucrats who can be bribed for a dollar," Krushchev said. Yeltsin himself was not accused of taking bribes. Instead, he became a model of ineffectiveness; he was known not for policies, but for alcoholism.

Putin rose in Yeltsin's shadow. He moved through various governmental positions, including, in July 1998, the head of the FSB, the post-KGB intelligence agency. That July, the government owed workers $12.5 billion in wages, monthly interest payments on Russia's debt were 40 percent higher than its monthly tax collections and Yeltsin was returning from a vacation. In August, Russia's stock, bond and currency markets crashed.
The following year, Putin became Russia's fifth prime minister, the equivalent to a vice president, in 17 months. The economy improved, in no small part due to rising international oil prices. Krushchev says that Yeltsin "started to make decisions in a condition where he was not fully drunk," but was still overwhelmed. He was in poor health and beleaguered by criminal associates. A CNN estimate put his approval rating at two percent. He resigned on December 31, fewer than six months before scheduled elections, leaving the country in Putin's hands. Putin ran Russia as an interim president until March, when the public elected him.

Putin has done much to improve Russia, especially economically. By opening up to foreign trade, particularly with barrels of oil at $90 each, he's raised the Russian stock market from $60 billion in value to over $1 trillion. Over the past four years, workers' salaries have more than doubled on average. Moscow has gone from a poor, desperate city to one of the world's most expensive--a clean, friendly place that Krushchev called "something between Paris and Lisbon." Crime, too, has gone down significantly. Putin's approval rating in June 2007 was 81 percent, the highest of any world leader. Krushchev said that Russians were generally unused to prosperity, having gone from imperial oppression to Communist oppression to Yeltsin's incompetence, and compared Putin to American Presidents like FDR and Reagan, who led the US not just from bad to better but from bad to good.

Putin's also increased Russia's world standing from a PR perspectiveˆfor example, he was one of the first world leaders to issue a statement supporting the US after 9/11. Jacques Chirac awarded him the Legion d'honneur. Last year Time named him its Person of the Year.

Yet Putin's reign has had negative aspects. The American government condemned Russia for invading neighboring Chechnya in 1999 and torturing political opponents, and the Russian military has bullied voters in subsequent elections, both in Chechnya and at home. Furthermore, though his approval rating may in part be attributed to Russia's prosperity, Putin also achieved it by silencing dissenters. He enacted laws that made it more difficult for members of opposing parties to run against candidates from his. While he did much to create a free press in a country where none existed, he also restricted the press's rights and let its members work in danger. The Center for Journalism in Extreme Situations reports that over 300 journalists have been criminally prosecuted during Putin's time in office, and 17 murdered.

Corruption, while not as blatant as it was under Yeltsin, is still present. Despite claims to disavow his old KGB ties, Putin's government has let old KGB members form Russia's strongest Mafia group. "His legacy will be bad," Brown Professor of Slavic Languages Vladimir Golstein told the Independent, citing the way in which the group suppresses minor gangs. "Common people might be happy with control over lawlessness, but they do not have any additional income from these changes in power." Hillary Clinton once said that, as a former KGB man, Putin had no soul, to which he responded that he at least had a head.

Officials collect money behind closed doors. The Guardian estimates that Putin himself has over $40 billion in secret funds which, if true, would make him the richest man in Europe. When asked about the money at a press conference this past February, Putin replied, "This is true. I am the richest person not only in Europe, but in the world. I collect emotions."
Medvedev is not a KGB man, nor a politburo; in fact, prior to his presidential victory, he had never held an elected office. Like Putin to Yeltsin, Medvedev was appointed Putin's prime minister (albeit first deputy PM) prior to his presidential run; before that, he served various other roles in Putin's cabinet; before that, he was a lawyer with a passion for Deep Purple. While PM, he also held the post of chairman for Gazprom, the largest oil company in Russia and the third-largest corporation in the world, one in which the Russian government has a 51 percent stake.

Shortly after Putin declared Medvedev his desired successor, Medvedev said that, if elected, Putin would be his PM. Medvedev's campaign was relatively toothless--he declined to debate the other three candidates and stuck to inspirational messages rather than discussing policies.
"This man was selected. The election was simply a post facto after the selection," Adjunct Professor of International Studies and Watson Institute member Linda Miller told the Independent. She also said that the most significant aspect of the election was "that there wasn't any possibility that this would be opposed."

Putin has served two four-year terms in office. The Russian Constitution prevents the President from running for a third consecutive term. However, there is no law which says that he or she cannot run again later. Some experts say that Putin will rule the country from his prime minister position until he is eligible to run for president again. At 55, he has time left.

At one point during his presidency, Putin changed the law to make governors appointed rather than elected, ostensibly to keep the Mafia from bullying voters. He spoke a few times of amending the Constitution to lengthen his presidential term, but ultimately chose not to. Miller sees Putin as wanting to exert power without leaving a paper trail; Krushchev views him as committed to a Russian democracy and compares his choice to George Washington's choice to be president rather than king.

Miller said that the prime minister's role is ambiguous and that Russian politicians are "making it up as they go along." Under the Constitution, the president is responsible for military, foreign and security affairs. The prime minister, by contrast, handles domestic policy. Russia has elected two presidents since Yeltsin--both have been former prime ministers, both have been handpicked by the former president and both have won in landslides. Krushchev said, "Russia is not a democracy. This is a transition to democracy. So you have to change the mentality of the people to respecting the law."

Still, Medvedev may differ from Putin in key aspects. In a speech broadcast on state television, he said, "Freedom is better than lack of freedom—this should be at the core of our politics. I mean freedom in all its manifestations—personal freedom, economic freedom and, finally, freedom of expression."

No one knows, though, how these freedoms will express themselves, nor how the new president will differ from the old one. Campaign posters featured the two men standing next to each other, accompanied by the slogan "Together we will win." Yet when asked who would make foreign policy decisions, both men said that the new president would. It is uncertain what Medvedev's presidential policies will be; it is also uncertain if he even has any at all.

Golstein said, "Medvedev is a big unknown. And that's the general feeling."