In this excerpt from Mr. Putin: Operative in the Kremlin, Brookings experts Fiona Hill and Clifford Gaddy describe why Vladimir Putin likely came to power in Moscow after a seemingly unsuccessfully role in St.Petersburg.
For some six years (1990 — 96), Vladimir Putin played a key role in the economy of Russia’s second-largest city.
But in stark contrast with the performance of the Russian economy that he later oversaw, St. Petersburg’s performance was very poor in this period.
Every city and town in Russia suffered in the 1990s, but few places had lost as much in relative status as St. Petersburg.
When the Soviet Union collapsed, St. Petersburg was nearly on a par with Moscow in terms of per capita measures of economic performance.
Six years later, it was far behind in incomes, households, corporate sector, profits, and investment. St. Petersburg’s per capita gross regional product (GRP) was only 60 per cent of Moscow’s, while its per capita income was only 35 per cent of the capital city’s.
St. Petersburg outpaced Moscow primarily on negative indices. Its unemployment rate was 23 per cent higher; the out migration rate was 86 per cent higher; and suicides among working-age males were 70 per cent higher.
The area of the economy that was Vladimir Putin’s specific responsibility — trade and investment — was one where it had been expected that the transition to a market economy would benefit St. Petersburg because of its proximity to Western Europe.
But, again, by the end of Putin’s tenure, this was also a terrible failure. On a per capita basis, foreign trade was 26 per cent of Moscow’s, foreign investment was 55 per cent, the number of small businesses set up with foreign participation was 38 per cent, and the number of people employed by foreign-owned small businesses was 30 per cent of the capital’s.
In short, judging by the abysmal economic record of St. Petersburg, Putin’s credentials as an economic policymaker were not good. His credentials as a political manager, especially in light of the food scandal, were equally poor.
Yet, in August 1996, Putin was given a job in the administration of the president of the Russian Federation, by people who had worked closely with him and knew how questionable his performance had been.
On what basis did they appoint him if it was not on the balance of his record as deputy mayor in St. Petersburg? Why was Putin brought into Moscow in 1996?
The people who brought Vladimir Putin from St. Petersburg to Moscow never cared about his credentials as a specialist in developing business. For them he was an expert in controlling business.
All the time Putin worked in St. Petersburg, he played an official role as deputy mayor and chairman of the Committee for External Relations, but behind the scenes, Mr. Putin operated in his most important identity — the Case Officer.
In St. Petersburg, Vladimir Putin was an “operative.” Businessmen were not partners but targets.
Once he came to Moscow, Putin eventually began to target another set of businessmen, the Russian oligarchs. His goal was to make sure that Russia’s own new class of capitalists did not predate on each other and on the Russian state.
He was to try to harness them to be “bigger and better” and make more money in the service of Russia — not just for themselves.
Excerpted from the book Mr. Putin: Operative in the Kremlin. Copyright 2015 by The Brookings Institution. Reprinted by permission of Brookings Institution Press, Washington, D.C. All rights reserved.
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