RUSSIA’S POWER AND · PDF file · 2008-06-18487 Vladimir RUKAVISHNIKOV1 UDK: 341.238(470) Biblid 0025-8555,59(2007) Vol. LIX, br. 4, pp. 487–512 Izvorni naučni rad Oktobar 2007

487

Vladimir RUKAVISHNIKOV1 UDK: 341.238(470)Biblid 0025-8555,59(2007)Vol. LIX, br. 4, pp. 487–512

Izvorni naučni radOktobar 2007.

RUSSIA’S POWER AND COMPETITIVENESS

ABSTRACT

The revival of the Russia’s power and improvement of the country’scompetitiveness are declared as the main goals of the present Russianadministration. The evolution of the Russian power from the early 19thuntil the early 21st century is presented in the first section of this article.The analysis reveals why the present-day Russia is far weaker than in the1970s when the Soviet power was bigger than the American one. Theposition of Russia in the rating of the global economic competitiveness isa key issue of the second section. In the final section the Russia’s goalsfor the future are discussed.

Key words: national power, economic growth, global competitiveness,political regime and country’s competitiveness, economic liberties andpolitical democracy, Russian future goals

Ključne reči: nacionalna moć, privredni rast, globalna konkurentnost,politički režim i konkurentnost zemlje, ekonomske slobode i političkademokratija, budući ciljevi Rusije

INTRODUCTION

According to much recent commentary, Russia is back as a major globalplayer. We agree fundamentally with those who argue that in the 21stcentury, it is no longer possible to separate internal matters and external

relations, Russia’s domestic and foreign policy is subject to dispute, and thatRussia’s hollow political scene is dominated by Vladimir Putin since 2000.

1 Prof. Dr. Vladimir Rukavishnikov, professor at the Higher School of Economics, StateUniversity, Moscow.

RASPRAVE I ČLANCI

488

MP 4, 2007 – Moć Rusije i njena konkurentnost(str. 487–512)

It seems that for journalists and scholars who take Russia’s returnseriously the only question is how the West to deal with today’s Russia. Butactually for those people, who dislike Putin’s rhetoric, the only question ishow Russia will deal with the West after the March 2008 presidential election.However, this paper is not about these questions. We are focusing onassessments of Russia’s national power in the past and the present, country’sglobal competitiveness, trends and goals for the future as prerequisites forpossible answers.

RUSSIA’S POWER: LOOKING BACK AND LOOKING AHEAD

National power has many dimensions – military-political, economical,demographical, geographical, etc. Students of international relations knowthis very well. It is commonly assumed by scholars that the Correlates of Warproject’s Composite Index of National Capabilities (CINC) is the bestindicator of relative national power for cross-national studies.2 Thecomposite index of national capabilities for the state under investigation is acomposition of three components of power - demographic, economic andmilitary. Its formula is very simple - the average of country’s share of world’sresources over six variables in the given year (x): Total Population Ratio(TPR), Urban Population Ratio (UPR), Iron Steel Ratio (ISR), EnergyConsumption Ratio (ECR), Military Personnel Ratio (MPR) and MilitaryExpenditures Ratio (ECR):

2 See the documentation on the web-site of Correlates of War Project, National MaterialCapabilities Documentation, Version 3.0. Last update: May 2005. The example ofapplication of the CINC may be found in: Julian Go, “Waves of Empire: US Hegemonyand Imperialistic Activity from the Shores of Tripoli to Iraq, 1787 – 2003”, InternationalSociology, Vol. 22, No. 1 (January 2007), pp. 5-40.

The point needs to be stressed here is that the concept of power, on whichCINC is based, refers to available military, human and material resources ofthe nation at the given year and to the ability of the government to extractpotential resources for the purpose of accomplishing national goals in the caseof war and/or external or internal threats.

489


The charts on Figure1 demonstrate the evolution of Russia’s CINC duringthe last two centuries in a comparison with the USA. There is no correlationbetween power and the type of political regime, at least in the case of these twogreat nations.

Figure 1. The dynamics of Russian and American power in terms of the CINC in 1817-2001

Com posite Index of National Capabilities

0

0,5

1

1,5

2

2,5

3

3,5

4

4,5

1817

1822

1827

1832

1837

1842

1847

1852

1857

1862

1867

1872

1877

1882

1887

1892

1897

1902

1907

1912

1917

1922

1927

1932

1937

1942

1947

1952

1957

1962

1967

1972

1977

1982

1987

1992

1997

R USSIAN EM PIRE U S S R

RF

USA

RUSSIA

Source: Data of Correlates of War Project, National Material Capabilities Documentation,Version 3.0. Last update: May 2005.

The sharp drop in Russia’s CINC took place in late 1980s-early 1990s. Atthat time Russia lost its superpower status. The USA, on the contrary, remainsa ‘lonely superpower’.3

Let us consider the likely evolution of CINC components for the comingfuture in turn.

The demographic component:• The Russian share in the world population is declining (Figure2).

While this tendency can be traced back to the Soviet time, the

3 No need here to talk about the causes of the final of the American-Soviet Cold war andthe fall of communism. The author discussed these issues in the monograph (in Russian):Рукавишников О. Владимир, Холодная война, холодный мир. Общественное мнениеСША и Европы о СССР/России, внешней политике и безопасности Запада,Академический проект, 2005.

Composite Index of National Capabilities

RF

RUSSIA

RUSSIAN EMPIRE U S S R

USA

490


demographic situation in this country has worsened since the collapseof the USSR.

• The same declining trend has been registered for the post-Soviet Russianratio in the urban population of the world.

Figure 2. The Russian share of world population, 1820-2006Russia's Total Population Ratio

5,3

7

8,7

7,1

6,4

5,45

4

3,4

2,8

2,2

0

1

2

3

4

5

6

7

8

9

10

1820 1870 1913 1950 1973 1991 2006

year

% of the world population

Russian Em pire, Soviet Union Russia in borders of RF, 2006

Sources: 1820-1998 – Agnus Maddison, The World Economy: Historical Statistics. OECD,

2003; 2006 – UN, IMF.

