One of Putin’s major selling points — and that of his successor, Dmitri Medvedev — has been the impressive rates of economic growth that have occurred on his watch. In no small measure, these economic successes have helped to bolster Putin’s public approval rating to 70-80%, and ensure an easy victory for his party in last year’s Duma elections. But most of this boasting is just hot air, with little substance to back it up. Foreign Affairs recently ran an article by two prominent Russia analysts which took aim at this myth; their argument, in brief, was that Putin’s centralization of power has stifled the country’s growth potential, not maximized it.
The Economist now has a nice take-down of their own, arguing last week that the Russian strongman has actually impeded growth more than he’s encouraged it. They note, for instance, that the Russian economy actually started rebounding 18 months before Putin took office and that, in large part, he came on board in time to reap the benefits of Yeltsin’s economic liberalization program. Oil prices have also greatly buoyed the country’s rising GDP. To his credit, Putin made some important changes early on in his presidency — simplifying the tax code, instituting budget reform, repaying the national debt — but, beyond this initial period, he has hindered growth much more than helped.
In particular, the article suggests, the Russian president has centralized important businesses in state hands, making these industries much less efficient. He has also devalued the rule of law, and corruption has flourished. The attack on Yukos in 2003 didn’t help the economy either; with no clear respect for private property, Putin undercut the opportunities for foreign investment. As The Economist concludes: “Over the past few years, Russia has been outstripped (though from a lower base) by the former Soviet republics of Ukraine and Georgie which have no oil. If Russia enjoyed the rule of law, was not stifled by inefficient monopolies such as the gas giant Gazprom and had roads rather than vague directions, its growth – given the oil boom – could surely have been in the double digits.“