Scheherazade S. Rehman is a professor of international finance/business and international affairs at The George Washington University. You can visit her homepage here and follow her on Twitter @Prof_Rehman.
While Mother Nature (super-storm hurricane Sandy) was causing destruction throughout the north-eastern seaboard of the United States on Monday, across on the other side of the world Russians were remembering a man-made destruction. Over a period of two years (1937-38), approximately 1.7 million people were arrested and sent to gulags, and of which more than 750,000 were executed under Joseph Stalin's brutal crackdown. Why is this Remembrance Day particularly poignant for the Russians this year? In all likelihood Russian efforts to regain superpower status is going to be associated with increased state repression. (This is the third of a series of articles on potential superpowers.)
The fall of the Berlin Wall in 1989 was a prelude to the fall of Russia as a super power. Although the Russians gained all sorts of freedoms in their strangely evolving democracy, they concurrently lost their real living standards over the entire decade of the 1990s. This marked an economically difficult and humiliating time for the former super power.
This all changed in 2000, when Vladimir Putin became president. The past 12 years of "Putinism" orchestrated through a game of presidential and prime ministerial musical chairs between Putin and Dmitry Medvedev is essentially a system that "…depend[s] on the Russian economy growing rapidly enough that most people had rising standards of living and, in exchange, were willing to put up with the existing soft repression." Putin's initial liberal economic Land Code, Civil Code reforms coupled with flat income and lower profits tax resulted in rapid growth of real GDP (gross domestic product) and a 50 percent reduction of poverty in Russia. Over the past 12 years, under the Putin and Medvedev machine, Russians have seen their real living standards—i.e. GDP and real income—more than doubled, average salaries increase eightfold from $80 to around $640, and regained much of their pride—hence Putin's popularity.
The last round of elections in early 2012 put Putin back in the driver's seat for another six years—however, this time amidst protests and widespread claims of election fraud. The acceptable soft repression has now grown visibly harder under the camouflage of democracy, pluralism, and the State Duma (parliament) while oligarchs, elite corruption, cronyism, and lack of transparency thrive. Additionally, new laws resulting in loss of free media and making it a crime to slander government officials are increasingly threatening Russian civil society. Since economic growth has slowed (from 4.2 percent in 2012 to around 3.5 percent in 2012) and Putin's internal support is waning as the people are pushing back against increased state repression, he now needs an external opposing force—the West—to rally the Russians under him. The big excitement during the Russian elections earlier this year over human and civil rights from the Russian middle class has abated and has now fallen on the shoulders of Russian activists who are in what promises to be a protracted cat and mouse game with their government. It does not bode well for Putin's macho image or his ability to indefinitely control Russia when he has to resort to depositing a few young women from the Pussy Riot band into Siberian camps to affirm control.
Putin has never been shy in declaring his intentions to restore Russia back to its former superpower glory and is actively trying to recreate the former empire. For example, by proposing a "Eurasian Union" to the former Soviet states accompanied, of course, with energy benefits from uncle Vanya. While there are several very convincing facts that underscore Russia's influential position in the world (i.e. the world's largest energy producer of crude oil, a primary exporter of natural gas to Europe, a balanced budget if oil prices stay over $100 a barrel, a permanent seat on the United Nations Security Council, and boosting one of the world's strongest nuclear arsenals), it is only just that: an influential power—and not a superpower.
Putin ambitions to mark a return of Russia to its former "Great Power" glory requires an external export market to sell its energy and earn revenue, requires an external threat to rally its people, and requires the price of oil to be well over $100 a barrel. The later issue is the most tell-tale sign of Russia's demise as a superpower because much like Mahmoud Ahmadinejad (Iran) and Hugo Chavez (Venezuela), Putin's aggressiveness in foreign policy depends on the how high oil prices go. If the West isolates an increasingly iron-fisted Putin, he will assuredly turn to China for "secondhand technology" as he needs to modernize. While the Russian military-industrial complex needs a serious makeover, make no mistake it is still intact and can be rebuilt because there are no supply-side constraints—but this can only be done at a severe cost on the living conditions of the Russian people. Putin will not survive a deterioration of Russian income per capita wealth and freedom at the same time. Thus, in the end, nothing will really change much. Russia will continue to be influential but not a superpower: Russia will stay Russia.