Indeed, today’s Russia contains about 141-142 million people – much

lesser than the USA, the European Union and the former Soviet Union, not

speaking about Asian giants (Figure3). This country got from the Soviet Union

about 70% of its territory and 55% of the total population, but since 1992 the

annual loss of population is about 700,000 – 1 million people. Russia’s

population is declining because of low birth rates and abnormally high death

rates for males.

The habits of a nation – its diet and a nutrition standard, alcohol

consumption and smoking patterns – all have a tremendous influence on a

society’s health. Unfortunately, the traditional pattern of strong alcohol

consumption determines the premature male mortality to a large extent. This

pattern is widespread and deeply rooted in the Russian folk culture. Alcohol

Russia’s Total Population Ratio

% o

f th

e w

orl

d p

op

ula

tion

Russian Empire, Soviet Union Russia in borders of RF, 2006

year

491


abuse leads to cardiovascular diseases, increasing casualties in accidents on theroad, murders, suicides, etc. Add a non-stop drug usage and the spread of AIDSamong the youth to the list of mortality causes.

Figure 3. The dynamics of total population of Russia empire, the USSRand Russia in a comparison with the USA in the 19th and 20th centuries

Total Population, 1816-2001.

0

50000

100000

150000

200000

250000

300000

350000

YEAR

1820

1825

1830

1835

1840

1845

1850

1855

1860

1865

1870

1875

1880

1885

1890

1895

1900

1905

1910

1915

1920

1925

1930

1935

1940

1945

1950

1955

1960

1965

1970

1975

1980

1985

1990

1995

2000

thousand people

RUS TPO P US TPO P

RUSSIAN EM PIRE

U S S R

RF

U S A

Source: data of Correlates of War Project, National Material Capabilities Documentation,

Version 3.0. Last update: May 2005

Do not forget the very fact that Russia’s population is aging alike Europe’s

one to complete the picture.4 The negative effect of the process of aging of the

population on economics, national defense and politics is well-known and

unavoidable. The able-bodied citizens will diminish significantly. It urges the

government to enact policies that boost productivity and labor force to deal

with the trend. Therefore the vital question is whether the new ambitious social

4 Population in many countries in Europe and the former Soviet Union will be among theoldest in the world by 20025.The median age of populations in Europe will increase from38 to 49 in 2050, and Spain with half its population older than 55 by 2050, will be theoldest country in the world, closely followed closely by Italy and Austria (the World Bankprognosis released in June 2007).

Total Population, 1816-2001

RUSSIAN EMPIRE

U S S R

RF

USA

thou

san

d p

eop

le

492


programs – so called national projects – demographic, immigration,

educational, medical and health care, etc. launched recently, can help to break

the tendency of declining of the total population or not. If these governmental

programs fail, than the total population may shrink to near 130 million by 2025

and 120 million by 2050, i.e. to the level of total population of the Russian

Soviet Federative Republic in late 1950s – early 1960s.5

The push, in our view, came at a critical time, although there are various

explanations of the underlying motives of these projects.6 The public monitor

over national projects gives us a hope for the better final of these projects than

previous similar initiatives.7

The economic component. The indicators of the CINC economic component

– country’s ratio in the global energy consumption and the relative size of iron

and steel production – were chosen basically for the aims of historical

comparisons. The very selection of these indicators emphasizes the importance

of the ferrous industry as the principle foundation of powerful economics of any

country in late 19th century and the most part of the 20th century, on one hand,

and the role of energy consumption as overwhelming evidence of the achieved

level of economic development of the nation, on the other.

Rolling the historical carpet back, one can see Russia’s attempts to run

down the USA in the volume of industrial production during the Soviet time

(Figure 4 and Figure 5). As for the current situation and the prospect for the

foreseeable future the state of arts looks the same:

5 According to the World Bank, the EU is projected to see its total population shrink byalmost 24 million over the next two decades; Russia alone is projected to lose 17 millionfrom its current level of 142 million people (The World Bank report “From red to grey:the third transition period” released in June 2007). See also the UN demographicprojections on the web-site of Population Division of the Department of Economic andSocial Affairs of the United Nations Secretariat (Internet, http:,esa.un.org/unpp).

6 There was an impression that national social projects were initiated primarily topromote Dmitry Medvedev, one of Putin’s closest associates, to the first deputy prime-minister position. These projects are an important part of PR-action to make himpopular amongst the general public as one of possible successors of the incumbentpresident at the 2008 election.

7 There is plenty of conferences and parliamentary hearings devoted to the national projects.Press also monitors activity related to these projects. But nobody knows exactly, what willhappen with Mr. Medvedev personally and all his projects after the presidential electionof March 2008.

493


• The contemporary Russian ferrous metallurgy is a bit smaller by size andproductivity than the Soviet one. The facility of main metallurgy plantsshould be renovated, but the volume of investments in this branch ofindustry is far from desirable. There is no prediction of a significantincrease of the Russian share of the global iron and steel production in theforeseeable future.

• The drop of energy consumption in 1990s was a direct consequence of thedeep economic crisis linked with the fall of the Soviet economy and theintroduction of market relations. The energy consumption is increasing innowadays, and it a symptom of country’s economic recovery. We do notexpect the very great rise of Russia’s energy consumption share in thenearest future as well, despite the announced huge plan of reconstructionof the national electric power engineering system.

Figure 4. The Russia-American energy consumption rally

Energy Consum ption, 1816-2001.

0

500000

1000000

1500000

2000000

2500000

3000000

3500000

YEAR

1820

1825

1830

1835

1840

1845

1850

1855

1860

1865

1870

1875

1880

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1995

2000

eqiv. thousand tons of coal

R US TNTRG Y US TNTRG Y

USA

U S S R

RF

R U S S I A N E M P I R E


eqiv

. th

ou

san

d t

on

s of

coal

Energy Consumption, 1816-2001

RUSSIAN EMPIREU S S R

RFUSA

494


The military component. Russian military power in its historic dynamics isassed here by two variables used in the formula of CINC: 1) the ratio ofmilitary forces of the Ministry of Defense in the total military personal of theworld; 2) the relative weight of national military expenditures in the globalmilitary spending of the given year.

Available data clear demonstrate, first, how the USA and Russia mobilizedtheir resources in times of war or military conflicts, and, second, how theSoviet Union tried to be military equal to the US by rising up its defenseexpenditures during the years of Cold war (charts on figures 6 and 7). The finalof this enduring rally is known.

