Putin’s Inauguration – more of the same or a breakthrough?

Today, Vladimir Putin was officially inaugurated as President of the Russian Federation for the fourth time.

His inaugural speech contained little new.

Russia had upped its defence budget, although against whom is unclear.

As our video points out, following the collapse of the Soviet Union, the US and NATO countries had reduced their military spending apart from the spike during the interventions in Iraq and Afghanistan. The US had also greatly reduced the number of its troops stationed in Europe.

These are very odd policies given Russia’s claims that the West/US had “surrounded” Russia and was determined to “keep the country down.”

Nevertheless, official Russia, countless Russians and other nationalities in Russia and across the Former Soviet Union, as well as many Westerners, continue to believe that the West has indeed “surrounded” Russia – a sheer physical impossibility given the existence of numerous other countries on Russia’s borders which are not part of “the West” and indeed are not even allied with the West, China being the obvious example.

In his inaugural address, Putin stressed Russia’s history of rising like a phoenix throughout its history to surprise the world, as well as the need to concentrate on improving the lives of Russia now that the country’s defence had been secured.

How the economy will be fixed is totally unclear. All the claims about “breakthroughs” to a new level have been heard before and indeed go back not just to perestroika, but 300 years to Peter the Great. None of Russia’s attempts to catch up with the West has ever succeeded.

Immediately after Putin’s inauguration, Russia’s 1st Channel broadcast its live show Время покажет! (Time Will Tell!) in front of a studio and with various “expert” guests.

As usual, the show generated more heat than light, with one anchor in particular interrupting the “experts” almost immediately after they had started speaking – even though there was no ideological disagreement here.

This year, for the first time, Putin arrived at his inauguration in a Russian-built luxury car rather than a Mercedes. The experts saw this as yet another sign that Russia had risen from its knees and re-established itself as a great power.

As is the case in the West, such “experts” have little understanding of the deep structural problems their country is facing, problems which are deeply rooted in Russia’s history, such as massive corruption, which no leader, even Stalin, has been able to eradicate.

Russia remains poor and, like China, is almost certainly mired in a middle-income trap, but in contrast to China, it has very little in the way of a proper economy and produces little.

The excessive concentration on hydrocarbons, metals, agriculture, arms and some machinery remains barely unchanged, while Russia has failed to move up the value chain and produce goods and services the rest of the world wants.

As ESC has been warning repeatedly since the shale revolution, time could well be running out. The shift from hydrocarbons and breakthroughs in renewable and alternative energy sources will devastate the economies of all petrostates, including Russia, and there is precious little to take up the slack. Russia has no Plan B.

Russia is in need of massive reform and liberalisation, but this goes against the grain of Putin’s policies after the new president’s initial welcome but short-lived reforms in the early 2000s.

A greater realisation of Russia’s problems could nevertheless be dawning in Moscow. Last week, The Financial Times reported that the former Minister of Finance Alexei Kudrin could be appointed to a special role in the Kremlin with a view to repairing relations with the West.

Kudrin enjoys considerable respect in the West for his competence and liberal views, but even if his appointment does materialise, he will have his work cut out. He will need serious backing from Putin and Russia will have to dial back its various alleged foreign activities.

If these twin conditions are not place, the US establishment in particular will maintain the current sanctions and may even increase them.


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