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No way out

Source : BUSINESS_STANDARD
Last Updated: Mon, Dec 12, 2011 19:51 hrs

The Russian government’s surprisingly calm reaction to the street protests against the suspicious result of the December 4 Parliamentary election shouldn’t be taken as a sign that Vladimir Putin’s autocratic regime is liberalising at last.

The demonstrations were tolerated, there were few arrests, and the event was even reported on national TV. On the face of it, this could suggest that Putin appreciates the significance of events enough to change course and set the country on a different political and economic path. But, wounded autocrats can’t reform political and financial institutions without questioning their own legitimacy. For the regime he has built in Russia, with something of the old KGB and the Wild West in its DNA, reforming is the first step towards its leaders’ retirement.

Russians today don’t live under a dictatorship, or in a newly-clothed version of the communist system they knew for 70-odd years. Rather, they live in a country managed by a corrupt state machine, and without proper law enforcement. This is Putin’s most devastating failure, and the economy’s most crippling flaw. When policemen and politicians are for hire, judges corrupt, and laws simply tools to advance their promoters’ self interest, no entrepreneur or investor can be entirely certain that what he has built or earned won’t be taken away by some well protected bandit. That means the only sure profits are those of the quick-buck variety. If increasing capital flight is any sign, investors are even tiring of that type of return.

The key message in the Putin regime’s propaganda has long been that it offered Russia “stability”. This becomes a problem when the only stability in sight is that of its strongman’s hold on power. The prospect of Putin being elected president next March for another six years, which could double with a second mandate, may have galvanised educated middle-class Russians who feel they have waited long enough for modernisation.

Putin could attempt to extend them a reformist hand, presaging economic renewal. But, his own power base is the corrupt state apparatus he would then need to take on. Why would he even think about it?




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