The current situation and perspectives for the future in this field can becharacterized as follows:

• The Russian military budget as a percentage of GDP is lesser than theAmerican, yet a bit bigger than in major European countries – members ofNATO (Figure 8).

Figure 5. The dynamics of ferrous metallurgy in the USAand the Russian Empire, the USSR and the Russian Federation


Iron and Steel Production, 1816-2001.

0

20000

40000

60000

80000

100000

120000

140000

160000

180000

YEAR 18

211827

1833

1839

1845

1851

1857

1863

1869

1875

1881

1887

1893

1899

1905

1911

1917

1923

1929

1935

1941

1947

1953

1959

1965

1971

1977

1983

1989

1995

thousand tons

R US IRST US IRST

USA

USSR

RF

Iron and Steel Production, 1816-2001

thou

san

d t

on

s

USA

RF

U S S R

495


• No doubt the impact of the Russian military expenses, which are growingup since Putin’s coming to power, can not bring a significant rise ofRussia’s military expenditures ratio.8

• Russian military budget counted in US dollars is very small compared withthe USA (Figure 9), yet we doubt that the Russian government exposes allexpenditures related to defense and security to the press and the public.

• After the drop in early 1990s and an increase in mid-1990s due to theChechen war, the total size of the Russian military (MoD) has stabilized inearly 2000s, and it seems that Russia’s ratio to the total world militarypersonal likely will continue to decrease than increase.

• Russia intensifies efforts to rebuild its military machine. But the unfoldingmilitary reform along with modernizing of arms and armaments andreviving of the military-industrial complex cannot alter the above-madeassessments.

Although the difference between the huge American military expendituresand the moderate Russian military budget is enormously big, rising trendsemerged in 2003-07 look comparable (Figure 9).9 The similar tendency ofincreasing military expenditures is observed in all NATO-members, China,India, Saudi Arabia, South Korea, Australia, Brazil, and so on (Table 1). It isan alarming sign of global militarization.10 Alas, the arms race has not finishedby formal end of Cold war. Power politics is coming back. And the USA withits foreign policy is first and foremost responsible for this remake.

Happily, nobody predicts a great nuclear war in which Russia will beengaged in the observed future. Yet Russia is viewed as the potential treat tothe US, although not the enemy, – and this view prevails among the US expert

8 According to the popular American newspaper, “Russian defense budgets have beensoaring since Putin came to power, buoyed by a rising tide of petroleum income, and areset to jump by 23 percent in 2007 to a post-Soviet high of $32.4 billion. Moscow doesarms business with over 70 countries, including China, Iran, and Venezuela, and in 2006exported $6 billion worth of arms” (Fred Weir, “Russia intensifies efforts to rebuild itsmilitary machine”, The Christian Science Monitor, February 12, 2007, cited from web-edition – Internet, http://www.csmonitor.com/2007/0212/p04s01-woeu.html).

9 The rise of Russia’s military expenditures is carefully monitored by foreign observer butit is very rare compared with the rise of military expenditures of the US or other nationsby the popular media.

10 See the latest SIPRI report: Recent trends in military expenditure (Internet,http:,www.sipri.org/contents/milap/milex/mex_trends.html). It should be noticed thatSIPRI data differ slightly from data of other sources.

496


community despite the numerous declarations about partnership between thesetwo great nations made after the end of Cold war.11

Figure 6. The Russian and American military in times of war and peace,19th and 20th centuries.M ilitary Personal, 1816-2001.

0

2000

4000

6000

8000

10000

12000

14000

YEA

R

1820

1825

1830

1835

1840

1845

1850

1855

1860

1865

1870

1875

1880

1885

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1910

1915

1920

1925

1930

1935

1940

1945

1950

1955

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1965

1970

1975

1980

1985

1990

1995

2000

thou

sand

peo

ple.

RUS M ILPER U S M ILPER

U S S RRUSSIAN EM PIRE ÐÔ

USA


11 It is easy to draw such a conclusion from the media reports about recent hearings at theIntelligence Committee of the US Congress and speeches of heads of the CIS and the USarmy intelligence.

Military Personal, 1816-2001

thou

san

d p

eop

le.

RUSSIAN EMPIRE RF

USA

U S S R

497


Figure 7: Military expenditures of the two great rivals of the previous centuriesM ilitary expenditures, 1914-2001ã.

0

50000000

100000000

150000000

200000000

250000000

300000000

350000000

YEAR

1916

1919

1922

1925

1928

1931

1934

1937

1940

1943

1946

1949

1952

1955

1958

1961

1964

1967

1970

1973

1976

1979

1982

1985

1988

1991

1994

1997

2000

Thousands of US $

RUS M ILEX 1914 + USA, m ilex,1914+

RF

W W II

C O L D W A R

Korean war

Vietnam w ar

U S S R

USA


Figure 8. A comparison of military budgets as % of GDP in 2006.Defense spending, 2006

4,7

2,9

2,1

1,31,2

3,6

0

0,5

1

1,5

2

2,5

3

3,5

4

4,5

5

USA UK France Italy G erm any Russia

% of GDP

Source: NATO and Russian official statistical data.

Military expenditures, 1814-2001

Th

ou

san

d o

f U

S $

U S S R

WWII

Korean war

Vietnam war

RUS milex 1914 + USA, milex 1914 +

COLD WAR

USA

RF

Defense spending, 2006

% o

f G

DP

USA UK France Italy Germany Russia

498


Figure 9. The rising trends of military expenditures of the USAand the Russian Federation in the 21st century

M ilitary Budget, 2003-2007

11233 14282 18801 23660 30846

439533 433024456052

470241

502475

0

100000

200000

300000

400000

500000

600000

2003 2004 2005 2006 2007

years

mln US$

Russian m ilitary budget US m ilitary budget Ëèíåéíûé (US m ilitary budget) Ëèíåéíûé (Russian m ilitary budget)

Source: Russian and US statistical reports (official data and est.).

Table 1. Military expenditures of 15 top nations in 2006

Rank Country

Militaryexpenditures in

2006 (US$ bin.)

