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Washington Post, May 31, 2003

Putin Losing Momentum on Russian Domestic Reforms

By Peter Baker, Washington Post Foreign Service

MOSCOW -- Although President Vladimir Putin emerged from the Iraq crisis with his popular standing intact, disillusionment has grown within the Russian political establishment over his inability or unwillingness to turn his strength into meaningful change at home.

Putin's staunch opposition to the U.S.-led war that toppled Saddam Hussein resonated with the Russian public, but the domestic reforms that once seemed so promising appear to have stalled. As he hosts President Bush and dozens of other world leaders in St. Petersburg this weekend to show off Russia's refurbished "window to the West," Putin has found it easier to renovate buildings than a country.

Some political leaders and analysts already have begun comparing his tenure to the lethargic rule of Leonid Brezhnev in the 1970s and early 1980s, a period of suspended animation and economic drift that ultimately led to the disintegration of the Soviet Union less than a decade later.

"This is a new stagnation period," said Boris Nemtsov, a leading reformer and head of the Western-oriented Union of Right Forces political party, using the word associated with Brezhnev. "Russia lost a big opportunity. All of the reforms stopped, including military, including tax, including bureaucracy reform. . . . Sometimes I feel like we're living with Brezhnev again."

Even some Putin allies concede his administration has lost steam and console themselves with the prediction that he will be freer to do more in his next term should he win reelection in March, as is widely expected. In effect, even in this sympathetic analysis, Putin's drive to Westernize Russia will remain frozen for at least 10 months.

"It's not stagnation," said Dmitri Rogozin, a parliamentary committee chairman and Putin supporter. "Putin was waging counterrevolution, stabilization of the regime, calming down the passions. Of course there is none of the energy that usually accompanies a revolution, but there shouldn't be any energy at this point in time. At the same time, if there is no energy in his second term, that would be a real drama."

The meeting this weekend in St. Petersburg comes at a time of profound choices for Putin: Will he repair the rift with the Americans or will he solidify the entente with France and Germany forged out of mutual opposition to the invasion of Iraq? Will he continue to push Russia toward a genuine Western-style market economy, or will he resign himself to the inertia that has bogged down the post-Communist transformation?

The shift toward "old Europe" and away from the United States in recent months has sparked debate about just where Putin is taking Russia internationally. While some push him to seize the moment and lead a European axis to rival U.S. hegemony, others believe that Russia's future ultimately lies with the United States.

"We will have to find our real place," said Vladimir Lukin, a former ambassador to Washington, who said he thought Putin should position Russia as the go-between. "We have a chance to be not a splitter but the middleman, a kind of mediator in the Euro-Atlantic split."

Putin came to power in 2000 as the successor to the mercurial Boris Yeltsin and immediately set about restoring a degree of order after a decade of economic and political upheaval. Along the way he demonstrated an authoritarian streak, effectively seizing control of the nation's television networks, hounding defiant tycoons out of the country, reinvigorating security agencies and prosecuting a brutal and still unsuccessful war in the separatist southern republic of Chechnya.

But Putin also has embraced Western-style economic reforms, and early in his presidency he advanced more reforms eliminating the vestiges of the U.S.S.R. than did his revolutionary predecessor. He pushed through a land code legalizing the sale of property, a labor code giving businesses more control over the workforce, a tax code establishing a single flat rate and a court system expanding the use of juries and curbing prosecutors' power.

Once an economic basket case, Russia has rebounded largely on the strength of its oil industry. The gross domestic product has grown 20 percent in three years, real incomes have risen 32 percent, the government has paid off a quarter of its foreign debt, infant mortality has fallen and for the first time in a half-century Russia has gone from being a grain importer to an exporter.

The decisive moment seemed to have come after the Sept. 11, 2001, attacks on the United States, when Putin firmly placed himself in the pro-American camp and enlisted in Bush's war on terrorism, a move seen as a seismic shift for Russia. Yet in the past few months he broke with Bush to join France and Germany in blocking U.N. endorsement of the invasion of Iraq. Meanwhile, Putin lost momentum at home in pushing major structural reforms and has taken to blaming his own government for failing to make more progress.

Putin's annual speech to parliament this month was a scathing critique of how far Russia had not come in the past three years. The economy remains "unreliable and very weak," the instruments of state power "ineffective" and most industry "not competitive," he declared.

Yet as he called for doubling the gross domestic product in 10 years and making Russia a "great power" again, he offered little in the way of concrete plans.

Heading into a weekend when he will host not only Bush but also German Chancellor Gerhard Schroeder, Chinese President Hu Jintao and dozens of other leaders before heading to France for the summit of the Group of Eight industrial powers, Putin has economic incentive to move closer to Europe -- given that it represents 50 percent of Russia's trade.

To truly revamp his economy, however, Putin needs American help, analysts contend, and so officials say he will seek to paper over the differences with Bush on Iraq. Bush seems ready to reciprocate. In a recent speech, U.S. Ambassador Alexander Vershbow said the U.S.-Russian schism over Iraq was "a bump in the road, but we are putting that behind us."

"Russia faces a choice of getting closer to the Western security structures or remaining isolated," said another senior U.S. official, who spoke on condition of anonymity. "And the issue is which Western security structures Russia wants to grow closer to: a U.S.-led NATO or the Luxembourg-Belgium-France-Germany alliance? If you really want to ally with Luxembourg, I guess that's up to you."

Sergei Rogov, director of the Institute for U.S.A. and Canada Studies in Moscow, sees it differently. During the Iraq crisis, he said, Putin positioned himself squarely in the international mainstream.

"On balance, Putin is trying to keep an evenhanded relationship with the U.S., with Europe, with China, and he has been pretty successful," Rogov said. "He's avoiding conflicts he cannot win."

One conflict he stands likely to win will be the upcoming elections. The first test will be in the December balloting for the State Duma, the lower house of parliament. Although Putin already dominates the Duma, the Kremlin-backed United Russia party wants to smash stubborn Communist opposition.

The presidential election follows in March, and Putin so far faces no serious threat. Nemtsov, who harbors presidential ambitions, said he would decide whether to run after seeing Duma election results; Communist leader Gennady Zyuganov, a two-time losing candidate, recently said the same. Analysts suspect that liberal leader Grigory Yavlinsky, another two-time contender, is angling instead for a cabinet job.

"There's nobody else," said Michael McFaul, a Stanford University professor and longtime observer of Russian politics. "There is no credible alternative to him. Everybody talks about 2008."

With everything seemingly frozen until the vote, reformers have grown disenchanted with Putin. "He's thinking only about the elections," said Vladimir Ryzhkov, an independent member of the Duma. "That's why he takes everything very carefully. . . . But there's a saying in life: If you don't move forward, you move back."

Correspondent Sharon LaFraniere contributed to this report.


Washington Post, May 31, 2003

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