Beware of a Man in Search of a Legacy

Historical legacies are interesting things, offering as they do a chicken and egg situation.  Was Napoleon motivated foremost to secure his name in history and his deeds merely the methods he used to do it?  Or did he simply fancy taking charge of France and conquer large swathes of Europe by deploying astonishing military skill, and the legacy simply resulted from his actions?  I’m more inclined to believe the latter.  Not that great historical figures don’t have enormous egos and are unaware of the significance of their actions, but I don’t believe Peter the Great thought “if I want to be remembered in history I’ll have to do something big” and then after weighing up various options decided upon building a new capital and developing a Russian navy as the way to go about it.  No, I think he decided on building a new capital and turning Russia into a European-facing naval power and his legacy resulted from this decision.

Of course, the only people who succeeded in creating a legacy were those whose actions were both successful and significant.  History is littered with those who had grand ideas that never came off, and others whose actions changed little in the grand scheme of things.  What we hear even less of, thankfully, are those who, longing for a place in the history books, decided to create a legacy and then based their actions around this goal.  How do we know such people existed?  Because they’re still with us.

I remember during the New Labour years in the UK, people were always on about Blair’s legacy.  I think that’s the first time I was politically aware enough to see that somebody’s policies are being driven by what he wants people to say about him in the future, rather than what he actually believes.  Education Education Education was one mantra, that came to nothing.  Whatever the state of British education now, Tony Blair isn’t going to be remembered for playing any significant part in it.  Insofar as he has a legacy, it is one of a disastrous war in Iraq.  Those who supported the war don’t think he has a legacy at all.

Barack Obama is another modern politician in desperate search of a legacy, hoping to go down in history for something other than his skin colour.  He may well achieve it with Obamacare when the bills finally start coming in, although not for the reasons he thinks.  But that’s not enough: ill-advised peace talks with Iran and muddled overtures towards Cuba have followed, as Obama seeks a geopolitical issue on which to hang his hat in the history books.  Both are bound to fail.

Those who actively seek a legacy, rather than simply let it follow their actions, are doomed to fail largely because they lack the conviction to see their decisions through.  Historical legacies are not the results of popularity contests, in fact usually they’re the complete opposite.  Just ask Genghis Khan.  Those who succeed in pulling off great historical feats (both good and bad) do so from a position of absolute determination and self-belief in their actions, and will see them through regardless of the setbacks, or die in the attempt.  And the actions themselves are normally bold, brutal, and unprecedented.  This is in contrast to the modern politician seeking a legacy, who will be uncertain even on which path to take to achieve it, let alone the required actions.  At the first sign of trouble – an unkind editorial, an unfavourable opinion poll – most of them will backtrack and seek another way.  Abraham Lincoln didn’t suffer from this.  They also don’t think big enough: legacies are made by actions which affect millions for generations, permanently changing a country or continent, not tinkering with health policies or lobbing a few Tomahawks.

It is probably a good thing that today’s world doesn’t readily allow the actions that bring about the sort of legacies historical figures have left, given that most of them involved death and destruction on an industrial scale.  But the problem of those seeking a legacy, rather than simply doing their job, remains.  This brings me onto the current state of Russia under Vladimir Putin.

There is no doubt that Putin was very good for Russia in the early years: young, fit, and sober he was probably the best leader Russia has ever seen, although I should add that the bar is set extraordinarily low.  Russia in the ’90s was a terrible place, and Putin provided much needed stability and a reining-in of the oligarchs and gangsterism that plagued the country.  How much of this was down to him personally is debatable, but under his reign the currency stabilised, the economy grew, violence declined, and living standards rose as a new middle class of moderately wealthy Russians appeared.  The decade between 2000 and 2010 probably represented the best period Russia has ever seen (although again, the bar is set astonishingly low) and Putin deserves considerable credit for presiding over it.  Given what Russians lived through in the USSR and its aftermath it is not difficult to see why Putin was, and remains, so popular with his people.

Now we can argue that Putin should have done more, but I don’t take that view.  What he had achieved up until around 2006-7 had surpassed all expectations, and I don’t think anything more should have been asked or expected of the man.  That’s not to say there was not an awful lot left to do in Russia: there was.  It is to say that Putin was not the man to do it.

