Just as Putin started to pull back from the West, Russians themselves began to globalize. There was an explosion in air-travel routes linking provincial Russian cities to the outside world. The formerly closed city of Ekaterinburg in the Urals, of grim vodka-racketeering fame in the late 1990s, was now linked by dozens of direct flights a week to booming tourist resorts in Turkey, Egypt, Israel, Thailand and across the EU. Tourist companies even started operating in the former Gulag town of Magadan on the north Pacific coast.
There were now so many tourists from the ‘depths’ that it became a national joke. In a Russian copy of the hit British TV show Little Britain, called Nasha Russia, one sketch involved Gena and Vovan, two workers from the polluted tank-factory city of Nizhny Tagil in the Urals. ‘Tagiiiiil’, they shout during drunken scenes while on holiday in Turkey, where the pair defecate in swimming pools, ‘Tagiiiiil’. A cruel joke, yes, but a sign of progress. The very idea of a tourist from Nizhny Tagil in the twentieth century would have been preposterous.
This was an incredible turnaround. In 1999 the Russians who were travelling abroad often did so on old Soviet passports. By the end of the decade almost 10 million Russians were travelling abroad annually, a more than 50 per cent increase from the start of Putin’s term.28 For a nation where the Iron Curtain had left normal people with minimal exposure to East Asia and the West, the excitement felt by regular tourists is hard to convey. For centuries Russia was a country with the saying ‘See Paris and die’. Millions had now seen it and returned to tell the tale in Omsk, Tomsk and Krasnoyarsk. Russian women began to joke that they had stood out (the few who could get out) during the twentieth century when they travelled in European cities, because they were so badly dressed, but now they stood out – to the chagrin of Europeans – for always being overdressed. It was no longer true that Russia knew less about the world than the world knew about Russia.
Not everyone was living like this. This ‘new middle class’ was a minority. The majority of Russians remained poor or socially excluded. Roughly 25 per cent were living in the blue-collar industrial cities and over 38 per cent were rural or semi-rural, still struggling with the collapse of collective farming.29 Yet poverty was not as crushing as it had been. The number living on less than $15 a day fell from 64.4 per cent in 1999 to 30.6 per cent in 2010.30 Amongst the Russian poor, 15 per cent now owned a plasma TV and over 35 per cent a refrigerator.31 This may not have been a gigantic leap to European living standards, but it was still an improvement.
As Russia grew wealthier, it grew steadily healthier. Official estimates of male life expectancy soared between 2005 and 2012 from 59 to 64. Russia’s demographic crisis was brought under control as young people felt secure enough to have ever so slightly more children, whilst those older lived slightly longer. According to official estimates in 2005 the population fell by more than 700,000, but by 2012 it had at last stopped shrinking.
The growth of prosperity for around 20–30 per cent of the country in the new middle class was also the growth of class differences, regional disparities – but before the financial crisis not resentment. The irony was that for the new middle class, Putinism was popular as it was experienced as a revolution in their way of life, but it was also popular amongst the poorer bulk of society, precisely because it was not revolutionary.
The opposition and the liberal intelligentsia almost disdained this new class – as they accused them of thinking only as consumers, not citizens. This is because these people’s lives were marked by a complete rejection of politics. Pessimists pointed to the fact that in 2008, as much as 50 per cent of the new middle class were working for the state.32 But this attitude was more to do with the way people thought. This was half flight, from the misery of the 1980s and the troubles of the 1990s, into the overflowing supermarkets Yeltsin had promised them; but also half satisfaction with a leader who had delivered in his promises to them, seeing them dismiss as irrelevant his trampling on the rights of ‘others’. In long evenings I spent with friends in this new middle class Moscow, hanging out on their new sofas, in their tasteful new apartments – asking about Putin’s authoritarianism, I felt like we were discussing something distant and not relevant to them, like a conversation in New York as to whether American forces had committed war crimes in Iraq. The new middle class was not looking at the Kremlin – but somewhere between apathy and IKEA.
Putin’s Missed Opportunity
Prosperity strengthened the Putin consensus and the Putin majority. The apathy of the new middle class became the bedrock of his ‘stability’. Yet was the boom cementing all this ‘luck’ or ‘Putin’? In fact there was more government intervention to create a boom than many think. One study calculated that no more than 50 per cent of GDP growth in the period was due to the rise in oil prices.33 Policy choices accounted for some of the rest. Studies have shown that the flat tax, which increased labour supply and lowered tax evasion, boosted growth. The decision to create a ‘one-stop shop’ for business registration, taking no longer than a week, also helped. A key reform was ensuring inspecting agencies only had the right to do so no more than once every two years. Making licences valid for five years improved the climate for small and medium businesses. The choice to exempt about 90 per cent of businesses that had previously required licences also boosted growth.34 The Kremlin’s choice of a conservative macro-economic policy, financial-sector reform and the decision to build up reserves calmed investors and interests rates, whilst creating enough market confidence to support an investment boom. This helped the stabilization of financial services and their strong link-up with the property and consumer sectors, further fuelling growth. All this strengthened the middle class.
Not everyone, of course, agreed. The influential economist Sergei Aleksashenko, deputy governor of the national bank when Russia defaulted, looks back miserably at the boom as a gigantic missed opportunity: ‘None of those reforms you listed can really be counted as major reforms… is a reformed tax code really a major reform? Looking back on it I feel saddened that Putin wasted the best decade in Russian economic history on his corrosive agenda.’
Studies backed this up. A report by the prestigious Centre for Strategic Research headed by a former deputy finance minister estimated that in 2010 only 36 per cent of the reforms envisaged in the government’s ‘Strategy 2010’ a decade earlier had been achieved.35
Much more could have been done, but Russia was still leaving poverty behind. The Putin government saw the consumer revolution as its finest achievement. However, it was going to be one of its biggest problems. The old politics of the Putin majority was based on there being one huge, formless mass on the verge of poverty that could be rallied round the standard of ‘stability’. Russian society was now becoming more diverse – but the ‘United Russia’ straightjacket would soon leave this new middle class feeling suffocated and impotent. The Kremlin did not grasp this until it was much too late.
The Rise of the Runet
That Russia would become an Internet success story in the first decade of the new century would have seemed utopian to those who knew the Soviet Union in its final years. The technological lag in personal computing was enormous. The joke, ‘the USSR makes the most advanced micro-chips in the world, they are the biggest’ reflected reality. Computers in regular offices were virtually absent in the late 1980s.