Change (% to theprevious

year)

Militaryexpenditures

per capita(US $)

Globalshare (%)


in 2005(US$ bin.)

1. USA 528.7 10.6 1 756 46 478.2

2.GreatBritain

59.2 22.6 990 5 48.3

3. France 53.1 14.9 875 5 46.2

4. China (est.) 49.5 20.7 37 4 41.0

5. Japan 43.7 3.8 341 4 42.1

6. Germany 37.0 11.4 447 3 33.2

7. Russia (est.) 34.7 65.2 244 3 21.0

8. Italy 29.9 9.9 514 3 27.2

9. Saudi Arabia 29.0 15.1 1 152 3 25.2

10. India 23.9 17.2 21 2 20.4

Military Budget, 2003-2007

mln

US

$

Russian military budget US military budget Линейный (Russian military budget)Линейный (US military budget)

years

499


Source: SIPRI reports.

Resuming, we must say, a scrutiny of CINC’s components reveals that

contemporary Russia is weaker than this country was before the collapse of the

USSR and even in 1970s when the Russian CINC was higher than the

American one. It is unlikely to take the Russian CINC up speedily in the years

to come. It means Russian power in the foreseeable future will stay lower than

that of the USA or China.

Perhaps, this diagnosis is indisputable, yet, in our view, the analysis

presented above transparently clear shows the limitations of any cross-

national comparison of modern states based on the CINC. The power

capacities of modern state, in our view, cannot be precisely described by the

composite index, which was developed basically for purposes of historical

researches.12

Power as a concept is dynamic: its content and attributes are changing

over the time. Indeed, today’s Russia possesses more than 3,000 strategic

12 We have no place here for a discussion of advantages and limitations of the CINC(see: Kelly Kedera and Gerald Sorokin, “Measuring National Power”, InternationalInteractions, Vol. 30, No. 3 (July-September 2004), pp. 211-230). Generallyspeaking, there are three different approaches to the measurement of power (JeffreyHart. “Three approaches to the measurement of power in international relations”.International Organization, Vol. 30, No. 2 (Spring 1976), pp. 289-305). Due to thedifficulty to measure and assess power in terms of control over actors or control overoutcomes, these two above-mentioned approaches were not used in the comparativeanalysis presented in this paper.

Rank Country

Militaryexpenditures in

2006 (US$ bin.)

Change (% to theprevious

year)


per capita(US $)

Globalshare (%)


in 2005(US$ bin.)

11. South Korea 21.9 33.5 455 2 16.4

12. Australia 13.8 31.4 676 1 10.5

13. Canada 13.5 27.4 414 1 10.6

14. Brazil 13.4 н.д. 71 1 н.д.

15. Spain 12.3 24.2 284 1 9.9

Total (top15) 963.7 14.8 83 839.8

All nationsof the world

1 158.0 15.7 100 1 001.0

500


nuclear warheads, is the world’s second-largest exporter of oil13 andarmaments,14 is the foremost exporter of natural gas,15 and is member of G-8 and a permanent member of the United Nations Security Council. Countrywith these attributes cannot but is a global player with strategic heft, even ifafter precise scrutiny its power capacities appeared to be far less substantialthan prevailing wisdom avers.

The world is rapidly changing, and becoming ever more integrated. The eraof globalization is altering the rules of behavior at the international arena.Certain dimensions of Russian power are becoming more important in the newcircumstances than in the years before (say, a scale of energy resources becamecomparable with a size of nuclear arsenal, a principal determinant of country’sweight in international relations of the 20th century, since its role in worldpolitics has dramatically changed, etc.).

Current Russia’s ratio to the global GDP is lesser than in 1991 (Figure10).In 2006 post-crisis Russia was tenth in the list of leading economics of theworld according to GDP PP in prices of 2002 like in 1994 (in 1991 this countryoccupied the fifth position – Figure 11).16

Russia’s economy is growing more slowly than we need it to do. Or wishit to do. The government has increased the volume and scale of those activities,which it believes demonstrate its international status, but most branches ofindustry have not reached for the level of 1990 in terms of productivity andefficiency so far.17 Consequently, we as a nation cannot competeinternationally as effectively as wish.

13 After Saudi Arabia.

14 After the USA.

15 Russia provides more than a quarter of the European Union’s oil and more than two-fifthsof its natural gas.

16 In May 2007 President Vladimir Putin said journalists Russia has shifted to thenumber 9. We do not see the statistical reports to check out whether this move tookplace or not.

17 We must add that the largest part of advanced technology products from Russia isexporting to the CIS countries and to China, while the total share of European marketand Japan is near 10% (data of International Trade Centre (UNCTAD/WTO)/ Countries(Internet, http:,www.intracen.org/menus/countries.htm).

501


Source: 1820-1998 – Agnus Maddison, The World Economy: Historical Statistics. OECD,2003; 2006 – UN, IMF.

Figure 11. The first ten nation of the world ranked by GDP PP(in prices of 2002)

Figure 10. The impact of the Russian Empire, the USSR and the RussianFederation to world GDP in the past and the present

Russian ratio to w orld GDP, %

5,3

7,4

8,4

9,49,2

6,7

5,2

5,75,3

4,1

2,5

0

1

2

3

4

5

6

7

8

9

10

1820 1870 1913 1950 1973 1991 2006

years

%

Russian Em pire, the USSR Russia in RF borders

Ranking GDP PP

0

2

4

6

8

10

12

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

year

USA

Japan

China

G erm any

Russia

India

France

Italy

UK

Brasil

Source: UN and IMF statistics.

Russian ratio to world GDP, %

%

Russian Empire, the USSR Russia in RF borders

years

Ranking GDP PPyear

USA

Japan

China

Germany

Russia

India

France

Italy

UK

Brasil

502


RUSSIA’S COMPETITIVENESS

Nobody talk about economic competitiveness in the Soviet Union. It is safeto say, global competitiveness as a concept did not even exist in policydiscussions at that time. Competitiveness has become a buzzword in a nationalpolicy debate in Russia only during last few years.

