Four experts take a peek into the future

Dmitry Medvedev has been elected the new President of Russia. The news did not exactly steal headlines even when the returns of the March 2 elections were published. Ever since Vladimir Putin threw his weight behind his candidacy, the outcome was a foregone conclusion. The outgoing President's authority in Russia is indisputable.

The hallmark of Putin's rule has been political and economic stability.

For Russians, who in the 10 years before Putin experienced chaos, crises, and the collapse of social systems, the President's main achievement has been to provide stability and a chance to pause for breath and pull themselves together. But stability that lasts too long can easily become stagnation.

The social and economic plans Putin and Medvedev set forth in February are massive and ambitious. Will the new President be able to implement them? What tasks will he have to grapple with first? How big will be the internal and external challenges he will have to confront in the early months of his tenure?

In these pages four leading Russian experts attempt to answer these questions.

Not too liberal, but liberal enough

As the election drew nearer journalists wondered how to refer to Dmitry Medvedev between March 3, when news of his victory is confirmed, and May 7, when he will be inaugurated: "President-elect" or "elected as President"? Eventually they settled for a joke: "The man elected by President Putin." But there is a grain of truth here. No one could occupy Putin's office without his endorsement, because of Putin's high approval rating and because of his top-down vertical power structure.

It is fair to assume that the game of patience Putin played before choosing his successor featured more than just the card marked "Medvedev". The President could not fail to hear the names of various candidates and short lists coming from every side. Behind these calls were personal interests and far-from-uniform views on the course post-Putin Russia should take.

So why has Putin chosen Medvedev?

Putin recently spoke about the managerial skills his successor gained working in the administration and government, and about his personal qualities ("honest and decent", "progressive, modern, with an excellent background"). He also referred to the "personal chemistry" between them.

Granted, "personal chemistry" is important, but Putin also had to heed political arguments.

Medvedev's words about democracy ("either it exists or it doesn't") were not lost on Putin. Nor his criticism of "state capitalism" and his "freedom is better than unfreedom", which earned him the reputation of a liberal, especially abroad.

Putin probably sensed it was time, if not to change course, at least to make some adjustments and shift the political emphasis from power, his preoccupation over the past four years, to liberalism. Not too liberal, but enough to allay fears, in and outside the country, about an "unravelling of liberal reforms". He reached this conclusion because his own political agenda has been exhausted. The authorities seem to have overcome the fear of a "colour revolution" and to have done everything to rule out any risks of political instability.

The economic landscape is not exactly idyllic, being vulnerable to changes in oil prices, the persistent threat of inflation and the fallout from negative trends in the world economy.

That said, one should not expect Medvedev to do anything dramatic. The change is likely to be more in style rather than substance. Caution is a feature of the new President's political style. Observers note, for example, the neat and careful way in which he carried out the reform of the Civil Service and the liberalisation of Gazprom shares.

Will Putin's plan work? It will depend on him because he'll have to build a system of checks and balances (especially early on) to keep the Medvedev safely away from conflicting interests and lobby groups. And it will depend on Medvedev's persistence and leadership in pursuit of the national goals at this new stage of Russia's development.

Vitaly Dymarsky, Political commentator

Law above all

The new President's economic policy should meet the primary concerns of both businessmen and rank-and-file citizens, because the former's success depends on the latter's prosperity.

To improve the investment climate, it is necessary to reduce taxes and bring rules closer to world standards. This will encourage investment and promote economic growth.

Ordinary citizens are interested in how the government will redistribute national wealth. If the poor in depressed regions see no improvements, social tensions are bound to impede growth. This is like passing between Scylla and Charybdis. On the one hand, it is essential to encourage business to develop and make profits. On the other, it is necessary to collect taxes for the broadest possible support of those who cannot take care of themselves.

It is crucial to continue the four national priority projects. There have been stumbling blocks in their implementation and there have been rumours of corruption at the bottom level in the regions. These problems may be overcome. The main thing is that these projects have produced results, and people believe the government is ready and able to improve the situation in agriculture, education, health care and housing. It is worth extending them in new directions.

Dialogue with can-do people will play an important role here. No country has developed without consultations with businessmen, who know where gains will be greatest. Having derived tremendous revenues from surging oil and commodity prices, we cannot fund everything simultaneously. We would simply spread it thinly without any effect.

For this reason, it will be important for the new President to develop a dialogue with business that will produce feedback and provide effective solutions.

The greatest threat to Russia's steady advance lies in its imperfect institutions of power and management. We need institutions that will allow society to regulate itself. We have to create a genuinely independent judicial system. The right to property should be immutable. This is an absolute must for businessmen. Nobody should be able to come and say: "Give us your business, we'll run it better."

Competition law should also be improved, and the Federal Anti-Monopoly Service should be given more authority. Otherwise monopolies will oust medium-sized and small businesses. Price collusion will pale into insignificance compared with the results of further monopolisation. It is necessary to find a sound balance between the public and private sector, and it is probably time to restrict the growth of state-owned assets. Unless all these measures are taken, many of our plans will be jeopardised.

Finally, there are two problems that threaten seriously to impede economic progress - the demographic situation, and the transport and energy infrastructure. Needless to say, we will not remedy such far-reaching problems in a single presidential term, but we must at least make a breakthrough in these areas in the next four years.

Igor Yurgens, Vice president of the Russian Union of Industrialists and Entrepreneurs

A five-point plan

It was not long ago that the Russian government's social policy consisted of only one issue: helping the vast majority of its citizens live through the aftermath of the 1998 financial crisis.

