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EXPECT CONTINUITY FROM RUSSIA

EXPECT CONTINUITY FROM RUSSIA

Yesterday, May Day, Vladimir Putin gave his version of the State of the Union speech.  In deference to Boris Yeltsin, Putin stressed the continuity of leadership from Yeltsin, his own presidency and his successors. Yeltsin wasn’t particularly popular, because economic conditions for most Russians deteriorated badly under his rule, but Putin was handpicked to succeed him by Yeltsin’s people.  It wouldn’t play well with these people for Putin to denigrate his memory.  The idea of continuity does give one an idea of what to expect from any successor to Putin.

Much of his speech concerned large scale industrial projects intended to help raise living standards, like transportation infrastructure, nuclear energy and the like.  There was a proposal to develop a high tech industry in Russia.

Nothing dealt with the concentration of wealth and ownership of the natural resources into the hands of a tiny minority of Russian, the oligarchs.  Continuity pretty much means that won’t change.  In fact, most of that was a product of Yeltsin’s tenure.  This group basically runs things, and really has no interest in Russian business being anything other than natural resources.  Any one of them that decides to step out of the line a la Khodorovsky or Berezovsky will quickly find out that they have what they have at the pleasure of the group.  The group won’t suffer any challenges to their control.  In fact just threatening to name who is who could end badly, as M. Litvenenko found out.

The idea that the wealth from the natural resources will be used to build industries that will help raise the living standards of most Russians plays well with the public but it has been promised over and over again and never followed through on.  Under the present structure, it is unlikely to be followed up on this time.  The oligarchs see no real benefit for themselves.  A concept that is steeped in the Russian culture is the idea of outside interference.  Whatever goes wrong in Russia can always be blamed on outside interference, and usually is.  So, expect to continue to hear that outsiders should not interfere or criticize the actions of the Gazproms and their ilk.

There was also clearly some wistful memories of the cold war days, when Russia was viewed as a superpower.  Russian’s very much want to be viewed as important players on the world stage, even though (as measured by most of the population), it is still a very poor country.  The Average Russian makes $500 per year.  That is ten times what he made under Yeltsin, which explains Putin’s general popularity, but it means that Russia is still very poor and falling behind it’s neighbor China.

Really, Putin gave an upbeat speech and touched on his succession, but don’t expect Russian policies to change.