There are limits to what people can do in office, and that is often driven by time.  A two-term president in the US is usually in charge of a very tired administration in the final couple of years, regardless of how good they’ve been beforehand.  Even New Labour’s supporters were glad to see the back of Tony Blair after 10 years as Prime Minister; Margaret Thatcher left Downing Street a tired shadow of the vibrant woman who had entered almost 12 years previously; and despite the economic boom and rise in living standards Australia enjoyed under 11 years of John Howard, the population felt they were in need of a change when they kicked him out.  The optimum period in office for a leader in a modern democracy is approximately 7-8 years, after which their administration is plagued by various scandals, stumbling policies, tired rhetoric, and a population that has gotten tired of seeing the same damned face on the TV every night and could use a change.  Even the Soviet leaders eventually departed, unable to fulfill any more promises or bring about change in the way they could when they first took over.  With the exception of Stalin, few missed them.

By this measure, Putin’s time was up around 2007.  Having taken over as President in 2000, he was required to step down in 2008 when his two-term limit had expired.  This would have been a good time to usher in a protégé and retire from politics, having achieved so much and leaving the country in far better shape than he found it.  He would have been universally admired both at home and abroad, and gone down in history as a truly good, if not great, Russian leader.

But unfortunately, he was having none of it.  With the idea of amending the constitution to allow him to remain President floating around in the final years of his second term, he sidestepped the issue by installing a puppet President in Dmitry Medvedev, and slotted effortlessly into the Prime Minister’s role transferring his previous authority to his new office until it was time to return to his old job four years later.  Starting around 2006, buoyed by high oil prices that had brought enormous wealth to him and his friends and unprecedented wealth to many ordinary Russians, Putin started to strut his stuff at home and abroad.  A new wave of Russian nationalism took hold, taking the form of increased anti-western rhetoric, a re-positioning of Russia as the victim of foreign exploitation, and a desire to get more involved in global affairs in order to protect Russia’s perceived interests.  It was during this era that the Russian government intervened in several major oil and gas projects operated by western oil companies, citing legal or environmental irregularities as justification for bringing them back under state control.  At the same time, Russia decided the operatorship of the giant Shtokman project in the Barents Sea would remain with Gazprom, the state-owned energy giant.  In September 2007 I wrote that the policy of resource nationalism that Russia had pursued the previous summer could one day be seen as a turning point in the country’s development, the time at which the Russian leadership decided that the production of oil and gas by state-owned behemoths in an otherwise unreformed economy was the route to future prosperity.

For a while it was looking good for Russia.  The country was rocked by, but ultimately survived, the global financial crisis thanks to an oil price that quickly rebounded after an initial tumble.  But crucially, once he’d decided to remain in power, Putin failed to reform the economy beyond the Soviet-era export of natural resources, primarily oil and gas.  As I said earlier, given everything Putin had done to stabilise Russia I don’t think the onus was on him personally to reform the economy: such a daunting task would have had to fall to somebody else.  But by staying on, unless he was willing to double-down on his efforts and likely expend whatever energy and political capital he had, such a reform was postponed indefinitely.

It is not just the case that Russia is too dependent on oil and gas exports, it is that it is almost impossible for individuals to develop and grow a profitable business unless they are well connected to a rich and powerful entity in the locality.  For all practical purposes, this means being pals with the mayor or FSB of the local town, or the bigger politicians in the larger cities.  Otherwise, your business simply won’t be allowed to develop.  It is no surprise that most Russian towns feature one giant shopping mall owned by a local bigwig who also owns a nightclub and a few restaurants, with another one or possibly two smaller “empires” making up the bulk of the remaining local business portfolio.  If an enterprising but unconnected person decided to develop a small patch of land beside the river and turn it into a waterside restaurant, and by some miracle obtained the permits to get it up and running, within days of turning a profit (or even before) he would lose his business.  He would be forced out: either by a never-ending stream of regulatory authorities ranging from fire safety to health inspectors, all of whom would demand a cut of the proceeds to “allow” him to stay open; or simply by a gang of thugs working on behalf of a local bigwig who fancies co-opting the business (now that somebody else has done all the hard work) into his own empire.  In my discussions with Russians, this is something which is absolutely beyond dispute: the number of parasites that descend on private, independent businesses makes running a successful enterprise near-impossible.  In Russia, you may run a business only with the approval of the local power chiefs, and tribute must be paid.

