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BusinessWeek: January 10, 2000 |
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International -- Int'l Business: Russia
The Man Who Would Be Russia's President (int'l edition) Vladimir Putin is a nationalist with pro-market leanings
It's a step that could be a boon for Russia's sclerotic economy--and for Putin's political prospects as well. For now, he's popular, based largely on a favorable public perception of his management of the war raging in Chechnya. But public approval could plummet if the conflict becomes a bloody quagmire. To become President, Putin needs to show that he can do more than send Russian troops into battle. Putin has yet to articulate a broad vision for the country. Government economist Vladimir Mau, among those meeting at the countryside resort, describes the 47-year-old Prime Minister as a "liberal nationalist." Putin is using patriotic appeals to rally support for the cause in Chechnya and for a call to rebuild Russia's defense sector. But he also aims to channel Russia's greater sense of national purpose into the broader cause of modernizing its economy. Westerners who have had close contact with Putin say his instincts lie in a pro-market direction. He's pledging to create a more hospitable environment for foreign investors. He's not an advocate of "deprivatization"--the push, favored by communist leaders and Moscow Mayor Yuri M. Luzhkov, to review past privatization deals and rebid the assets if the transactions are found to have violated the law. Putin has told economist Yevgeny Yasin, an informal adviser, that he wants new regulations requiring Russian companies to adhere to international accounting standards. The idea is to make Russia's murky financial world more transparent and understandable to outsiders. Foreign investors in Russia "will not be disappointed," he told BUSINESS WEEK at a Dec. 23 reception. TAX REFORMER. On the tax front, his emerging plan is likely to feature tax reduction and simplification. Cuts are expected in payroll and profit taxes on business and income taxes on individuals. An overhaul of Russia's byzantine tax code would be a huge step towards national economic progress. But don't expect Putin to embrace the American market credo. Judging by his few public statements, his vision of a market-driven economy resembles German-style state capitalism more than the entrepreneurial system in the U.S. The top-down German model, which emphasizes cooperation between elites in government, business, and labor, appeals to Putin, who worked in Germany in the 1980s as a KGB official. The problem with adopting the German model is that it could perpetuate Russia's entrenched system of crony capitalism--an economic order controlled and manipulated by Kremlin-connected business titans. Putin has so far accommodated himself to this arrangement. He would not be where he is without the support of Boris A. Berezovsky, the most powerful of the business lords. Berezovsky controls Russia's most popular state-television channel and masterminded a campaign in the Duma contest to smear the rival Fatherland-All Russia party, led by Moscow mayor Luzhkov and former Prime Minister Yevgeny M. Primakov. But insiders say Putin doesn't enjoy close ties with Berezovsky. "My impression is that Berezovsky does not trust Putin--never has, never will," says Thomas E. Graham Jr., a former political aide at the U.S. Embassy in Moscow. "He supported Putin as the lesser of evils in the Duma campaign. And now that Luzhkov and Primakov have been mortally wounded, he will probably begin a more active search for a substitute for Putin." A possible replacement: Sergei Shoigu, leader of the Unity party and Yeltsin's Emergency Situations Minister. Putin must also please the mercurial Yeltsin, who has a history of firing Prime Ministers. But Putin is adept at negotiating such minefields. "He is almost pathologically faithful to his bosses," says a report prepared by the Center for Political Information, a Moscow research firm. Being faithful does not guarantee Yeltsin's support, but Putin's ability to read his bosses boosts the chance that he will survive as Prime Minister until the June elections. DISCIPLINED STRONGMAN. Yeltsin and Putin are altogether different characters. Yeltsin is a big bear of a man, moody and effusive, camera-friendly, prone to impetuous actions and hobbled by chronically poor health and occasional drinking binges. Putin, younger than his boss by 21 years, is short and lean and has a black belt in judo. Classmates from his days at St. Petersburg State University recall him preferring milk or beer to vodka. He prides himself on his emotional restraint and command of logic. While Putin has shown good instincts for maneuvering inside the Kremlin, he has yet to show Yeltsin's genius for the bold public gesture. Still, Putin's image as a disciplined strongman resonates with Russians in the twilight of the tumultuous Yeltsin era. Putin is seeking to bind a vast land whose people have felt disoriented since the Soviet Union collapsed. "A nation must have some basic, fundamental values--our patriotism, our culture, our religion," he says. While disapproving of Soviet ideology and practices, he praises Russia's older generation, which came of age during Soviet times, for making "our country" a "superpower." Putin's emerging brand of liberal nationalism is one possible response to post-Soviet Russia's chaotic, incomplete effort to transform a dysfunctional society. And most Russians don't want to return to Soviet times--they would simply like to see the fruits of the new order spread more evenly. The risk is that liberal nationalism could turn illiberal. Some of Russia's most reform-minded leaders, including Peter the Great, have also been among the most authoritarian, resorting to brutal means to serve progressive ends. "Some psychologists see in Putin all the makings of a dictator," the Center for Political Information notes in its report. But so far, that chilling diagnosis has not been fulfilled. Putin may yet have the opportunity, through democratic means, to pull Russia forward. But he has to fight Russian politics--and Russian history--to do so. Return to top | |
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 TABLE A Look at Vladimir Putin BORN In 1952 in St. Petersburg, the son of a factory worker. EDUCATION Earned a law degree in 1975 from St. Petersburg State University. EARLY CAREER Served abroad as an intelligence agent for the KGB from 1975 to 1989, including a stint in East Germany. RISING STAR Held top political posts in St. Petersburg, including deputy mayor in charge of foreign investment, from 1989 to 1996. In 1998, was named director of Federal Security Service, successor to the KGB. Appointed Prime Minister by Boris Yeltsin in August, 1999, and is now the front-runner in the June, 2000, presidential race. PERSONAL Married with two daughters. Holds a black belt in judo. Return to top |
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