Medvedev’s Election Victory

Marhsall Goldman is a Professor of Economics Emeritus at Wellesley College and Senior Scholar at the Davis Center for Russian Studies at Harvard University. In his forthcoming book, Petrostate: Putin, Power, and the New Russia , Goldman chronicles Russia’s dramatic reemergence on the world stage, illuminating the key reason for its rebirth: the use of its ever-expanding energy wealth to reassert its traditional great power ambitions. In the article below Goldman reflects on Medvedev‘s recent victory in the Russian elections and on what it means for Russia.

Dmitri Medvedev’s election (or more accurately, selection) as president of Russia was not much of a cliffhanger. By eliminating any viable contender, his patron, Vladimir Putin did all he could to ensure his protégé’s election. For many Russians, there was little point in even bothering to show up at the polling station–everything had been decided in advance. Except for Medvedev, no other candidate (or even a potential candidate) was allowed meaningful access to TV, much less campaign funding. Large public rallies were restricted, if not banned outright.

It’s not that Medvedev had much to fear. Even if access to TV was open to all and the candidates had abundant funding, as Putin’s choice, Medvedev was automatically the favorite. After all, with public opinion polls showing over 70 % support for Putin, whomever he selected as his successor was endorsement enough. Putin is genuinely popular among the Russia public. Russians credit him with transforming their country from a state of near-bankruptcy after its August 1998 financial collapse—when most banks closed their doors and the state defaulted on its internal and external debt—to its present position as a financial powerhouse. Today, Russia has the world’s third largest holding of foreign exchange and gold, and its economy has been growing at about 7 % a year during most of Putin’s tenure. More than that, Russia has again begun to build up its military prowess and as several Russian leaders have boasted, “No longer will other countries (read the US and the EU) dare to push us around and tell us what to do and what not to do.”

None of this would have been possible if oil prices had not jumped from about $12 a barrel in 1998 to over $100 today. If Boris Yeltsin had stayed on for another eight years as president rather than turn over the job to Putin, with that increase in prices, even Yeltsin would have looked like an economic genius. That is because Russia today is the world’s largest producer of petroleum and the world’s second largest exporter. Moreover, Russia’s Gazprom, the country’s state dominated gas producer, is the world’s largest producer and exporter of natural gas. It is a major supplier of natural gas to most of Europe. Germany, for example, imports 40% of its natural gas from Russia. This is not only important economically for Russia, but politically. If the pipeline is cut off in the middle of the winter, there is no other readily available alternative.

It is not a coincidence that Medvedev has been not only a senior government official in the Kremlin (most recently the First Deputy Prime Minister) but also Chairman of the Board of Gazprom. Only Russia under Putin has allowed senior government officials to serve simultaneously in both the government and in for-profit as well as dividend-paying corporations.

What remains to be seen is whether or not Medvedev can sustain Russia’s economic success and whether or not he can work harmoniously with Putin when Medvedev becomes the senior ranking official and Putin becomes prime minister—that is, Medvedev’s subordinate (not the other way around as it has been since 1991). Medvedev as President has the right to hire and fire the prime minister but is unlikely to do so, at least in the early years of his presidency. After awhile however, there is a good chance that the younger Medvedev (42 now) will begin to question the need to clear everything with his mentor, Putin (age 55), who, given his KGB background, has a much tougher and rougher edge than Medvedev, whose parents are both educators (his father is a college professor). Moreover, if oil prices begin to fall and/or inflation begins to accelerate, we will see whether or not Medvedev will be able to make Russia less dependent on oil and gas, the goal of both Putin and Medvedev. Medvedev must also keep in mind that unlike Putin, who was appointed Prime Minister and then President at a historic low point in Russia’s economic and political history yet led it to a high point, Medvedev takes over at a high point. Given the recent deterioration in the world’s economy, it will be hard to sustain the momentum built up by Putin—but easy to lose it.