For the purpose of discussion here, we stick with a definition of nationalglobal competitiveness as “the degree to which a nation, under free and fairmarket conditions, produce goods and services that meet the test ofinternational markets while simultaneously maintaining and expanding the realincomes of its citizens”, adopted in the USA in 1980s.18

There are three important points in this definition. First, competitivenessimplies an ability of nation to compete in a global market. Another point to bestressed is that the concept of economic competitiveness refers basically to theability of the government to create certain conditions for doing business. Thisis a capacity of the political system to convert national real and potentialcapabilities into actual advantages at the global market. Third, it means thestate should reach the high level of global competitiveness without anassociated decline in real incomes and without a decline of the value of nationalcurrency that would cause falling real wages over time.

All in all the definition draws national attention to the position of thecountry in the world economy and simultaneously to prosperity. It alsoindicates both national power and global competitiveness are means, not goalsin and of themselves.

The crucial determinants of competitiveness as defined above areproductivity improvements and technological innovation as well asinvestments in human capital. Human capital is nation’s greatest competitivepotential and a prime element of country’s power. To compete internationally,the nation should improve all three above mentioned parts.

Despite a common support of this simple idea by Russian authorities, notspeaking about the general public, it is too early to speak about the results ofmentioned above loudly announced national projects and other changes indomestic policy which are often called as the state coming back to economy,education and medical and health care.

18 Laura D’Andrea Tyson, “Competitiveness: An Analysis of the Problem and aPerspective on Future Policy”, in: Martin K. Starr (ed.), Global Competitiveness: gettingthe U.S. back on trac, The American Assembly, Columbia University/ New York,London, W. W. Norton & Co., 1988, p. 97.

503


Global competitiveness has economic and symbolic significance for anycountry. In recent years social scientists have expended a great deal of effort inattempts to develop accurate and practical measures of country’s globalcompetitiveness. These efforts performed under the auspices of the WorldEconomic Forum19 have been met with considerable interest amongst scholarsand practitioners.

We must say here a few words about the difference between basicmeasures of power and competitiveness. GDP as a major macroeconomicindicator of country’s might refers to national power, while per capita GDPserves as an indicator of economic prosperity. As a matter of fact, measures ofglobal competitiveness speak (indirectly) about the ability of governments tocreate prosperity inside and to compete outside peacefully, while measures ofnational power refer to the ability of states to engage in military conflicts.Therefore, a mentioned conceptual discrepancy between indicators haspolicy’s implication.

In 2006 Russia was ranked 62 in the list of 125 nations according to thescores of GCI – the growth competitive index.20 This country was rankedbelow India (43) and China (54) but before Brazil (66). Russia’s closestneighbors in this list were El Salvador (61) and Egypt (63), while its formerrival, the USA, occupied the 6th position in the first ten in a company withSwitzerland (1), Finland (2), Sweden (3), Denmark (4), Singapore (5), Japan(7), Germany (8), the Netherlands (9) and the UK (10).21

There is no correlation between the CINC and indexes of competitiveness.The picture of relationship between the type of political regime and country’scompetitiveness is fuzzy and rather complicated. Although overalldemocracies show themselves as more competitive nations than othersbecause of maintaining and/or expanding political, social and economicliberties and the rule of law, there were examples of backward nations growingmore rapidly than open economics.22

19 The Global Competitiveness Report 2005-2006, WEF, 2007.

20 There are two complementary indexes: GCI – growth competitiveness index, and BCI -business competitiveness index. Ratings of nations on these indexes are correlated.

21 In 2005 according to the WEF report Russia was ranked 53rd among 117 states. Thismeans its rank has been declined on 9 points a year. The methodologies of assessmentsin 2005 and 2006 are in a perfect match.

22 See our chapter (in Russian): Рукавишников О. Владимир, “Политическая культура,демократия, и конкурентоспособность” В кн.:, Мы и Они. Россия в сравнительной

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What counts for the poor results of Russia? The opinions in Russia varyfrom a total rejection of the WEF rankings and a harp criticism of measuresof competitiveness to an outwardly restrained acceptance of the WEFreports.23

The possible explanation links historically open economies with good stateand societal institutions, the mature civil society. But because institutions andpolicies correlated with growth are highly correlated among themselves, it ishard to isolate the effect of individual policies.24

The economic growth is a basis for both national power and globalcompetitiveness. What is quite clear is that power capacities heavily dependupon wealth, which, in its turn, normally is rising up because of capitalisteconomic liberties. But economic liberties may continue living in the absenceof real political and social democracy.

Power’s central role in international relations is unsurpassed up to this date.And military muscles can be pumped in no democracy. History had proofed it.

As for global competitiveness of the nation, it depends upon politicaldemocracy perhaps even more than on wealth. Country’s competitivenessflourishes more often than not when a full set of human rights and civicliberties is in a good stand and when corruption is low. And all this is not thecase of today’s Russia.25

перспективе. (Под ред. В. А. Мау, А. А. Мордашева, Е. В. Турунцева). Серия“Межстрановые социально-экономические исследования”. – М.: ИздательствоИнститута экономики переходного периода, 2005, с. 197-239; the book wastranslated into English and published in Finland in this summer. The main results werepresented also in the author article published in Russian: Рукавишников О. Владимир,“Конкурентоспособность и демократия”, Социологические исследования/Sociological Researches Monthly, No 2, 2005, с. 3-15.

23 The topic has been addressed so often, that even the task of neatly summarizing theliterature concerning Russia’s poor position in the WEF competitiveness ratings isdaunting.

24 The political and social dimensions of global competitiveness and rebuilding of theRussian economy require a new sense of collaboration and trust among business andlabor, government and people (described empirically in terms of interpersonal trust andpolitical trust as measures linked with social capital and political stability). For a lack ofroom this issue is not discussed in this paper.

25 See, for instance, The Global Corruption Report 2005, released by TransparencyInternational on March 16, 2005. Russia was ranked 90th among 146 nations in companyof poor African and Asian states. In the 2004 report Russia was on 86 position.

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CONCLUSIVE REMARKS

What goals should the Russian Federation pursue in effort to regain itsglobal prominence? What strategies for renewal should be adopted in thepublic and private sectors? Leaders in government, business, political partiesand labor unions permanently address these questions. The importance foreconomic growth of property rights and the rule of law with a low level ofcorruption is universally accepted, but there is a skepticism concerning thedegree of openness of economy. Almost everyone agrees that while many ofcauses of the present situation can be traced back to the USSR, although haveworsened since its collapse, others are rather new or were created in 1990s.The Russian capitalism is not strong, democracy is too weak.