This situation is a product of the enormous bureaucracies that govern Russian business life, coupled with the corruption that infests almost every corner of them.  Overhauling this is a mammoth task, and in all likelihood impossible.  But that doesn’t mean it shouldn’t be tried, and the starting point would be to strengthen the country’s institutions – particularly the courts and justice system, and insisting that governmental authorities everywhere follow the rule of law.  However, that would require giving them independence and devolving centralised state power over a much wider area, and neither the Kremlin nor the regional powers were prepared to do this.  Like a lot of leaders who have enjoyed unopposed power a while, Putin began to see himself as indispensable.  Far from state institutions being granted more devolved authority and independence, Putin centralised Russia’s powers further, notably around himself.

Further convinced of his own indispensability, in no small part due to genuine feelings of support for the idea from the Russian population backed by crushing election victories, Putin became yet more assertive in his dealings with the rest of the world, determined to restore what Russians consider to be their rightful place in global affairs, with himself in the role of saviour of the nation.  Somewhere along the way, Putin seems to have sniffed an opportunity of one day being held in the same esteem as Peter the Great, Katherine the Great, and maybe even old Joe Stalin.  Sometime after 2012, the ageing Putin perhaps thought time was running out for him to establish such a legacy, and so stepped up his efforts.  Confused mumbo-jumbo regarding Imperialist Russia and Soviet history underpinned much of his foreign policy, with vague ideas about manifest destiny thrown in for good measure.  Having trampled all potential domestic opposition and removed any dissenting voices from within his own circle, Putin fell into the trap of all long-serving authoritarians: he started believing his own bullshit, hearing nothing but rapturous applause every time he spoke.  So when the opportunity to reclaim Crimea for Russia presented itself, Putin moved quickly to take it.

Now regardless whether you believe the Russian claims that the annexation of Crimea was necessary to prevent the Americans establishing a base there, the fact is that in 2006-7 and again in 2010-12 Putin faced the choice of either reforming the economy by overhauling the state institutions and rooting out corruption, or improving Russia’s position with regards global affairs and its near-abroad with himself as the figurehead of Russia’s resurgence.  It is almost beyond question that doing both was impossible, and completely beyond dispute that he chose the latter.  In my view, he did so for two reasons: it was much easier for him, coming more naturally; and he thought this was the best route to establish himself in the history books alongside other great Russian leaders.

With that choice, any hope that the Russian economy could free itself from local strongmen and the national giants was lost.  The government remained dependent on a high oil price to balance its budget, while the rest of the economy remained unreformed, unreconstructed, and hopelessly inefficient.  As a result, Russia in 2014 found itself still heavily dependent on imports and produced little of value domestically: even the foreign car assembly plants set up in western Russia are dependent on imported parts, for which they must pay in Euros.

So long as the oil price remained high, none of this really mattered.  But with its collapse, and the western-imposed sanctions, the Russian economy has nosedived.  This article by Tim Worstall explains just how grim things are looking for Russia, but does not tell the whole story.  The middle-class consumer boom which took place in Russia over the last decade was driven mainly by personal debt: people borrowing from banks or credit card companies.  With the real prospect of incomes drying up and jobs being lost, a lot of households are going to struggle.  But what makes it worse is that credit in Roubles was being offered at interest rates of around 15-20% but consumers had the option of taking loans in Euros or USD which only attracted interest rates of 5-10%.  Many Russians took the latter option, and now face paying household debts in Euros or USD at a time when their Rouble salaries are worth half what they were.  Even those who borrowed in Roubles haven’t escaped: according to my Russian friends, banks are “renegotiating” the interest rates with their customers, which means higher monthly repayments.  Coupled with the rapidly increasing price of food (not helped one jot by Putin’s ban on imported products), we could see many households going into bankruptcy for the first time since 1998.  And this is before one considers the effect of the Rouble’s decline on the country’s main employers.  The head of Renault-Nissan in Russia recently came out and said manufacturing in the country is facing a bloodbath.

What will happen next is anyone’s guess, but a return to the grinding poverty and economic instability of the 1990s is looking increasingly likely.  Putin remains as popular as ever, having successfully dumped the nation’s economic woes squarely at the feet of the United States and European Union.  But as the economic reality starts to sink in, and increasing numbers of people with no jobs go hungry, issues such as political leadership and the inequality between the elites and the rest are going to become more pronounced.  Even if the Kremlin successfully manages to deflect the questions by piling on the anti-western rhetoric, this will not solve the underlying economic problems.

