Russia: Can Putin Squash Dissent And Free The Economy?

Can Russia's new president, Vladimir V. Putin, have his cake and eat it too? He seems to think he can: Putin aims to make his country more prosperous by pursuing liberal economic reforms. But at the same time, he is clamping down on political dissent and reasserting the Kremlin's control over Russia's regions.

The clampdown is happening fast. On May 11, just four days after Putin's inauguration, machine-gun toting federal police raided Media-Most, the Moscow media conglomerate that has been critical of the Kremlin's military campaign in Chechnya. Then on May 17, in an unexpected television address, Putin called for the right to fire Russia's popularly elected governors and dissolve regional parliaments.

Putin is actually making a calculated gamble that he can create a new model for Russia: a liberal economic environment coexisting with political illiberalism. His bet is that he can chill criticism at home while maintaining support from foreign investors and Western governments whose top priorities lie elsewhere. The KGB veteran stands a strong chance of getting away with it--if not in the long run at least in the short term.

SHRUGS. Neither foreign investors nor foreign governments have an interest in antagonizing Putin this early in his regime. Investors mostly shrugged in reaction to the raid on Media-Most. "I don't think anyone in the business community particularly liked this, but there were no people selling stock because of what Putin did," says William Browder, manager of the $430 million Hermitage Fund in Moscow. More important for business folks are reports the Kremlin is putting the final touches on an economic reform plan, including sweeping tax cuts.

Washington also is keen to maintain good relations. Presidents Clinton and Putin plan to meet for a summit in Moscow on June 4-5. Although Clinton can be expected to raise the question of Putin's commitment to freedom of the press, the White House is more focused on cutting a deal with the Kremlin on U.S. plans to build a national missile defense.

Nevertheless, Putin's press crackdown suggests that his regime is mindful of its own vulnerabilities. The main weak point is Chechnya. Through state-controlled media, the Kremlin has promoted Chechnya as a successful campaign in which Russian military losses have been minimal. But the stubborn reality is that the Chechen rebels have not been subdued. On the day of the raid on Media-Most, 18 Russian soldiers were killed in an ambush on the Chechen border.

Far from being over, the war may widen. This presents a threat to Putin's credibility. He rose to prominence on his image as a tough guy who brought the Chechens to heel. He feels threatened by Media-Most and other outlets that call attention to what looms as a failed policy. The worse it goes in Chechnya, the more compelled the Kremlin may feel to squelch dissent.

The open question is how Russians, foreign governments, and investors will react if Putin continues to consolidate power in the Kremlin. Some Russian politicians are warning that Putin won't be able to sustain an authoritarian stance. "Russia has already lived through a huge number of authoritarian regimes and can't tolerate another attempt," says Duma deputy Irina Khakamada, a liberal who supports Putin's economic program but sees the Media-Most raid as an affront to democracy.

She may be right. If Putin keeps pursuing his own model of economic liberalism and political illiberalism, Western governments--including Clinton's successor--could face their toughest decisions on Russia since the Soviet Union's collapse.

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