The waging of war in Chechnya was central to Putin’s rise, not only boosting his image early on, but also creating a diffuse sense of threat that served to rally public opinion around the leader. But here again, Putin was following in Yeltsin’s footsteps, having digested the lessons of the First Chechen War. Russia’s second invasion was still more ruthless than the first, levelling what was left of Grozny. Putin had also noted the vital role played by the media in sustaining opposition to the first conflict. This time, journalists trying to report from the war zone were effectively shackled, forced to embed with the Russian Army or else fend for themselves in the firestorm. The few brave reporters who chose the second, independent path – Anna Politkovskaia, Andrei Babitsky – were confined to marginal media outlets.
The contrasts between the 1990s and the 2000s may appear more obvious in the realm of economic policy. Where Yeltsin implemented a radical programme of market reforms and mass privatization, seeking to dismantle forever the state socialist system, Putin seemingly moved to expand the state’s role. In the Western press, the dismemberment of the oil company Yukos and the incarceration of its oligarch proprietor, Mikhail Khodorkovsky, in 2003 were seen as a major turning point, signs of a creeping renationalization of the economy. By 2004, Putin appointees were in charge of nine companies with assets worth 40 per cent of Russia’s GDP – a phenomenon seen as evidence of a turn away from free-market capitalism back toward a statist model.
But this picture, too, changes on closer inspection. Putin’s rule has been driven throughout by two parallel impulses, one rooted in neoliberal principles and the other in a strategic statism. Putin’s first administration, from 2000 to 2004, was perhaps his most energetically neoliberal, introducing a series of measures designed to extend the reach of private capitaclass="underline" in 2001, a flat income tax set at 13 per cent; in 2002, a labour code scaling back workers’ rights; tax cuts for businesses in 2002 and 2003. These moves were widely applauded in the West at the time: the right-wing Heritage Foundation praised ‘Russia’s flat tax miracle’, while Thomas Friedman gushed about Russia’s embrace of ‘this capitalist thing’, urging readers of the New York Times to ‘keep rootin’ for Putin’.{14} His second presidency, too, was marked by moves to increase the private sector’s role in education, health and housing, and by the conversion of several in-kind social benefits to cash payments – a ‘monetization’ that prompted popular protests in the winter of 2004–05, but which was carried through in modified form all the same.
Alongside this liberalizing thrust, however, there was a push by the state to regain control of the ‘commanding heights’ of the economy. This primarily meant control over natural resources for export, in particular oil and gas. State dominance of the energy sector is not in itself out of the ordinary: majority state ownership is in fact the global norm, and when Putin came to power, Russia was one of very few oil-producing states where production was largely in private hands.{15} Before entering the Kremlin, Putin had expressed a commitment to the idea that the state should play a decisive role in strategic sectors. In 1997, he obtained a doctorate in Russian economic policy and natural resources from the St Petersburg Mining Institute. Chunks of his thesis seem to have been lifted from the work of two US academics, and it’s likely Putin didn’t write the rest of it either. But its theme was clearly close to his concerns, and a 1999 article on the same subject published under Putin’s name argues that the Russian state should assist in the creation of strong, vertically integrated corporations capable of competing with Western firms.{16} Yet even here he insists on a combination of state intervention and market mechanisms. In other words, the statism for which Putin has often been condemned in the Western financial press has always been of a relative, targeted kind.
It’s important to bear in mind, too, that the ‘statist’ component of Putin’s economic policies didn’t always require actual state ownership. Even as it was handing pieces of Khodorkovsky’s Yukos to Rosneft, the Putin government was busy privatizing other major assets: in 2002 it sold off the oil company Slavneft, and in 2004 divested itself of its remaining stake in Lukoil, which went to ConocoPhillips.{17} What’s more, even state behemoths like Rosneft and Gazprom are organized like private companies, geared primarily to pay dividends to shareholders – of which the state is simply the largest. There has been little to distinguish the behaviour of many state companies in Russia from that of privately owned ones; the apparent statism of the Putin era is in that sense far removed from the thinking of Soviet economic planners.
This combination of neoliberal and statist impulses produced what the political scientist Gerald Easter calls an ‘upstairs-downstairs’ economy: large strategic industries remained directly or indirectly subordinated to the state, while private enterprise took care of the rest, from banking and construction to retail and petty trade.{18} But what both strands of Putin’s economic policy share is a respect for profit-making. This is not an incidental feature, nor is it simply driven by desires for personal enrichment or corruption at the top. The defining characteristic of the Putin system has been its commitment to defending the capitalist model put in place during the 1990s.
How, then, should the Putin system be described? During the 2000s, a number of terms were applied to it: ‘competitive authoritarianism’, ‘virtual democracy’, ‘militocracy’.{19} The Kremlin’s own ideologues called it ‘sovereign democracy’ or ‘managed democracy’ – to which Russian wits responded by saying that either adjective was to ‘democracy’ what ‘electric’ is to ‘chair’. Later, as Russia’s relations with the West began to worsen, new terms joined the latter’s lexicon: ‘mafia state’, ‘kleptocracy’.{20} The various labels stressed different aspects of the regime: its increasingly authoritarian bent, reflected in the suppression of dissent and the spread of security service personnel throughout the state apparatus; its hollow performance of democratic rituals such as elections, emptied of any actual democratic content; and its artful manipulation of appearances through its grip on the media. Then there was its endemic corruption, and the entanglement of officialdom with organized crime. All of these features are undoubtedly present in Putin’s Russia, and they inflict real damage on the country’s socio-economic fabric. But they did not emerge only after 2000: they were present in the 1990s too. Still more crucially, identifying these ills only gets us so far in understanding what the Putin system is. They are symptoms, not causes; they describe the consequences of the system, rather than defining its essence.