During 1990s politically post-Soviet Russia was young quasi-democracywith formally existing human rights and democratic liberties. For manyRussians Boris Yeltsin and his team of reformers are responsible for thedevaluation of democracy in Russia more than others, because since 1990s theword ‘democracy’ is associated in minds of the general public with masspoverty and misery, unfair privatization of public assets and personal troublesas an aftermath of liberalization of economy.

Anocracy is a general term for state with weak (or non-existent) centralauthority; this kind of states might be easily shifted to civil war, because theintegrity of the country is likely to be imperiled by regional separatists. Itspattern of political system is a mixture of democratic and autocratic elements.The balance of these elements is unstable.

In our view, the bloody Chechen wars and the deepest economic decline in1990s are the most direct proofs that Russia under Yeltsin represented a specialsort of anocracy. The move from the ‘Russian edition of anocracy’ to the so-called ‘soft variant of personality cult’ of the incumbent president occurred inearly 2000s. The balance of elements of the political culture shifted towardsthe authoritarian pole.

The strengthening of state – or of the personal power of the president -became the central theme of the first Putin term. But since foreign affairs couldnot be ignored, Putin’s emphasis on the fight against Chechen separatists andinternational terrorism provided a convenient formula for melding thedomestic and the foreign into a basic theme in a dialog with the Westernleaders. This theme after the September 11 tragedy in the USA becamedominant. The accent on terrorism as a common threat helped both sides tosmooth the criticism of western media concerning the process of reducing of

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democracy in Russia. As we know. Putin was easily reelected in 2004. Duringthe second term the Russian president reinforced the priority placed ondomestic affairs, and the view for foreign policy as an extension of domesticpolitics26 had a side effect: the relations with the West have deteriorated.

The attentive reader of mainstream western newspapers could easily detectthe growth of doubts about whether Russia ever may be an ally for the US inthe global struggle against the international terrorism and a reliable supplier ofoil and natural gas for Europe since 2005. Backed by oil and gas reserves,Russia is becoming stronger and independent, and the non-stop campaign ofcriticism of Putin’s policy in the western media is intensifying in parallel.27

Currently President Putin is pictured by the western media as anincreasingly hostile to democracy and to the West because of his words andactions, but, in our view, it is an oversimplification. The real picture is morecomplex.

Here let me quote what The Sunday Times wrote in May 27 of this year:“to the West, Moscow’s strongman is a despot out to crush democracy; that’sjust why most Russians like him”.

It is true that about 70% of Russians support President Putin, according tothe latest polls – by any standards a record for a leader at the end of his tenure.But to say that plain Russians like him because of his anti-democratic domesticpolitics is not correct, in our view, – if, of course, such a declaration is not aconscious misinformation or even defamation.

For the bulk of plain folks, Putin’s youthful appearance, sobriety andintelligence make him the perfect symbol of Russia’s going out of the crisis.This perception is backed by the step-by-step growth of wages and pensionsduring his reign.

The official propaganda created an image of national savior for Mr. Putin.The national television channels feed up the audience by the idyllic pictures ofthe President working hard during his numerous visits abroad or at thegovernmental meetings. His recent anti-American propaganda escapades have

26 Vladimir Rukavishnikov, “Choices for Russia: Preserving Inherited Geopolitics ThroughEmergent Global and European Realities”, in: Kanet R. (ed.) Re-emerging Russia,London, Palgrave Macmillan, 2007, pp. 23–45.

27 The author discussed this issue in the article “Déjà vu: a sociological look at the currentstate of Russia-US relations”, in: ГОДИШЊАК ЗА СОЦИОЛОГИJY – SociologicalAnnual Journal of the Department of Sociology, Faculty of Philosophy, University ofNiš, Serbia, No. 2 (2006), pp. 57-70 (in English).

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been met at home with great sympathy as symptoms of rebuilding of Russia’sgreat power status.28

It is true that any appeals to restore ‘real democracy’ find no responses inapathetic masses.29 It is also true that Putin’s vision of democracy in his owncountry differs from western understanding of this concept. And that he likesthe practice of appointment of governors and the effective populist actionsstrongly rejecting any political motivations of the last.30 Nevertheless, thepower elite did not resisted the new edition of the personality cult in thiscountry. The business elite is getting richer and richer under Putin’s reign; allthese people are satisfied with the status-quo and wish to preserve it, referringin public to a popular culture with the deeply rooted mistrust to the West of thepopulation to justify the attitude toward the regime.

Today Putin’s entourage controls leading companies with totalcapitalization equal to 80% of Russia’s stock market.31 His closest lieutenantsare on top positions of most state-controlled economic giants, such as‘Gasprom’, ‘Rosneft’, ‘Russian railways’, etc In short, those who aregoverning Russia simultaneous are actual owners of this country wealth.32

In our view, all these facts indicate that Mr. Putin simply went further andfarther on in Yeltsin’s shoes employing different tactics. And if the readeragrees that he is not the architect of a corrupt bureaucratic system in Russia,just an ingenious builder, than he or she may more correctly interpret his policyand politics.

Now let us return to the basic questions, which were set up at the verybeginning of this section.

28 And it is not a surprise if one takes in account the press of governmental propagandaforcing the nation to consolidate around the flag as in the old good times of Russia’smilitary glory.

29 The left-wing forces are weak and demoralized, because the ruling party successfullystole away their social demands and patriotic slogans. The right-wing forces lost itselectorate, because many associate their leaders with the economic hardships of 1990s.Therefore Putin’s pressure on the right-wing and liberal critics of his politics was backedby negative popular attitudes towards western-oriented politicians.

30 The highly publicized actions against several oligarchs also seem to have been motivatedby politics and looked like an object lesson for other richest people.

31 This estimate is taken from The Wall Street Journal (David Satter. “Putin’s Soul”, TheWall Street Journal, June 29, 2007, p. A15).

32 That is why critics of the president say that Pitin’s regime is concerned, first of all, aboutits own safekeeping, while genuine national interests often write off.

