together for a long time. In the end Putin plumped for Dmitri Medvedev. At the time Medvedev was serving as First Deputy Prime Minister; he was also in charge of the ‘national programmes’ announced by Putin to improve health care, housing, agriculture and education. He was not a complete unknown but as yet lacked a clear profile in the eyes of most Russians. Continuity would be preserved by a secret deal whereby Putin would be asked to serve as the new Prime Minister. The usual dirty tricks were played. Liberal-minded politicians were ruled out of the contest on spurious technical grounds. These included ex-premier Mikhail Kasyanov. Even the former chess world champion Garry Kasparov was banned. Tired veterans Zyuganov and Zhirinovski were allowed to stand but they received little airtime on television. In stark contrast, Medvedev’s every public appearance was filmed and the Kremlin’s mastership of ‘political technology’ secured the desired result in March 2008.
Medvedev was an appropriate selection for Putin to make. A fellow Leningrader, Medvedev had proved his allegiance as a political client over many years. He was bright in intellect and gentle in appearance. If Putin strutted around like a judo master, Medvedev had the aura of a retired member of a 1990s boy band. What attracted the rest of the world was Medvedev’s readiness to emphasize Russia’s need for the rule of law. But his appointment of Putin as Prime Minister made it clear that change, if it was going to happen, would occur only very gradually.
Russian assertiveness in international relations kept rising. The ‘foreign policy concept’ adopted in July 2008 took pleasure in the recent strengthening of state power and economic well-being in Russia. Foreign minister Sergei Lavrov suggested that the period of the West’s global dominance was over, and Medvedev’s team were determined to roll back the recent inroads made by NATO. A suitable opportunity cropped up in August 2008 when President Mikhail Saakashvili of Georgia sent troops into the rebellious republic of South Osetiya. Georgia had already announced its intention to apply for NATO membership. Russian presidents since the break-up of the Soviet Union had regarded the ‘near abroad’ as a zone where American influence was not welcome. Saakashvili’s campaign met with a furious response. The tank units of the Russian Army thrust their way over the mountains down into Georgia, smashing all military resistance and ruining strategic economic infrastructure. Medvedev, while announcing that armed occupation would be only temporary, proceeded to give official recognition to the independence of both South Osetiya and Abkhazia.
The Russian Army carried out a crude operation that attracted opprobium in the rest of the world. It was reported — and never convincingly denied — that Putin told French President Nicolas Sarkozy that he intended to follow the example of what the Americans had done to Saddam Hussein and to ‘hang up Saakashvili by the balls’. Sarkozy allegedly asked: ‘Yes, but do you want to end up like Bush?’ Putin admitted: ‘Ah, you’ve got a point there.’14 Russia’s people in any case felt positive about the Russian campaign. The rulers and the ruled sensed that proof had finally been given that the country would need to be taken seriously even by the Americans. First Putin and then Medvedev demanded that the US should stop using NATO as a means to pursue a unilateralist foreign and security policy around the globe. Medvedev claimed that the difficult stage of rebuilding the Russian state and economy was over. Russia was again a great power. It demanded respect for international law in relations among states. It required to be treated on an equal basis by the countries of NATO. It depicted itself as having its own distinct civilization, and the values and power of the West were declared as being on the decline.
