In the early 1990s, I was a relative optimist about the direction that Russia was headed. Despite the flaws in the 1993 Constitution, Russia had a highly educated population, and the middle class was growing, suggesting that more representative political institutions might evolve. Since the ‘loans for shares' deal and the 1998 financial crisis, I have had serious doubts. I see three serious dilemmas inhibiting the consolidation of Russian democracy," remarked Harley Balzer, Associate Professor of Government, Georgetown University, at a Kennan Institute lecture on 21 October 2002. He noted that, "in the short term, the recent economic recovery strikes me as shaky because it is based primarily on higher prices for energy exports and the devaluation of the ruble." In the longer term, Balzer noted three serious constraints on democratic development.
The first dilemma, he explained, is the overall structure of Russia's economy with its high concentration in commodities. Resource-based economies tend to foster oligarchy, with weak contestation and few countervailing pressures to combat the power of rent-seeking elites." Balzer stated that despite the fact that Russia's GDP has returned to pre-1998 levels, there appears to be little investment or development in other sectors of the economy. He explained that it appears that Russia is falling into a "pernicious cycle that is typical to countries where the energy sector dominates, and seriously limits the real sector of the economy." He noted that finished goods account for less than ten percent of Russia's exports and the number of small and medium enterprises is "still hovering in the same 850-900 thousand range as in 1995 when some of us started to get optimistic about it." Balzer noted there are some positive indicators about the Russian economy, such as the return of some capital flight, yet questions remain about how that capital will be used.
A second dilemma for Russian democracy involves Putin's policies, which Balzer describes as "managed pluralism." He explained that while there is political stability, there is a lack of "the development of political openings and the pressures that would force the ruling elite to divest itself of its control. Democracy does not just happen; it is produced by contestation." Balzer noted several examples that illustrate Putin's attempts to "create a form of soft authoritarianism suitable for the 21st century global age, where the regime permits and even encourages some diversity, but keeps it within limits it deems acceptable." One example is the law on political parties. According to Balzer, "Putin is smart enough to know that you can't have a one party system, but there ought to be just a few ‘tame' parties. Regional, religious, ethnic, anti-system parties that provide serious opposition are to be excluded." Another example of Putin's managed pluralism can be seen in the media. Balzer stated that it is not a situation where the government necessarily wants prior censorship, or only one voice, but the regime reserves the right to limit the number of voices, and the kind of voices. Independent TV networks with national reach are clearly not acceptable. Other examples of Russia's managed pluralism include government efforts to orchestrate labor unions, business associations, youth groups and last year's Civic Forum.
The third long-term dilemma for Russia involves demography. Balzer argued that Russia's demographics create a "political situation where it is enormously difficult to liberalize or to generate pressures for greater democracy." He contended that the declining Russian population combined with increasing populations of non-Russian, non-Slavic, non-Orthodox groups could result in "what we have seen in a host of elections in Europe where the immigration issue led to a major role for candidates running on anti-immigrant, anti-foreigner platforms." Russia is experiencing sharp social and educational stratification, and there is a serious question whether it makes sense to subsidize higher education for the children of the upper and middle classes when 20 percent of the population is getting less than 5 years of schooling. Similarly stark choices are likely to be required in the health care system, where the onset of HIV/AIDS threatens to consume the entire available budget. Balzer stated that tensions resulting from the demographic crisis are likely to encourage the leadership to continue its policy of managed pluralism.
Balzer stated that while he sounds pessimistic, this is not "a forecast of imminent disaster, collapse, or crisis for the Russian Federation." He noted that, "the processes are slower, which makes them more dangerous. Politicians everywhere put off unpleasant choices." According to Balzer, pressure from the world community for democratic reform in Russia has slackened since September 11th as the United States has slipped back into its "Cold War pattern of being willing to accept authoritarian regimes that support our international policy." Balzer concluded, "Russia's long-term fragility and the potential for instability in Eurasia absolutely requires us to think about these challenges, and that is why I am so disturbed about the relationship between demography and politics in the former communist world."