Putin Gets His Self-Confidence Back
In the chess world championship that ended Wednesday, President Vladimir Putin rooted for Sergey Karjakin, the Crimea-born grandmaster who took Russian citizenship five years before Russia annexed the Ukrainian peninsula. Putin's annual state of the nation speech on Thursday resembled Karjakin's chess game: The Russian president was almost preternaturally calm and his message was designed to make the best of a bad situation. One might have expected something more flamboyant from a leader who is demonized in the West for betting on today's populist upheavals -- but Putin was quietly confident, and he finally appeared to have a semblance of an economic plan.
After a weak, stumbling, self-justifying speech in 2014, Putin gave maximum attention to domestic policy and kept geopolitics to a minimum for the second consecutive year. But while in 2015 Putin appeared to be stalling for time and told his audience that an economic slump might last for a long time, this time he made clear he saw light at the end of the tunnel.
His extraordinary luck appeared to run out in 2014, when energy prices collapsed and Western leaders attempted to isolate Russia for Putin's aggression in Ukraine. Now, Russia's economic decline is largely over. While the Bloomberg consensus forecast is that the economy will shrink by about 0.6 percent this year, it declined just 0.4 percent in the third quarter and Putin predicted that the full-year year drop would be about 0.3 percent.
As usual, Putin tried to point to hopeful signs, saying some industries as well as agriculture were showing signs of growth. He boasted that Russia now makes more money from the export of agricultural commodities than from the sale of weapons, and that the farm sector got a boost from the import embargo Russia adopted in response to Western sanctions. He mentioned record-low inflation, which should stay under 6 percent this year. In truth, Russia's growing exports of grain haven't been affected by the embargo. The nation's industry has experienced a string of year-on-year declines despite a few bright spots such as trucks and agricultural machinery. Inflation is relatively low because domestic demand, too, is still shrinking in real terms, as it has since the oil bust. Though oil prices have stabilized and, most recently, gotten a boost from a production cut negotiated by the Organization of Petroleum Exporting Countries, balancing Russia's budget like in the days of the commodity boom would require another currency devaluation.
The economy is not what's giving Putin back his mojo. Mostly, he appears secure in the knowledge that Russians have lived through the worst of the crisis and are more united around him and his recently crystallized patriotic ideology. As he put it,
Citizens have united -- and we see it, and we must thank out citizens for that -- around patriotic values. That's not because they are happy and content with everything. No, there are still plenty of dificulties and problems. But there is an understanding of their reasons and, most importantly, the certainty that we will overcome them together.
To an outsider, Russia is a repressive, aggressive state that just had another rigged election, without an independent judiciary, a free press or an active political opposition. To Putin, however, Russia is a functioning democracy -- though one where most people agree with him. Putin spoke with pride about building a strong state as a basis for the "conscious, natural consolidation of citizens for the sake of Russia's successful development." His liberal opponents, he said, simply needed to have more respect for common people. As for the lack of a lively, competitive democracy,
Can significant strategic goals be attained in a splintered society? It it possible to complete that task with a parliament where a contest of ambitions and fruitless bickering substitute for effective work?
"Even the most prosperous and stable nations," Putin said, clearly referring to Europe and the U.S., have to deal with "more and more new divisions and conflicts of a political, ethnic, religious and social nature." Russia, he implied, has managed to avoid such pitfalls thanks to the strength of its state.
Indeed, the centrist Western leaders who tried to turn Putin into a pariah are now insecure thanks to the populist explosion. Putin said nothing specific about fostering the turbulence or even welcoming it -- but he radiated the smugness of someone who had avoided similar problems in his country. That superiority is clearly mixed with a sense of relief. The political edifice he has been building has survived an economic crash and some major geopolitical risks, and there has been no serious protest.
Putin feels he can build on this foundation. He ordered the government to draw up an economic program that would, by 2019 or 2020, ensure that Russia grows faster than the world economy. He already knows, however, what he'd like to do -- a sense that was missing from his major speeches in the last two years.
The Russian leader is planning a major infrastructure program, focused on improving roads in major cities and between them, as well as finishing the construction of a massive bridge to Crimea. He wants the retooled Russian defense industry to start producing more high-tech civilian goods, up to 50 percent of its output by 2030. His government will aim to stimulate non-energy exports, including agricultural and high-tech products. To diversify the economy and ensure growth, Putin sees major tax breaks for technology companies and a more business-friendly tax regime. Though that part of his speech wasn't too specific, Putin made clear he wasn't in favor of increasing taxes, as his technocratic economic team has suggested to fight budget deficits.
The highlights of his economic plan are broadly in line with Donald Trump's proposals for the U.S. Putin said he'd like to work with of the new U.S. administration "on an equal and mutually beneficial basis." If Trump had listened to the speech, it would have been easy to imagine him nodding in agreement at many points. It's also easy to picture the two developing an outwardly cordial relationship in which Putin flatters the next American president to manipulate him. Putin makes the same points as Trump, but in a far more understated, sophisticated way. With the sense of danger receding, he seems natural and relaxed, just like Karjakin in his best games.
In Wednesday's chess championship tiebreaker, the Russian player faced a powerful, creative, inventive adversary. Karjakin survived the first of four games, salvaged the second one from an almost impossible position, exhibiting his superior, cold-blooded defensive skills -- and then lost the next two games to a rampaging Manus Carlsen, who ended the challenger's hopes with a brilliant, slashing move of his queen. There's no one among today's world leaders who could do the same to Putin, and the new crop of Western presidents and prime ministers is not likely to change that. And though Carlsen has trained with an eminent Putin opponent, former world champion Gary Kasparov, the Russian political opposition is not up to Putin's level of play.
I wish global politics could be more like chess. As it is, the wrong man appears to be winning.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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Leonid Bershidsky at firstname.lastname@example.org
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