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Putin? Really?Time magazine gives Vladimir Putin way too much credit for Russia's economic recovery.

By Michael McFaulPosted Wednesday, Dec. 26, 2007, at 7:55 AM ET

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Russia's economic transformation from communism to capitalism followed a very similar pattern to all countries in the region. Given the dreadful initial economic conditions, every post-Communist government was compelled to pursue some degree of price and trade liberalization, macroeconomic stabilization, and eventually privatization. The entire region experienced economic recession and then began to recover several years after the adoption of reforms. Russia followed this same general trajectory and would have done so under Putin or Yeltsin. Had Putin become president or prime minister in January 1992, he would never have appeared on the cover of Time.

Russia's economic turnaround came after a financial meltdown in August 1998 that finally forced the Russian government to pursue prudent fiscal policies and a more rational exchange-rate policy, including a major devaluation. As a result of these painful but necessary reforms, Russia's economy finally began to grow a year before Putin came to power.

In addition to coming to power well after the painful reforms necessary to jump-start growth had been implemented, Putin benefited from another force not of his making: rising world oil prices. As the price of oil moved from $10 a barrel in 1998 to over $90 a barrel today, anyone in the Kremlin would have reaped the credit for Russia's economic recovery. But is being in the right place at the right time "leadership—bold, earth-changing leadership"? Putin did implement some important tax reforms and established a stabilization fund to ensure that the windfall revenues would not be spent frivolously or in an inflationary manner. The main drivers of Russia's economic rebirth, however, were world commodity prices, not Putin's leadership.

In fact, the change in which Putin's leadership is most apparent—growing autocratic rule—has slowed economic growth, not spurred it. Corruption, a drag on growth, has skyrocketed under Putin's "central authority." Renationalization and redistribution of property directed by Putin's autocratic regime have caused declines in the performance of formerly private companies, destroyed value in Russia's most proﬁtable companies, and slowed investment, both foreign and domestic. Investment in Russia, at 18 percent of GDP, is stronger today than ever before, but well below the average for democracies in the region, such as Poland and Estonia.

Perhaps the most telling evidence of Putin's personal impact on Russian growth is provided by regional comparisons. Between 1999 and 2006, Russia ranked ninth out of the 15 post-Soviet countries in terms of average growth. In 2006, the Russian economy outperformed only Moldova's and Kyrgyzstan's. That's leadership? Time's claim, therefore, that Putin has provided a "grand bargain" of more growth for less freedom is indeed a "subjective one," based on "no measuring stick or algorithm."

Comparing Russia with Ukraine especially underscores the fallacy. Russia and Ukraine share hundreds of years of culture and history and endured the hardships of the 1990s. But today the two countries have two big differences: Russia has oil and gas, and Ukraine does not; Russia is an autocracy, Ukraine is not. Yet, despite these differences, democratic Ukraine has managed annual growth rates higher than autocratic Russia's, despite having to pay dearly for—rather than reaping profits from—higher energy prices. So, why was the erosion of democracy necessary for economic growth? How did taking control of Russia's independent TV stations help to balance the budget? How did arresting Garry Kasparov earlier this month foster investment? One can only wonder how much faster Russia would have grown with a more democratic system, complete with an independent media to expose corruption, a genuine courts system to prosecute illegal seizures of property, and a real opposition to check the Kremlin's predatory behavior.

In mistaking correlation for causation—in arguing that the coincidence of Putin's time in power and Russia's economic recovery proves that "individuals can make a difference to history"—Time has delivered a public relations coup to Putin. Kremlin officials have already applauded. For those in Russia still fighting for independent media and still convinced that objective journalism is a noble aspiration, Time's decision to celebrate Putin with this un-honor most certainly doesn't "feel right," and it most certainly doesn't feel like journalism. Some traditions should come to an end.

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Michael McFaul is a Hoover fellow, professor of political science, and director of the Center on Democracy, Development, and Rule of Law at Stanford University. For elaboration on the Putin myth, see his article with Kathryn Stoner-Weiss in the January/February 2008 edition of Foreign Affairs.

Photograph of Vladimir Putin by Ralph Orlowski/Getty Images.

COMMENTS

Remarks from the Fray:

I find myself agreeing with most of this article. But it leaves two significant questions for me that are as yet unanswered:

Have food prices stabilized under Putin - and if so what impact does that have on the overall perception of "stability?"

Has the government of Russia really changed in any significant functional structure in the last 5 hundred years?

I ask about the latter because from my perspective, Rodina has perhaps changed the color of her stripes, but she has largely been an oligarchic autocracy with a centrally ordered economy for some 500 years. Sure the level of control and how the oligarchs and their autocratic leader are selected has changed somewhat in form - but I would argue it has not changed in structure.

This leads me to question what the Russian people want. And from the various "man on the street" interviews I've heard and read, and from the comments of my friends and relatives in Latvia, it seem to me that the Russian people are most comfortable with their government when it doesn't require a lot of input from them and in return provides them with a SENSE of security and stability. I'd be interested in what the author thinks of this viewpoint.

As to the former question of food price stability - this I would suggest, is a large part of what contributes to the sense of security and stability for most of the Russian population. I would suggest that if one were to look at when the greatest level of political instability occurred in Russia it was associated with periods of dramatic food price instability. Inflation of college tuition and luxury goods - while a damper on a middle class's aspirations, doesn't threaten to drag them into poverty.

Food price inflation OTOH does. And once the middle class feels insecure, you've lost control of the population.

I would argue that Putin has focused on stabilizing food and energy prices within Russia, and it is from THAT stability that the sense of security and stability derives for the average Russian. Thus the more objective measures of security as suggested by the author, will never accurately measure the citizens' sense of security.

--degsme

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(12/26)

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