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The resurgence of former Russian power is the main goal of PresidentPutin’s policy. It is in the name of getting Russia ‘back on the track’, his regimehas turned oil and gas reserves and Russia’s role as a monopoly energy supplierfor much of Europe into a real power policy instrument that, as some westernobservers said, “makes Russia invulnerable and gives it commanding statusover a weakening West”.33

Perhaps, the cited statement of “The Washington Post” is an exaggeration,but almost everyone agrees today that Russia under Putin, greatly helped byrecord oil prices, has gone from being a country that owed billions to one thathas paid its international debts and is sitting on a stabilization fund ofastronomic size.

The transformation of Russia into a special sort of so-called “petrostate” – acountry that organizes its political, economic and social relations around energyextraction and suffers from long-term distortions as a result – is, in our view, amyth.34 As with almost any myth, this one is not entirely false. There are certaingrounds for such a proposal. But this particular myth created a strong feeling of“déjà vu”, – as if the Cold war with irrational fear of Russian bear came back.

The principle strategic goal for Russia for the coming future is to avoid abecoming of ‘petrostate’ through a growth of global competitiveness anddiversity of export products.

The process of economic recovery in recent years was developingsluggishly, mainly because the government is too afraid of becoming a victimof so-called ‘Dutch disease’, a destructive consequence of a flood of easy oilmoney, and partly because of ‘uncongenial investment climate for foreigninvestors’.35 It means the current tactics objectively hampers the progress ofeconomy despite the optimistic declarations of the president, the flood of oilmoney and an abundance of import goods in the Russian shops.

The tactic of Russia’s recovery must be revalued. Only then can we hopeto achieve our strategic economic, political, social and geopolitical aims. But a

33 Jim Hoagland, “Dealing With Putin”, The Washington Post, Sunday, May 27, 2007; B07,cit. from the Internet site: washingtonpost.com.

34 Rajan Menon and Alexander J. Motyl, “The Myth of Russian Resurgence”, TheAmerican Interest, March-April 2007 (online version: Internet, hpp,the-american-interest.com/ai2/article.cfm?Id+258&Mid=8)

35 Many western businessmen cited politics as the reason that Russia remains out of favor.See, for instance, the commentary of Jens F. Laurson and George A.Pieler with aremarkable title “Raw Power, Bear Facts”, Forbes, December 29, 2006.

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revision of tactic will become a national agenda only after the elections tocome. The relics of pluralistic democracy exist till nowadays despite theconcentration of power in Kremlin, and there is no doubts the next electionswill be in time, and that, according to opinion polls, the voters’ turnover at thecoming elections will be significant. But we are absolutely sure that the natureof ruling regime will not change after the next national and presidentialelections whatever the outputs will be.36

LITERATURE

1. Julian Go., “Waves of Empire: US Hegemony and Imperialistic Activityfrom the Shores of Tripoli to Iraq, 1787–2003”, International Sociology,Vol. 22, No. 1 (January 2007), pp. 5-40.

2. Владимир О. Рукавишников. Холодная война, холодный мир.Общественное мнение США и Европы о СССР/России, внешнейполитике и безопасности Запада. М.: Академический проект, 2005.

3. The World Bank report “From red to grey: the third transition period”,World Bank, June 2007.

4. Fred Weir, “Russia intensifies efforts to rebuild its military machine”, TheChristian Science Monitor, February 12, 2007.

5. Kelly Kedera and Gerald Sorokin, “Measuring National Power”,International Interactions, Vol. 30, No. 3 (July-September 2004), pp. 211-230.

6. Jeffrey Hart, “Three approaches to the measurement of power ininternational relations”, International Organization, Vol. 30, No. 2 (Spring1976), pp. 289-305

7. Laura D’Andrea Tyson, “Competitiveness: An Analysis of the Problem anda Perspective on Future Policy”, in: Martin K. Starr (ed.) GlobalCompetitiveness: getting the U.S. back on track, The American Assembly,Columbia University, New York, London, W. W. Norton & Co., 1988.

8. The Global Competitiveness Report 2005-2006, WEF, 2007.

9. Владимир O. Рукавишников, “Политическая культура, демократия, иконкурентоспособность”. В книге: Мы и Они. Россия в сравнительнойперспективе. (Под ред. В. А. Мау, А. А. Мордашева, Е. В.Турунцева),

36 Regional elections in March 2007 marked the start of a political season that willculminate in elections for the Duma this December and for the presidency next March.But the contests are likely to be fake competitions, conducted by pro-Kremlin candidates.

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серия “Межстрановые социально-экономические исследования”. –М.: Издательство Института экономики переходного периода, 2005, с. 197-239; the book was translated into English and published in Finlandthis summer.

10. Владимир О. Рукавишников, “Конкурентоспособность и демократия”,Социологические исследования/Sociological Researches Monthly, No 2,2005, с. 3-15.

11. The Global Corruption Report`2005, Transparency International, March2005.

12. Vladimir Rukavishnikov, “Choices for Russia: Preserving InheritedGeopolitics Through Emergent Global and European Realities”, in: R.Kanet (ed.) Re-emerging Russia. London (UK), Palgrave Macmillan, 2007,pp. 23-45.

13. Vladimir Rukavishnikov. “Déjà vu: a sociological look at the current stateof Russia-US relations”, in: Sociological Annual – ГОДИШЊАК ЗАСОЦИОЛОГИJY, Journal of the Department of Sociology, Faculty ofPhilosophy, University of Niš, Serbia, No. 2 (2006), pp. 57-70.

14. David Satter, “Putin’s Soul”, The Wall Street Journal, June 29, 2007, p.A15.

15. Jim Hoagland, “Dealing with Putin”, The Washington Post, Sunday, May27, 2007; B07

16. Rajan Menon and Alexander J. Motyl. “The Myth of Russian Resurgence”,The American Interest, March-April 2007 (online version: Internet,hpp://the-american-interest.com/ai2/article.cfm?Id+258&Mid=8)

17. Jens F. Laurson and George A. Pieler, “Raw Power, Bear Facts”, Forbes ,December 29, 2006.

Original in English

APSTRAKT

Sadašnja ruska administracija je objavila da su njeni glavni ciljevi ponovnosticanje moći Rusije i povećanje njene konkurentnosti. U prvom delu rada jeprikazana evolucija ruske moći od početka 19. do samog početka 21. veka. U analizise ukazuje zašto je sadašnja Rusija daleko slabija država od one iz sedamdesetihgodina 20. veka kada je sovjetska moć bila veća od američke. Relativno niska pozicijaRusije na lestvici globalne ekonomske konkurentnosti je ključno pitanje koje autorrazmatra u drugom delu rada. U poslednjem delu članka se govori o ciljevima zabudućnost Rusije.

