The Kremlin Begs to Differ

By Simes, Dimitri K.; Saunders, Paul J. | The National Interest, November-December 2009 | Go to article overview

The Kremlin Begs to Differ


Simes, Dimitri K., Saunders, Paul J., The National Interest


Twenty years after the fall of the Berlin wall, Russia remains as Sir Winston Churchill described it: "a riddle, wrapped in a mystery, inside an enigma." Russia's complexity has contributed to an American debate in which policy preferences too often shape analysis rather than analysis driving policy. It's not a sound basis for decisions when key American interests and goals are at stake.

One doesn't need to be a Russian domestic radical or a foreign Russophobe to see major flaws in the way Russia is ruled. The country's president, Dmitri Medvedev, has catalogued its problems: "an inefficient economy, semi-Soviet social sphere, fragile democracy, negative demographic trends and unstable [North] Caucasus," not to mention "endemic corruption" defended by "influential groups of corrupt officials and do-nothing 'entrepreneurs'" who want to "squeeze the profits from the remnants of Soviet industry and squander the natural resources that belong to us all."

Russia's problems are fundamental to its political system, which, while officially democratic, is perhaps best understood as popularly supported semiauthoritarian state capitalism. Russia is clearly not a Western-style democracy, though its citizens enjoy considerable freedom of personal expression, with the level of liberty inversely proportional to the potential impact of criticism. The state dominates "strategic sectors" of the economy like energy and defense, but political-business clans have retained much space to pursue their parochial interests, including through the state's administrative machinery. As throughout its history, Russia is dominated by a ruling class: originally aristocrats, then Communist Party nomenklatura, and now a combination of senior bureaucrats and business leaders, including former Soviet managers, ruthless-yet-effective younger entrepreneurs, and outright criminals who took advantage of the decay, collapse and anarchy of the 1980s and 1990s.

The question now is how long Russia's current political arrangements can hold. Corruption is deeply embedded and pervasive, affecting state and private enterprises along with the media and the courts, severely limiting Russia's modernization and sustainable economic growth. And with so much power concentrated at the top of the system, recent murmurs of a growing rift between President Medvedev and Prime Minister Vladimir Putin false serious concerns about stability.

Moscow's arbitrary rule affects the people and state of Russia most of all, but it also presents a challenge to the United States. Russia is vital to American interests, and if the Obama administration has any illusions about the nature of Russian politics or, alternatively, surrenders to the long-standing temptation to act as a self-appointed nursemaid, it could severely damage our ability to work pragmatically with Russia to advance important U.S. goals.

It is difficult to overstate the role of corruption in Russia, which in many ways is the glue that holds together the disparate groups dominating Russia's current political system. The Russian state is organically linked to Russian companies, both overtly--through stock ownership and officials' simultaneous service on corporate boards--and covertly, through family ties and secret deals. At the upper levels, Russia's corruption takes the form of private stakes in state firms and profound conflicts of interest; at lower levels, simple bribery is more common. And the scope of corruption is expanding: according to official statistics, Russia's bureaucracy has doubled in size in the last ten years.

Those at the top have a relatively free hand to enrich themselves through insider dealing. Thus, notwithstanding Russia's extensive privatization, it is often difficult to distinguish between government-owned companies and large private conglomerates. Officials are deeply involved with both and the government often acts to protect both, though it is not always clear whether government actions are a result of state or private interests. …

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