The bludgeoning of Georgia removed lingering doubts in Poland and the Czech Republic about accepting the American proposal to establish installations against long-range ballistic missiles on their territory. Russia caused fear without gaining friends or admirers. It also worried potential investors. Despite its petrochemical riches, it needed help in modernizing its drilling and refining facilities — and the Russian government’s bullying of foreign companies was scarcely going to hasten this process. The harassment of Berezovski, Gusinski and Khodorkovski had the effect of inducing other rich businessmen to try and decant their fortunes to London. Putin and Medvedev inadvertently pushed economic talent westwards. The departure of Berezovski and other ‘oligarchs’ was regretted by few citizens but the atmosphere of Russian big business was not improved. The Kremlin and the petrochemical industrial sector were locked in an intimate embrace. Occasional information trickled out about the wealth of ministers. Public office became a ticket to vast wealth. Liberal political opposition to the Kremlin became demoralized. Yavlinski stepped down from the Yabloko leadership in June 2008. The Union of Right Forces gave up independent activity in November, amalgamating itself with other such parties into the new Right Cause party and campaigning for democracy, the rule of law and free markets; but the fact that Medvedev endorsed its foundation indicated how little a challenge to him it represented.15
Moscow’s meddling in the post-1991 territorial settlement in the former USSR was on the increase. Medvedev pointed out that this was no different in principle from what the Americans had done with Kosovo (which formally declared its independence from Serbia in February 2008). Russia strengthened its ties with Venezuela and Cuba as if searching to help the enemies of successive American presidents in the New World. A dispute with Ukraine about payment for Russian gas led to a suspension of supplies to several other European countries in January 2009 until the Ukrainian government agreed to terms. In November 2008, furthermore, Medvedev had announced the intention to install missile-launching facilities in the west of the Russian Federation in reaction to President Bush’s initiative in Poland and the Czech Republic. By January 2009, after Barack Obama’s inauguration as US President, things were calming down, and Medvedev suggested the need to resume negotiations. Russians aimed to bargain from a position of pride and strength. Tacitly they regarded most of the former Soviet Union as falling inside their sphere of legitimate influence and aimed to secure agreement from the Americans to keep their noses out of the region.
The Russian rulers vigorously pursued the national economic interest in international relations. They — or Gazprom and Rosneft — sold their energy resources to Europe. The existing pipelines favoured the maintaining of this commercial connection. The Chinese were known to be slow payers; the Europeans had a record of prompt settling of charges. Medvedev, moreover, was just as aware as Putin that Russia stood in need of foreign capital and technology. The boom in state revenues from gas and oil was disrupted in mid-2008 when world prices dipped; and the forecasts of Russian extraction of its energy resources anyway suggested that output was going to fall. Manufacturing, agriculture and transport remained in an outdated condition. Moscow and a few great cities flourished while the rest of the country awaited ‘modernization’. Public education stood in great need of adequate financing and rapid reform. The decline in the birth rate among ethnic Russians continued. What is more, eastern Siberia underwent depopulation as the state withdrew its subsidy for residence there. Although the incidence of poverty across the country declined during Putin’s presidential terms it still affected one in seven households in mid-2008.16 Russia took 131st place in a world ranking of countries according to how ‘peaceful’ they were. Quite apart from the violence in the north Caucasus, Russian crime, political repression and military expenditure were high and getting higher.17 Drug abuse, moreover, went on rising. Acute concern grew about Russia’s demography as measured in rates of mortality, births and ill-health.
A vast task of transformation lay ahead. The Kremlin elite was aware of its responsibilities to the nation and spoke often about them. Putin and Medvedev settled for a mixture of politics and economics which appeared to have worked elsewhere. Vigorous control over elections and policy-making was imposed. Big business was made to understand that its freedom to make money could and would be revoked if ever its leaders fell out of line with the government’s wishes. At the same time the Kremlin held back from censoring the Internet or closing down bookstores. Private dissent was tolerated so long as it stayed inside the apartments of the dissenters or was limited to a few eccentrics selling poorly produced pamphlets on street corners — this was more than what was allowed in China, Singapore or Indonesia.
The Russian economy after 1991 was immensely sensitive to shockwaves emitted by the global economy. When the global ‘credit crunch’ occurred in summer 2008 the Russian stock exchange had to suspend its operations several times before the end of the year. The decrease in oil and gas revenues in the same months aggravated problems. The budget had been written on the assumption that Russian energy products would continue to command high prices on foreign markets. There was a return to the difficulties of the 1990s with salary and pension arrears, job uncertainty and inflation. The Russian boom had failed to last a full decade. Closures of businesses became an epidemic. Even the mightiest Russian company, Gazprom, experienced an eighty per cent collapse in its share prices in the second half of the year. Many of the most successful entrepreneurs had accumulated their wealth by raising huge loans from foreign banks, and as the value of commodities fell on world markets they faced difficulty in servicing their debts. The solution for them was to sell off assets to the state. Once-mighty oligarchs felt the bruises of a deep recession and started to lose their grip on the country’s natural resources. The loans-for- shares debacle of 1996 was repeated in reverse: this time it was the business elite going cap in hand to the government. The fragility of Russia’s decade-long economic upsurge was revealed.