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Prof. Vladimir RUKAVIŠNJIKOV

MOĆ RUSIJE I NJENA KONKURENTNOST

REZIME

U članku se ističe da su ponovno sticanje moći i zauzimanje boljeg mesta nalestvici globalne ekonomske konkurentnosti dva najvažnija cilja današnjeg ruskogrukovodstva. Takođe se ukazuje da su i moć nacije i svetska konkurentnost sredstva ane ciljevi za sebe i po sebi.

Prvi deo članka autor započinje analizom moći Rusije u nedavnoj i dalekojprošlosti poredeći je sa moći SAD, tradicionalnim bivšim sovjetskim/ruskimsuparnikom i usmerava svoju pažnju na trendove koji mogu pomoći da se sagledadogledna budućnost. Složeni indeks nacionalnih kapaciteta (Composite Index ofNational Capabilities – CINC) se koristi prilikom ove komparacije. Što se tiče CINC,sadašnja Rusija predstavlja “slabiju” državu po svojoj snazi od one koja je to bilasedamdesetih godina 20. veka kada je njena moć bila veća od američke. Nijeverovatno da će ruski CINC dostići sovjetski nivo uprkos postignutom ekonomskomnapretku tokom godina od kada je Putin na vlasti. Ova dijagnoza je možda nesporna,ali moć kao koncept je dinamična kategorija i njen sadržaj se menja vremenom.Analiza koja je predstavljena u prvom delu rada takođe ukazuje da postoje jasneslabosti i ograničenja svakog poređenja među modernim državama primenomistorijski zasnovanog CINC. Ne postoji korelacija između CINC i indeksa Svetskogekonomskog foruma (World Economic Forum – WEF). Slika odnosa između tipapolitičkog sistema i konkurentnosti zemlje je nejasna i prilično komplikovana.

U drugom delu rada autor razmatra zbog čega ruska privreda ima sporiji rastnego što je to potrebno, ili što to Rusi žele. Konkurentnost ima ekonomski isimboličan značaj za svaku zemlju. Rusija je 2006. godine bila na 62. mestu liste od125 zemalja prema rezultatima globalnog indeksa konkurentnosti (GlobalCompetetiveness Index – GIC) – indeksa WEF konkurentnosti rasta. Zbog čega jepoložaj Rusije po ovom pokazatelju tako nizak? Mišljenja ruskih stručnjaka idu odpotpunog odbacivanja rangiranja WEF i oštre kritike konkurentskih mera donaizgled uzdržanog prihvatanja izveštaja WEF. Značaj imovinskih prava zaekonomski rast kao i vladavine prava i nizak nivo korupcije su univerzalnoprihvaćeni, ali među ruskom elitom postoji skepticizam u pogledu stepenaotvorenosti ekonomije. Skoro svi se slažu da mnogi uzroci sadašnje situacije potičuod SSSR, i da je u prvim godinama od raspada te države došlo i do značajnogpogoršanja stanja. Smatra se takođe, ukazuje autor, da postoje i drugi, novi uzrocikoji su nastali devedesetih godina 20. veka. Ruska vlada je u toj fazi povećala obimi razmeru onih aktivnosti za koje je verovala da demonstriraju njen međunarodnipoložaj; istovremeno pokazatelji govore da u većini grana industrije nije postignutveći napredak u odnosu na produktivnost i efikasnost proizvodnje.

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U završnom delu autor ukazuje da osnovni strateški zadatak Rusije treba da budeda kroz rast svoje globalne konkurentnosti izbegne da postane „petrodržava“. Procesekonomskog oporavka je poslednjih godina tekao sporo najviše zbog toga što se ruskavlada suviše bojala da ne postane žrtva takozvane „holandske bolesti“. To znači da jepolitička taktika objektivno sprečavala veći napredak u privredi. Ekonomski rast jeosnova državne moći i globalne konkurentnosti. Ono što je sasvim jasno je dakapaciteti moći u velikoj meri zavise od bogatstva, koje, sa svoje strane, normalnoraste zbog kapitalističkih ekonomskih sloboda. Ekonomske slobode mogu i daljepostojati čak i u odsustvu stvarne političke i socijalne demokratije. Globalnakonkurentnost nacije zavisi od bogatstva, ali isto tako i od postojanja i razvijanjapolitičke demokratije. Konkurentnost zemlje je veća kada se u potpunosti ostvarujuljudska prava i građanske slobode i kada je korupcija na niskom nivou. Autor ukazujeda su ratovi u Čečeniji i najdublja ekonomska kriza zabeležena devedesetih godina 20.veka najdirektniji dokaz da je postsovjetska Rusija na čelu sa Jeljcinom predstavljalaposebnu vrstu anokratije. Skretanje sa anokratije ka jačanju uloge države i autoriteta iovlašćenja funkcije predsednika koje se dogodilo u vreme vladavine sadašnjegpredsednika Putina, uz sve veće isticanje prioriteta rešavanju unutrašnjih problema utoku njegovog drugog mandata, bez sumnje je doprinelo porastu njegovepopularnosti. Imajući potporu u rezervama nafte i gasa današnja Rusija postajeekonomski jača i nezavisnija u nastupu u svetu. Autor smatra da se suština postojećepolitike i uspostavljenog sistema vladavine neće promeniti posle održavanjaparlamentarnih (decembar 2007) i predsedničkih (mart 2008) izbora, ma kakvi njihovirezultati bili.

Documents

RUSSIA’S POWER AND · PDF file · 2008-06-18487 Vladimir RUKAVISHNIKOV1 UDK: 341.238(470) Biblid 0025-8555,59(2007) Vol. LIX, br. 4, pp. 487–512 Izvorni naučni rad Oktobar 2007