Russia's Contradictions

June 23, 2004
By Nikolas K. Gvosdev

Befitting a country whose national symbol is a two-headed eagle, Russia remains a country of profound contradictions. Yet it is vital to appreciate the complexities of post-Soviet Russia in order to gain a realistic appraisal of the situation.

During the 1990s, we underestimated Russia's problems in order to maintain the fiction that a post-Soviet Russia under President Boris Yeltsin was firmly on the path to Western-style free-market democracy. Today, we underestimate Russia's successes in order to depict the country under President Vladimir Putin as a neo-Stalinist authoritarian dictatorship.

So how grim is the situation?

We cannot speak of "Russia" as a singular entity in making any assessment. Certain regions and sectors function at a level equivalent to what can be found in North America or Western Europe; others may resemble the poorer countries of southern Asia or sub-Saharan Africa.

Certainly, the economic situation remains uneven. The country has 36 billionaires, as per the Forbes list. But up to 31 million people still subsist on an income of less than $50 per month. The Russian economy has grown by 38 percent since the crash of 1998, and Russia currently has a $60 billion trade surplus, but prosperity has not trickled down to all sectors and regions of the country.

And Russia must avoid falling into the "oil trap" if it wants to progress. At present, 85 percent of its exports are commodities or raw materials -- with energy making up 60 percent of exports alone.

The state hopes that by earmarking "excess" energy profits into a "Stabilization Fund," it can encourage the continued growth of other sectors of the economy. Russia's Stabilization Fund will exceed 500 billion rubles by January 2006, even if oil prices were to fall to $22.50 per barrel.

Given strong performance in other sectors -- including agriculture, construction and industry -- Peter Westin, the chief economist at the Moscow-based brokerage firm Aton Capital, concludes that even if oil prices were to fall to $20 per barrel, Russia's economy would continue to grow at a rate of 5 percent per year. To meet Putin's target of doubling Gross Domestic Product by 2010, the economy needs to grow by an average annual rate of 7.2 percent.

The political situation is also complicated. Contemporary Russia, both territorially and functionally, mixes democratic and authoritarian characteristics. There are elections, political alternatives and the opportunity to replace leaders, but the state plays a role in controlling the number of groups allowed access to the public square.

Russia today has a vibrant civil society sector, with more than 70,000 non-governmental organizations. Many, however, focus on cultural, charitable or religious issues. On the other hand, some of those engaged in political activism – especially the promotion of human rights or Western-style liberal democracy – have felt increasing pressure from the state, especially after Putin's "state of the nation" speech in May, when he singled out some non-governmental organizations, or NGOs for criticism for accepting funds from Western sources or from Russia's oligarchs.

The Duma seeks to limit public demonstrations -- a piece of legislation that even the head of the Russian Orthodox Church opposes. However, thousands protested proposed changes in the social security system when the Federation of Independent Trade Unions organized small rallies in more than 300 cities and towns across Russia on June 10.

As with many other political liberties, press freedom is defined by a sliding scale, with the regime exercising more controls in certain areas such as nationwide television. But the Kremlin allows more vigorous debate and coverage to take place in other arenas, especially newspapers and the Internet.

Therefore it is not surprising that young Russians – by a margin of some 70 percent in current polls – support media freedom in Russia. For it is the younger generation that has greater access to the Internet and other "alternative" means for obtaining news and information.

There is a pronounced authoritarian streak in today's Russia. But there are also optimistic signs that the groundwork is being laid for the rise of a prosperous middle class that could sustain a more democratic Russia in the future. Let's not write Putin's Russia off just yet.

Nikolas K. Gvosdev is editor of In the National Interest and a senior fellow at The Nixon Center. This piece appeared in UPI's "Outside View" column and is used with permission.