Sunday, September 16, 2007

Putin's Next Step: "Prepare Three Envelopes"

Anyone practicing amateur (or professional) Kremlinology must have been struck by an exchange published in the transcript of the Valdai discussion club. IMHO Putin's joke about leadership style explains why Yeltsin's chaos was blamed for Russia's problems; why there was an economic boom in the middle period; and finally why there is such uncertainlty about the future:
PIOTR DUTKIEWICZ: Which do you think are the three most important things you have achieved during your time in the Kremlin? Which three things did you not have enough time to do or were not able to do? And what are three pieces of advice that you would give your successor when you have your first meeting with him?

VLADIMIR PUTIN: On this account we have an old joke. When the head of a company or - let’s take a bigger picture - of a region, leaves his position, he gives his successor three envelopes and tells him the following: ‘Open the first envelope now, the second in two years, and the third just before you leave your position’. Upon opening the first envelope he reads: ‘Blame it all on me’. In two years he opens the second envelope which reads: ‘Promise everything’. And when he has six months left he opens the third envelope and reads: ‘Prepare three envelopes’. (Laughter). This story is relevant because our colleague has asked me to formulate three things three times right now.

I am not ready to state all of the most important things in all three spheres. But it is very obvious that we were able to strengthen Russian statehood. It seems to me that there is a great deal that can still be done in this field: to administratively and morally strengthen Russian statehood and establish more or less capable power and economic agencies.

The second achievement concerns the restoration of the Russian economy. We mentioned basic economic indicators. When I started working Russia’s gold and currency reserves amounted to 12 billion USD. Just this year they grew by 80 billion and total around 275 or 280 billion USD, I think. We had hyperinflation. And though it remains high I think that this year we will achieve nine percent. And before it was 30 or more and even went off the scale, up to unknown levels.

We constantly held out our hand to all international financial organisations for credits. As you know, today we are not financing our main activities with money obtained from credit and we are also repaying our debts ahead of schedule. And just recently we paid back 22 billion USD that we owed. Now the ratio of our foreign debt to GDP is one of the best in Europe. On average over the last three years the economy has grown by seven percent. In the first six or seven months of 2006 it grew by 7.4 percent.

40 million Russian citizens lived below the poverty line. Today there is still quite a lot of poverty. But it is no longer 40 percent of citizens – I think it is somewhere around 20 percent. The number has been halved. And I think that before the end of 2008 this indicator will approach the general European level.

We have minimal unemployment, quite simply minimal unemployment. And I think that we have learned to be quite pragmatic, but not confrontational, when defending our interests in the international arena. In other words we strengthened the Russian Federation’s international position.

If asked to state briefly and from the top of my head, these are three basic things that I would classify as positive.

What would I have liked to do and what is still incomplete? I have already referred to lowering the number of citizens below the poverty line as an advantage but, at the same time, there are still large numbers of poor people. The average income is still too low. However, we understand that in order to maintain macroeconomic stability and the rate of economic growth we cannot lessen the numbers of poor people in a way that is harmful to macroeconomic stability. This is the first and most important thing.

The second is the fight against corruption. I think that this is one of the very significant negative things that we have to continue to fight against.

And the third – something we have already talked about with Mrs D’Encausse – is demography.

What must we do in the near future? Incidentally, it is impossible to talk about such things with certainty and I am very much at risk when I do so. But nevertheless I will talk about things on a general level. We need to continue developing our country’s political system. We need to establish a truly multiparty system, develop self-management and improve relations between the federal centre, the regions and the municipalities so that each level takes responsibility upon itself and is able to accomplish the tasks incumbent to it. And of course we must continue to diversify the economy and thereby create the conditions that will help us resolve social problems.