Though memories of the default are still raw, in the past 10 years the government has successfully minimised the social impact of the catastrophe.

Wage and pension arrears in the public sector are a thing of the past.

Public health care, general education and vocational training have mostly weathered the crisis.

Prosperity is growing in all sections of society, though unevenly.

But stopping here would seem premature.

All countries - even the most highly developed - have social problems.

Poverty, the quality of health care and education, and small pensions are challenges for any government.

One measure of social progress is the extent to which these problems are minimised and the nation has moved on to a more complex agenda.

Russia is now in a position to do this.

Of prime importance, then, is the social agenda the new President will inherit.

First, Mr Medvedev will need to address the widening gap between rich and poor. At present, the incomes of the richest 10pc of the population are approximately 17 times larger than the incomes of the poorest 10pc. The government has no effective policy for redistributing funds in favour of the disadvantaged and offering encouragement to those who so far do not earn enough (above all public sector employees and small businesses).

Second, the quality of life of most Russians (even those who consider themselves middle class) has deteriorated since the break-up of the Soviet Union. They have to pay more - and unofficially - to get quality health care and education. As a result, only 15pc-20pc of population have the means to go to a good doctor and give their children a competitive education. Of no surprise is the fact that Russia only holds a modest 67th place in the human development index.

Third, Russia is facing an increasing labour shortage, despite positive recent changes in the demographic situation. It is clear that this situation cannot be normalised without a wise migration policy.

Fourth, the growth of inflation will seriously complicate the life of Russia's 40m pensioners. The average pension is less than 25pc of the average wage, although the official poverty-line figure is 40pc.

Fifth, gas, electricity and water tariffs are all set to grow several-fold as a consequence of market liberalisation, the balancing of domestic and export energy prices, and potential shortages in the domestic market. Substantial increases in rents and utilities will be a heavy blow to the living standards of low-income families and the middle class.

These will be the five hottest problems on Russia's social agenda in the next few years.

Whether they can be solved through the joint efforts of a renewed state, businesses liberated from red tape, and a rising civil society remains to be seen.

Yevgeny Gontmakher, Director of the Centre for Social Studies, Russian Academy of Sciences

A softer line towards Europe

Russia's new President is reluctant to reveal his foreign policy, perhaps leaving it for now to President Putin, one of the most practised foreign policy players around. So far, the main tenets of Dmitry Medvedev's platform have been domestic and economic: Russia will be committed to further modernisation, partial liberalisation of the economy, investment in human resources and renunciation of state capitalism. In foreign policy, this implies conserving efforts and avoiding open confrontation with other major powers, except on fundamental issues. In short, it means following the path already forged by China.

Domestic commentators, afraid of striking a discordant note, have toned down their anti-Western "great power" rhetoric. External commentators have also been generally positive.

By the same token, Russian liberals and those engaged in business have argued that confrontation with the West is economically damaging and should be abandoned. A softer line could also be discerned in a speech delivered in Munich by Sergei Ivanov, once Medvedev's main rival for the presidency.

Although the sycophantic Russian political classes have hardly mentioned him recently, he will undoubtedly be one of the key figures in the country's future leadership.

So the future President has pledged to stay the course, but to soften it a bit. And today Russia can afford to take a softer stance. In recent years its prestige and leverage have rocketed out of proportion to its real economic weight and military-political potential. There is nothing wrong with that, apart from the risk of unwarranted euphoria. The West has yet to live down its own sense of weakness and shock at Russia's newfound assertiveness and drive.

The EU has no Russia policy, but it is anxious to prove through its dealings with Russia that it does, after all, have a coherent foreign and defence policy. This makes it likely that any concessions on Moscow's part will be seized upon, but not reciprocated. This is not to say that there are no avenues to be explored in the European direction. If that were true, Russia would face a prolonged period of semi-isolation from the cradle of its own civilisation, Europe.

This is all the more reason to dramatically intensify European policy. If concentrated efforts are applied, things could well bear fruit within a few years. However, this will only happen if Brussels overcomes its insecurity, sheds its illusions about a single European policy and realises that a strategic alliance with Russia is crucial if it is to avoid being sidelined as a geopolitical and economic entity by the booming powers of Asia.

It is probable that the new Russian President will be cajoled, pushed and even provoked into making concessions, especially if he does not immediately soften the country's foreign policy as seems likely. He will have to be firm enough not to appear weak, while calm enough not to slide into confrontation and hostile rhetoric.

The best that can be expected from the new President's foreign policy is constructiveness and initiative, but these have so far been conspicuous by their absence. Indeed, they have been for some time. While the outgoing administration managed to change rules of the game it did not like - and gained Russia more influence and prestige - it did not actually offer an alternative of its own. But an alternative is urgently needed in relations with Europe and with the United States. Unless one is found, the "constructive cooling" that Russia initiated may degrade into a bitter winter of systemic confrontation.

Turning points in policy have been declared, but so far few turns have been taken. For example, Russia does not have a consistent economic strategy with regard to rising Asia. We may soon find that because of this we have missed important opportunities.

Finally, the new President, who will take control of a stronger and more confident Russia, can afford to be merely polite with the outside world, concealing for now any not-entirely-justified arrogance.

But perhaps most importantly, Medvedev will take the reins of power at a time when a distinct scent of conflict, possibly of a major war, hangs over the world. The overarching task of the new leader of one of the world's most influential countries is to ensure that such devastating conflicts are never given a chance to develop - or if they do, to keep Russia out of them.

Sergei Karaganov, Dean of the World Economics and International Affairs Faculty, State University - Higher School of Economics

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