Putin's last term: Taking the long view

Policy brief
Ian Bond, Igor Yurgens
23 January 2019

Putin has dominated Russia since 1999. He now faces many problems, including how to transfer power, if at all. The West should prepare for change – or for no change.

  • Vladimir Putin has dominated the Russian political scene since 1999. But he is now in what should be his final term as president. He faces economic, social and foreign policy problems; and he has to decide what will happen at the end of his term of office.
  • The performance of the Russian economy in recent years has been mixed. Inflation has fallen, foreign reserves have risen and the ruble’s exchange rate is relatively stable; but growth has been anaemic and real disposable incomes have fallen.
  • Putin has set ambitious economic targets for his final term, but is unlikely to achieve them. Russia is not investing enough in education to enable it to modernise and diversify the economy. The oil and gas sector is too dominant. Structural reforms (such as moving investment from the defence sector to other, more productive areas) are not on the cards.
  • Russia has suffered from demographic problems since the Soviet period. With a shrinking working-age population and an increasing number of unhealthy pensioners, Russia risks stagnation, while countries like China leap ahead.
  • Putin has yet to give any hint of his thinking about his successor. He could find a trusted individual to take over as president; change the Russian Constitution to allow himself to run again; or create a new position from which he could still exercise power. But if he stays in power too long, Russia could become like the late Soviet Union – a system unable to renew itself.
  • In foreign policy, Putin has had a number of successes, and when the West has pushed back, for example by imposing sanctions after the annexation of Crimea in 2014, his regime has used the external pressure as a unifying force at home. He has regained some of the influence in international affairs that Moscow lost when the Soviet Union broke up. He has engaged with other great powers in solving shared problems, when it has suited him; he has acted decisively when the West has hesitated; and he has been adept in exploiting the West’s internal divisions.
  • In dealing with Putin, Western policy-makers need to act as though nothing will ever change in Russia, and as though everything might change overnight. That means ensuring that the West itself is resilient in the face of threats; but also that the door is open to improvements in relations. Russia needs to consider whether its interests would be better served by having more co-operative relations with its neighbours – a policy that would also build trust with the West.
  • Russia and the West should talk about some of the issues that divide them, even if agreement on what to do about them will have to await fundamental political changes. International security, including nuclear and conventional arms control, should be at the top of the agenda. New areas of confrontation, such as outer space and cyber space, should also feature. The two sides should look for shared problems, such as climate change or global health, that they could tackle together or at least in parallel.
  • For Putin, a better relationship with the West could be part of his legacy. And the West has an interest in laying the foundations for a stable relationship for the rest of the Putin era and beyond.

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