SECURITY & FOREIGN AFFAIRS / MONOGRAPH Can We Manage a Declining Russia? Richard Weitz November 2011 CAN WE MANAGE A DECLINING RUSSIA? Richard Weitz November 2011 Table of Contents CORE MONOGRAPH PUTIN 2.0: AUTHORITARIAN UPGRADED? ........................................................... 6 ENERGY SUPERPOWER? ....................................................................................... 8 DEATH BY DEMOGRAPHICS ............................................................................... 23 AN ECONOMIC HOUSE OF CARDS? .................................................................... 30 RUSSIAN MILITARY POWER ........................... 5ERROR! BOOKMARK NOT DEFINED. REGIONAL FOREIGN POLICY PRIORITIES ................................................................... 64 KEY RECOMMENDATIONS .................................................................................. 79 COMMISSIONED PAPERS RUSSIA AND THE LIMITS OF AUTHORITARIAN RESILIENCE HARLEY BALZER ................................................................................................ 85 RUSSIA’S DEMOGRAPHIC CONSTRAINTS: DIMENSIONS AND STRATEGIC IMPLICATIONS NICHOLAS EBERSTADT AND APOORVA SHAH ................................................. 118 RUSSIAN ENERGY OUTLOOK 2020 ARIEL COHEN ................................................................................................... 187 THE RUSSIAN MILITARY FACES THE FUTURE STEPHEN BLANK ............................................................................................... 212 APPENDIX: ADDITIONAL INSIGHTS ..................................................... 289 2 The material in this monograph results from a year-long study conducted by the Hudson Institute and partially supported by the Smith Richardson Foundation. Principal Investigator Richard Weitz produced the monograph, supported by several commissioned papers and a day-long policy workshop, to assess the possible evolution of the main foundations of Russian power, focusing on key transition points and the windows of strength and vulnerability they create for Russian policy makers. Hudson commissioned experts to write commissioned research papers analyzing the key variables that could affect the evolution of Russia’s foreign policy capabilities. Hudson then convened a workshop on April 11, 2011, during which the participants commented on one another’s drafts, which were circulated in advance. They then revised them after exchanging their views at the workshop. Dr. Weitz then integrated the workshop findings, the commissioned papers, and his own research and produced this monograph that analyzed the questions addressed by this proposed project. The imminent return of Prime Minister Vladimir Putin to the Russian Presidency leads one to recall the mixed legacy of his previous eight years in that office. Putin was brought to power by Russia’s first president, Boris Yeltsin, who saw the young Putin as a loyal and efficient aide who would protect Yeltsin’s friends and family from the constant disorders afflicting Russia at the time. When Yeltsin unexpectedly retired at the end of 1999, he designated Putin as acting president. The move strengthened Putin’s candidacy for the March 2000 presidential elections, which he won with slightly more than half the vote. He assumed office on May 7, in a peaceful transition of political power, a rarity in Russian history. Putin then began a major campaign to restore the authority of the Russian presidency, which had waned under Yeltsin’s erratic leadership. Yeltsin’s rule was marked by protracted struggles among the factions within his presidential administration, between the president and a parliament filled with many influential opposition legislators, and between the central federal government in Moscow and many semi-autonomous regional entities that at times appeared out of Moscow’s control. Although Yeltsin generally made the key decisions regarding Russian foreign and defense policy, large sways of the Russian bureaucracy ran their own operations, often in conflict with other agencies. Meanwhile, wealthy Russians (“oligarchs”), who had seized Soviet assets through questionable privatization schemes, used their wealth to buy political influence as well as private security forces. And regional leaders exploited the chaos in Moscow to carve out considerable autonomy. Putin slowly consolidated his power, relying heavily on his contacts within the former Soviet security forces. He appointed many of these strong men (Silovoki) to the presidential administration as well as the government bureaucracy and major state-controlled corporations. He tamed the oligarchs by enforcing peace among them while turning on a few of them who had challenged his power. Under the pretext of fighting terrorism and crime, Putin curbed the power of regional authorities and concentrated political authority in Moscow. For example, he ended popular elections for regional governors, instead giving the Kremlin the power to select regional governors. He also rolled back some civil liberties and media freedoms despite the protests of human rights groups. Given that Soviet communism and Western-style liberalism had both failed to bring Russians peace and prosperity during the previous decade, Russian voters generally approved of Putin’s “law and order” program and he easily won reelection in March 2004, with 71% of the vote. 3 In addition to the state’s control of the media and the discrediting of alternative ideologies, another factor sustaining Putin’s popularity was the economic recovery Russia experienced during his presidency. Starting from the nadir of 1998, Russia’s economy grew by very high rates, approximately 7% annually. Putin was lucky that he happened to assume office just when world oil prices started rising and the 1998 currency devaluation made Russian products more competitive in domestic and foreign markets. He also introduced some good economic reforms. The Putin administration exploited its control over Eurasian energy flows to punish unfriendly foreign governments and discourage European criticism of Russian policies. The growing prosperity allowed the state to expand its social programs as well as stabilize military spending. In his early years in power, Putin continued Yeltsin’s policy of seeking good relations with the West and China while launching his own initiative to restore Russian political primacy in Central Asia and the South Caucasus. Putin demonstrated a strong pragmatic streak that enabled him to accept without much fuss the U.S. occupation of Afghanistan, establishment of military bases in Central Asia, and the withdrawal of the United States from the Anti- Ballistic Missile Treaty. Starting in 2006, however, Russian-American differences over ballistic missile defense spilled over to disrupt bilateral relations in other areas. In 2007 and 2008, Putin adopted an increasingly critical, and sometimes belligerent, stance toward NATO countries and partners. In 2008, many observers expected that Putin would arrange to circumvent the constitutional limit on two consecutive presidential terms. Instead, Putin declined to become president for life, a model followed by some other former Soviet republic leaders. He designated Dmitry Medvedev, a longtime aide and adviser, as his successor. With the backing of Putin and his allies, and with the government’s restricting the opposition candidates, Medvedev easily won the March 2008 presidential elections with more than 70% of the vote. After his election, Medvedev carried out his election pledge to appoint Putin his prime minister. Although Dmitry Medvedev is Russia’s first post-Soviet president, having been a student at the time of the USSR’s disintegration, he has pursued policies that differ little from those of his predecessor. Some Russian and Western analysts expected that Medvedev’s background in private business combined with his liberal reputation—he never joined the Communist Party or served in the KGB or military—would lead him to roll back some of Putin’s authoritarian measures in the kind of “thaw” that sometimes occurred after a change in Soviet leaders. Certain observers even thought that Putin chose Medvedev as his successor precisely in order to reduce tensions with the West and to take responsibility for moderating some of Putin’s earlier decisions. During his campaign and while in office, Medvedev has publicly called for greater freedoms, for less corruption, and for greater respect for the rule of law. Despite some high-profile initiatives to promote these objectives, Russia’s quasi-authoritarian political system has continued, though power is now awkwardly shared between Medvedev and Putin rather than concentrated solely in the office of the presidency. The changes that have occurred in Russian politics have primarily been those of style rather than substance. 4 Medvedev is shorter, younger, and generally less threatening in stature and discourse than Putin. Whereas Putin regularly resorts to street slang and gutter language when referring to his domestic and foreign critics, Medvedev’s rhetoric is embedded with legal terms and reasoning. The intimidating nationalist (critics would say fascist) youth groups that gained prominence during the last years of the Putin presidency have adopted a much lower profile under Medvedev. In contrast to his secretive predecessor, moreover, Medvedev has increased presidential transparency by posting travel logs and other musings on the Internet, reporting his household income and property (and requiring