The trouble now is that it is too late.  The economy cannot be reformed with the sanctions still in place and the Rouble so weak, and so they have no choice but to ride it out until the oil price rises again, which on current forecasts could be a while.  Russians are facing the very realistic possibility of returning to the 1990s: empty shelves already line supermarkets, companies running package holidays abroad are going bankrupt by the dozen leaving local vacations as the only affordable option, and photos on Facebook show mass crowds buying TVs, video cameras, Ikea furniture, and other household items they don’t need in an effort to swap Roubles for something with a chance of retaining some value.  If this keeps up, it may be fair to ask exactly what progress has been made in Russia in the past 20 years.

Putin had the option of stepping down in 2008, his job well done, and handing over to a successor.  He chose not to, and instead opted to pursue what he hoped would become his legacy, which would be underpinned by the self-development of Russia’s vast hydrocarbon reserves.

The worst part is they didn’t even get that right.  The last major oil and gas development in Russia was the Shell-built Sakhalin II LNG project, which started up in 2008.  The Gazprom-led Shtokman development ground to a halt amid spiralling costs and disagreements between the partners.  Rosneft has been in the news mainly for its deals with BP, its appropriation of Yukos and Bashneft, and its staggering corporate debt rather than concrete development plans bearing fruit.  Umpteen grand announcements ranging from Nigerian gas deals and far-east LNG plants to Arctic developments and Chinese pipelines have come to nothing (or remain stuck on such details as pricing).  As of 2014, Russia remains as unpredictable, risky, and dangerous for an oil company – even a Russian one – to do business as it was in the 1990s.  For a country that picked hydrocarbon development as the sole political-economic strategy in lieu of reforming the economy and engaging with the west, this is a shockingly poor performance.

So what of Putin’s legacy?  If Russia hangs onto Crimea, which it probably will, it might warrant a note in a history book somewhere (offered as much prominence as Khrushchev’s transfer of the peninsula in 1954, which few knew about until recently).  But it’s hardly the stuff to warrant a mention alongside Katherine the Great or Ivan the Terrible.  As I said at the beginning of this post, the modern-day politician (of which Putin is one, no matter how much he wishes he belonged to another era) just doesn’t think big enough to create a proper legacy.  In the grand scheme of things, the annexation of Crimea is mere fiddling, and expensively at that.

The irony is that if he had stood down in 2008, he would have left a legacy of quite some merit.  Had he decided to stay and expended his considerable political capital in ramming through the economic and institutional reforms Russia so desperately needs, he would have created a legacy even greater (albeit one that carried a lot more risk of failure).  Instead it is looking increasingly likely that his early work will be completely undone, and his legacy will be one of having progressed Russia precisely nowhere since he took over, having gone the full circle from crisis-ridden poverty to stable wealth and back to crisis-ridden poverty in just 15 years.  Putin’s is a story more suited to Africa than Russia, with a legacy more akin to Robert Mugabe than Peter the Great.  What a terrible waste.  What a terrible shame.

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11 thoughts on “Beware of a Man in Search of a Legacy

  1. The Achilles heel of Putinism is Putin himself. He is perceived as the only person who can run the country. If this is true, then the system he has created is extraordinarily weak by its very essence. If only one person can manage things, then things can’t be managed.

  2. Estragon,

    That is a very good point…and it’s hard to know whether he hangs onto power because he simply doesn’t want to give it up, or because he genuinely believes only he can run the country. At this point, it’s hard to tell how far the delusions run.

  3. All political careers end in failure. A trite observation but generally true. And where else could be go?

  4. One aspect of the Putin/Medvedev era was the tendency of the gov’t to announce grandiose development plans. I don’t know how Skolkovo is coming along, but as I recall, Russia was supposed to be a “world leader in nanotechnology” by now. Yet the last I heard from Rusnano was that they were facing corruption charges.

    And how about that “national payment system” that’s supposed to get Russia off the tyranny of the dollar & euro? Coming any day now, I hear.

  5. And where else could be go?

    Just retire and do the book/speaking tours so beloved of former U.S. presidents.

  6. I don’t know how Skolkovo is coming along…

    I read a brief reference to it in the Economist recently: it looks to have gone precisely nowhere, which is hardly a surprise.

  7. Such a shame that The Potato Oligarchs experience with Jackets in the 1990’s is the same as one could expect now when attempting to set up a company in the “free market” of Russia.

  8. Pingback: On the killing of Boris Nemtsov | White Sun of the Desert

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